Q3 2024 DURECT Corp Earnings Call
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Speaker Change: Greetings and welcome to the Direct Corporation 3rd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference, please press star and then zero on your cell phone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Papp. Thank you, you may begin.
Tim Papp: Good afternoon and welcome to Direct Corporation's 3rd Quarter 2024 Earnings Conference Call.
This is Tim Papp, Chief Financial Officer of Durex.
Tim Papp: Before we begin, I would like to remind you of our Safe Harbor Statement.
Tim Papp: During the course of this call, we may make forward-looking statements regarding direct products in development, expected product benefits, our development plans, future clinical trials, or projected financial results.
Tim Papp: These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements.
Tim Papp: Further information regarding these and other risks can be found in our SEC filings including our 10-K and 10-Q's under the heading risk factors.
Tim Papp: To begin, I would like to review our third quarter 2024 financial results.
Tim Papp: Total revenues in the third quarter were $1.9 million compared to $1.7 million in 2023.
Tim Papp: 2024 revenues were higher primarily due to an increase in product sales partially offset by a decrease in revenue from collaborations.
Tim Papp: The decrease was primarily due to lower clinical trial related expenses and lower employee related costs.
Tim Papp: SG&A expenses were $3.2 million in the third quarter of 2024 compared to $3.8 million for the prior year. The decrease was primarily due to lower employee, professional services, and legal expenses.
Tim Papp: As of September 30, 2024, we had cash and investments of $10.5 million, and our cash utilization in the third quarter was $5.3 million.
Tim Papp: We believe our cash on hand is sufficient to fund operations through the first quarter of 2025.
Tim Papp: Lastly, Inacol has notified us that they are terminating the licensing agreement related to Pazamir. We are in the process of evaluating our options for Pazamir, but given that we have not been receiving royalties in recent quarters, we do not expect that this will have a material financial impact for DIRRECT.
Speaker Change: Now, I would like to turn the call over to Jim for a business update.
Jim: Thank you, Tim. Hello, everyone, and thank you for joining us today.
Jim: DIRECT's priority continues to be initiation of the confirmatory phase 3 clinical trial of larsicosterol and alcohol-associated hepatitis or AH and I'm excited to share an update on our progress.
Jim: As we finalize preparations for the trial, we continue to have positive dialogue with the FDA, utilizing the advantages offered under our breakthrough therapy designation.
Jim: During the quarter, we held a Type B meeting with the FDA and reached an agreement on key aspects of our planned Phase III trial design.
Jim: The Phase III trial is designed as a randomized, double-blind, placebo-controlled, multi-center study that will be conducted in patients with severe AH in the U.S.
Jim: We plan to enroll approximately 200 patients who will be randomized one-to-one to either 30 milligrams of larsiclosterol or placebo.
The primary outcome measure will be a 90-day survival endpoint.
Jim: We are conducting this trial at U.S. sites to avoid the variability we observed in health care provision at ex-U.S. sites in the prior affirmed study.
Jim: For example, we observed a difference across regions of the world in the time to treat patients in the AFFIRM trial. These data will be presented in an oral presentation at the AASLD meeting this weekend.
Jim: The dosing regimen in Phase 3 is consistent with AFFIRM, with patients receiving the first dose on Day 1 and if still hospitalized, a second dose on Day 4.
Jim: This trial design leverages the data from our Phase 2b affirmed trial and the feedback we received from the FDA through our Type B meeting held under the breakthrough designation.
Jim: As a reminder, in a firm both doses of larsicosterol reduced mortality by nearly 60% in the US patients, who represented 76% of the total number of patients in the trial.
Jim: The FDA has confirmed that a single pivotal trial would be sufficient to support an NDA filing in NIH and with breakthrough therapy we have the opportunity to submit the NDA on a rolling basis.
Jim: We are preparing to initiate the trial as soon as we can, subject to obtaining sufficient capital, and our goal is to have top-line data within two years of initiation.
Jim: We remain committed to attaining approval for larsicosterol in AH as expeditiously as possible and ultimately bringing this potentially life-saving therapeutic to patients with no effective treatment options today.
Jim: We have already undertaken important steps to prepare for initiating the trial, including starting the process of onboarding clinical sites and selecting a CRO to help manage the trial.
Jim: We expect to report top-line data within two years of initiating the trial.
Jim: We've continued to analyze the affirmed data and will have additional data presented at the AASLD meeting during the next week.
Jim: We also have two poster presentations, one on liver transplants and the other on drinking behavior of patients who participated in the AFIRM trial.
Jim: We remain encouraged by the strong interest from hepatology thought leaders and key opinion leaders for the affirmed results and their continued support for larsicosterols potential to provide a clinically meaningful survival benefit in AH patients.
Jim: As a brief reminder, our Phase 2b affirmed trial was a placebo-controlled, double-blind, multinational study with two active arms of 30mg and 90mg of larsicosterol and a placebo arm of approximately 100 patients each.
Jim: In total, we randomized 307 patients with severe AH from a global network of clinical sites. Our sites included renowned liver centers in the United States, Australia, the EU, and the UK, and we had the honor of working with some of the world's preeminent thought leaders in AH.
Jim: The top-line results in the key secondary endpoint of mortality at 90 days showed a 41% reduction with a 30 milligram dose of placebo sterile and a 35% reduction with a 90 milligram dose of placebo sterile as compared with placebo.
Jim: Even more impressive results were observed in the U.S. population, which comprised 3 quarters of the total enrollment in a firm. That was 232 out of 307 patients.
Jim: In the U.S. we saw reductions in 90-day mortality of 57% and 58% for the 30 and 90 milligram arms respectively compared with placebo.
Jim: Although not part of the original trial statistical analysis plan, the p-values for these results were both approximately 0.01.
Jim: Very importantly, Norseco Sterile exhibited an excellent safety profile with no serious adverse events in either arm and greater than 20% reductions in the total number of treatment emergent adverse events for both active arms when compared with the placebo group in these severely ill patients.
Jim: Ultimately, these clinically meaningful reductions in mortality, coupled with reduction in adverse events in these severely ill patients, reinforce the compelling risk-reward proposition of lepsicosterol.
Jim: We continue to believe that the affirmed data provide compelling evidence that larcecosterol could represent a safe and effective therapy with life-saving potential for AH patients.
Jim: There are no approved therapies for AH today. So if our sequestrial meets our expectation in the phase 3 and we gain approval, it would likely be the first FDA approved treatment for this disease and establish a new standard of care.
Jim: A.H. is the cause of more than 160,000 hospitalizations each year in the U.S. and with a 90-day mortality rate of approximately 30% is responsible for tens of thousands of deaths each year.
Jim: In addition to its high mortality rate, AH represents a significant cost to the U.S. healthcare system.
Jim: Hospitalizations attributed to AH incur charges between $67,000 to $180,000 per patient, a total charge to hospitals of approximately $10 billion annually.
Jim: As a result, LARSUCO sterile can potentially save thousands of lives each year while representing a potential blockbuster opportunity in the U.S. alone and could simultaneously provide overall cost savings to the health care system.
Speaker Change: We would now like to take any questions you may have.
Speaker Change: Thank you. We will now be conducting question and answer session.
Speaker Change: If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys.
Speaker Change: The first question we have is from Francois Brassois of Oppenheimer. Please go ahead.
Thanks for watching!
Speaker Change: Hi, this is Dan on for Frank. Thanks for taking our questions. At this time are you sharing anything about your strategy for the onboarding of sites? Would you be targeting the same sites in the U.S. as in the AFIRM trial? Were there any sites that were fast for enrolling? Sites, any color there?
Speaker Change: Yeah, we definitely are going to be using a number of the same sites and we've
and spending this time actually putting in place.
Speaker Change: confidentiality agreements and putting in place agreements, because when starting any clinical trial it's the paperwork, the legal component of it all that takes the longest from starting it. But Wei-Chi is on the line. I'll let her also speak to that. Wei-Chi, any thoughts on the specific approach you're taking with these U.S. sites?
Wei-Chi: Yes, we actually will include at least 60-70% of the affirmed trial sites in the U.S.
for our phase 3 trial.
Thank you.
Speaker Change: Thanks for that. And with respect to, you highlighted that there were some time-to-treatment differences around the world. I'm wondering if there were any geographical differences within the U.S. or was this mostly a U.S. versus ex-U.S. phenomenon?
Speaker Change: Once again, I'll let Wei-Chi speak to that first. Go ahead, Wei-Chi.
Yeah, there were huge differences.
of Time to Tweet.
Speaker Change: of the regional differences for the time to treat, which we are going to present at ASLD meeting on the 18th of November. Within U.S., of course, there might be side-to-side variations, which we...
Speaker Change: We did observe that, but, however, because the N numbers from U.S. region is much bigger, so it's more or less.
Speaker Change: overcome that variation because the smaller sample size from FUS regions so that's exaggerating, further exaggerating that the time to treat variations.
That's why this phase 3 trial will be
at least for now, for the phase three.
That makes sense and thanks for taking my questions.
Sure.
Speaker Change: The next question we have is from Ed Ark of HE Wainwright. Please go ahead.
Speaker Change: Hello, everyone. Good afternoon. This is Thomas Yip asking a couple of questions for Ed. Thank you for the kind of questions. So, first, besides funding, what are some other preparations that are needed for Lasso Cluster to enter Phase 3?
Speaker Change: Well the funding obviously is the most important piece and once that's in place we feel like we can complete the trial and from about two years from when we
Speaker Change: we established in the start of the trial. The things we're doing now are things that do have a long lead time and can be done with very little money, and those are
putting in place the legal relationships and contracts between ourselves.
Speaker Change: and the various clinical sites as well. We have selected our CLO, which always takes a bit of time, so that's been done. And so we're just doing everything we can in preparation to start the trial as quickly as possible once we have the funding in place.
Speaker Change: I see, so it sounds like pretty much everything's ready to go, but just waiting for the funding.
Speaker Change: relatively short initiation to readout timeline that they pointed out in about two years.
Tim Papp: Yes, I don't know, Tim, do you want to maybe speak to that? Sure. As Jim mentioned, we
Tim Papp: Get the get their estimates for what the phase three trial would cost from an external cost perspective and that's in the
are scaled to start the trial.
Got it.
Thank you, Thomas. Good talking to you.
Speaker Change: The next question we have is from Karl Burns of Northland Capital Markets. Please go ahead.
Karl Burns: Thanks for the question. Actually, most of my questions related to the trial didn't answer. So, kind of moving over just a bit, were there any royalty revenue recognized from Intercal in the third quarter? And if so, can you quantify that? Thanks.
I'll let Tim speak it. Yeah, they will know.
Okay, great. Thank you.
Sure.
[inaudible]
Speaker Change: At this time we have no further questions and I would like to hand the floor back over to James Brown for any closing remarks.
James Brown: Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.