CymaBay Therapeutics, Inc.
Q2 2016 Earnings Call Transcript

Published: 10 Aug 2016

[Operator:]

Good day, ladies and gentleman, and welcome to the CymaBay Second Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open your call for questions. Please be advised that the call will be recorded at the Company’s request. It’s also being webcast live on the Investors section of CymaBay website at www.cymabay.com. At this time, I would like to turn the call over to Mr. Sujal Shah, Chief Financial Officer at CymaBay. Mr. Shah, please proceed.

[Sujal Shah:]

Thank you, operator, and good afternoon, everyone. Welcome to the CymaBay financial and operating results conference call for the second quarter of 2016. Earlier today we issued a press release announcing our second quarter 2016 financial results and you can access that release on our website under the Investors tab. Leading the call today, is Hal Van Wart, President and CEO of CymaBay, who will provide an operational update covering our clinical program. I will return to review the Company’s financial results and pass the call back over to Hal for a summary of our upcoming milestones and then we’ll open up the call for Q&A. Before we begin, I would like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay’s expected future performance, future business prospects or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasts due to the impact of many factors beyond the control of CymaBay. CymaBay expressly disclaims any duty to provide update to its forward-looking statements whether as a result of new information, future events, or otherwise. Participants are directed for the risk factors 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 a property of CymaBay and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. With that, let me turn the call over to Hal.

[Hal Van Wart:]

Thank you, Sujal. Good afternoon, everyone, and thank you for joining us on today’s call during which I will provide an update on our three clinical programs. We have two late stage drug candidates in development. MBX-8025 or PPAR delta agonist, which has potential therapeutic applications in several rare diseases and arhalofenate a potential Urate-Lowering Anti-Flare Therapy or ULAFP in development for gout. Our current resources are predominately focused on advancing 8025 while we look to finalize a partnership for Arhalofenate. So my primary focus today will be on 8025 an important data announced this quarter from a Phase II study we conducted in patients with Primary Biliary Cholangitis or PBC. On May 31, we reported topline results from a Phase II proof-of-concept study in this indication. Primary Biliary Cholangitis is an autoimmune disease at a liver. It’s characterized by a condition known as cholestasis or impairment of bile flow as well as total inflammation together leading to destruction of the bile ducts within the liver. This causes toxic substances to build up leading the tissue destruction, irreversible scarring and potentially progressing to hepatic failure which transplantation is the only available treatment option. Clinical symptoms of PBC includes fatigue and pruritus or itching both of which can be quite debilitating. PBC is a accompanied by elevations in biochemical marker with cholestasis including Alkaline Phosphatase, ALP, Gamma Glutamyl Transferase, GGT, and Bilirubin. The study we recently completed those are placebo controlled, dose ranging study originally designed to enroll approximately 75 patients with PBC who are inadequate responders to first line therapy ursodiol. We compared two doses of 8025, 50 milligrams and 200 milligram with placebo and the intended duration was 12 weeks with once daily dosing. The primary endpoint was the percent reduction in alkaline phosphatase. What became apparent to us very early in this study even though we were blinded to whether or not patients who are on placebo with study drug that many patients were experiencing very robust reduction in a number of secondary cholestatic markers that were monitored as part of the ongoing safety assessment including GGT and bilirubin. As the study progressed, we observed three cases of asymptomatic transaminase elevation, two of these were in the 200 mg cohorts and one in the 50 mg. All three cases were reversible upon cessation of treatment and were not accompanied by an elevation in bilirubin. These elevations were unaccepted as no transaminase had been seen in prior Phase II studies in over a 100 patient with either mixed dyslipidemia or homozygous familial hypercholesterolemia who had been treated with 8025 or with a same dose range for up to 12 weeks. Given the reductions we were observing and multiple secondary endpoints of cholestasis and the transaminase not observed, we made the decision to voluntarily discontinue the study at that point and focus on getting back into the clinic to study lower doses of 8025 in patients with PBC. After the study was unblended, the changes in the primary endpoint of alkaline phosphatase were analyzed using data available for the 26 subjects enrolled in this study and completing at least two weeks of treatment. The mean decreases from placebo in alkaline phosphatase for the 50 mg and 200 mg dose groups were 57% and 62% respectively versus 0.37% for placebo. The difference between active and placebo groups was highly statistically significant with the p-value being less than 0.0001 for both treatment groups. The secondary endpoint was the responder rate for patients achieving the composite criteria of serum alkaline phosphatase value less than 1.67 times the upper limit of normal with a decrease of at least 15% and normal levels of total bilirubin. Based on these criteria, the responder rate for the placebo 50 mg and 200 mg groups were 10%, 67% and 100% respectively. The p-values comparing the responder rates for the 50 mg and 200 mg groups versus placebo was 0.02 and 0.0004 respectively using the Fisher’s Exact Test. 8025 treatment also produced decreases in three other biochemical markers of cholestasis, GGT, total bilirubin and 5’-nucleotidase. In addition there were decreases in LDL cholesterol and high sensitivity CRP are marker of systemic inflammation. Thus 8025 exhibited the rapid and potent anti-cholestatic effect in subjects with PBC. Importantly along with this striking decrease in al phos there was no evidence that the treatment with 8025 was associated with pruritus. Recent data from a pre-clinical study demonstrated that MBX-8025 is predominantly metabolized by the liver and excreted into bile, because PBC patients have impaired bile flow, as a characteristic of their condition. They may have had a higher hepatic drug exposure, which could explain the transaminase signal that was not seen in another patient populations with normal hepatic function. The next step in developing 8025 for PBC will be to explore a lower range of doses. The [indiscernible] essentially no dose response between 50 milligrams and 200 milligrams. We believe that lower doses have the potential to show similar activity. We are targeting the initiation of a second Phase II study by the end of this year. As we think about the positioning of 8025 in the marketplace, we know that first line treatment for PBC for many years has been ursodiol. Unfortunately up to 40% of patients did not respond adequately to ursodiol and there is a clear need for second line therapy. Recently Intercept Pharmaceuticals obtained accelerated approval for obeticholic acid or OCA as second line therapy for the treatment of PBC and patients who do not adequately respond to ursodiol, and also as monotherapy for those adults unable to tolerate ursodiol. OCA is a bile acid analog and FXR agonist. And their Phase III studies Intercept used the composite surrogate endpoint of reductions in alkaline phosphatase and normalization of bilirubin as the endpoint. The FDA agreed that this was an acceptable surrogate for accelerated approval. Based on what we know about its mechanism of action as PPAR delta agonist as well as the data generated in our clinical studies, we believe that 8025 has the potential to offer an improvement of existing therapies for PBC patients and specifically that it has the potential to be a more effective second line therapy than OCA. We note that in Phase III studies for OCA in subjects who are inadequate responders to ursodiol less than half were converted to responders. So there is clearly some room for improvement on the efficacy plan. And we also note that 8025 is not appeared to reduce pruritus and result in an improvement in overall lipid profile in patient, whereas OCA can cause or exacerbate pruritus in some patients. We plan on providing more details on the proposed design of our next Phase II study as we get closer to starting it later this year. Shifting gears to our other critical candidates, arhalofenate is the Phase III ready highly differentiated drug candidate for the treatment of gout. It has the potential to become the first in a new class of gout treatment that we refer to as Urate-Lowering Anti-Flare Therapy or ULAFP. In clinical studies completed to date, including five Phase II studies arhalofenate demonstrated the ability to gout lower serum uric acid and reduce gout flares. This dual mechanism of action is potentially very valuable because the ability to achieve the additional uric acid lowering and better flare control with a single agent would address the two biggest unmet needs in the almost 2 million gout patients that are inadequately treated today with currently available therapies. Clinical data from the most recent study we completed, a Phase IIb study in 239 gout patients were published recently in the journal Arthritis and Rheumatology. The paper work accompanied by an editorial describing the need for novel agents such as arhalofenate for the treatment of gout. In January 2016, we completed our end of phase II discussions on arhalofenate with the FDA. Discussions with potential partners have advanced since our first quarter update and we continue to move toward our goal of finding one or more partnerships that would allow arhalofenate to advance in the Phase III, while we are awarding the Company for the value created and its development. I would now like to hand the call back to Sujal Shah to go over the financials.

[Sujal Shah:]

Thank you, Hal. In today’s press release, we reported cash, cash equivalents and short-term investments at June 30, 2016, of $29.1 million. Based on our current operating plans, we continue to believe our existing cash is sufficient to fund operations through at least the end of the second quarter 2017. Research and development expense for the three and six months ended June 30, 2016 were $4.1 million and $8.6 million respectively. This compared to R&D expense of $4.3 million and $8.4 million for the three and six months ended June 30, 2015 respectively. Research and development expense in the first half of 2016 were in line with prior year period as Phase II clinical development activity shifted from arhalofenate to MBX-8025. General and administrative expense for the three and six months ended June 30, 2016 were $2.2 million and $4.7 million respectively compared to $2.3 million and $4.9 million for the three and six months ended June 30, 2015. G&A expense in the first half of 2016 were in line with prior year period as headcount remains largely unchanged. Net loss for the three and six months ended June 30, 2016 was $7 million and $13.8 million respectively, compared to $1.4 million and $3.7 million for the three and six months ended June 30, 2015. The changes in net loss were primarily due to decreases in non-cash gains of $5.7 million and $9.9 million for the three and six months ended June 30, 2016 as compared to the prior year period from the mark-to-market valuation of the Company’s warrant liability. Hal?

[Hal Van Wart:]

Thanks, Sujal. Now we’d be happy to take your questions and I’ll turn the call over to the operator.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from the line of Sa’ar Yaniv with Roth. Please proceed with your question.

[Sa’ar Yaniv:]

Hi, guys thank you so much for taking my question. I appreciate it. I wanted to ask if two questions regarding 8025. I wanted to know if you could possibly give us an update on the potential study in combination with PCSK9 inhibitor that you have talked about in the past, where is that in the potential design. And then if you have any thoughts about the second designed for the 8025 study that you are talking about initiating later this year. If you can give us any kind of thoughts regarding the design of that study?

[Hal Van Wart:]

Sure, Sa’ar. This is Hal. I’m glad to answer both questions. Let me start with the second one first. So well first of all very pleased that the first study has demonstrated very robust proof of concept is basically a saturation of the anti-cholestatic effect at doses between 50 milligrams and 200 milligrams. So very clearly our goal in the next study is go down to a lower range to figure out where we can maximize the benefit of the effect and while showing that the transaminase signal goes away the way it has been absent in new other patient population that we’ve studied in prior clinical studies. Now that precise dose range that we are looking in whether or not this is going to become length of the study and whether or not its going be open or close label, we are still debating details of that, we have had some contact with the FDA was agreed to review our proposal and give us feedback on it. They’ve been very, very constructive. And I think probably within the next month or two we’ll be able to deliver further details on that. Now because we’re so excited about – the really quite robust and dramatic size of the efficacy signal for PBC, we believe the key value driver for the Company in a short run is going to be the PBC study and so that’s been our primary focus. Having said that, we still believe that we would like to test the hypothesis that the combination of 8025 with the PCSK9 inhibitor which were damp down on the increase in PCSK9 levels that the drug exhibited in our earlier clinical study would be a very interesting hypothesis to test. But that would require that we find a site that has six or eight patients that are already on a PCSK9 inhibitor most likely [indiscernible] and hopefully patients that are not on apheresis. And that’s been a little slow and we’re still evaluating the possibilities for doing that and that’s clearly our second priority as we move forward.

[Sa’ar Yaniv:]

Okay. Thank you so much. When you talked about the design of the PBC study, are you looking at type saving 8025?

[Hal Van Wart:]

Yes. There will be arms with multiple doses for sure whether or not they’ll be up titrated or running parallel, those are things that we’re still debating and we want to get some feedbacks from regulatory agencies as to whether or not gives an advantage from their perspective of one versus another. And we think we can get that feedback in a reasonably timely manner that would enable us to start the study before the end of the year. Good question.

[Sa’ar Yaniv:]

Okay, great. Thank you so much, Hal.

[Sujal Shah:]

And Sa’ar just to pick up on some of the comments Hal had with respect to how we think about the next potential study, clearly picking up on some of his comments around the fact that we see very clear activity from the patients in this study that was discontinued early give us encouragement on studying doses lower than even 50 milligrams. When we think a little bit about the conduct of the study, the goal is to start it before the end of the fourth quarter and again pending final conversations with the FDA. We do believe that we can conduct a study in a very timely and capital efficient manner where we get an opportunity to analyze the effects of MBX-8025 on patients that lower doses as the study progresses. So again, we will give a clear indication of how data would be released once we have the final design of that study through the discussions with the agency, but we do believe that there is a potential opportunity for us to analyze this as we progress.

[Sa’ar Yaniv:]

Perfect. Thank you so much.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of David Bouchey with IFS Securities. Please proceed with your question.

[David Bouchey:]

Hi, guys. Thanks for taking my question. Can you give us any kind of a flavor for how much you think Phase II and PBC will cost? In other words how time and calculus – do you think this will be?

[Sujal Shah:]

Yes. I’m happy to answer that question. Thanks David. We’ve talked about having sufficient cap to fund our operations through at least the end of the second quarter of 2017. If you look at our historical burn when we’ve been actively in development whether it’s been with our arhalofenate or 8025 in Phase II proof-of-concept studies over the past year. Our burn is typically been in the $5 million to $6 million range. We certainly believe that the next study can be conducted in a capital efficient manner as we proceeded with 8025 development in the past. So when we think a little bit about our overall runway, again pending the final design and outcome of discussions with the agency around completing this next dose ranging Phase II study, we do continue to believe that we can enter the clinic in the fourth quarter this year and continue to have sufficient funds again through at least the end of the second quarter of next year. The 75 patients study that had been discontinued early I think as mentioned in past calls was the study that was going to cost the company in and around the range of $8 million to $10 million total if it had been completed as designed, so there is some savings from that study certainly. We also believe that this next study being contemplated given the activity that we’ve seen in a very small number of patients through this discontinued study in a short period of time. We believe we can design the study and again in time efficient and capital efficient manner that would have a price tag certainly under the intended price tag of the full 75 patients study that we had started last year.

[David Bouchey:]

Okay. Thank you. One last question. In your view of the marketplace for PBC and where would you consider yourself in terms of – are you the closest behind Intercept, are you the second closest behind the Intercept to getting the market in your view?

[Hal Van Wart:]

Yes. Those are always a little difficult questions to answer because it would require us to project ahead to how future studies would go, but I think in terms of having established robust proof-of-concept I think that we were very close behind Intercept and now it’s going to be a matter of how rapidly we can figure out what are those right doses are to bring into Phase III. So that’s our challenge. I’m personally very confident. I feel that we have all the right characteristics were - for the next drug which will be an alternative to OCA. And I think if we’re not second behind them I think we’re very, very close.

[David Bouchey:]

Great. Thank you very much.

[Sujal Shah:]

Thank you, David. End of Q&A

[Operator:]

Thank you. That’s all the time we have allotted for today’s call. I’ll now hand the call back to Hal Van Wart for closing comments.

[Hal Van Wart:]

Yes. I just wanted to thank everybody for joining us today. I hope you have a sense of the excitement that we have based on the very nice and very positive findings from our earlier PBC study in the fact that we have a very clear path forward for refining the further clinical studies and further doses. So we promise to stay in touch and we’ll update you on our progress as our plan solidify. Thank you very much everybody.

[Operator:]

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