Q2 2019 Earnings Call

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As a reminder, this conference is being recorded an audio recording of todays webcast will be available shortly after the call today on Riyadh its website at Reatta pharma dot com and the investors section.

For the company proceeds with its remarks. Please note the forward looking statements disclosure in the company's press release, the company will be making forward looking statements on today's call.

There are many factors that could cause results to differ from expectations, including those noted in the Companys FCC filing.

Today's statements are not guarantees of future outcomes. Please also note that any comments made on todays.

Call speak only as of today August eight 2019 and may no longer be accurate at the time of any webcast replay or transcript reading I would now like to introduce your host vintage adult Vice President of strategy you may begin.

Thank you.

Hello, and welcome to reenter Reatta management call to discuss our financial results for the second quarter of 2019 and to provide a review of our development programs.

This morning, we issued a press release with a summary of these results and the press release can be found on the investors section of our website at <unk> Dot com.

I'm joined today by our Chief Executive Officer, Werent House, Chief Medical Officer, Colin Meyer, and Chief Financial Officer, Jason Wilson.

I'll now turn the call over to Warren.

Thanks Bonnie.

Good morning, everyone and thank you for joining us on our quarterly calls.

I'd like to begin our call today by reviewing the significant progress that Reatta team has made in advancing our development pipeline.

Over the past few years, we've reported proof of concept data in eight different diseases, and we've advanced four programs into Registrational studies.

We're poised to report data before the end of this year from two of these pivotal studies the Cardinal study in Alport syndrome, and the Moxie study in friedrichs attacks here.

Preparations for regulatory submissions and commercial launch for these programs are well underway and the entire Reatta team is working to create a seamless transition from a development stage to a commercial biopharmaceutical company.

As many of you know, we're studying Murdoch salon and five rare forms of chronic kidney disease with an aggregate population of over 700000 patients who have no or few effective therapies currently approved.

Our lead program as the pivotal Cardinal Trela barred in CKD caused by Alport syndrome, which is fully enrolled with 157 patients as we announced in May enrollment is now underway and Falcon a pivotal study for paradox alone in autosomal dominant polycystic kidney disease or 80 PKD.

In addition to 80 P.D., we reported positive data from our Phoenix study in patients with Ita nephropathy focal segmental glomerulosclerosis and type one diabetic CKD and as we've commented previously we intend to pursue these indications commercially as well.

[noise] the phase three portion of Cardinal enrolled 157 patients across a range of ages in baseline kidney function that we believe represents the broad population of patients with progressive Alport syndrome.

The F.D.A. has provided us with guidance that an improvement in retained estimated glomerular filtration rate or EG fr.

Versus placebo after one year of Bard treatment may support accelerated approval in this indication and an improvement in retained EG a far versus placebo. After two years of Bard treatment may support full approval.

We expect to announce top line, one year efficacy and safety data from Cardinal before the end of the year.

We recently modified the statistical analysis plan or SAP for Cardinal to benefit from what we learned from the F.D.A. review of data from the Reprice study, which served as the basis for approval about sucrose told apt and for ATP Katie.

This was the first drug to gain FDC approval using retained IGI as far as an endpoint.

The reprice SAP assessed retain DGF, our benefit using an analysis of covariance worthy Incubus statistical method to align with this F.D.A. precedent, we incorporated the use of Enco, but ended the SAP for Cardinal for the assessment of the retained EG a far benefit.

Compared to the mixed effect model repeat measurement or in MRM method selected previously the encoder method allows for the inclusion of patients who discontinued early in this minimizes missing data.

With 157 patients enrolled the study can detect a placebo correct. The difference in change from baseline EG fr of approximately 2.5 milliliters per minute.

Last year, we reported long term results from the phase two portion of Cardinal demonstrating that patients treated daily with Bard docs alone.

Experience an improvement in retained Egypt far of approximately four mill per minute.

That was observed in patients that were actively declining by an average of over four milliliters per minute annually prior to the study.

Using these patients as their own control group and our statistical modeling we estimated the potential treatment effect is approximately six to eight milliliters per minute.

As a result, we believe this study remains very conservatively powered for success.

In the second quarter, we announced the enrollment of the first patient in Falcon a pivotal phase three study of art Aucs alone in 80, PKD similar to Cardinal an improvement in retained each year for benefit versus placebo. After one year of Bard treatment may support accelerated approval.

And an improvement in retained EG, if our benefit versus placebo. After two years apart treatment may support full approval.

We are actively opening new clinical trial sites and enrolling patients and we expect to provide guidance on timing for the completion of enrollment of the study in the near future.

In summary, our CKD development programs are making excellent progress and were in active preparation for India submission and commercial launch in the event that the Cardinal data are positive.

We conducted all pivotal preclinical toxicology studies and clinical pharmacology studies required for India's submission, we're making significant investments in supply chain readiness, we put our marketing commercial operations and sales leadership in place and we've initiated or a first disease awareness campaigns for Alport syndrome.

Following Alport syndrome, we believed that 80 PKD represents a significant label expansion opportunity for box lawn and CKD because over a 140000 patients are currently diagnosed with the disease in the United States alone.

Additionally, the Ami study in diabetic CKD being conducted by Kai what Karen is expected to read out in the first half of 2022, adding meaningful safety and efficacy data for botox loans clinical profile.

[noise] turning to own the have the pivotal part two of the Moxie study in patients with friedrichs attacks here.

Enrolled 103 patients across a range of ages and baseline M. far scores that we believe represents the broad population of patients with Friedreichs ataxia.

The FDIC has provided us with guidance that an analysis of the modified friedrichs, a taxi or rating scale or M scores, demonstrating an improvement versus placebo. After 48 weeks of Omega of treatment may support in India, a submission for L. map for the treatment of FX.

We expect to announce top line efficacy and safety data from this trial before the end of this year.

[noise] Pes canvas is a muscular skeletal foot deformity that interferes with patients ability to perform assessments.

That require standing walking or pedaling, including components of the M., Fars exam like lower limb coordination and up right stability.

The cost these comprise two of the four components of the M. Fars patients with pets Cabot's may be less likely to have a measurable response on the M. Fars exam.

The F.D.A. recently published draft guidance titled enhancing the diversity of clinical trial populations that encourages sponsors to study broader participant groups as part of the secondary efficacy and safety analyses, even when the primary efficacy analysis population has narrowed.

Consistent with the guidance we've included a predictive enrichment strategy in part two of Moxi.

The primary analysis population has been narrowed to the 83 patients enrolled in part two of Moxy without pest campus.

The minimum detectable placebo correct. The difference in M. farce is approximately 1.3 point, assuming similar variability to that observed in part one of Moxi.

You may recall than a part one of moxi, excluding the pest cabbage patients we observed a statistically significant improvement in m. far scores, a 4.4 points relative to placebo.

Several secondary endpoints are also included in Moxy to provide descriptive data that we hope will support approval of own math, if we hit the primary endpoint.

The study is not powered to achieve statistical significance for any of these secondary endpoints. They may provide additional evidence that Omar has important activity in patients with hefei, including the patients with pets campus. The F.D.A. has reviewed and provided guidance on our revised statistical analysis plan and the predictive enrichment strategy.

In summary, the Moxie study is proceeding as expected and we are in active preparation for India submission and commercial launch in the event that the data are positive.

The few clinical pharmacology and Nonclinical toxicology studies required for India's submission are underway and are nearing completion.

We're making significant investments in supply chain readiness, we put our marketing commercial operations and sales leadership in place.

And we've initiated our first disease awareness campaigns for friedrichs attacks here.

In addition to these three ongoing pivotal trials were currently enrolling a fourth pivotal study the catalyst trial of our dock Salon.

In patients with connective tissue disease associated pulmonary arterial hypertension.

Patients with CGD ph generally have a worse prognosis than patients with other forms of PIH and despite treatment would be so dialer therapies. These patients have a five year survival rate of only approximately 44%.

Based on the results observed in our phase two Larry a trial in the design of the catalyst trial, we're optimistic depart oxylate has the potential to become the first therapy approved specifically for patients with CGD ph, we expect top line data to be available in the first half of 2020.

I'll now turn the call over to Jason to provide a summary of our financials for the quarter.

Thanks, Warren as noted earlier this morning, we reported financial results for the second quarter of 2019.

Net loss for the quarter was $34.4 million or $1.14 cents per share compared to a net loss of 28.2 million or one dollar an eight cents per share for the same period last year.

The increased net loss for the three month period was driven by an increase in expenses for revenue remained consistent.

Higher expenses were driven primarily by an increase in research and development expenses due to clinical manufacturing and medical affairs activities and an increase in personnel expenses to support growth of our development activities.

The company incurred total expenses <unk> expenses of 41.5 million for the quarter with research and development accounting for 29.6 million.

And this compares to total expenses of $34.2 million for the same period last year when research and development was 23.44 million.

Our cash based operating expenses, a non-GAAP measure we define as total expenses, excluding stock based compensation expense and depreciation expense were 36.8 million for the quarter. This compares to 31.6 million for the same period last year.

A reconciliation of this non-GAAP measure to total expenses can be found attached to the press release filing this morning.

We expect our cash based operating expenses will continue to increase in the future as we advance Barden Omar.

Our own going and future clinical trials continue to scale manufacturing for registration and validation purposes.

Advance additional product candidates and increase both R&D and administrative personnel as we move forward and plan for commercialization for our product candidates.

At June Thirtyth 2019, we had 280.4 million in cash and cash equivalents.

And we expect our current cash to fund our operations through data Readouts for Cardinal Marxian catalyst.

With that I'll turn the call back over to Warren.

Thanks, Jason.

As our presentation today indicates Riyadh has developed a significant late stage pipeline, which will yield three pivotal data read outs over the coming year, including potentially registrational data from Cardinal and Moxy This year.

This concludes our prepared remarks, and I'd like to thank everyone, who dialed in for listening, we'll now open the lineup for questions.

Thank you if you have a question at this time. Please press the Star then the one key on your Touchtone telephone. If your question has been answered or you wish remove yourself from the queue press the pound key.

And our first question comes from Maury Raycroft with Jefferies. Your line is open.

Hi, everyone. Good morning, and thanks for taking my questions.

First question is just on.

The S&P changed use no, but I'm just wondering if you could provide any specifics on.

Early discontinuation rates are you seeing any major differences in the control arm and then any other context I know what drove the statistical change.

Sure and so we haven't commented on the discontinuation rate.

In the trial.

I will say that the primary analysis at week 48, we'll continue to use in memory and all available patients will be included in the analysis, including those who discontinue early.

For the end Coburn emphasis at week 52, obviously as Weve discussed multiple times that is the registrational endpoint.

The FDIC will use to determine.

I could see with Inox loan and that was the end point that was used in reprise fraught with top afton.

In that analysis, a benefit of that analysis is that.

Allows us to use all patients in the analysis and so dropouts don't really affect the numbers if patients discontinued early.

For the week 52 time point.

If they have a week for value.

After they discontinue treatment that value is used in the analysis and there is effectively a time adjustment to that particular patient style you sort of a time based coverity, yet and that was the methodology that was used with reprice analysis and that is the major benefit and a lot of those patients to be included the analysis the patient doesn't happen to have a week for value after they.

Terminate study drug early the values that will be imputed using multiple amputation based on an assumption of missing at random and so therefore, all available patients will be included in the analysis.

Got it thank you and.

Just a quick one on Friedreichs ataxia after that the trial adjustment. There just clarifying is that our revised plan finalized or is it still an ongoing discussion with FDA.

It's finalized it was submitted to FDA and we received minor comments.

Yes back from the FDA slightly tuning up the calculation.

Got it okay and.

Quick question on 80 PKD.

Im assuming you can't comment much on the enrollment that you're seeing so far but I'm. Just wondering if you talk about the site rollout for this study. We currently have 82 sites listed on clinical trials that you anticipate needing more or less sites based on what you're seeing.

We obviously don't comment on ongoing enrollment.

For ongoing studies, but as I'm sure you can appreciate.

It's much quicker to rollout sites in the US first and so when we announced the first enrollments that occurred in the U.S. and so all those sites either active or being activated at the next sites typically are from Australia for this trial, and then Europe and in Japan after that and so.

It's it's ongoing.

Got it. Thank you thanks for taking my questions and I'll hop back in queue.

Thank you our next question comes from.

No come of it with Citigroup Your line is open.

Hi, guys. Thank you very much for taking the question.

Just had a few clarifying questions on the powering so I believe previously the powering for for Cardinal was 2.2, and now if I understand correctly with the switch to encode its now.

2.5 can you just confirm that or clarify.

Yes, I can clarify or confirm that it is 2.5 it was 2.2.

Can point out that in the phase two data, we saw a pretty full and pretty meaningful treatment effect the increase.

Above baseline half withdrawal was was about 4.1 mill per minute those patients were progressing at a rate of 4.1, and so that estimated treatment effect based upon the phase two data is 8.3, and so we view that change of 2.2 to 2.5 is very small and hopefully meaningless.

We have a large margin 3.3 fold margin, we believe to detect.

The significant P value.

Yes.

Okay. Thanks, and just so I understand when you when you say 2.5 now from it is that the minimum delta that you need for significance or is that just the way. The study is how words such that if you had a lower down.

Below that you would you would still.

Hit a P value.

Yes, it depends upon the variability and so based upon the observed variability that we've seen in this trial and our large historical database of CKD trials.

If we hit that assumed variability at 2.5 P values under 0.05.

If the variability happens to be lower we can detect a smaller difference.

And by the way at that.

You bet.

Excuse me that very small delta. It wouldn't you know it would be frankly noise inside of the variability changes.

Okay, and then are you, making the same adjustments on this using a couple of hours per week 52 for Falcon as well or just cardinal.

Yes, yes for Falcon as well and so there may be a very small difference with that minimal treatment.

Detectable effect of 1.6, and so we may decide to five big boost up the sample size.

But it should be very small impart because there are more patients being enrolled and Falcon.

Okay, and then you warn you you referenced yearend before year end 19 for both Cardinal on for Derik say taxes. So.

Is that is it fair to assume that this is more likely now going to be a fourq you 19 event as previously communicated it was second half.

Now we're still cautious.

We're not going to provide any additional guidance on timing other than what we've provided before which is the second half of this year.

Okay.

All right understood. Thank you very much.

Thank you. Our next question comes from Adam Walsh with Stifel. Your line is open.

Good morning, guys as Neal on for.

Uh-huh Sucre is still that then as seen success in the early stages of their launch despite the difference in the size of the patient population can you talk about.

Any read through that you think this may have here to BARDA in Alport should the Cardinal ultimately readout positively and gain approval and then.

In a in 80 PKD specifically do you have any initial thoughts on positioning Bard versus told that then I know, it's a larger patient.

Population, but.

Do you have any thoughts there should the Falcon trial read out positively and Bard gain approval and 80 PKD as well thanks, Yeah, Oh yeah.

Yes were obviously were really encouraged by.

The response, you know to the 12 after launch I mean, I think it confirms the.

The research that we had done which suggests that patients with these diseases. These rare forms of CKD Ham and extremely high unmet need and are very willing to adopt.

A new therapy, they just haven't had anything available to them.

We don't.

We don't think that the 80 PKD.

That told apt and we'll have.

An impact frankly on Bart auction alone.

There is a very simple way to distinguish the two.

Historically in the other rare forms of CKD, we've produced clinical data showing that patients actually recover on average function.

In the <unk> told Afton studies, both the placebo and active groups were meaningfully declining from baseline and so I think that.

Obviously will be a significant distinguishing factor or said another way because patients are still declining until they happen there's need for additional therapy.

Great Congratulations on the progress guys. Thank you.

Thank you again, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

And our next question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.

Hi, Good morning, everybody. This is Maria on for Charles Duncan. Thank you for taking my question.

As we all know we're looking forward to the read outs for both maxing Cardinal in the second half of this year I'm, assuming they're both positive could you. Please provide a little bit more color regarding next steps I know you mentioned that commercial preparations are both under way for both Moxian, Cardinal, but maybe a little bit more granularity in terms of sales force size.

Specific physicians, you're targeting early pair interactions and also an update on how the disease awareness campaigns for both our Delhi.

Yes, sure Theres, obviously a lot of activity.

A lot of activity because we could be moving forward with.

You know two novel products into completely different disease areas.

As you mentioned you have both are in rare diseases with no approved therapy.

With with specialty.

Physicians as the as the target population. So we have significant work streams, taking place in terms of you know ramping up.

Our manufacturing as I mentioned, we've put our commercial leadership team in place you. All May know that's led by again I'm Dawn Becker.

Hirst senior team is all in place and doing the sales force sizing.

And market development work.

That's necessary to position us for successful launch.

We've launched our initial.

Disease awareness campaigns for both Alport syndrome, and Friedrichsen Akcea.

We've done preliminary sizing work for Alport syndrome, it's obviously, the nephrology, primarily the nephrology community.

And.

I don't think we've given any estimates, but theres nothing.

Unusual it's.

Specialty the targeted specialty in the United States, So a very reasonable.

Size of sales force to address those physicians.

And we actually have.

Well worked out plan.

To have our regional leadership in place and available to scale frankly for.

The demand after launch.

This is similar in friedrichs attacks, yes. So there are approximately a dozen key.

Centers treating friedreichs ataxia patients and virtually all of them are actually in the study and then there is also a relatively small number I think 20 to 30 additional centers.

That are focused.

Almost exclusively on neuro muscular diseases, so its a.

It's a again a very addressable.

You know target group for our commercial activities that have again, a very manageable.

Salesforce for launch.

And so yes, theres just a lot of activity now to prepare ourselves for a potential success in both studies.

Sure. Thank you and I have a quick question about Moxi you know given the prior failures.

It seems that you guys are taking a much more conservative approach with longer duration dies and limiting the enrollment has had.

The placebo cracked the difference in bars.

I guess my question would be what type of result, do you think will be cleaning clinically meaningful to drive interest and also are you guys measuring biomarkers in the secondary.

Thank you.

Sure. So we think that any significant difference is likely to be very clinically meaningful as you may know.

There's a national history registry.

That is led by Dave lunch, the pie of our trial I've been sponsored by the main patient advocacy group Farah.

And they've demonstrated in this registry that's enrolled over 2000 people and followed them for up to 10 years that the annual rate of progression is one to two points.

And so that may seem like a small number but that's just the scale that's used and so if we see a significant difference at the minimum detectable difference of 1.3 that would be one years difference in the rate of progression. So we think that would be very clinically meaningful as you know there are no approved therapies for these patients there. Unfortunately on a predefine course, two significant disability and premature death, and so we think there would be a high demand for the drug.

FDA deems that to be efficacious and safe.

We are conducting a battery.

Secondary endpoints the key secondary secondary endpoint is the patient global impression of change its simply a question to the patient.

If they are doing better than they think they were when they started the trial.

There are seven gradations and so in the middle no change and three for improvement in free for worsening and so it's a.

An important.

Endpoint in the trial to generally understand if the patients think they're doing better. There is also a clinical global impression of change and done a series of other.

Endpoints, including nine hole pegged test falls diary activities of daily living pricing, if I put walked past.

And a few others importantly, the trial is powered to show a difference in the modified Fars test. The trial was not powered to show significant difference in the secondary endpoints, we hope that we see.

A lean in several of these to support the change the Fars.

But.

We think that the.

Overall.

The data should you would obviously tell us if the drug is working.

And we believe that if it took to impart is significant and we would proceed to discussions.

With the FDA and hopeful India submission.

Thanks for taking the questions.

Thank you and we have a follow up from you call. The Covis with Citigroup. Your line is open.

Thanks, I was just wondering on Falcon.

The old powering was 1.6 retain benefit.

Given the change on the stats plan what is what is the new number.

Or is there any number.

No there isn't a new number yet it might be modestly higher if we keep the sample size of 300, we may increase the sample size slightly to make up for that small difference.

But obviously with the with the.

Cardinal trial was enrolled 157 patients the difference goes from 2.2 to 2.5, so 0.3.

We've been role we're playing to enroll double.

The patients approximately with Falcon. So we think that that delta would like maybe smaller much listen.

Probably if we wanted to I'm sure we could easily bridge it with a small increase in the sample size.

Got it okay.

And then Collyn just going back to the basic science I know that there were some experimental work that you are working.

One of your collaborative collaborators is working on with the multi photon imaging explore a vascular flow with products on a single not fund level, where does that that work stand and do you have any updates there.

So yeah as you may recall that physician investigator.

Professor Kashiwahara as the president of the Japanese Society Nephrology.

Procuring colleagues and the most important nephrologist in Japan.

He published data.

In circulation of prominent journal, a few months ago, demonstrating that the mechanism of acute reduction in Jia far with impact will flows and yes, you will see two inhibitor to reduction in diameter blood vessel going into the cautionary lesson. So.

Just to remind you all the work that he's doing with redox sort of similar to that work is able to in living animals certain not some contrived artificial system image.

The corollary to lie and he's able to determine if there is any change to the diameter of the blood vessel going in and out civil to measure blood pressure to determine if there is any change and pressure.

Or to potentially rollout hyper filtration is able to measure the size I think when Merial us.

As well as the permeability of the core megawatts to protein as well as dextran since so.

This this work has been ongoing.

And we will be presented at a future medical meeting and we think it will be hopefully very enlightening.

And put to rest and your question about the mechanism of acute increasing Jia pharma products one.

Okay got it thank you.

Thank you.

That concludes our Q and a session for today.

An audio recording will be available shortly after this conference call on this website Riyadh pharma dot com and the investors section.

Thank you for participating in today's conference you may all disconnect everyone have a great day.

Yes.