CymaBay Therapeutics, Inc.
Q4 2018 Earnings Call Transcript

Published: 1 Mar 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to CymaBay’s Fourth Quarter and Year-End 2018 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the Company’s request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com. Now I would like to turn the call over to Mr. Dan Menold, Vice President of Finance at CymaBay. Mr. Menold, you may proceed.

[Dan Menold:]

Thank you, operator, and good afternoon, everyone. Hopefully by now you will have had a chance to review the press release we issued announcing our year-end 2018 financial results and business update. You can access that release on our website, under the Investors tab. Joining me on the call today are Sujal Shah, Chief Executive Officer; Dr. Pol Boudes, Chief Medical Officer; and Dr. Chuck McWherter, Chief Scientific Officer. They will provide an update on our financial position and clinical programs and review upcoming milestones before we open up the call for Q&A. Before we begin, I’d like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay’s expected future performance, business prospects, events or plans, including clinical plans, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasted due to the impact of many factors. The Company assumes no obligation to update or supplement any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Participants are directed to the cautionary statements set forth in today’s press release as well as the risk factors set forth in CymaBay’s quarterly and annual reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. This conference call is the property of CymaBay, and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. At this time, I’d like to turn the call over to Sujal.

[Sujal Shah:]

Good afternoon, everyone, and thank you for joining us. It’s already been a busy start to the year for us at CymaBay. During the call today, we will focus on our most significant accomplishment and importantly on key upcoming milestones that have the potential to meaningfully increase future value and to establish CymaBay as a leader in addressing the unmet needs for patients with liver disease. As I spend time speaking with investors, I sometimes hear that CymaBay is under the radar or underappreciated given the derisk profile of seladelpar and its potential to an improved treatment alternative for patients with inflammatory liver disease. The advances we made in 2018 and thus far in the first few months of 2019 have positioned us to transform that sentiment into one where the promise and opportunity of CymaBay will be more widely appreciated. We ended 2018 with two major achievements in the development of seladelpar for patients with primary biliary cholangitis or PBC. We initiated our first ever Phase 3 registration study and for the third consecutive year we made a late breaking presentation of Phase 2 data at the AASLD’s Liver Meeting. Earlier this month, we announced two additional significant accomplishments. First, we announced the FDA granted seladelpar Breakthrough Therapy Designation for treating patients with PBC; and second, we completed enrollment of a Phase 2b proof-of-concept study of seladelpar in patients with nonalcoholic steatohepatitis or NASH, one quarter ahead of schedule. As we look to the year ahead, we expect to increase the pace of major milestone events and catalysts. By the end of 2019, we anticipate completing enrollment in ENHANCE, our global Phase 3 registration study for seladelpar in PBC and also completing our ongoing Phase 2 study in PBC for which we have already shared interim data at recent key medical meetings. In addition, we expect to announce top line data from our Phase 2b study of seladelpar in NASH in the second quarter. And finally, we intend to complete ongoing evaluation and reach decisions regarding other opportunities to expand the development of seladelpar. Let us start with our development program in PBC. As I mentioned, ENHANCE is our global Phase 3 registration study of seladelpar in PBC that we initiated in the fourth quarter of 2018. This study is designed to establish the efficacy and safety of seladelpar in PBC patients, who have an inadequate response to, who are intolerant to UDCA, the current first line treatment for PBC. Our goal with this study is to support the submission of a global registration dossier with health authorities to obtain approval of seladelpar. I’ll ask Pol to review some of the key elements of ENHANCE. Pol?

[Pol Boudes:]

Thank you, Sujal. ENHANCE is a 52-week placebo-controlled randomized study with a target enrollment of approximately 240 PBC patients at more than 150 clinical sites in over 20 countries. Patients are being randomized to receive daily doses of placebo or seladelpar at either 10 milligram or 5 milligram with a possibility to increase the dose to 10 milligram after six months. The primary endpoint is the composite responder rate in which a responder is defined as a patient who achieves an alkaline phosphatase level of less than 1.67x the upper limits of normal with at least 15% decrease from baseline and also as a normal level of total bilirubin at 52 weeks. We are making good progress in this large global study which includes enrolling patients across four regions; North America, Europe, Latin America and Asia-Pacific, and are working to complete enrollment in ENHANCE by the end of this year. ENHANCE was initiated on the strength of what we believe to be a very compelling and differentiated profile in Phase 2 using the same dose regimen, the same duration of treatment and the same key outcome measures that we are using in ENHANCE. We believe that the results of – in Phase 2 have helped to derisk the Phase 3 program by establishing a differentiated profile for seladelpar in efficacy and tolerability as a potential treatment for PBC. Results from the 52 weeks of treatments in the ongoing Phase 2 represented for the first time at the Liver Meeting this past November. We also described positive results at 26 weeks on pruritus or itching, as well as in the subset of patients with cirrhosis at baseline. Each of these presentations from last November and their companying press release with additional details can be found on our website. All in all, this Liver Meeting was our busiest medical meeting today, and it provided a forum for critical external evaluation of the sustained anti-cholestatic and anti-inflammatory effect in PBC patients treated with seladelpar up to 52 weeks. Very importantly and in contrast to the only approved second line treatment today, the potential benefits of seladelpar on cholestasis and the inflammation we have without worsening of in pruritus. The most common clinical symptom of PBC and one that adversely affect patients quality of life. The data from our ongoing Phase 2 study suggest the potential that seladelpar may in fact improved pruritus in patients with PBC. On an effect, we will look to confirm in ENHANCE. To recap, we believe that seladelpar has the potential to serve the two key unmet needs in patients with PBC, namely improved efficacy and better tolerability. Improved efficacy is believed to be linked to reduce risk of disease progression based on AP reduction as a surrogate in a greater number of patients and better tolerability as the potential to foster better compliance while potentially improving overall quality of life for patients. Sujal?

[Sujal Shah:]

Thank you, Paul. I want to turn to a major accomplishment in the PBC program that we announced earlier this month. The FDA has granted breakthrough therapy designation for seladelpar for the treatment of early stage PBC. In determining to grant this designation. The FDA examines the clinical evidence for substantial improvement over existing therapy. We believe that this decision by the agency reflects the importance of the existing Phase 2 seladelpar clinical data and the potential for seladelpar to be substantially improved alternative over existing treatments for patients with PBC. The benefits of the breakthrough therapy designation include those of fast track designation with greater FDA guidance on development efficiency, organizational commitment involving senior managers as well as eligibility for rolling review and priority review. Seladelpar has also been awarded the corresponding priority medicine or prime designation by the European medicines agency. Together these programs provide an opportunity for enhance dialogue with regulatory authorities and are expected to facilitate the path for potential approval of seladelpar and PDC. Moving to our NASH development program. We were very pleased to announce completion of enrollment in our Phase 2b study of seladelpar approximately one quarter ahead of schedule. I’ll turn the call over to Chuck to provide an update on this study.

[Chuck McWherter:]

Thanks, Sujal. A total of 181 patients with a baseline biopsy confirmed diagnosis of NASH with fibrosis have been randomized into this comprehensive dose ranging double-blind placebo controlled study. Prior to a baseline biopsy, subjects were required to have a liver fat content greater than 10% using the magnetic resonance imaging, proton density fat fraction or MRI-PDFF method. Subjects were randomized in a 2

[Sujal Shah:]

Thanks, Chuck. Beyond our current focus in PBC and NASH, we continue to make progress with evaluating opportunities to expand the development of Seladelpar for other chronic inflammatory liver diseases with high unmet need. This work includes discussions with thought leaders, the valuation of scientific in clinical rationale for development, assessment of the unmet need and other criteria important for us to determine future opportunities. We look forward to sharing updates on this front over the course of this year. Turning briefly to our financials, our cash, cash equivalents, and marketable securities totaled $178.7 million at December 31, 2018. Based on current projection, our existing cash is expected to fund the current operating plan into 2021. For a detailed overview of our operating results for the 12-month period ending December 31, 2018. I will refer you to the press release and to our 10-K filed with the SEC today. With that, I’d like to open up the call to question. Operator?

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Yasmeen Rahimi with Roth Capital. Please proceed with your question.

[Yasmeen Rahimi:]

Hi team, thanks for taking my question, and congrats on the continued progress. Question one is, you had mentioned in the past of conducting a Phase 3 study, PBC study in hepatic impaired patients. Can you maybe give us an update where you are in that regard? And maybe what are the gatekeeper? And then what caught our attention was also at the EASL preview was that you’ll be presenting data on transplant survival at 52 weeks. So can you give us a little bit color on that regard? Thank you.

[Sujal Shah:]

Yes, sure. Yasmeen, thanks for the question. Maybe I’ll address the first one and then I’ll turn it over to Chuck and Pol to answer the second. I think ultimately with respect to our PBC study…

[Chuck McWherter:]

Yes. This is Chuck. So, yes, in terms of what’s being presented at EASL, this is what that’s really led from a collaboration with Bettina Hansen and Gideon Hirschfield, they’ve developed an overall GLOBE risk score. And so what was done was to really take baseline characteristics of patients who enrolled in the population and then evaluate what happens in the risk reduction using the GLOBE score analysis based upon their ended treatment, biochemical parameters. I think gratifyingly what you see is – what you would expect, we already know that the al-phos reduction was linked to improved transplant-free survival. This was underscored and reconfirmed by use of the most – more sophisticated methodology using the GLOBE risk score.

[Sujal Shah:]

And then Yasmeen, to swap and answer your first question, we recognized that there is a need in the broader PBC patient population, particularly in patients with advance disease to have a better understanding of overall exposure, and also have a better understanding of what the benefit risk profile is in that population. As you know, prior sponsor, obeticholic acid, that a population that was not included in their Phase 3 development, even though that population is in fact on their label. And there is a desire, we continue to have conversations, particularly with the agency and thinking through the right study design for hepatic impaired patients with PBC in particular, and understanding again, not only exposure but being able to actually measure what the overall benefit risk profile was in that population. So that’s a dialogue that we continue to have with the regulatory agency.

[Yasmeen Rahimi:]

Thank you, team, for taking my question.

[Sujal Shah:]

Thank you.

[Operator:]

The next question is from the line of Edward Nash with SunTrust Robinson Humphrey. Please proceed with your question.

[Fang-Ke Huang:]

Thank you for taking our question. This is Fang-Ke Huang for Edward Nash. One quick question on your ongoing Phase 2 study in PBC. And can you talk about one – present additional data this year? And my second question is on NASH. And given that we can ask you the data in second quarter, can you give us some of your internal expectations in terms of what do you want to see in that trial? Thank you.

[Sujal Shah:]

Yes, sure. Thanks for the question. So just to start off, with respect to PBC and the ongoing Phase 2 study, as you know, we’ve had a series of presentations at recent medical meetings as that study has progressed. Sometime in the middle of this year, in fact, this is a very robust ongoing Phase 2 study with north of 100 patients randomized, that entire population will be through the 52-week treatment period. And as it’s been our practice in the past, it’s our goal to assure that fulsome dataset in peer reviewed publication and in upcoming medical meetings. And with all the patients coming through this study, somewhere in the middle of the year, this year, that would be a dataset that we would expect to be able to share either the end of this year or early next year. A fulsome dataset that ultimately will come an entire year before the data from ENHANCE, so we think that’s significant. To provide at least a little bit of an update by the way on the Phase 2 study, we continue to be very encouraged. This is a study now in which just over 60 patients in this study that have been through the 52-week treatment period and patients effectively eligible to roll in for the long-term extension, have all rolled into the long-term extension. So we got a significant number of patients now in this study, for which we continue to collect safety and efficacy data beyond 52 weeks. So we continue to be extremely encouraged by the ongoing context of that study. And perhaps, I’ll turn it to Chuck and Pol, whereas to talk a little bit about some of the thoughts with respect to NASH.

[Chuck McWherter:]

Obviously. Yes. So I guess for us the benchmark is recent results from similarly position Phase 2 dataset. So one thing’s about medical data to a certain extent NGM data, where the key issue is really the relative fat reduction. So for example, NASH result was about 30%, meta-placebo 40% overall. And the key characteristic that we look at is the relative fat reduction, absolute fat reduction, and importantly, the proportion of patients who achieve a 30% reduction in fat. That’s the key finding that has been increasingly been associated with histological improvement in NASH and linkage improvement in the fibrosis as well. So for us, we think maybe a clear sign of a competitive profile would be somewhere between 30% maybe down to 20% reduction in relative reduction in hepatic fat.

[Fang-Ke Huang:]

Really helpful. Thank you so much.

[Sujal Shah:]

Thank you.

[Operator:]

Our next question is from the line of Tyler Van Buren with Piper Jaffray. Please proceed with your question.

[Tyler Van Buren:]

Hey, good afternoon, guys, and congratulations on the breakthrough designation. Just wanted to follow-up on that a little bit. In the release and on the call you mentioned, in order to get it, you need to see clinical evidences, substantial improvement over existing therapies of at least, one end point. And imagine OCA is involved in that comparison analysis. And you mentioned alkaline phosphatase in the release, but is there any back and forth on that with respect to other measures and results that have been presented in particular, maybe pruritis. Just curious to get your thoughts there as it relates to the breakthrough designation.

[Sujal Shah:]

Yes, absolutely. Great question. So with respect to the package delivered to the agency when we applied for the breakthrough designation – and I believe that’s a tremendous accomplishment and an recognition now, not only by the FDA, but with PRIME designation by EMA that there is an opportunity certainly, that we believe seladelpar can have a substantial improvement overall in treatment for patients with PBC. The designation is supported by the data that we’ve submitted to the agency to-date and that’s around reductions in AP, the robustness of those reductions. And in particular, when you look at the proportion of patients thus far in our Phase 2 study that are experiencing normalization of AP the ladder as a key secondary endpoint in ENHANCE and something that we think is quite differentiated with the profile of seladelpar relative to other treatments available today. Certainly, thus far, what we see around tolerability and the potential for seeing improvement on pruritus that will validate in ENHANCE, I think, is an additional key upside potential differentiator with seladelpar relative to obeticholic acid. And that’s the dataset that I think the agencies will continue to review. But important for them to review that in the setting of ENHANCE where we have handheld device, looking specifically at daily itch in that study with a validated PRO. And we’ll be able to provide information with a placebo compared around that outcome.

[Tyler Van Buren:]

Great. And the second question is with respect to the Phase 2 NASH results coming next quarter. Obviously, there’s been a lot of focus on MRI-PDFF and reduction in fat, and you guys just spoke about that previously, and I think people are very fairly aware of how to think about potential antifibrotic effects, and any sort of statistically significant result or numerical result would be impressive there. But with respect to the other things that you mentioned in terms of bile acids and lipotoxic lipids and anti-inflammatory effects, how should we think about those in terms of analyzing the data that we will see? And specifically, what types of reductions would be meaningful on the various endpoints related to those measures?

[Chuck McWherter:]

Thanks, Tyler. This is Chuck. And so I think one thing that’s really quite impressive in this study is speaking of the richness of the data that’s going to be collected. We’ve already discussed what some of the endpoints and additional features will be. But at top line, as we anticipate sharing data, it will be the liver fat, I think transaminase or another feature, it is really important and thus have some literature that supports the correlation between transaminases and histological improvement. I think another measure of the quality of the population we enrolled was not just the NASH score, but the baseline transaminases. So ALT baseline had a mean of 51, AST was 46. So I think that will be another point of interest to examine what the potential treatment effect would be. In addition, as you mentioned, we will collect a number of other web biomarkers at 12 weeks. It will take us some time to look through those. And we have a principal or a practice, if you will, of releasing information when it’s been appropriately clean, understood, analyzed. And some of those features will be – will take some time to work through as their patch analyzed, but you could anticipate that those would be part of a more fulsome data package that we would seek to present at a medical conference. But all in all, I think the ability to look at liver fat, lipids, transaminase, bile acid markers, wet biomarkers around fibrosis, all linked together just try to connect some of the – some of our hypothesis and rational about the mechanism of action of seladelpar really being foundational and in terms of its effects on hepatocytes inflammation and fibrosis.

[Tyler Van Buren:]

I just had a follow up – I just had a follow up with respect to transaminase in ALTs. We’ve seen elevation in the ALTs and some of the other datasets for drugs that are reducing fat. What do you think is causing it? Because to some extent with a higher proportion of reduction in fat, you’re seeing increased ALTs, but then there is also some debate as to whether it’s related specifically to the mechanism. And if that’s the case, is there anything in particular with respect to seladelpar that you’ve seen preclinically that would suggest that you won’t see an increase in ALTs?

[Chuck McWherter:]

Well, in our study in mixed dyslipidemia, where we’ve studied 50 milligram and 100 milligram in a little over 120 patients for eight weeks. These are patients with baseline, highly elevated LDL cholesterol and triglyceride, they’ll be subjects to with presumptive fatty acid – fatty liver disease, excuse me. We didn’t see any signal in transaminases. Tyler, I really can’t help you much. I think that there is many mechanisms that lower lipids that I’m not aware that there’s – there is nothing in the label for stat and there’s not really anything that I can point to PHR datas not necessarily the ones in development for NASH, but early first-generation compounds certainly did have a signal. If that mechanism linked, I would just be speculating, I’d be.

[Pol Boudes:]

Yes, it’s Pol. So I think the PBC data are interesting. Because I think for us, we see the increasing transaminase and signal inflammation in the liver. And we really have a very impressive decrease in transaminase that we see in PBC. So I think we are expecting to see that in NASH because the population is also a population where you see the inflammation which is linked as a transaminase. I think I was listening to Chuck, now – I think I know what you are talking about and it’s probably related to the TRβ agonist. In fact, there is one thing, and especially with the former generation I would say, TRβ agonist. One thing that we know is that they are actually increasing the synthesis of bile acid in effective side. And that could be one of the reason where in previous compound you saw an increase in transaminase. But I would say that for the other type of triglycerides, in general, what you see is an anti-inflammatory effect is the decrease in transaminase.

[Chuck McWherter:]

Yes.

[Tyler Van Buren:]

Got it. Thanks for taking the questions.

[Operator:]

The next question is from the line of Pasha Sarraf with SVB Leerink. Please proceed with your question.

[Michael Giaquinto:]

Yes. Hi, this is Michael on for Pasha. Thanks for taking my question. So obviously, still a couple of years away, but in terms of pricing dynamics between PBC and NASH, can you discuss how we should we be thinking about your pricing strategy in a scenario in which you potentially have seladelpar approved for both of rare disease in PBC and NASH?

[Sujal Shah:]

Yes, thanks for the question, Mike. It’s still somewhat early for us, so it’s hard to have a specific answer. But certainly, it make sense for me to be able to share with you some of the factors that we believe will be important as we put together some of the scenario planning that we’ll view do over the course of development for seladelpar and not only in PBC but also in NASH. And between now and 2021, at which point we expect to have ENHANCE completed. And we are anticipating a number of different potential developments that will be input into our consideration. So first of all, with respect to the overall seladelpar profile, we’ll learn from ENHANCE and hopefully validate and confirm the efficacy profile and outbox reductions, the composite responder rate as well as the normalization rate and effects on tolerability vis-à-vis pruritus. These are key things that we continue to believe significantly differentiate seladelpar and validating what we found thus far. And ENHANCE will be a key input to thinking about the overall positioning, even from a pricing dynamic perspective with respect to seladelpar in PBC. We’ll continue to look at the maturation of various strategies to also expand the addressable population. I think you’re seeing today that there is a significant need for treatment – for second line treatment in PBC. And with the potentially better and more efficacious treatment, more – a better tolerated treatment, and we think there’s an opportunity to significantly expand that addressable population. That’s another consideration that will put in as we think about the overall pricing dynamics. Of course, all of that is – will be reflective also of the overall competitive environment, meaning how the current treatment are continuous to progress and the trajectory that we learned a bit about earlier today, and how that continues to progress over the course of the couple of years. As well as its overall, safety, tolerability, patient retention on current treatment and how significant the patients will be, that are in a need of a better tolerated treatment alternatives as well as a more efficacious treatment alternatives. And finally, just connecting it to, I think, really the root of your question with respect to how things develop in NASH. Not only for us, but I think it’s important to recognize that the development of other agents in the NASH base will be another key input in terms of how we think about it. Fundamentally, with respect to PBC, the keys are, the differentiated profile, the high unmet need in this population and our ability to ultimately grow the overall population. We’ll get there first with respect to PBC. And our goal is to be successful there at a substantially improved treatment alternative, that we think will underscore a key pharmacoeconomic benefits for that patient population. As we progress in NASH, if we’re successful in NASH of course there’s still questions around what doses we believe we would carry forward post Phase 2 into Phase 3 development with Seladelpar in NASH. That’s another key input in thinking about some of the differentiations between NASH and PBC. In the end, the profile and the data will also drive us to what the right positioning is for Seladelpar in the NASH population. So, if it’s a more niche population that I think that gives me some sense of where the pricing could come in based on what we see not only in the effects of hepatic fat reduction, but of course importantly on effects on NASH resolution and fibrosis. And if it’s a broader population, of course that’s going to be reflective then of the pharmacoeconomic benefit to address the broader population. Okay. I’ve given you a lot of different inputs in the end our goal fundamentally is to be able to not only get these treatments through clinical development, but also to support true patient full assets. And we’ll take all of these things into account when we think about pricing differential.

[Michael Giaquinto:]

Thanks very much. Very helpful.

[Operator:]

Next question is from the line Jay Olson from Oppenheimer & Company. Please state your question.

[Jay Olson:]

Hey guys congrats on all the progress and thanks for taking my questions. You touched upon this earlier, but with regards to the top line results from your Phase 2 NASH Study, in addition to efficacy, I guess sort of expectations that you outlined for us. How much information can you provide around the safety and tolerability from that study? And how specific, can you be in the top line?

[Sujal Shah:]

Yeah, I think it’s important to point out of course, that this study progress’s to 52 weeks if patients remaining blinded. So, the measures we share at top line data will be group mean, so that we respect and keep the blinds as for the patient population. Similarly from the safety perspective, I think this is also very important for us to be able to be transparent, report what we’ve seen from a top line perspective without jeopardizing the blind with respect to a fundamental findings. What I can tell you is that I think it’s important, at least today for me to tell you as we now have the study enrolled, that we continue to be confident. This is study in which a medical monitoring is done on a daily basis as is typical for all clinical development and we continue to see support for executing the study as planned.

[Jay Olson:]

Okay, great. Thank you. And then just I wanted to follow-up on some comments you made earlier with regards to what you’re doing with thought leaders on additional studies, to pursue for development of Seladelpar and potentially broadening the population in PBC. Would you consider a first line study in PBC?

[Sujal Shah:]

Well, I think maybe I’ll start off and perhaps Pol can add some color here as well. Fundamentally in PBC the target is second line treatment, UDCA, the generic treatment alternative largely well tolerated for patients, a number of patients that are in fact adequate responders to UDCA. And so really the key unmet need in the population of course, for those that remain at risk of disease progression, there we start to think a little bit about patients that are technically responders to UDCA. So experience in AP drop that brings them below 1.67 times upper limit of normal, but nevertheless remain elevated above the upper limit of normal. And I think one potential alternative for seladelpar, it continues to be an efficacious, well-tolerated and safe treatment alternative through development is the potential to expand into this patient population that we believe continues that would – that benefit from a further reduction in AP, benefit from further anti-inflammatory measures from treatment alternative as well as even on some of the preclinical symptoms of the disease. So we think there are opportunities to expand the population even outside of thinking about the frontline therapy treatment alternative.

[Jay Olson:]

Great. Thanks for taking the question.

[Sujal Shah:]

Thank you, Jay.

[Operator:]

The next question comes from the line of Ellie Merle with Cantor Fitzgerald. Please proceed with your question.

[Ellie Merle:]

Hey guys, thanks so much for taking my question. First just in terms of, I guess, mechanistically on NASH and clinical trial endpoints. I guess, what’s your take on whether NASH resolution will be easier or harder to achieve clinically in F2 and F3 patients relative to – in F1 patient? I guess, first just generally for NASH agents, but also specifically in the context of PPAR delta, I guess, is there anything mechanistic that might drive greater activity in F3 and F2 patients versus F1?

[Chuck McWherter:]

Yes. Thank you for the question, Ellie. This is Chuck. I think that what we saw is that other sponsors has taken the cut at looking at fat reduction is a function of different degrees of that stage and haven’t really seen any differences in response. Maybe somewhat simplistically I think about steatosis or fat internal to hepatocyte, liver injury, matrix is the extracellular. I don’t necessarily feel like those two things have a strong connection. If we drive fatty acid oxidation, which is basically pushing fat out of lipid droplets into mitochondria, burning it, oxidizing it and breaking it down. I’m not sure that that would be different depending upon the extracellular matrix environment. So actually anticipate – so the goal there is actually really to reduce not just fat but ugly fat or bad fat. It’s driving continuing – tissue injury which is causing inflammation and driving the fibrogenesis. So I feel like across F stage NASH resolution should be fairly neutral, is at least a baseline assumption. Having said that, we all recognize that risk to progression at least for liver complications, liver adverse event is strongly linked to F stage. And so NASH resolution, fat reduction and the study even have more advanced disease where you’re looking to ultimately resolve a degree of fibrosis with the potential benefit and long-term on outcomes. That is the study where we would have a key interest. And I think that thought leaders are focused there at least as far as the liver is concerned, payers are likely to going to have a focus there. And so that’s really the aspect in terms of liver that’s of course – in terms of cardiovascular risk lipids in general, decreasing them across the board irrespective of stage, could have a potential PB benefit there as well. So that again would be in large measure, I think independent of that stage.

[Ellie Merle:]

Got it. That’s very helpful. Thanks. And then just a quick question on PBC enrollment for the Phase 3, I think you mentioned 150 trial sites. I guess, if you could characterize, I guess, what proportion of the trial sites are already up and running versus the ones that need to still got to setup. Thanks.

[Chuck McWherter:]

Yes. Sure, Ellie. We don’t typically comment on mid-stage enrollment as well as how things continue to progress with respect to specific number of sites. I can tell you, we initiated the study at the end of last year over 150 sites as you pointed out in over 20 countries across four continents. We’ve held all of our key investigator meetings across these different regions. And this site continue to come on board, and we continue to be very pleased with how things are progressing. These are challenged largely because it’s an orphan and rare disease and therefore we have what we believe to be a very robust global effort. And ultimately our most powerful tools, we think not only about site initiation, but ultimately with respect to enrollment and completing enrollment are the strength of the Phase 2 data set that has been featured in key medical meetings across really all of the thought leaders globally in the space and in the field in PBC. The support both from the FDA and the EMA with respective breakthrough and PRIME. Now these are the tools that we’re able to leverage once these sites are opened to truly drive patients into our studies, and continue to be very pleased with how things are progressing today

[Ellie Merle:]

Got it. Thanks.

[Chuck McWherter:]

Thank you.

[Operator:]

The next question comes from the line of Steven Seedhouse, Raymond James. Please proceed with your question.

[Steven Seedhouse:]

Hi, good afternoon. Thank you. I have one clarification question regarding the protocol for reading biopsies in your Phase 2 NASH study. Our baseline and post treatment biopsies for each patient paired and read together by the same pathologist? Or are all the biopsies scrambled together, and then i.e. you not paired? Maybe if you could just describe that protocol? And are there any other ongoing or previous Phase 2 studies that use the similar protocol as the one you’re using?

[Pol Boudes:]

Maybe I can – its Pol – maybe I can take that. We haven’t actually communicated on the details of the way we’re reading the biopsy. But suffice it to say that we will use the best possible technology to run the biopsy. I can remind you also that, we are using actually two pathologies that are extremely well known in the field of liver pathology. And for us we think it’s key criteria for having quality reading of the biopsy. NASH biopsies are not so easy to read actually. And I think we communicated on call. And actually one of our radar is I recon that’s done, who is, I would say the inventor of the NASH scoring system. So we feel very confident that we have a very robust technology they own. So, far everything looks very good.

[Steven Seedhouse:]

Okay. And just on the enrollment of these NASH trials – I mean, most of these trials are enrolling more or less overlapping patient populations. You’re obviously, able to enroll your NASH study ahead of scheduled, I’m just curious, is that more of a function of getting access to the right centers, in the right trial lists? Or patients actually educated about different mechanisms and playing a role in choosing which trial’s enrolling?

[Pol Boudes:]

I think it’s a combination of factor. The one you’re mentioning, it’s certainly a very important one. I think also when you grow into the kind of recruitment campaigns you want to really study what has been done before, what worked well and what didn’t work with us well. So I think we’re also working with, somebody like Stephen Harrison was really an amazing investigators were extremely well organized and as a very efficient network of investigators. So I think also that’s possible for success. And the last thing also is to be able to channel patients that are really the right patient that you want to answer in the study. And that’s also, there is a way to do that. Then I think again based on prior example is very proficient in this kind of a clinical trial.

[Steven Seedhouse:]

Great. Thank you.

[Operator:]

The next question comes from the line of Ed Arce with H.C. Wainwright. Please proceed with your question.

[Ed Arce:]

Hey Sujal, Chuck, Pol how are you? Thanks for taking my questions. And I’ll add my congrats on the breakthrough therapy designation. That’s a big one. So couple questions had already been asked. But I just wanted to drill little bit further on your upcoming read out in the Phase 2 NASH study next quarter. So there here for me. First, if you could just discuss the considerations around the powering of that study in particular relative to key readouts like the 30% threshold on PDFF? Second is on the novel secondary endpoints that you’ve mentioned a few times. If you could just go over how those may support more complete understanding of the compound in NASH? And then the final question is, given this is a dose ranging study of obviously, the 10 milligrams, 20 milligrams and 520 milligrams, if you could just review how you decided on these three doses. I know we discussed this before, but just to go over that and especially, in terms of the prior data that you’ve seen. Thanks a lot.

[Chuck McWherter:]

Ed, it’s Chuck. I’m going to start off with the dose selection and the dose ranging. Just to remind you that in PDC, we’ve explored a very wide range of doses. And in particular, had settled on 10 milligrams in PBC, it’s having a very attractive treatment effect in particular, called attention to the degree of alpha and phosphatase reductions, which we know from a prior work or linked with bile acid depression, the 10 milligrams with reduction is not only our cost but also a strong reductions in transaminase is which is a shared feature to two diseases, really helped effect kind of the low end to the range for study. At the top end we wanted to have a very wide range because if you really want to be able to select the dose if you decide to go forward, that's where many times in drug development folks trip themselves up. So at the top end, we had prior done a study in mixed dyslipidemia, the 120 subjects were treated for 8 weeks on 50 or 100 milligrams, these are subjects who are obese, have high LDL trig, have a lot of metabolic syndrome. And in that study, just to remind you, we saw a nearly 40% reduction in triglyceride, at almost 30% reductions in LDL cholesterol. And the treatment effects that were comparable between 50 and 100 milligrams. So 50 milligrams really seems like the -- it kind of the top end of the range to see an effect, the population that is, albeit, it's not NASH, it certainly share some of the features, the potential to see the risk reduction. These are patients that one could think because of their body type are quite likely have a lot of fatty liver disease and the fact that the drug is safe and well tolerated, we didn't see a transaminase, signal 50 milligrams really kind of was at the top end and then 20 milligrams is that added just as kind of a log to increase over time to fill out the range.

[Pol Boudes:]

I think the other question was about the power of this study. So we've powered the study on the MRI-PDFF. As a reminder, the outcome is the relative change in fat fraction. And the study is actually very well powered because we have more than 80% power for difference of 20% and actually in this calculation, we also included the expected drop out rate so that's a power that's taking to account the potential drop out.

[Sujal Shah:]

I'm sorry, Ed, did we leave out any portion of your question? Was it on other additional biomarkers and measures in the study?

[Ed Arce:]

The sort of some of the novel secondary endpoints that you've mentioned already, previously. I just wanted to get maybe a little more details around how you're thinking of and there's a quite of number of them, but how are you ultimately once you've got the full 52-week data, how that will sort of fill out the entire package and help you decide on the Phase 3 design?

[Sujal Shah:]

Yes, that’s a great question. So maybe I’ll take the first half, and Pol can fill in it with an additional thoughts on it. You’re right, we have not only MRI-PDFF, we have MRI elastography. In addition will have liver mutli parametric methodology for perspective where we can look at corrective key line, which is essentially a reflective of edema which is linked to inflammation in the liver, inflammation in NASH. And then we’ll have a number of biomarkers that have commonly been used in this stage process, we’ll have bile acids before. In totality a lot of different measures that ultimately is, I think you recognize the histology which is what matters. But what we’re building is really an knowledge base, not only to help us make decisions. So for example, we make the theoretically differences and different doses in different parameters you know and fibrosis may have, you would look for efficacy and effective one dose on say, marker fibrosis may be somewhat different and something you see for inflammation maybe somewhat couldn’t align a little differently that you see in fat. And you put those all together. That’s what we understand with respect to kind of broad mechanism of seladelpar it may help us to understand. Do we want just one dose for Phase 3, I mean that’s the dataset and then they support that decision. Or do you want, you want to have to or you want to have a focus more on fibrosis or do you want to make sure that NASH resolution has covered. So all of this really built data package that could help to plan for Phase 3 as well as think about some of the characteristics of subsets, the patients – the baseline patients, who have the higher degree of fibrosis markers versus those that have lower or have higher bile acid responses versus those that have lower. So, it’s a little, not just a little, but highly speculative at this point, but as a scientist, I’m really excited about the rich data set and to think through alternative scenarios and hypotheses. So, I don’t know exactly how it’ll turn out, but I know that we’re very intrigued it would be quite committed to really taking a kind of a scientific view of the totality of the data set that we get to help make some decisions around trade-offs that we might be facing.

[Pol Boudes:]

Yes. Yes, it seems very interesting given that you’re such a highly specific PPAR delta, the data should mechanistically be very eliminating.

[Ed Arce:]

Exactly. Thanks

[Pol Boudes:]

Thank you so much.

[Operator:]

The next question is from the line of Mayank Mamtani from B. Riley FBR. Please state your question.

[Mayank Mamtani:]

Hi everyone. Thanks for taking my question and congrats on all the progress. My questions are generally follow-ups to points already discussed. On PBC first, the breakthrough designation, like you pointed out, very strong Phase 2 data, the unmet need, but we’re just curious how much of a role did the different mechanism that seladelpar has relative to bile acid analog play in that – in the consideration with the review with the FDA. And then in PBC also, I think you talked about a lot in the new indications or new potential markets that you could go. And could you also maybe talk about maybe combinations as you are aware many other mechanisms are also being pursued in Phase 2 studies. And then I have a NASH follow-up. Thanks so much.

[Sujal Shah:]

Sure. Thanks for the question. So with respect to breakthrough, the determination is not so much mechanism-specific as it is evident to see the potential for a substantial improvement in overall profile and overall benefit. So, I think fundamentally, the agency as we’ve seen in our Phase 2 development concurred that the robust nature of the alkaline phosphatase drop the proportion of patients not only experiencing decreases below 1.6, 1.7 times upper limit of normal, but also into the normal range was quite significant and differentiated from Ocaliva. So, it was more with respect to the actual treatment effects than anything determine with respect to just being a different mechanism. I’ll highlight that seladelpar is really the only compound that has breakthrough designation as well as prime for PBC today.

[Mayank Mamtani:]

Great.

[Sujal Shah:]

Maybe, what I’ll do is, I think your other – and your other question was I think addressing how we think about combinations and I think there in particular, in the setting of NASH, while we’re very focused on completing this Phase 2b study and understanding the overall profile of seladelpar, which is long since discussed, we believe could be a potential foundational treatment alternative given its impacts on the metabolic elements as well as the inflammatory and fibrotic nature of the disease. We – I think in Chuck’s group, we have been thinking a bit more about combinations with seladelpar, particularly in that setting. And maybe, I’ll turn it over to Chuck to talk a little bit about some of that work.

[Chuck McWherter:]

Yes. So we’ve been – our kind of our focus has been trying to understand the scientific rationale, where mechanism could either enhance or reinforce actions against various features of the disease or it might fill in a gap. So, we’ve been focusing recently on selecting lead molecule, lead therapies that have either metabolic, anti-inflammatory or anti-fibrotic activities and have been studying those in obese mouse models of NASH or you can look at characteristics of various biochemical features both in the liver and in plasma as well as NASH pathology and fibrosis. And we presented some of these, for example, at The Liver Meeting, we had a presentation at NASH-TAG and at the Keystone meeting and we should have – we will have an additional presentation coming up at EASL, where we look at these agents both alone for benchmarking and in combination. In that context, I think that we’ve had some really interesting observations. For example, in a study that we did, looking at liraglutide, a GLP-1 receptor agonist, which also has some human NASH data has some effect on NASH Pathology, comparing that mechanism and looking at it in combination, we found that those two really work well together, both in terms of the effect on weight loss, fat reduction, NASH Pathology. But interestingly, there were the liraglutide in this mouse model had very minimal effect on fibrosis, seladelpar was able to add to all of the components and then fill in the gap if you will, added anti-fibrogenesis component into the mix. So, as one begins to think about combination therapy, I think that’s a strong rationale, let’s say combinations with marketed drug that has the potential to be redirected to NASH, where you can have some additive aspect, but at the same time, add something that’s not available with the other agent. We’ve continued to do that. That’s some of the presentations that you’ll see at EASL and we continue even to the state to look at compounds that are in late stage development as well as marketed drugs that has a potential to be either metabolic anti-inflammatory or anti-fibrotic or some combination of those two.

[Mayank Mamtani:]

Great, great. That’s super helpful. Thank you. And then on NASH and also thinking about this sites, is there any overlap in the PBC and again, different patient populations, but is there any overlap that you see in the NASH and the PBC sites? And specifically for NASH, are there international studies also part of the program? Maybe I missed that maybe, you had mentioned at this floor, there’s generally the baseline, there have been different placebo responses in the U.S. versus international. So, just thinking through how to think about the placebo response there.

[Pol Boudes:]

So, I can take the first part of the question. So, there is some overlap between PBC study and NASH study, it’s not that big overlap actually. People tend to be more specialized into lab resigned to NASH study. So that there is a little bit of an overlap.

[Chuck McWherter:]

I think the placebo response question I guess, of course, the main question there’s been entire conferences or at least major portions of conferences trying to address that issue, KOL sponsors and regulators are keenly aware of that and you – the podium presentation showing a range of placebo responses. I think in our case, the practicality is that we selected U.S. sites only in our study, this is really, a syndicate of sites that have a lot of experience in NASH and are able to leverage really very, I think thoughtful and effective strategy to be efficient, to enroll the kind of population that you would like to have in phase 3. And then coming to your question around placebo response, I think that – and our favor is just the very high proportion of subjects with a high NASH, our mean was 5.2, a high degree of inflammation. So, baseline is 61 and 46 in ALT and AST respectively. And I think importantly, the proportion of patients with F2 and F3 baseline fibrosis. And the latter in particular, I think gives some reassurance around, let’s put it this way, less likely to see a placebo effect. It’s a little bit easier to imagine and I think there’s some data that’s a little bit easier for an F-1 to kind of move back and forth between F-1 and F-0, whereas having more advanced fibrosis is not something that would necessarily be subject to the vagaries of leader to a leader difference or the time variation theoretically could be less so than the earlier stage fibrosis. So I think in terms of the practicality of a study of this size and speed of which and the quality that is vital to us. I think we’ve done just about every reasonable measure we can to try to minimize any potential placebo effect.

[Mayank Mamtani:]

Sounds great. Thank you guys. Appreciate it.

[Pol Boudes:]

Thank you.

[Operator:]

The next question is from the line of Patrick Dolezal with LifeSci. Please go ahead with your question.

[Patrick Dolezal:]

Hi, just one for me. Can you just speak to the potential of seladelpar in diabetic versus non-diabetic NASH patients and provide guidance on whether you plan to analyze data from these populations separately?

[Sujal Shah:]

Yes, of course. The overall top-line results, we’ll look at the entirety of the population and at this particular aspect, I’m a little uncomfortable speculating or handicapping what we might see, but we certainly would examine various subsets of population with respect to the baseline parameters. importantly, I think, because diabetes is a risk factor that’s known to be associated with higher risk of progression of NASH, we did stratify for diabetes as a baseline component. And I think also because it’s such an important co-morbidity and some drugs that I alluded to earlier that may they have a place ultimately in the treatment of NASH are in fact registered as anti-diabetic medications. I think that examining that makes a lot of sense. So, having about half of our patients to be diabetic in a study of this size at least will give us some insights to think about are there any differences in say, a sensitivity analysis and more serious parameters including the potential for effects on glycemic parameters that’s certainly something that would – of course, we’d expect us to take a look at what that ends up happening to be. Patrick, I really – I’m really not sure. Does that shape our strategy for phase 3, does that push us one way or another in terms of a potential ultimate type of population we would target if we’re ultimately successful that’s early to say. but as you would expect, we always take the position that we should be informed by the data that we’ve at least made sure that we can collect the data.

[Patrick Dolezal:]

Great. Thank you.

[Pol Boudes:]

Thank you, Patrick.

[Operator:]

Thank you. At this time, I will turn the floor back to management for closing remarks.

[Sujal Shah:]

Well, thank you all once again, for joining us today. We are extremely passionate here at the company about the work that we have an opportunity to do with patients, their caregivers, really world renowned thought leaders in the space. But we continue to remain focused on our core objective to bring seladelpar to patient. in PBC, we firmly believe that we have an opportunity to substantially improve treatment for patients. We’re certainly hardened to see that with the granting of the breakthrough designation as well as previously prime that both the FDA and EMA see this potential for seladelpar as well. And in NASH, we are excited to be quickly approaching a data set that we believe as the potential to support the positioning of seladelpar truly as a foundational treatment alternative for patients with this disease and particularly, given seladelpar’s unique mechanism of action, we fundamentally believe there isn’t a more compelling compound being studied today. We look forward to providing updates on these programs and plans to expand the development of seladelpar in the coming year. Thank you.

[Operator:]

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.