Albireo Pharma, Inc.
Q4 2016 Earnings Call Transcript

Published: 14 Mar 2017

[Operator:]

Good morning, ladies and gentlemen, and thank you for joining us for Albireo’s financial results conference call to review results for 2016. Following some prepared remarks for the company, we’ll open the call for questions. I would now like to turn the call over to Paul Arndt from LifeSci Advisors representing investor relations for the company. Please go ahead, sir.

[Paul Arndt:]

Thank you, Kevin, and good morning, everyone. Thank you for joining today's call during which management will discuss Albireo’s financial results for 2016 and provide a business update. Earlier today, Albireo issued a press release announcing its results. The press release is accessible via the company's website, www.albireopharma.com. Before proceeding, let me mention that comments today may include forward-looking statements made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding A4250 or any other Albireo product candidate or program; the progress or scope of development, including the size, design, population, location, objective, duration and points or other details for, or regulatory feedback on, any future clinical trial, including Albireo’s planned clinical trial for A4250 PFIC patients, target indications, commercial outlook or opportunity for the timing of initiation or completion of, or reporting of, results from any clinical trial; for meeting with regulatory authorities or for submission or approval of any regulatory filing, including the New Drug Application filed for elobixibat in Japan, any payments that EA Pharma may make to Albireo or Albireo’s cash runway revenues or expenses, plans expectations, objectives or future events, financial results or commission or any other matter that is not a historical fact. Actual results may differ materially from those expressed or implied by any forward-looking statement as a result of many factors, including those described under the heading forward-looking statements in Albireo’s press release from earlier today or under the heading Risk Factors in its most recent Form 10-K or in later filings with the SEC. Albireo cautions you not to place undue reliance on any forward-looking statement. Also, any forward-looking statement that is made speaks only as of today, Tuesday, March 14 2017 and should not be relied upon as representing Albireo’s views as of any future date. Albireo disclaims any obligation to update any forward-looking statement except as required by applicable law. With that, I'll turn the call over to Ron Cooper, Albireo’s President and CEO.

[Ron Cooper:]

Thanks, Paul. And thank you everybody for joining today's conference call, our first as a public company. And for those of you in the northeast of the United States, hope that you’re in a safe and warm place. With me today is Tom Shea, our Chief Financial Officer. 2016 was certainly a transformative year for Albireo, with the generation of promising Phase II data from our ongoing trial of A4250 in children with chronic cholestasis, the positive Phase III trial for elobixibat in Japan and subsequent filing for regulatory approval, and the successful completion of our business combination transaction and associated financing that resulted in our listing on NASDAQ and a capital infusion of approximately $13 million. With that foundation, we’re excited for 2017 and beyond. Let me begin with a brief business update. I’ll start with A4250, our lead product candidate which we’re developing to treat patients with progressive familial intrahepatic cholestasis or PSIC. PSIC is a rare genetic disorder commonly associated with elevated bile acid levels in the liver and highly debilitating pruritus. A4250 is an IBAT inhibitor which acts to divert bile acids that would otherwise recirculate from the small intestine to the liver, thereby reducing bile acid levels in the liver and serum. PSIC causes progressive life-threatening liver disease, with symptoms commonly developing in the first month of life. There are currently no drugs approved to treat PSIC. Instead, first-line treatment is typically an off-label medication in the hope of symptomatic relief and many patients will require surgical intervention, either procedure known as bile diversion surgery in which bile acids are diverted to a stoma bag outside the body or a liver transplant. Reports in the literature of favorable clinical outcomes with bile diversion surgery provide proof of principle for the IBAT inhibition mechanism and support our choice of PSIC as the initial target indication for A4250. We’re currently evaluating A4250 in a Phase II trial in children with chronic cholestasis and pruritus, a diverse patient population. This is an open label study where the goal was to learn as much as we could about the effects of A4250 in children with cholestatic liver disease to help us design a planned Phase III trial in patients with PSIC. The ongoing trial is a dose escalating study, which commenced with very low doses. To date, we’ve completed five out of six cohorts planned for the study and the preliminary data are very exciting for us. In particular, we’ve seen a reduction in serum bile acids in the substantial majority of patients, especially patients with PSIC, as well as an improvement in reducing pruritus across multiple assessment scales and a significant correlation between the effects on serum bile acids and the effects on pruritus. A4250 has been generally well tolerated with no patient dropouts and assessments of liver biochemistry have showed high patient variability. The sixth and final planned cohort of the trial remains ongoing. With the learnings from the Phase II trial, we’re now engaged with regulatory authorities in the United States and Europe with the objectives of designing a coordinated Phase III program in patients with PSIC to support the potential approval of A4250 in both regions. We recently met with the FDA and plan to meet with the EMA in the second quarter and expect to initiate the planned Phase III trial in the second half of the year. One other comment about A4250. We are really pleased in the fourth quarter to announce that the European Medicines Agency has accepted A4250 for the treatment of PSIC to its prime program. The prime program was established by the EMA to provide enhanced support to developers of investigational medicines that target an unmet medical need. The program focuses on investigational medicines that may offer major therapeutic advantage over existing treatments or address the disease with no current treatment options. This program is highly selective. Now, turning to elobixibat, which is the first in class product candidate to treat chronic constipation. We believe that elobixibat, which is also an IBAT inhibitor, is differentiated from prescription constipation drugs on or nearing the market because it acts directly in the large bowel and has both secretory and motility effects. Elobixibat is partnered in Japan and other select markets in Asia with EA Pharma, a company that was formed by the combination of Eisai’s GI business with Ajinomoto Pharmaceuticals. EA Pharma completed a highly successful Phase III of elobixibat in Japan in the fourth quarter and proceeded quickly to submit an application for regulatory approval in Japan last month. This is a key corporate milestone for us. As elobixibat was our most extensively developed product candidate and we believe it’s clinical success provides validation for the potential of IBAT inhibition as a therapeutic mechanism. Now, a quick word about some of our programs, which we’re very enthusiastic about. A3384 is a proprietary formulation of a well-characterized bile acid sequestrant known as cholestyramine that are designed to address that drug’s limitations. We’re developing A3384 to treat bile acid malabsorption, a condition marked by high levels of bile acids in the colon and chronic watery diarrhea. We generated these two proof of principal data with a prototype version of A3384 and we're in the late stages of what looks like a successful formulation optimization program, with an eye towards returning to the clinic as soon as possible. On the pre-clinical side, I’d like to highlight our program in NASH where we’re working to leverage the data we’ve generated to date with our IBAT inhibitors showing positive effects on cholesterol, insulin resistance, and fibrotic and inflammatory markers to progress a next generation bile acid modulator towards the clinic. Finally, 2016 saw several key organizational developments for Albireo. In particular, we’ve built out our management team with key hires that we believe can take our company to the next level, including Tom as our CFO; our Chief Medical Officer, Paresh Soni, and our Chief Regulatory Officer, Muffy Carter. And with the growth of our US-based team, we will soon be moving to a new office space in Boston. S, to summarize, 2016 was a great year in the evolution of Albireo and we believe it positions us well to capitalize on our expertise in bile acid biology and the promise of our product pipeline. And with that, I’ll turn the call over to Tom for a financial update and then we’ll be happy to take your questions.

[Tom Shea:]

Let me quickly highlight our financial results for 2016, which we released earlier today. We ended 2016 with a balance of $29.9 million in cash and cash equivalents. Our net loss was $16.3 million for 2016 compared to $6.8 million for 2015. Based on our current operating plans, we expect that our current cash resources will be sufficient to meet our operating requirements at least through mid-2018. This guidance assumes receipt of a contingent milestone payment under our license agreement with EA Pharma. Our revenue totaled $11.4 million for 2016 compared to $5.1 million for 2015, an increase of $6.3 million. This increase was entirely due to payments received in 2016 under the EA Pharma agreement. Our research and development expenses for 2016 were $8.1 million compared to $5.6 million for 2015, an increase of $2.5 million. This increase was primarily driven by costs associated with the progress in our A4250 development program. Our G&A expenses for 2016 were $15.8 million compared to $4.5 million for 2015, an increase of $11.3 million. This increase was primarily due to the share exchange transaction that resulted in our becoming a public company, the hiring of additional executive personnel in our Boston headquarters and costs associated with being a public company. Other expenses for 2016 were $4.1 million compared to $2 million for 2015, an increase of $2.1 million. The increase was primarily due to the conversion of convertible notes into equity in connection with the closing of the share exchange transaction. So, as we’ve outlined, 2016 was a very productive for Albireo. And now, Kevin, we’ll open the call for any questions.

[Operator:]

Thank you. [Operator Instructions]

[Operator:]

Our first question is coming from Katherine Xu from William Blair. Please proceed with your question.

[Katherine Xu:]

Good morning. I’m just wondering [indiscernible] summarize a little bit [indiscernible] ongoing. Just want to understand how the [indiscernible] has come along, whether the dose is sort of the [indiscernible] and how [indiscernible] reacts to [indiscernible] agreed upon with the FDA.

[Ron Cooper:]

Good morning, Katherine. Thanks for your questions. Your line is a little bit foggy for us. I want to just make sure that I summarize your question. I think you're asking about our FDA meeting, a question around dose and then our feelings about the EMA meeting. So, thanks for those questions. We had an excellent meeting with the FDA. It was a very cooperative, collegial meeting where we received a lot of good feedback on our program and some guidance on the next steps. As you’ve indicated, we are waiting for the completion of cohort six to finalize our dose. And our intent has always been to have a single program for A4250 in the development of PSIC, particularly given the ultra-rare disease and number of patients that are available. So, our intent is then to take that feedback and have a good discussion with the EMA. And that meeting is scheduled for the second quarter of this year. As you know, we've been in ongoing discussion with both regulatory authorities, and so we anticipate getting concurrent on a trial design for Phase III program for A4250, which we anticipate starting in the second half of this year.

[Operator:]

Thank you. [Operator Instructions] Our next question is coming from Matt Kaplan from Ladenburg Thalmann. Please proceed with your question.

[Matthew Kaplan:]

Hey, good morning, guys. Congrats on the progress last year.

[Ron Cooper:]

Thank you, Matt.

[Matthew Kaplan:]

A couple of questions in terms of – just following-up on Katherine’s with respect to the feedback from the FDA. Can you give us a little bit more detail in terms of what you're thinking is at this point in terms of the Phase III trial and its design or the program?

[Ron Cooper:]

Well, I think, Matt, out intent has always been to have a single program for the US and for Europe to seek approvals in both regions on the basis of that. Our initial thinking in terms of length of trial endpoint and some of the other details still holds. That’s [indiscernible] thinking. We’ve received feedback from the FDA and then we’re going to share that with the EMA. For me to speculate in between probably is inappropriate right now. And what we hope to do is to get a good view from the EMA. We have a good thought as to where we think the direction that we are going. And then once we have that all buttoned up, we’re going to be happy to share that information with you.

[Matthew Kaplan:]

Okay, great. Fair enough. And then, can you talk a little bit about the market potential for the PSIC indication for 4250?

[Ron Cooper:]

Yeah, absolutely. I think that when you first think about these cholestatic liver diseases, this is a wide range of diseases that affect young children. The cholestatic liver diseases itself we estimate to be about 30,000 to 50,000 children around the world and there are various diseases such as PSIC, [indiscernible] and others. There are no treatment for any of these diseases right now and no pharmacological treatment. For PSIC itself, estimates suggest this is one in 50,000 or one in 100,000 children around the world. And we estimate that that’s about 10,000 – approximately 10,000 kids that would be available around the world that would receive treatment for PSIC.

[Matthew Kaplan:]

Okay, that’s helpful. Thank you. And then a couple more questions. You mentioned elobixibat and the progress in Japan, the filing there. Can you talk about the potential for licensing opportunities in the US and, I guess, outside of Japan, Asia as well?

[Ron Cooper:]

Thanks for that question as well. We’re very pleased with our partnership with EA Pharma. We’re routinely engaging business development discussions with third parties in the ordinary course of business. However, as a general principle, we do not comment on business development activities unless and until there’s a transaction to announce or disclosure is otherwise warranted. So, we’ll keep you posted.

[Matthew Kaplan:]

Okay, perfect. And then one last question. For 3384, what are your current plans for that program looking out the next 12 months, I guess.

[Ron Cooper:]

Thanks for that question, Matt. We’re excited about 3384 because we believe it solved the problem that physicians, specifically gastroenterologists, have been struggling with. They really love cholestyramine for the efficacy, but they find it very difficult to get patients to take it because of the tolerability of the amount of cholestyramine that they have to take. Now, this is a good example of the base understanding of bile acid biology that our scientists have and I think we’ve made some good progress with the prototype A3384 where we’ve showed some good effects on diarrhea and other GI affects. So, right now, what we’re trying to do is take that proprietary formulation and optimize that and we’re going to optimize that to ensure that it is more stable, that it works better physiologically and continues to be convenient to take. And we’re making pretty good progress from that perspective and we hope to be in the clinic sometime in the near future.

[Matthew Kaplan:]

Again, congrats on the progress and thanks for the added detail.

[Ron Cooper:]

All right. Thanks for the questions, Matt.

[Operator:]

Thank you. [Operator Instructions] Our next question today is coming from Ed Arce from HC Wainwright & Company. Please proceed with your question.

[Ed Arce:]

Hello, everyone. Congrats from me as well on all the progress.

[Ron Cooper:]

Thanks, Ed.

[Ed Arce:]

Just a couple of questions. Most of mine have been asked and answered, but a couple more. One on elobixibat, if you could just perhaps describe the timeline in Japan around approval and sort of the early launch plans that EA Pharma has. And then, separately, if you could also share with us any updates that you might have with regards to your bile acid modulator still in preclinical for NASH.

[Ron Cooper:]

Thanks for your kind comments and thanks for those questions. So, for Japan and elobixibat, I think we’re really excited about elobixibat. Elobixibat is an IBAT inhibitor, like A4250, and I think that that gives us a very good proof of concept on the IBAT inhibitor mechanism of action. From a timeline perspective, our Japanese colleagues announced fantastic Phase III data near the end of last year and they followed up quickly with filing in the first quarter of this year. We anticipate approval in the first half of 2018 and we know that our partners, EA Pharma, have been working diligently with the regulatory authorities in preparing for commercial launch. From a commercial launch perspective, they’ve engaged a local party to partner with as well, Mochida Pharmaceuticals, and Mochida will provide extra strength in the marketplace for this launch. So, we’re looking forward to the potential approval and launch of elobixibat in Japan to help patients suffering from chronic constipation. And then a quick comment on our bile acid modulation preclinical efforts. I think this is a space of where our multiple decades of experience in bile acids is really coming to fruition. We do know that with our IBAT inhibitors that we have an impact on the four hallmarks of NASH, being cholesterol, glucose transport, inflammation in Japan and fibrosis. And so, our team is using that knowledge and screening some potential product candidates and we’re pleased with the progress that we've made thus far. We look forward to announcing more information as we make progress.

[Ed Arce:]

Okay, sounds good. Thanks, Ron.

[Operator:]

Thank you. We’ve reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.

[Ron Cooper:]

All right. Thanks very much, Kevin, and thank you all for joining our first financial results conference call. As you’ve heard, 2016 was transformational for Albireo. We look forward to continuing our progress in 2017 and specifically to the planned initiation of a Phase III trial of A4250 in patients with PSIC. We’ll be keeping you updated on our progress throughout the year. Have a good day and thanks again.

[Operator:]

Thank you. That does conclude today’s teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.