Q2 2019 Earnings Call
Greetings and welcome to these Oceanics second quarter 2000, <unk> financial results Conference call.
At this time all participants are in listen only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Brian Ritchie. Please go ahead.
Thank you operator, and thank you all for joining us this afternoon.
With me on today's call are Chief Executive Officer, Dr. Stephen Farr.
<unk> Chief Financial Officer, Michael Smith.
Ashish Agrawal, a car chief commercial officer will also be available during the key when a session.
This afternoon, so Janice issued a news release announcing financial results and providing a business update for the three and six months ended June Thirtyth 2019.
Please note that certain information discussed on the call today is covered under the safe Harbor provision of the private Securities Litigation Reform Act.
We caution listeners that during this call. So genex management will be making forward looking statements.
Actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business.
These forward looking statements are qualified by the cautionary statements contained in short agenda, six news releases and actually she filings, including in the I knew we report on Form 10-K and subsequent filings.
This conference call also contains time sensitive information that is accurate only as of the date of this live broadcast August six 2019.
So genomics undertakes no obligation to revise or update any forward looking statements to reflect events.
Or circumstances after the date of this conference call.
Now I'd like to turn the call over to Steve.
Thank you Brian Good afternoon. Its revenue is joining us on today's call.
Since our last Investor call. We are very pleased to sort of made positive strides advancing well with all key principle programs first and reach an agreement with the after here in regard to the pending a resubmission for jury syndrome.
Second in completing patient enrollment into our global Phase three studies live ensconced those terms are more out yes.
These are true childhood onset epilepsy, there, but can present life long term because patients.
As a reminder, you talked about the Bromday recall these drug candidates, yes, here's your age old friend sure.
As previously announced following a constructive meeting when do you foresee a at the end of May we now have a clear understanding on defined path forward for the Resubmission. All those are tough on India for the treatment of seizures associated with your base in Brazil.
When the dust is concurrents, where we are able to submit the R&D day without the additional chronic toxicity studies supposedly fine in the agency's refusal to file on Crs not sure, which we received in early April .
In addition, we have resolved the things that issue also knows you can youre just not true.
Uh-huh implemented a remediation I'm foundation.
Agreed upon with the FDA for the Resubmission Davis.
It is important to reinforce the study results were determined using the correct.
I Miss unfortunate I read was limited to Offloading, an incorrect critical data center to the submission.
[noise] working through these issues with the ex yard highlighted the strong supports our position I'm kinda give acuities fool himself or other potential future treatment option interface.
And we are on track to resubmit the yen.
In September .
[noise] empowering tour you are spread matriarch technologies I'm pleased to report that the European brokerage applications open top up for the treatment of seizures associated retracing from remains under active review.
We are currently assuming priority review for our forthcoming intrinsic Andy a resubmission.
I'm correspondingly all preparing for launch in South, Florida in the United States in the first half 2020 .
To ensure commercial readiness, we have a number of ongoing activities such as interacting with conditions on the driving community to increase our understanding of critical treatment arm charities, including including the continued demand new more efficacious Bell answer tolerated treatment options for many patients on also discussing the investigation the data generated to date.
As part of these efforts, we are increasing our level of engagement with community stakeholders.
Physicians advocacy groups through meetings medical conferences and medical education programs Im during the remainder of Trenching 19 subjects will have a significant presence at several upcoming U.S., our European medical meetings, such as the European Pediatric Neurology Society in September .
A child Neurology Society in October .
Okay, that's what I'm sorry.
We also recently launched a drop in your words, Kallikrein, United States, including a website strawberry urgency dot com designed to help physicians understand the need for both improve seizure control.
That's a quality of life for patients and their families.
Turning to product manufacturing during the second quarter, we finalized commercial scale validation, but also apologize for this drug substance.
It's finished drug products.
We're also pleased to report that distribution via specialty pharmacy.
Has been established and is already up and running and supplying drug to patients participating in our expanded access program or EAP.
We are encouraged by the strong interest and participation weve seen from the dropping community and from the agency on the ongoing open label extension studies.
In total there are currently 380 dropping patients being treated with cancer across these programs.
More than 260 of these patients have now been often top left for at least one year, which continues to show a favorable safety profile no incidents Obama hofh disease.
I'd now like to move outs for working and NASCAR Stosur underwear LG us another difficult to treat severe shrugged it off.
Let's see for which new and more effective treatments are urgently needed.
As I mentioned earlier, we announced last month that we have completed enrollment goal and rationalize the loss of 263 patients into the treatment paradigm study six you know well.
As a reminder, this phase three trial is an ongoing so growing global double blind placebo controlled three on trial in subjects between 235 years of age.
We expect the top line safety and efficacy data and now to gas from study 60, no one will be available in the first quarter 20 threat.
In addition to our recent regulatory development and commercial preparedness activities.
We're also pleased to report that our international proposition a strengthened through the recent notice of allowance for one U.S. patent application.
The issuance of two new restaurants.
We allowed patent application covers the safe use of transforming for epilepsy treatment.
The two issues.
Cover the proprietary synthetic process, we used to manufacture French or.
The granting of these patents were burning off issue for us.
Oh, you're fulfilling Chopra, seven which in combination with our international portfolio and global Rocky Mountain exclusivity infections also provide for privacy protection up to 2030 cents and potentially beyond.
Earlier this year, we discussed plans to initiate a randomized controlled study of consolidating Joseph syndrome.
In response to.
In response to input from members of the advisory boards, we engaged to prepare for this study.
We stress the urgent need for new treatments in several restructuring childhood onset epilepsies on the potential for something to address this need.
We have decided to start to initiate a phase two open label exploratory study orphan.
In several severe Nazi syndromes, including doses syndromes.
We expect the study to begin later this year and look forward to providing further information in the coming months.
In conclusion, we made good progress in multiple regulatory developments medical affairs and commercial areas for both <unk> and the out years programs and our strengthened our global proprietary intellectual property position opens up.
Looking ahead to the remainder of the year, we are preparing the idea for printers.
In Dravet syndrome or Resubmission in September .
In addition.
Occasion, and Dravet syndrome remains under review in Europe .
We remain on track with our Lcs program and anticipate topline results in the first quarter of next year.
Moreover, we are preparing to initiate a phase two study often tuck in several severe childhood onset epilepsy conditions later in the year.
With that I'll now turn the call over to Mike for his review of the financials Mike.
Thanks, Steve and good afternoon, everyone.
Today, we issued a press release summarizing our business and financial results for the quarter ended June 32019, which I'll now summarize.
We recognized $1.1 million in revenue in the second quarter of 2018.
This is the result of our March 2009 strategic distribution partnership for Japan, leading the punch in your pocket.
For which we received upfront payments in the second quarter of $15.5 million for development activities related to the tablet for the treatment of debates in German out yes.
Total operating expenses for the second quarter were $41.9 million.
R&D expense totaling $27.1 million for the quarter was the main component of our operating expenses and we were predominantly driven.
By the ongoing global LG as Stacy program, a continued high level of participation of patients in our phase Petwo Open label extension study and work related to our infill template and D.A. and M. A resubmission.
That's DNA expenses for the second quarter ended June 32019 totaled $15.5 million, which reflects an 80% increase versus the second quarter of 2018.
Our <unk> expense increase was driven by continued investment in preparations to prospectively launch.
Syntel up the treatment for Dravet syndrome in the U.S.
And in various countries in Europe in the coming years.
Net loss for the second quarter ended June 32019.
With $37.8 million or 89 cents per share. This compares with a net loss of 29 million or 83 cents per share in the second quarter ended June 32018.
In the first half of 2019 net loss was 73 million.
Or a net loss of $1.72 cents per share compared with a net loss of 59.2 million.
Or a net loss of one dollar and 69 cents per share in the six months ended June 30 in the prior year.
We ended the second quarter with cash cash equivalents and marketable securities totaling $463 million.
With the continued strong balance sheet, you remain well positioned to execute our strategic plan to bring contemplative market as a potential new treatment option for Dravet syndrome, and eligible patients and their family and expand our pipeline through targeted business development acquisition or licensing deals for rare disease therapeutic opportunities.
I'll now turn the call over to the operator to begin the human data.
Operator could you please provide the instruction.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Jose language would do whole. Please go ahead.
Hey, Good afternoon, guys. This is Alex in for Difei. Thank you for taking the question.
I was wondering if you could comment a little bit on nuts on spending trends for the second half of 19 and into 2020 with the launch of Fintech. How should we think about your cash burn going forward and in the coming six to 12 months.
Hi, Alex.
Handed it over to Mike will address it for you.
Yes sure. Thanks, Steve Yes, so yeah, we would expect similar cat for cash operating expenses.
In the second half of the thing here is we have this year, they're slightly above.
Where we were last year R&D is relatively similar to the context of two base program, concluding but we do have a never normal ongoing open label extension study that contribute to the R&D line as well as the old Yes program it'll be standing and third program that Steve mentioned on the call that's going to investigate multiple other epileptic encephalopathy.
So we'll continue to have similar R&D expenses for the second half of this year as we have for the first half <unk> 's DNA will go up slightly as we start to plan with respect to launching a in the following year and we haven't given any specific guidance on 2020 is yet and so you know I think.
Common sense says that it won't be an increase over this year, but we're not guiding any specifics with respect to those costs.
Okay, Great and then on if I may just a final question I'm wondering if you could give us an update on the ZX is yours, a combo studies with CBD.
Or should we still expect to see some data from these studies by the end of the year. Thank you.
Yeah, Alex as you know we do have study ongoing assuming best can it shows study in a few centers in the United States are looking at the addition, obviously you actually use your right to patients who wants how are you doing various forms of CBD Besaw Invesco initiated studies, so really the publication Osage I won't be responsible if you have a or b or the physicians Oh, there's a possibility that on data maybe available days from the year, but we will sort of follow up with that but you might see something baked in this year if not it will be next year early next year.
[noise].
Our next question comes from Yatin Suneja with Guggenheim Partners. Please go ahead.
[noise].
Yeah Gene your line is live.
Yeah.
[noise] Yeah Tim.
Let's move on to Tim Lugo with William Blair. Please go ahead.
Hi, This is Tim thanks for taking the questions a couple.
Oh from Us I'm following up on the prior question. How are you thinking about your combination use with epidiolex, They just reported and some significant.
Sales growth. So there are obviously getting.
Hi, good amount of Houston and would like to hear your thoughts there and then.
And secondly, just <unk>.
Have you.
Ah you given any thought to perhaps the size of this exploratory phase two trial.
Thanks.
Yes.
It was difficult to hear you precisely, but let me see if I can decipher it see my answer here so.
We we certainly.
Expect that some of the use of.
Things happen in the marketplace will be in combination with CBD.
We also expect there to be patients, who will be on off therapy and not on the on CBD.
We have conducted.
The appropriate drug drug interaction studies that will inform our future label in terms of how those products will be used together.
Ashish is anything you want to say about the commercial combination of those two.
At this point in time, which would be premature to say, how physicians, who use it but I think what you have kind of claims makes absolute sense based on what you're hearing from the physicians there is a need for multiple penalties and that.
East any single therapy is not suitable for every patient so we would see as the landscape evolves.
Thank you and to refer to your second question.
We we haven't provided any information yet in terms of the size.
Of that exploratory phase three program, it's our intent to include.
Several epilepsy syndromes into that study and of course have adequate number of patients in order to be able to provide meaningful data. So we'll provide more information on that protocol as we go forward this year.
Great. Thank you.
Our next question comes from Tazeen Ahmad with Bank of America. Please go ahead.
Hi, This is bottom line on for Steve Thanks for taking our question.
My question is in regards to competitor development from an LCR.
Can you comment on how you think syntel mechanism and clinical data.
Positions within the competitive landscape.
And specifically how do you view the potential for gene therapy, Fourg operator treatment.
Well in several years out do you think mechanistically it makes sense to try this route.
First.
With respect to fund tougher it does have its own unique mechanism of action in Dravet syndrome.
It's a drug which has a different pharmacology to all the other anti epileptic drugs are available today.
And we are clearly im thrilled to have been able to generate what we see as efficacy data that could create a new standard of care for the treatment of base syndrome. So from that perspective, we have what we think we have a very valuable drug on a drug that reuse widely by the Dravet syndrome community.
In terms of gene therapy, you're absolutely right. It's it's a long way off its an exciting.
Opportunity we believe.
We do think that.
Treating a hopper insufficiency with a gene therapy makes sense and we will continue to monitor area as we move forward.
Okay. Thanks.
On your phase III publication for Joel day, what new information could we look forward to it.
There.
Do you mean.
Our upcoming conferences, all peer reviewed publications.
Peer reviewed publications.
Yes, we've got a number either in preparation on the peer review right now, which is a really associated with our pivotal trials that we conducted with the drug program. So study one stay 54 as well as open label extension study. So those will be forthcoming hopefully over the next.
Six to 12 months.
Okay. Thank you.
Our next question comes from Danielle Brill with Piper Jaffray. Please go ahead.
Hey, Thanks for taking my question this sooner rather on for Danielle barrel.
Hi, just had a couple the first one was with Epidiolex on the market and I think.
Just going to be pretty short interval between from temples launch in Germany, and it's launching now lgf. So I was wondering how you were thinking about pricing.
Ashish would you like to address that question.
Definitely.
Mitch in terms of the launch timing I think it can depend on our submission and as the agencies that will certainly be premature to comment on that.
Yes from pricing its too early to determine what the potential of this priceless independently.
We will be addressing potential considerations.
Closer to the approval. However, as you know it is definitely not an FX loss to jump in epilepsy, but flat. The giambi gas we are lucky get primarily the strength and durability of Los Angeles assessing outcomes data are the small population FAP patient population of probably it will be launching first and that goes in Acs continued investment in the community.
Most importantly ability of patients and families to have access to the tenants.
Once we have.
Ngs data published yet if it is positive with this you have cooler and thats the banking visiting how we've been looking at the price across the indication.
I see okay. Thank you thats very helpful.
The other question I had was on.
For me your interactions with experts.
If we were to get synced up let results from phase three LG s. trial to be similar to what Epidiolex has seen.
What would you what would you expect adoption to look like in competition with Epidiolex.
Yes.
I don't think Thats fair for us to speculate what our phase three data are going to be until we read our phase three results. So maybe that's a question we can actually address when we have those data.
Got it okay. Thank you so much.
Our next question comes from Jason Butler with JMP Securities. Please go ahead.
Hi, Thanks for taking the questions I had two first.
You mentioned that there are 380 dravet patients across the expanded access program and the and the elderly can you just break out what the numbers are for each of those and then secondly on the newly allowed patent for covering elements to assure safe use can you speak to how that patent could tie directly to language I'm either in the private label or Rems program or both.
Yes.
Thanks, Jason for your questions with respect to the breakout of.
Turvey patients and I spent a good access versus.
This is a.
Open label extension.
It's approximately a 100 in expanded access and the remainder in open label I want to make the point you're that no. We have not we didnt start or EAP broadly.
Deliberately we started it in a small number of sensors, the guest experience and confidence with the with the process and now we're starting to expand the numbers of centers that we can provide.
Texas program, an Australian demands, what we're actually seeing by by families out there. So we do expect as we move forward share price for the product and improve the number of patients in expanded access will increase.
Second question I forgotten it. So appreciate your existing a quick reminder.
Just on the AD the newly allowed patent for.
Elements to show safety is just how that might tie in directly to the language in the label of the Rems program.
Very closely.
Because it really does describe the distribution system that we're putting in place.
There will be both reflected in these dosing administration in the in the label as well as elements of the future Rems program.
Great. Thanks for taking the questions.
Well. Thank you once again, if you would like to ask a question. Please press star one on your telephone keypad. Our next question comes from David Sherman with Life Science Capital. Please go ahead.
Hi, guys. Thanks for taking my question I was just wondering with regards to the phase two exploratory study that you're talking about.
Do you envision standardizing background therapy or is there potential lead going to be a need to do a dose adjustments like you had done with stiripentol.
Okay. David could you just repeat that again fully make sure I got it absolutely right.
Sorry, I was just wondering with the exploratory study are you going to need to do any dose adjustments like you had done with the scary part until trial.
But now we have the information thing clearly is outside dose adjustment if patients are taking drugs, whether a drug drug interaction and known drug drug interaction with with with with that same toppling youre stuck with that will be part of the the protocol.
Okay got it.
Thanks, a lot.
Thanks.
Our next question comes from Yeah teams in Asia, but to get high partners. Please go ahead.
Hey, guys. Thank you for taking my question I apologize. So there was something wrong with my headset or maybe I'm. My two questions for me first could you maybe talk about your confidence in getting a priority review once you submit the file is what the timelines would be if you get the priority review and then a second a little bit broader question could you maybe talk about how you are thinking about building. The pipeline are there certain areas within the numerous psychiatry indications already or or disease area, where you might be interested in and the type of asset or transaction that you could do thank you.
Sure.
Thanks Jaeson.
We were able to connect with respect to priority review or I'm, not going to dive into the specifics of our interaction with the FDA.
The meeting for 'em, we feel very confident that the N.D.A. resubmission world qualify for priority review, given us really ER, we factored that into our planning as we move forward here.
With respect to the pipeline we are looking.
A broad array of potential potential opportunities, but they're all characterize be by being in the rare disorder space. Some of them are clearly heavily focused in a new role she got even in the treatment of seizures, but there are other opportunities that are a broader than that so we we are obviously looking.
Intently to variety of a number of things right now we would like to move a few of these are closer to the finish line or trying to become current on any of them until they have been signed but we feel that there's a few opportunities ahead of us, but we would like to we would like to move to closure.
So in terms of the where they're at in a development stage. We would prefer things are either preclinical or are in the phase two arena or coming up to phase three I think the in enough, particularly environment, we would be able to luxor.
To position on the asset.
We will be able to do appropriate developments and increase and thought it was going forward.
Got it and then just one more quick question on the Pn outside the C. I saw an uptick on R&D and DNA can you just maybe help us down modeling going forward for the second half.
You know should we anticipate further uptake in our R&D engine you might be building up the commercial so for DNA might go up but you know just help us understand how we can model that thank you.
Yeah, I'll pass it over to Mike to address that question for you.
Yeah, Oh, yeah. Since yes, you need to go up modestly in the second half versus the first half as we're getting closer to launch the R&D.
Me.
May increase slightly not significantly.
Yeah that is reflective of.
Hey, increasing.
The amount of patients that are being continually treated.
And with other met just survey, but within TEP love for Julian LG, Yes. So we do have ongoing Algea study in the JV studies concluded, but most of the patients.
Predominantly most of the basin.
That ran through our phase three programs are now enrolled in our open label extension study and so as patients are.
Rolling into that study and continuing not dropping down and then have we're having L.D.S. stations continue is well into its open label extension study, we got an increase there versus where we were last year. We're just getting a lot more patient exposures and that will.
That will continue until were commercial in terms of those patients being on treatment and will transition them to commercially available drug once were approved.
Great. Thank you very much looking forward to the filing.
Next question comes from Marc Goodman with SBB Leerink. Please go ahead.
Hi, This is Ron I read is on the line for Mark Thanks for fitting me in.
I just want to touch upon your distribution network I think you mentioned it briefly in the prepared remarks can you give us any color around the number of locations and do you did you build up any sort of buffer to meet out pent up demand.
Thanks for your question I can handle with Russia Eastern dresses for your patent on this is actually scan promos distribution network perspective, what we are looking at is our first indication to launch is going to be an obvious syndrome.
Yeah, given the monitoring that could really be needing to be doing function test lab, we are planning to have a.
Limited distribution to a specialty pharmacy bad we can not only ensure that we follow the proper protocols, but also how the monitoring systems in place so that it can be managed asking locks.
As far as your second concern in terms of the.
Maybe I will only be up the province.
As we said in the prepared remarks.
The.
We've been able to do the validation for both drug as well as the final product earlier in those validation studies were very successful we feel very confident that we'll be able to handle any demand that will come out at the time of launch.
Okay, Great and just one quick follow up for your expanded access program I just thinking ahead. When do you expect those patients to convert to paid drug after a potential launch at the top line.
Yep.
That's a good question I think it's going to be very difficult to speculate exactly how much time. It will take yeah. It can depend on individual patients insurance captive situation.
Yes, as you have seen in some of the battling penalties. It has taken anywhere between six to nine months, depending on the condition of the patients can also.
Please note of that and so we will expect the similar timeframe, but our goal is to at the time of the launch pad to help transition. These patients from an early access program to the commercial therapy commercial product.
Great. Thanks, so much.
Oh, Thank you I would like to turn the floor over to Steve for closing comments.
Oh, Thank you operator.
We are focused on resuming often temporarily or intra basin drum September as we've just discussed.
Oh I see I don't we're actively preparing for unexpected to US commercial launch next year. We're also very excited about the expected better limits your topline phase three data from often somewhere Ngs program in the first quarter of 2020 . So we look forward to providing you with further updates throughout the second half of this year with that I. Thank you for joining us today enjoy the rest of your day Goodbye.
This concludes today's conference. Thank you for your participation.