Q4 2018 Earnings Call Transcript

Published: 28 Mar 2019

[Operator:]

Welcome to Capricorn Therapeutics Fourth Quarter and Full Year 2018 Conference Call. My name is Morin and I'll be your operator for today's call. At this time all participants are in a listen-only mode. At the end of this call, we will open up the lines for questions. Note that this conference is being recorded. I will now turn the call over to Capricorn CFO, A.J. Bergmann. Sir.

[AJ Bergmann:]

Thank you and good afternoon. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding among other things the efficacy, safety and intended utilization of our product candidates, our future research and development plans including our anticipated conduct and timing of preclinical and clinical studies, our plans to present a report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates and our possible uses of existing cash and investment resources.

[Linda Marbán:]

Good afternoon and thank you for joining us for our fourth quarter and full year update and conference call. Over the last few months, we have continued to make progress in the HOPE-2 clinical trial for Duchenne muscular dystrophy, which also included a pivotal meeting with the Food and Drug Administration under our RMAT designation. Additionally, we are continuing the development of our exosome platform technology. I am delighted today to provide you with some colors on both programs. As we announced earlier this year, we had a successful meeting with the FDA during which time we discussed the potential registration of CAP-1002 should hope to achieve its primary efficacy end point as well as other important issues such as trial size, clinical relevance of the performance of the upper limb as well as other measures of muscle function. We left that meeting not only with direction, but also feeling very encouraged. However, we were faced with a challenge right after the meeting when we learned that a patient in the HOPE-2 clinical trials sustained a serious adverse event otherwise known as an SAE during the infusion. The event was an allergic reaction that occurred during infusion which resulted in anaphylaxis. Luckily the patient was and continues to be fine. But the result of that incident was that we put ourselves on a voluntary dosing hold, while we investigated the SAE. It became apparent after investigation that these types of allergic reactions sometimes occur when a biologic is being infused and the cause remains unknown which is the case here, but that a pre-medication regimen of steroids and antihistamines usually does the trick to prevent these types of allergic responses from occurring in the future. We have now implemented one of these well accepted regimens and the trial was reopened within 30 days after the dosing hold went into effect. We are now confident that this proactive medication regimen will reduce the risk of future events of this type. We have infused 14 patients since removing the dosing hold, I have seen no problems to-date.

[AJ Bergmann:]

Thank you, Linda. This afternoon's press release provided a summary of our fourth quarter and full year 2018 financials on a GAAP basis. You may also refer to our Annual Report on Form 10-K which we expect to become available in the next few days and will be accessible on the SEC Web site as well as the financial section of our company Web site.

[Operator:]

Thank you. Our first question comes from Jason McCarthy with Maxim Group. Your line is open.

[Jason McCarthy:]

Hey guys. Thanks for taking the question.

[Linda Marbán:]

Hey, Jason. How are you?

[Jason McCarthy:]

Quite good. So earlier today, we saw some positive data from program. And I'd like to see if you could discuss a bit more in detail where CAP-1002 might fit into the treatment paradigm editions especially considering the unique mechanism of action, is it actually like a potential there for synergy with some of the other approaches out there?

[Linda Marbán:]

Absolutely Jason. And it's one that we've been aware of and excited about since the beginning of this program. We've always said that we believe that CAP-1002 is an important player in the treatment for Duchenne and will be one of the options within the toolbox. And as you know, we're targeting those later stage patients with more advanced disease although those patients are eligible for instance for some of the exon-skipping technologies as well as the gene therapies. Their fibrosis may be so advanced that it may not be as efficient as in younger patients. And so anything that we can do to get on top of inflammation and fibrosis will indeed be very important for patients and physicians are likely to adopt it as part of the treatment regimens.

[Jason McCarthy:]

Okay. Thank you. And then, the next one's more towards CAP-2003. We've actually seen a bit of research lately that's shown extracellular vesicles playing a role in liver injury from outside the liver particularly those carrying hedgehog. And you know, this is a topic of interest considering the recent activity in the NASH space. So, I was wondering as you progressed CAP-2002 through preclinical development, if you've given any thought to potential application to NASH and liver inflammation. And then, just more generally are there any other inflammatory diseases you could point to as a direction for the compound broadly speaking?

[Linda Marbán:]

Yes. So, this is one of my favorite topics, Jason, which is the fact that the exosome extracellular vesicles as they're sometimes called are really particularly good at treating injury and inflammation and that can be really not organ specific in the sense that they seem to know where injury is track there. They're taken up specifically by macrophages and we've published data, but it's been substantiated by others that it helps in the conversion of macrophages from M2 which are angry and inflammatory, the M2 which are basically anti-inflammatory and tend to promote healing. So yes, we're looking at all types of opportunities for CAP-2003. Additionally and I'm not talking about it a lot publicly, but please stay tuned over the next few months as we begin to really talk about using exosome as delivery vehicles. So what we have found and we're not unique, but I think we're the best doing is loading these exosomes with compounds whether they be proteins, RNAs or micro RNAs that could potentially enhance the ability of the therapeutic and also have a defined mechanism of action.

[Jason McCarthy:]

All right. Thank you very much. It's very helpful.

[Linda Marbán:]

Thank you, Jason. Take care.

[Operator:]

Our next question comes from Joe Pantginis with H.C. Wainwright. Your line is open.

[Joe Pantginis:]

Hey, guys. Good afternoon. Thanks for taking the question. Two questions, if you don't mind around the interim. Can you give a little more color as to the extent of the data analysis you will conduct? And then, also any color you could give with regard to any impact from alpha spent? Thanks a lot Linda.

[Linda Marbán:]

Yes. So, thanks, Joe. In terms of the type of analysis we'll be doing with the interim, but I can tell you as it's going to be looking completely at the data set that we have. So everything that we're collecting with HOPE-2, which we can talk about it or you can find in many of our filings or at clinicaltrials.gov. We will be looking at it. Of course, we're going to be eagle eyeing the performance of the upper limb. And then those measures of skeletal muscle function that the FDA asked that we provide that should support the performance of the upper line improvements or stabilization. So we'll be looking very carefully inside the muscle. Performance we're going to be looking at cardiac of course which is one of the measures that we've always talked about. And then, any other data that we have that supports for instance some of the quality of life data, the pulmonary function test data, the statistical analysis plan which involves the full interim look is being drafted now. So I don't have that completely baked in, but what we're really using it for it as a roadmap for the path forward.

[Joe Pantginis:]

The alpha spend.

[Linda Marbán:]

Alpha spend. So our statisticians are working with us very carefully on that. We don't believe that it's going to have a tremendous impact in the number of patients. There's a calculation that can be used called the LAN- DeMets investigators names that developed an algorithm that allows you to calculate alpha spend when you've done a full look at the data and we will do that after we decide how many patients we're looking at and the impact on the data and then we'll be able to announce the full trial size after that.

[Joe Pantginis:]

Got it. Thanks a lot.

[Linda Marbán:]

Thank you, Joe. Hope things are well.

[Operator:]

Thank you. Our next question comes from Tim Chiang with BTIG. Your line is open. Kim check out your line is open.

[Tim Chiang:]

Can you hear me, Linda?

[Linda Marbán:]

I can. Hi, Tim. How are you?

[Tim Chiang:]

Hi. Good. I know you highlighted that you're going to do this interim analysis for the HOPE-2 trial you've got 20 DMD enrolled in the trial. Is there anything you could say about how many of those patients are ambulatory and how many of those patients are non-ambulatory patients at this point?

[Linda Marbán:]

Yes. So I don't have that data in front of me. What I can tell you is that based on our inclusion criteria which is that they are either late, ambulant or early stage non-ambulant at best it's likely that most of them are non-ambulant, but I don't have that data in front of me right now.

[Tim Chiang:]

I know the first person who asked the question that there was some data that came out on exon 45 skip product and obviously there's a lot of interest in gene therapies. But what I find kind of interesting is that I think you guys are the only company that's running extracellular focused primarily in non-ambulatory DMD patients. Is that really much for those patients? And I know you've met with the FDA. I mean is there any sort of commentary you can kind of provide post the FDA meeting that gives you confidence that if you show a successful outcome in the interim analysis that you could potentially get an expedited pathway to filing a potentially an approval here?

[Linda Marbán:]

Yes. So, thank you, Tim. Yes. We're cautiously optimistic. And when we look at our data we'll decide the best path forward and consultation with our regulatory consultants, our clinical team and our KLL that work with us -- designers and conduct this trial. So everything's on the table and nothing is off the table. But at this point, we're really just focusing on the path forward and getting through registration.

[Tim Chiang:]

And maybe just one last follow up. How many patients do -- will you have enrolled by the time you do -- I mean, is it 20 patients that you're going to basically show the interim analysis on at the end of the second quarter?

[Linda Marbán:]

It's approximately 20 patients. What we've done because of -- really is driven by capital what we've done is we've capped enrollment right now to evaluate these patients in six months. We've had two infusions and six months of follow up. And so we feel like that will give us the best path forward and allow us to conserve cash to get to that point. And so it's not baked in 20 plus or minus 20.

[Tim Chiang:]

Okay, great. Well, best of luck, Linda.

[Linda Marbán:]

Thank you, Tim. We look forward to seeing you soon. Thank you. And that does conclude today's question-and-answer session. I would now like to turn the call back over to Linda Marbán, CEO, for any closing remarks.

[Linda Marbán:]

Thank you very much for joining us today. We look forward to presenting you with the interim analysis on the HOPE-2 clinical trial in the early part of the third quarter and to seeing you around at the variety of meetings at which we typically present. Have a wonderful rest of your day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. And you may all disconnect. Everyone have a wonderful day.