CymaBay Therapeutics, Inc.
Q1 2015 Earnings Call Transcript

Published: 9 May 2015

[Operator:]

Good day, ladies and gentlemen and welcome to the CymaBay First Quarter 2015 Financial Results Conference Call. At this time, all participants are in a 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 of the 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. Sujal, please proceed.

[Sujal Shah:]

Thank you, operator and good afternoon everyone. Welcome to CymaBay's first quarter 2015 financial and operating results conference call. This afternoon, we issued a press release announcing our first quarter 2015 financial results. The release is available on our website under the Investors tab. Joining me on the call today is Hal Van Wart, President and CEO of CymaBay, who will provide an operational update covering our clinical programs. 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 will open 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 statement as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. 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 statement whether as a result of new information, future events or otherwise. Participants are directed to 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. 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 thanks for joining us on this call today. We’ve had a very productive start to 2015 for both of our lead programs arhalofenate and MBX-8025. With arhalofenate, we’ve now completed a robust Phase 2 program that has enabled us to establish a highly differentiated product profile for the treatment of Gout. Next we’ll hold an end of Phase 2 meeting with the FDA after which the arhalofenate will be Phase 3 ready. As we previously indicated, we do not intend to move forward into Phase 3 without a partner. With our work on arhalofenate winding down, MBX-8025 is becoming the focus of our clinical resources. Well, let me start with an update on arhalofenate. As a background, the two primary goals of gout therapy are to lower serum uric acid and to prevent flares, the signature feature of gout. Paradoxically, the available urate lowering therapies, most notably allopurinol and febuxostat actually make flares worse for at least the first six months requiring prophylaxis with colchicine, a clearly tolerated drug. Arhalofenate can address both of these unmet needs because it has two activities in the same molecule. First, to lower serum uric acid with a uricosuric action that increases the excretion of uric acid into urine. Second, it blocks the urate crystal induced production of IL-1 data, the trigger for gout flares. This dual mechanism defines what we consider to be a new class of therapy known as ULAFT or Urate Lowering Anti-Flare Therapy, which is differentiated from all other available and emerging treatment for gout. Now, earlier this year, we reported data from two Phase 2 studies that demonstrated the ULAFT product profile. In our febuxostat combination study, striking reductions in serum uric acid were found with the combination of arhalofenate 800 milligrams and febuxostat 40 milligrams enabling 193% of patients to uric acid targets of 6 mg/dL and 5 mg/dL respectively. In a second study that evaluated the anti-flare activity of arhalofenate without colchicine prophylaxis, arhalofenate 800 milligrams demonstrated a highly significant P value 0056, reduction of 46% in gout flares versus allopurinol. Thus the arhalofenate-febuxostat combination could be a very effective second line therapy for the 2 million gout patients in US who failed to achieve a serum uric acid goal on their current uric acid lowering therapy. Not only with this combination allowed patients to reach their uric acid goal, but arhalofenate anti-flare activity will decrease their flare rate making it more likely for them to remain compliant and possibly allowing them to avoid the need of colchicine prophylaxis. We're currently planning an end of Phase 2 meeting with the FDA for the third quarter, which would put this program in a position to move into Phase 3 in the first half of 2016. In parallel, we are actively seeking a strategic partner to assume financial and operational responsibility for the Phase 3 program and commercialization of this exciting product. This will allow us to continue to shift our attention and development resources to MBX-8025. That now brings me to an update on the 8025 program. As you may remember this compound is an oral, once daily potent and selective PPAR delta agonist. MBX-8025 had previously completed a Phase 2 study in patients with mixed dyslipidemia and demonstrated positive effects on lipids including reductions in LDL-cholesterol and also biomarkers of liver health. Our strategy has been to redirect development of 8025 to rare or high unmet need indications for which there is a strong scientific rationale for its potential to become frontline treatment and for which it is feasible to conduct small economical proof of concept studies. We've identified homozygous familial hypercholesterolemia or HoFH as the first new indication. HoFH is a rare life threatening genetic disorder characterized by loss-of-function mutations in the LDL receptor resulting in extremely high-level of LDL-cholesterol. This leads to early cardiovascular disease including MIs and strokes and sometimes fatality. As we’ve announced recently, MBX-8025 decreases LDL-cholesterol levels by about 45% in accepted animal model of HoFH. Indicating that the LDL-cholesterol lowering activity of 8025 is not dependent on having a fully functional LDL receptor and therefore maybe appropriate for the treatment of HoFH. We recently received Orphan Drug Designation from the FDA for using MBX-8025 to treat HoFH. Now despite two recently introduced therapies, Juxtapid and Kynamro, which do provide LDL-cholesterol lowering for HoFH patients, there remains a significant unmet need as both of these drugs have tolerability and safety issues including black box warnings. In April, we initiated a pilot Phase 2 study in patients with HoFH. This open-label dose escalation study will enroll approximately eight patients at sites in Europe and North America. Patients will begin treatment with a 50 milligram dose of 8025 and will then increase the dose first to a 100 milligrams and eventually 200 milligrams over the course of three months. We expect to have data from this study by year end. Now we also continue to explore other opportunities for MBX-8025 in other metabolic disorders. Based on the clinically demonstrated effects of 8025, two potential indications include primary biliary cirrhosis or PBC, and severe refractory hypertriglyceridemia or SHTG. Now PBC is autoimmune disease of the liver characterized by destruction of intrahepatic bile ducts leading to cirrhosis and liver failure. MBX-8025 has been absorbed to improve two markers of biliary health, alkaline phosphatase and gamma-glutamyl transferase in patients with mixed dyslipidemia. This suggest to us that people at delta activation could improve biliary function and possibly slow or averse the pathophysiology of PBC. SHTG is a condition in which patients with Fredrickson types I or V hyperlipoproteinemia have markedly elevated levels of triglycerides, chylomicrons and VLDL in spite of being on maximum conventional therapy. These patients are at risk for acute and chronic pancreatitis. MBX-8025 has been shown to be an effective triglyceride-lowering agent in patients with mixed dyslipidemia and maybe a treatment option for SHTG. In April, the FDA granted Orphan Drug Designation for MBX-8025 for the treatment of types I and V hyperlipoproteinemia. These are two potential new indications still under study and as our plans for them become more firm, we will issue additional guidance. Now on the corporate front, let me end by mentioning that we’ve made two important additions to our leadership team. We're very excited to welcome Dr. Robert Wills [ph] to our Board of Directors, with over 25 years of industry experience at Johnson & Johnson. Rob will be a tremendous value add for CymaBay in crafting our strategy for years to come. We also announced the appointment of Kirk Rosemark to the position of Vice President of Regulatory Affairs and Quality Assurance. With over 20 years of experience in reg affairs, most recently at Exelixis, he will add significantly to our capability in this area. With that, I’ll now turn the call back over to Sujal to review our financials.

[Sujal Shah:]

Thanks, Hal. In today’s press release, we reported cash, cash equivalents and short-term investments of $32.8 million as of March 31, 2015. We believe our existing cash provides us with sufficient resources to fund operations until at least the end of the first quarter of 2016. Research and development expense for the three months ended March 31, 2015 was $4.2 million compared to $2.6 million for the same period in 2014. The increase in R&D expense was primarily related to the increased spending associated with the development of our arhalofenate and MBX-8025. General and administrative expense for the three months ended March 31, 2015 was $2.6 million compared to $2.5 million for the same period in 2014. Net loss for the three months ended March 31, 2015 was $2.3 million. Net loss for the same period in 2014 was $10.1 million. The decrease in net loss was primarily due to a non-cash gain of $4.6 million for the three months ended March 31, 2015 compared to a non-cash loss of $4.8 million for the three months ended March 31, 2014 from the mark-to-market valuation of the Company’s warrant liability. Hal?

[Hal Van Wart:]

Okay. Let me close by highlighting what we aim to achieve in the coming year. With arhalofenate, we are now focused on the end of Phase 2 meeting with the FDA, which we expect to take place in the third quarter and in parallel, identifying a partner for Phase 3 development and commercialization. The primary focus of our development resources is now shifted toward the MBX-8025 program, where we are encouraged to have received orphan drug designations for both HoFH as well as Fredrickson’s types I and V severe hyperlipoproteinemias. Having recently initiated our pilot Phase 2 study in HoFH, we also look forward to sharing clinical data for this indication by the end of the year. So far, 2015 has been a productive year for us and we believe that our progress to-date has us well positioned to execute on our goals in the coming quarters. I’d now like to open up the call for your questions. Operator?

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question comes from Phil Nadeau of Cowan and Company. Please go ahead.

[Phil Nadeau:]

Definitely and thanks for taking my questions. First one on financing. Can -- most of my conversations with investors, financing is a prominent concern. Sujal, you mentioned that you have cash to last through the first quarter of next year. Is there anything you can say about your plans for financing or funding operations be on that?

[Sujal Shah:]

Yeah, sure, Phil. So, you know, we periodically review options with respect to strengthening our balance sheet, of course, including exploring various financing vehicles available to us such as our debt facility as well as more traditional equity financings. As it stands now, we currently are funded through at least the end of the first quarter of 2016 before which we expect to actually announce data from our HoFH study for MBX-8025 as well as have an update regarding a potential partnership to advance our arhalofenate into Phase 3. So, our goal remains to be opportunistic with respect to executing on financing strategy that matches up obviously to our business objectives. In terms of near-term with respect to shifting resources towards MBX-8025, again, we’re comfortable with where we are with respect to achieving these near-term milestones, but of course, our overall plan is to continue to push forward into multiple streams of development for MBX-8025.

[Phil Nadeau:]

Okay. And on the partnership front, in the past, you’ve suggested that partners needed to hear what happened at the end of Phase 2 meeting or at least your initial impression was maybe some partners would want to understand the conclusions of that meeting before signing an agreement. Is that still your expectation? Do you think that end of Phase 2 meeting is a major position [ph] in the partnership discussions or are there people willing to move forward before it?

[Hal Van Wart:]

Well, I think people are willing to move forward to get acquainted with the program to understand it and to do their preliminary diligence but I think you’re quite correct, Phil. What the commercial people in particular will be looking for is what the Phase 3 program is that we’ve negotiated and what end points we have to hit to get the label that we want. Now, because of the fact that we have a dual-acting drug, we actually have the ability to have two primary outcome parameters in our Phase 3 studies and how we craft our studies will enable us to get certain types of labels. The label that we would be aiming for is to get both, serum uric acid lowering and flare reduction in the label. And I think a confirmation that we’ve come to agreement with the agency for our Phase 3 program that would enable that label would be very important for potential partners.

[Phil Nadeau:]

Great. And then one last question for me. On the revenue model of HoFH, how predictive has that been in the past of clinical success? What did Juxtapid do in that model or Kynamro or kind of there may other agents that have been tested there?

[Hal Van Wart:]

Yeah, good question. So that model was used by the scientists at BMS who had wanted to originally develop Juxtapid and there was sound – in that case, the drug worked in our model and was found to be predictive to humans. As far as we are aware Kynamro was never tested in that model. And so I can't comment on that. So I guess you could say it's one for one.

[Phil Nadeau:]

And quantitatively was the reduction similar for Juxtapid between your other models ended up being shown in Phase 3?

[Hal Van Wart:]

Well, that's a more complicated question, because when that Juxtapids efficacy in both animals and humans is tolerability issues, so you are never able to fully dose to the most effective concentration because of those limiting toxicities. And as you know, even in humans the discontinuation rate is really quite high.

[Phil Nadeau:]

Great. Thanks for taking my questions.

[Operator:]

[Operator Instructions] The next question comes from Brian Klein of Stifel. Please go ahead.

[Brian Klein:]

Hi, thanks for taking my question. On arhalofenate just wondering, in an ideal scenario for partnership, do you anticipate being involved in the clinical execution of any late-stage program or do you more likely anticipate that you will just completely out license that product and just receive future royalty?

[Hal Van Wart:]

I think it's going to depend a bit on who the partner is. We believe that we've become very highly adept clinical development in the gout space and we believe that the Phase 3 program that we are going to go forward with, with the tremendous amount of input we saw from KOLs and other experienced industry veterans, will be a very good program. That does not mean that we would have to be involved in this execution, and I think there are some pharma partners who would I think prefer that to be a very active joint development committee in which there would be contributions from both sides. We are relatively agnostic toward it. The main thing that we want us to know that operationally and financially and commercially, we are putting that asset in good hands and we are finding a partner like in -- make the most of the value we created with it.

[Brian Klein:]

Okay, would you anticipate funding that clinical program in part?

[Hal Van Wart:]

No, it's not preference to have somebody assume the total financial responsibility for the program.

[Brian Klein:]

Great. And then just on the MBX-8025, I know that you’re pivoting focus on there. Do you anticipate the first clinical data for that program the initial phase will come in 2016?

[Hal Van Wart:]

No, we are targeting that to late this year. We think the fourth quarter is approximately when we expect it.

[Brian Klein:]

And with also PBC?

[Hal Van Wart:]

PBC, we've not yet made a firm decision to go into that. If we did, it would require that we would have to raise additional money. So we are probably going to make a decision on that in the next quarter. I would say that we are attempting to favor PDC right now over SHTG. But as we continue to evaluate these opportunities, it's always possible that could change.

[Brian Klein:]

Great. Thanks for taking my question.

[Hal Van Wart:]

Thanks, Brian.

[Operator:]

There are no further questions at this time. I would like to turn the floor back over to management for closing remarks.

[Hal Van Wart:]

Okay, I'd just like to thank everybody for your attention and we are very, very proud of the progress we've made in the first quarter and we hope that we can continue to provide these kinds of value driving updates every quarter for the rest of the year. Thank you very much.

[Operator:]

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