CymaBay Therapeutics, Inc.
Q3 2016 Earnings Call Transcript

Published: 10 Nov 2016

[Operator:]

Good day, ladies and gentleman, and welcome to the CymaBay Third 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 third quarter of 2016. Earlier today we issued a press release announcing our third 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 then pass the call back over to Hal for a summary of our upcoming milestones before opening the call up 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 the call today. I'm pleased to report that the third quarter was marked by a number of positive developments in our clinical program, but before I provide detailed update on these programs, I would first like to address all corporate strategy and explain where we are currently focusing our resources with the goal of improving outcomes for patient and maximizing shareholder value. Our intention at CymaBay is to a focus our internal development effort on indications with high unmet medical need, including rare and orphan diseases, particularly those affecting the weather. Our simultaneous goal is to ensure that our legacy clinical programs are placed in the hands development partners with domain and infrastructure to ensure that they are brought to the market successfully and made available for patient who are inadequately treated with current standard of care. This transition, which has been evolving over the past two years, has begun to accelerate in 2016. This is evidenced by the recent progress we have made, which includes first, achievement of clinical proof of concept and prime status for MBX 8025 for the treatment of PBC, second the acquisition of impressive new preclinical data for 8025 showing its potential [ph] utility in NASH and last, the expansion of our patent portfolio in both PBC and NASH. CymaBay will have multiple presentations at the annual meeting on the American Association for the study of liver disease, AASLD next week in Boston. These important milestones are key element in the evolution of the CymaBay. Now with that, let me begin with update on MBX 8025, our potent and selective people adult agonist, which has potential utility for the treatment of both lipid and liver disorders. The indication that persist along in development is primary biliary cholangitis or PBC. This is an inflammatory autoimmune disease of the liver primarily affecting women over the age of 40. It's characterized by inflammation in the immune mediated destruction of about bile ducts within the liver, causing caustic substances to build up leading to irreversible scarring and potentially progressing to hepatic failure for which transplantation is the only available treatment. Clinical symptoms of PBC includes fatigue and pruritus or itching which can be quite severe in some patients. PBC was characterized by elevations in biochemical markers of cholestasis, including alkaline phosphatase and bilirubin Earlier this year we reported data from a phase 2 study demonstrating proof of concept PBC by showing that treatment with 8025 produced marked reduction in the primary endpoint of alkaline phosphatase. This was a placebo-controlled, dose ranging study designed to enroll 75 subjects with PBC who are inadequate responders to ursodiol and had a treatment period of 12 weeks. It compared once daily dosing of either 50 or 200 milligrams of 8025 placebo. We decided to voluntarily discontinue the study as we also identified in treatment emergent signal of transaminase elevation and three subjects. These elevations were asymptomatic fully reversible upon cessation of treatment and were not accompanied by an elevation of bilirubin. The data that we reported earlier were for the 26 subjects who had completed at least two weeks of treatment at the time the study was discontinued. We have recently completed a final analysis that includes data from the termination visit of an additional 12 subjects. I am pleased to say were able to confirm a robust efficacy in the magnitude of effect size. All 23 subjects who received 8025 in this study experienced a rapid and substantial decrease in alkaline phosphatase level. The primary endpoint of the study. Based on the last observation carried forward the main decrease is from baseline in alpine phosphatase for the 50 and 200 milligram dose groups were 53% and 63% respectively versus 2% for placebo. The differences between active and placebo groups were highly statistically significant. The secondary endpoint was the percentage of patients achieving alpine phosphatase levels that were below 1.67 times the upper limit of normal, an endpoint use the registration in the phase 3 study for Ocaliva from intercept. Within two weeks of dosing all 23 subjects who received either dose of 8025 had out sized [ph] levels that were below this target. Another secondary endpoint was the percentage of subjects that achieve normalization of their out sized level, that is valued below the upper limit of normal. In the last observation carry forward analysis 8 of 9 line subjects receiving 8025 for eight weeks achieved normalization of alkaline phosphatase versus one on placebo. After 12 weeks of treatment 5 of 5 subjects receiving 8025 achieve normalization versus zero of 4 on placebo. These data indicate that MBX 8025 is a very potent anti-cholestatic agent. With the potential to actually set a new standard for efficacy in PBC. MBX 8025 treatment also produced decreases in three other bio chemical markers of cholestasis, namely Gamma Glutamyl Transferase, total bilirubin and 5 prim nucleotidase, marked production in two markers of bile acid synthesis and alpha hydroxy cholesterol and other intermediate refer to this before but also observed collectively the changes in biochemical parameters the point of view that 8025 is reversing the cholestasis PBC patient. Last I like to highlight that it was no indication of any drug-induced gliders during the study, which is a potential key differentiating feature from Alkaline. We are pleased to report that the data from this study will be highlighted as a late breaking oral presentation at the upcoming AASLD meeting on November 15 in Boston. The presentation will be given by Dr. Dave Jones of the institute of cellular medicine at Newcastle University in the UK. As you will seen from our recent press release, we have shared the efficacy and safety data from this trial in a meeting with the FDA and have now completed the design of the next clinical study. The FDA agreed with the company's proposal for the design of a second dose ranging study that will investigate lower doses in subjects with PBC in order to optimize the response. No transaminase signal at seen earlier at the same doses of 8025 in other patient population that had normal hepatic function, recently acquired preclinical data indicate that 8025 is predominantly metabolized by the liver and excreted into bile, because PBC patients have impaired bile flow is a characteristic of their condition they may have had higher hepatic drug level. Thus the strategy of exploring the lower dose range is very sensible. Because there was no dose response between 50 and 200 milligram, we believe that lower doses have the potential to show a similar anti-cholestatic activity. The goal of the phase 2 study to identify the dose is used in phase 3 and second, to gather additional safety data to support registration. The study will be open label and involve PBC subjects you have not had an inadequate response to ursodiol will not tolerate ursodiol, subjects will receive either five or 10 mg doses of 8025 for international a week. This will be by 18 with the extension phase is to those can be escalated after you safety of the initial eight weeks of treatment five and 10 mg on receiving 25 mg of MBX 8025 may be initiated. This cohort will have the same initial the treatment. Followed by the 18 extension phase. The primary efficacy outcome is reduction in our compositing pharmacokinetic data also be collected in the subgroups of patient cohort for more detailed the trial design the schematic is in our current slide presentation posted on the news even section of our website. We are on track to initiate this study before the end of the year. Another important development for this program was the announcement in October that the EMA has granted priority medicine or prime designation for the treatment of patients with PBC who do tolerate not always correspond PCA or not respond to the combination of BCA and Obeticholic acid treatment. Prain is the equivalent of the FDA's breakthrough designation., we see designation is very meaningful for us because in case that you may recognize and 8025 at the potential breakthrough therapy for the treatment of PBC will also increase our opportunity for interaction and dialogue with the DNA and will allow us to optimize the development program potentially accelerating patient access to 8025, we've also been exploring the potential utility of 8025 in the treatment of Nash in collaboration with just foul from the liver research group at the Australian national University, we've been able to demonstrate that MBX 8025 versus NASH pathology nearly completely blocked liver fibrosis in an animal model of Nash. The data will be presented in an oral presentation at next week AASLD meeting on November 14, we will – as a potential development opportunity for 8025, our strategy is in the fallfrom clinical development and regulatory perspective and position ourselves to the program forward at the appropriate time] our electric position around all PBC – with the recent issuance of two new US patents covering the use of 8025 for the treatment of each of the now like to change gears and talk that will open a our dual acting drug candidate for the treatment of gout. Arhalofenate has the potential to become the first new class of gout treatment that you referred to as urate lowering anti-flare therapy or UL ASC studies completed to date including five phase II study. Arhalofenate demonstrated the ability to lower serum uric acid and reduce gout players. This dual mechanism of action with a single agent is potentially valuable because it would address the two biggest unmet need the almost 2 million gout patients that are inadequately treated with currently available therapies for the additional uric acid lowering to be able to get them to go and second better flare control clinical data from the most recent study we completed phase IIb study in 239 patient were published earlier this year. The Journal arthritis and rheumatology. The paper was accompanied by an editorial describing the need for novel agents such as our love and eight treatment of gout. As I mentioned previously the program is faithfully ready. We have agreement on the phase 3 program with the FDA is the disease that is treated to a large extent by primary care physician makes sense for us to partner with someone has the resources to address this market and who will fund the phase 3 program discussions with potential partners continue to progress. Our goal remains to complete one or more partnerships in this program that will enable phase 3 studies to commence in 2017. With that, I'd like to hand the call back to Sujal to go over the financials.

[Sujal Shah:]

Thank you, Hal. In today's press release, we reported cash, cash equivalents and short-term investment at September 30, 2015 of $23.1 million. Based on our current operating plan we continue to believe our cash is sufficient to fund operations through at least the second quarter of 2017. Research and development expense for the three and nine months ended September 30, 2016 was $3.5 million and $12.1 million respectively. This compared to R&D expense of $4.5 million and $13 million for the three and nine months ended September 30, 2015, respectively. Research and development expense in the first nine months of 2016 were modestly lower than the prior year, as phase 2 clinical development activity shifted from arhalofenate to MBX 8025. General and administrative expense for the three and nine months ended September 30, 2016 was $2.1 million and $6.8 million respectively, compared to $2.2 million and $7.1 million for the three and nine months ended September 30, 2015, respectively. G&A expense in the first nine months of 2016 were in line with prior year, as headcount remains largely unchanged. Net loss for the three and nine months ended September 30, 2016, were $5.9 million and $19.7 million respectively, compared to $5.9 million and $9.6 million for the three and nine months ended September 30, 2015. The increase in net loss for the nine months ended September 30, 2016 as compared to the prior year. Was largely due to a decrease in non-cash gain of $10.9 million from the mark to market valuation of the company's warrant liability. Hal?

[Hal Van Wart:]

Thank you, Sujal. I like to close by highlighting some upcoming events and milestones that we believe will be significant catalyst for our activity periods in CymaBay. With RO presentation next week the AASLD meeting in Boston, we believe we have the opportunity to significantly raise awareness in the industry of our advancement with 8025 in both PBC and NASH. Following the liver meeting will be hosting a key opinion [indiscernible] New York at 8 AM on November 16 with two prominent clinical investigators. Dr. Gideon Hirschfield and Dr. David Jones, which will also be webcast live will highlight the potential for 8025 to offer patients with PBC a significant advancement in treatment alternatives over existing therapies. As approach the end of 2016, we will focus on monetizing the value of our alternate to out licensing activity and initiating patient enrollment in our next phase II study of 8025 and PBC. We're excited about the opportunity we have in front of us with these catalyst prior to the end of the year and into 2017. Thank you for joining us today. I'd now like to turn the call over to the operator for Q&A.

[Operator:]

Thank you, Sir. [Operator Instructions] The first question today comes from Ed Arce with H.C. Wainwright & Co. Please go ahead.

[Ed Arce:]

Hi, guys, Thanks for taking my questions and congrats on the progress to the quarter, including the two oral presentations next weekend. So I have a few questions on your upcoming phase 2 trial in PBC. You had mentioned the 5 milligram and 10 milligram doses for the initial 8 week treatment period. I was wondering if you could tell us how many patients you intend to enroll, and why did you choose to do this open label?

[Hal Van Wart:]

Yes, thanks. Good question Ed. This is Hal here. So we're targeting approximately a dozen patients per dose, per dose group and with regard to the decision to have at the open label we thought that was appropriate for this study for the following reason. First of all the efficacy endpoint is the biochemical parameter, very hard parameter and the dose limiting toxicity that were trying to manage away from is liver function task. So there seem to be no reason to have a placebo group. Keep in mind also that this is a rare disease and orphan disease and we didn't want a so-called waste patients by putting them on placebo. Third, we've already included a placebo group in our earlier study and establish that there were no changes in the out [ph] and other secondary endpoint. So for those three reasons they decide open label would be the most appropriate way to do this.

[Ed Arce:]

Okay. All right, good. Next question is, as you think about the results of that around what time frame would you expect to have a read out and also what percent reduction in all costs are you looking for, what do you believe is really clinically meaningful?

[Hal Van Wart:]

Okay. So if on the enrollment of progresses as we have the planned it, we believe that data for the five intended cohorts will be available in mid-2017, possibly early third quarter and we would likely disclose the result of that time. What was your second question?

[Ed Arce:]

Just around the primary end point, the out cost reduction. What are you looking for and how is that compare to?

[Hal Van Wart:]

Okay. Well, we have to date, seeing reductions in our cost [ph] and other patient population that did not have PBC in the range of 40% and we believe that although the - it’s a little bit hard to compare across patient population that certainly on the high-end of what it's seen with other agent. So I think that if we could establish something in that 40% range on top of ursodiol, which is the predominant patient population that we'd looking at, but that would be a very favorable outcome.

[Ed Arce:]

Okay. Great. One last question if I may, we talked about the mechanisms here several times the 8025 and you mentioned again that’s been metabolized in the liver and then excreted primarily through the bile and that’s central to why you believe lowering doses could be potentially beneficial here. I am just wondering if you could tell me given that this – if you are aware that’s PK characteristic is the same with [indiscernible]?

[Hal Van Wart:]

So from what's covered – how are you doing that, so its published for Relistor in a couple of papers that they looked at hepatic recirculation, so according to what they told us this is what they are describing and beyond that, I really couldn't provide any comment that other than what they published on the mechanism of the disposition.

[Sujal Shah:]

And I think importantly Ed, we don't know of course that Halliburton [ph] has been studied in PDP patient today of course they now plan to start a study at some point, but specifically PK in this population is not something that were aware of, right.

[Ed Arce:]

Okay. Fair enough. Thanks again for taking the questions.

[Hal Van Wart:]

You're welcome.

[Operator:]

This concludes the question-and-answer session. I would now like to turn the conference back over Mr. Shah for any closing remarks.

[Sujal Shah:]

Thank you, operator. Of course, I'd like to thank everyone for joining this call. We've had a lot going on here over the past couple of months as can be witnessed by the numerous press releases and advancements in PBC. This morning we were also granted orphan drug designation by the FDA, for MBX 8025 and CBC. We're excited about the upcoming AASLD conference and excited about continuing to keep you updated on our progress. Thank you.

[Operator:]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.