Catabasis Pharmaceuticals, Inc.
Q1 2016 Earnings Call Transcript

Published: 12 Aug 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the Catabasis Pharmaceuticals Incorporated Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host for today Andrea Matthews, Executive Director of Corporate Affairs. You may begin.

[Andrea Matthews:]

Thank you, Sonia. Welcome to today's conference call to provide a corporate update for Catabasis Pharmaceuticals and to review our second quarter 2016 financial results. With me today from Catabasis' management are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer; and Rick Modi, Chief Business Officer. We issued a press release after the market close today summarizing our corporate update and our Q2 2016 financial results, which we will reference on today's call. This press release is available on our web site. I would like to note that during today's call, we will make statements related to our business based on current and future expectations that may be considered forward-looking statements under federal securities laws. Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties, including those that were discussed in our most recent quarterly report on Form 10-Q, which we filed this afternoon with the SEC and is also available on our website. Such statements represent our judgment as of today, and Catabasis undertakes no obligation to publicly update any forward-looking statements except as required by law. With that, let me pass the call over to Jill Milne, Chief Executive Officer, who will provide the corporate and financial update. This will be followed by Joanne Donovan, our Chief Medical Officer, who will review our clinical progress. Jill?

[Jill Milne:]

Thank you, Andrea. Good afternoon everyone and thank you for joining us today for our corporate and financial update for the second quarter of 2016. We believe that Catabasis has made important progress since our last cal. We've achieved another important milestone in our DMD programs with edasalonexent and learned more about the CAT-2000 series. I would discuss both of these programs today. Our focus as an organization continues to be lead program edasalonexent for the treatment of Duchenne Muscular Dystrophy. Edasalonexent which we also call Edasa, was previously known as CAT-1004. We believe edasalonexent has the potential to be transformative in the treatment of DMD and offers a strong value proposition. Assuming patient enrollment and trial conduct to proceed as anticipated, we expect to report top-line data for edasalonexent from Phase II portion of the MoveDMD trial, in late 2016. We are seeking to develop Edasa as a new standard of care for Duchenne Muscular Dystrophy. And based on its mechanism of action, we believe that it has the potential to be effective in all patients with Duchenne, regardless of mutation type. Edasalonexent has the potential to be diseased modifying, meaning it could slow the typically relentless degeneration of muscle while enhancing muscle regeneration. We are pursuing this program by a well thought out development plan that we believe is consistent with regulatory guidance using the rigor of randomize double blind placebo control trials. As a reminder, edasalonexent is an oral small molecule that inhibits NF-kappa B, a protein that is activated in a very early stages of DMD and is critical in the progressive muscle degeneration in DMD. We are currently conducting the MoveDMD trial in boys affected by Duchenne ages 4 to 7. I mentioned a moment ago, that Catabasis recently achieved a significant milestone in the Edasa program. We continue to make significant progress in the MoveDMD trial as we had hoped and planned. In the first quarter of 2016 we presented positive safety, tolerability and pharmacokinetic data from Part A of the MoveDMD trial and in April announced positive NF-kappa B biomarker data demonstrating significant target engagement at the two higher doses. These are the doses we advanced into Part B of the trial, the Phase II efficacy portion of the MoveDMD trial which is now ongoing. Interest in the trial and feedback on the trial design from the DMD community have been very positive and enrollment is progressing well. Importantly, we recently initiated an open label extension to the trial that is expected to provide additional safety, and efficacy data on Edasa when administered for up to 48 weeks. The first patient completing Part B have now begun the open label extension. We are confident in the potential of the edasalonexent as monotherapy for the treatment of Duchenne and also believe that a combination drug approach may be able to offer additional benefits to patients. Recent literature suggest that in NF-kappa B in addition strategy combined with the dystrophin targeted therapy may further enhance dystrophin production, a potentially approach. I'd like to spend a moment on other areas. In June we announced the results from CAT-2054 Phase 2a trial hypercholesterolemia. We were disappointed that we did not meet the primary endpoint of reduction in LDL cholesterol from base line in conjunction with high intensity statin. We presented preclinical results for CAT-2003, another clinical stage molecule on the CAT-2003 and showed positive effects on liver steatosis, inflammation and fibrosis, as well as a reduction in the development of pre-neoplastic lesions in models of NASH. We continue to believe that these data, along with human genetic data support the potential of SREBP as a target for NASH, as well as the potential of the CAT-2000 molecules for the treatment of NASH. We believe that the portfolio of CAT-2000 molecules, which includes the clinical stage molecules CAT-2003, CAT-2054 and to other discovery stage molecules provides an opportunity to develop a therapy for NASH. Our intent is to seek a partnership for further development of the CAT-2000 series. We continue to apply our SMART linker technology to discover and develop candidates for additional rare disease. We are targeting multiple biologic pathways that may yield important enhancements and efficacy. Our current efforts here focus on rare disease, including ALS, friedreich’s ataxia and cystic fibrosis. Preclinical activities with CAT-4001 continue. On the corporate front, we are very pleased to have Joe Johnson joint our team at Catabasis to head regulatory affairs. Joe brings more then 25 years of pharmaceutical industry experience with deep global regulatory experience that includes orphan and pediatric neurological disease making him a valuable addition to Catabasis as we progress Edasa through the clinic and prepare for key clinical trials both in the US and internationally. Based on the promise and momentum that we are seeing in edasalonexent program we are excited to announce our first investor research and development day which is scheduled for November 17 in New York. We believe that this will be an excellent opportunity for members of the professional investment community to learn more about our corporate strategy and rare diseases and our pipeline. The R&D day will include presentations on Edasa and DMD by Catabasis team members, as well as key opinion leaders in the Duchenne community. Of course we will also provide more information on our other programs. We hope that many of you on the call today will be able to join us in person for this event. For more information or to register, please see our Q2 earnings release which we issued this afternoon. For our second quarter of 2015 financial update, our earnings release provides details, so I will provide only a brief summary here. As of June 30, we had $42.8 million of cash, cash equivalents and marketable securities, which we expect to provide us runway through at least June 30, 2017. In the second quarter of 2016, our net cash used in operating activities was $8.9 million. Our R&D expense was $6.8 million in Q2, an increase of $0.0 million over our R&D expense in Q of 2015. The increase was primarily due to increased direct program cost related to the edasalonexent MoveDMD trial and the CAT-2054 Phase 2a trial. Our G&A expense was $2.6 million in Q2, an increase of $0.7 million over our G&A expense in Q2 of 2015. This increase was primarily due to increased employee compensation cost and increased consulting and professional expenses to support our R&D pipeline and overall growth. Our operating loss was $9.4 million in Q2, an increase of $1.6 million versus Q2 of 2015. Our net loss of $9.4 million or $0.61 per share in Q1 was an increase of $1.4 million over our net loss in Q2 of 2015. For the second quarter, we had weighted average common shares outstanding of $15.3 million. Additional financial information is available in our 10-Q, which we filed with the SEC earlier today. I’ll now ask Joanne Donovan, our Chief Medical Officer to provide a more detailed update on our clinical programs in DMD.

[Joanne Donovan:]

Thank you, Jill and good afternoon everyone. I am going to focus our lead program edasalonexent or Edasa which was previously known as CAT-1004. We are very pleased with the progress with Edasa program and with the MoveDMD trial. As a reminder, in Part A of the MoveDMD trial we previously presented that all three doses of edasalonexent tested were generally well tolerated with no safety signals observed. We also saw adequate PK with edasalonexent both in healthy adult, as well as in boys affected by Duchenne. In boys with DMD, doses of 67 and 100 milligrams per kilogram per day achieved exposures at which NF-kappa B addition was observed in adult. We also recently announced positive biomarker data at these two doses, demonstrating successful and NF-kappa B target engagement and anticipate presenting these data at a future scientific meeting. We've had what we view as collaborative and constructive interactions with FDA and have initiated Part B Phase 2 efficacy portion of the MoveDMD trial in April, which will evaluate the safety and efficacy of edasalonexent and DMD over a 12 week period. Our target enrollment is approximately 30 patient’s age 4 to 7 who have not been steroids for at least six months. We very much appreciate the support and enthusiasm that we received for this program from Duchenne community and the dedicated clinical trial staff that are moving this program forward. Entry criteria are similar to those in Part A and the boys have participated in Part A were invited to participate in Part B with additional patients also being enrolled. Parents of 16 of the 17 boys from Part A have opted for their sons to participate in Part B. We believe that we have identified the sufficient number of patients for Part B of the trial and the site they are in process of scheduling them. The primary endpoint for Part B of the MoveDMD trial is changed and T2 MRI of the lower leg muscle. We will asses age appropriate time functional set as secondary endpoint including 10 meter walk, run, time to stand and for stair climb. We are also measuring the North Star Ambulatory Assessment, pediatric outcomes data collection instrument or PODCI and muscle strength. We look at controlled biology sine the imaging DMD group has shown statistically significant changes in T2 MRI in 12 weeks in a small sample size. We are working with the imaging DMD group using MRI protocols that are standardized across types and the scans will be read essentially by them in a central manner in a blinded fashion by experienced readers. Now T2 MRI is a quantitative and sensitive biomarker that reflects inflammation and muscle damage and allow us to see changes in a relatively short period of time, that are correlated to the longer term functional changes in these boys. We power the MoveDMD Part B study for this T2 MRI endpoint. We anticipate also learning from the data on the time functional test and other endpoints. However, the study is not powered to these endpoints and therefore we do not expect to see statistically significant effects at the 12 week point. An important step forward that we announced last month was the initiation of an open label extension for the MoveDMD trial. Following completion of the 12 week placebo controlled portion of the trial, patients will continue on open label edasalonexent for 36 weeks. The decision to initiate the open label extension was informed by the acceptable safety and tolerability data that we seen to date with edasalonexent. During the open label extension, safety will be monitored and will continue to periodically assess MRI time functional test, muscle strength measures, the North Star and the Part B. With these continued measurements the open label extension is accepted to provide additional data on the safety and efficacy of edasalonexent when administered for up to 48 weeks. Now these additional data are an important part of our development strategy for edasalonexent [ph] and DMD. If the results for MoveDMD clinical trial are positive and discussions with regulatory authorities regarding a pivotal trial is supportive, in 2017 we intend to initiate a six month Phase 3 placebo controlled pivotal clinical trial an ambulatory boys with DMD age 4 to 7, as well as an additional clinical trial in non-ambulatory boys with Duchenne. We expect that the Phase 3 study in ambulatory boys with DMD will have one of the age appropriate time to functional asses that are included in our Phase 2 trial as the primary endpoint. The final design of the Phase 3 trial is expected to informed by the results from our current placebo control trial and by the open label extension data that will be available prior to the initiation of the Phase 3. We recognize that developing a therapy in a rare disease where there currently no approved therapies in the United States is a challenge. To address this, we've taken a vigorous and thoughtful approach to give us the best chances of brining to those affected by Duchenne, a therapy that can positively impact their life. Its worth mentioning that our approach is built on three key objectives, supported by regulatory guidance, these include a double blind placebo controlled trial, both in Phase 2 and Phase 3, objectives and quantifiable biomarker measures with the use of MRI, and lastly, multiple functional strength and patient proxy reported measures. Consistent with these objective and the design of the MoveDMD trial, we've included three time functional path that are also included in the FDA draft guidance and age appropriate for our trial. These time functional test are actually quite rapidly performed enabling the test to be performed in triplicate, which increases the robustness of the data. Two capture additional information, we have included muscle strength, as well as the North Star ambulatory assessment and patient proxies will also provide their direct feedback through use of the Part B. I'd like to note our ongoing outreach to and work with the DMD community. On the clinical trial section of the Catabasis website you will find link to two recent webinars, discussing aspects of the MoveDMD trial. I think it’s worth reiterating that we are very pleased with the progress and results so far with edasalonexent program and Duchenne and we believe that we have designed a Phase 2 clinical trial that gives confidence in our chance to super success. In addition to our work in Duchenne, we have also evaluating other diseases with inhibition of NF-kappa B maybe to be beneficial. There are number of other rare diseases where NF-kappa B plays an important role and Edasa could have the potential for positively impact patients via a second indication strategy. This concludes our prepared remarks. And we'll now be happy to take your questions. Sonia, could you know please repeat the instructions and poll for questions. Thank you.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Heather Behanna from Wedbush Securities. Your line is open.

[Heather Behanna:]

Hey, congrats on all the progress. I just had a quick question about thinking about the pivotal study and a six months primary endpoint, when you think about this time function test in younger boys of 4 to 7 years of age, how do you think about which of these endpoints you think can actually you know, from national history se a significant decline or change in six months to help you figure out the joint effect?

[Jill Milne:]

Hi, Heather. This is Joanne. I am going to hand the question right over to Joanne to address.

[Joanne Donovan:]

So I think that – it’s a great question Heather. We have been informed by information from several data basis on the expected changes in these measure over six months in the study, so we are actually going to be using the data from the Phase 2 study to inform our selection of a primary endpoint for the Phase 3 study in terms of variability, and affect side. Now its [indiscernible] to look at statistically significantly affects for those, but we will get trend information.

[Heather Behanna:]

Okay. That’s helpful. Thanks.

[Operator:]

Thank you. And our next question comes from Joel Beatty from Citi. Your line is open.

[Joel Beatty:]

Hi, thanks for taking the question. This question is about open label question that’s beginning to enroll after the Phase 2 part of the trial, how often will you be measuring the additional data you're collecting in that part of the study? And then also could somewhere open label data be available when you announce the top line results or is that something that would come later?

[Jill Milne:]

Thanks, Joel for the question. This is Jill Milne. Again, hand it over to Joanne.

[Joanne Donovan:]

Hi. Yes, as Jill mentioned we actually have had boys already starting to enroll in the open label part of the study, so that will be ongoing. We anticipate that we will be providing our top line data on the placebo controlled part of the study and as the data evolves from the open label we will be periodically looking at that data and providing with updates. In terms of how often are the functional measures, we will be continuing to measure them on a similar schedule, so we'll be able to compare across longer term in the study and have a similar timeframes for all boys, whether or not they started initially or at the beginning of the open label extension.

[Joel Beatty:]

Okay. Great. And then I guess, one last question, thinking I had to the pivotal trial, are there stats preparation you can begin making now for that, I don’t know in terms of setting up centers or is that something else, what you like to do in Phase 3 results?

[Joanne Donovan:]

Absolutely, we are engaged in a lot of activities to prepare for that right now. So we are indeed preparing as soon as we can, so that we'll be able to hit the ground running when we have results.

[Joel Beatty:]

Okay. Very good. Thank you. Operator Thank you. [Operator Instructions] And I am showing no further questions at this time. I would now like to turn call back over to Jill Milne for any further remarks.

[Jill Milne:]

Thank you, Sonia. And thank you to everyone for being on the call today. We remain focused and excited about our lead program, edasalonexent and DMD. Since the beginning of second quarter this year we have announced results demonstrating NF-kappa B target engagement in boys affected by Duchenne, Part B of the MoveDMD trial is underway after what we view as collaborative and constructive interactions with the FDA and we also initiated a 36 week open label extension for Edasa. We believe that Edasa potentially disease modifying and currently in Phase 2 has the potential to be transformative in the treatment of DMD. Assuming patient enrollment and trial conduct proceed as anticipated we expect to report top line results for Part B of the MoveDMD trial for edasalonexent late this year. We further the Catabasis leadership team with additional regulatory expertise and continue to make progress with our preclinical programs. We look forward to discussing our corporate strategy in rare disease and our pipeline, including presentations on Edasa and DMD by Catabasis team members and external Duchenne experts and we will also discuss our other programs in more detail at our R&D day in New York on November 17. Thank you everyone for joining us on today's call and for your support and interest in Catabasis. Andrea?

[Andrea Matthews:]

That concludes today's call. A webcast replay will be available for 90 days via the Investor Relations page on our website at www.catabasis.com. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today’s program. You may all disconnect, everyone have a great day.