CymaBay Therapeutics, Inc.
Q2 2015 Earnings Call Transcript

Published: 11 Aug 2015

[Operator:]

Greetings, and welcome to the CymaBay Therapeutics Second Quarter 2015 Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sujal Shah, CFO of CymaBay Therapeutics. Please go ahead.

[Sujal Shah:]

Thank you, operator, and good afternoon, everyone. Welcome to CymaBay's financial and operating results conference call for the second quarter of 2015. Earlier today we issued a press release announcing our second quarter 2015 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 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 proceed to 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. 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 statements 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 thank you for joining us on the call today. I’m pleased to report that we’ve made significant progress during the second quarter, including clinical and regulatory advances with both of our lead clinical programs as well as the strengthening of our financial position with completion of our recent public offering of common stock. We continue to pursue the same strategy that we have consistently articulated on the earlier calls. As we enter 2015 with a three-point plan for arhalofenate. First, to complete our Phase 2 development program. Second, to design and gain support from the FDA for Phase 3 program with a differentiated product profile and last, attract the partner to help advance arhalofenate through registration study. Our plan for MBX-8025 is to advance it into one or more proof of concept studies in orphan, lipid and liver diseases indications. I will begin today by sharing with you our progress on these programs before closing with review of upcoming milestones for the second half of the year. Let me begin with arhalofenate, our oral once-daily drug candidate for gout which we believe is a potential game-changer for patients because it simultaneously addresses few significant unmet needs, the need for better uric acid lowering and better flare control. Most patients with gout retain uric acid in their body because they are not able to eliminate it efficiently through the kidney. Arhalofenate is a uricosuric drug that blocks the reabsorption of uric acid in the kidney and restores uric acid secretion to normal thereby lowering serum uric acid. Arhalofenate provides additional uric acid lowering on top of what patients achieve with inhibitors of the production of uric acid namely allopurinol or febuxostat. In addition, and what makes arhalofenate special, it also inhibits the production of the key trigger for gout flares IL-1 beta and thus has an anti-flare activity. Given this dual action, we believe arhalofenate defines a new class of gout drug that we refer to as Urate Lowering Anti-Flare Therapy, or ULAFT. Now in June, we presented the data from our Phase 2 study of arhalofenate in combination with febuxostat at the European Congress of Rheumatology, EULAR in Rome. The study showed that the combination provided significant serum uric acid lowering that enabled many more patients to need pre-specified serum uric acid target than febuxostat along. These data, which were well received by attending clinicians and KOLs, support the serum uric acid lowering part of the ULAFT label. The anti-flare part of the label is supported by our recent Phase 2b study, in which we showed that arhalofenate produces a reduction in flare rate of 46% versus allopurinol, highly statistically significant p value 0056, when used with colchicine. Thus arhalofenate is the only gout therapy that has been shown today to both lower serum uric acid and gout flares. Based on the results obtained in our Phase 2 program, we are positioning a drug as combination therapy with febuxostat, targeting the approximately 2 million gout sufferers in the US were currently on uric acid lowering therapy, but have not been able to reach their serum uric acid goals. These patients will not only be better able to achieve their uric acid goals, but will also experience less painful flares. The Phase 3 program we will be discussing with health authorities is designed to get a label for the treatment of hyperuricemia and the management of flares in patients with gout. We envision the program to include three Phase 3 studies, two in patients with chronic gout combining arhalofenate with 40 mg dose of febuxostat and the third study in patients with tophaceous gout combining arhalofenate with a higher marketed dose of febuxostat of 80 milligrams. In the last study, we would also imagine the reduction in tophi size. If we are successful, we believe arhalofenate would be uniquely differentiated from all uric acid lowering therapies available to patients today. We have scheduled an end of Phase 2 meeting with the FDA for later this quarter to discuss this plan. Now, gout is primarily treated by primary care physicians who write the great majority of prescriptions. Therefore, partnering arhalofenate with one or more companies that have a sales force that market a primary care product is a priority for us before initiating Phase 3 development. We are in active discussions with potential partners and plan to advance these discussions, while simultaneously planning for and conducting our end of Phase 2 meeting for arhalofenate. Last on the arhalofenate front, we have been granted issuance of two new and important patent. The first is for the use of arhalofenate to treat both hyperuricemia and flares in gout patient, including the prevention of flares while lowering serum uric acid. The second patent covers the use of arhalofenate for treating hyperuricemia when used in combination with febuxostat. These patents provide protection for the precise indications and combination use that we are going to forward with. They also extend the protection for arhalofenate out to at least 2032. So in a nutshell, arhalofenate is an unincumbent, highly differentiated and highly dersik clinical asset in a large and growing market with significant patent life, so you can see why we are still excited about this program. Now, let me turn attention to our second clinical asset MBX-8025. By way of background, 8025 is a potent, selective, PPAR delta agonist that we are developing for orphan lipid and liver diseases. The two indications in active development include homozygous familial hypercholesterolemia or HoFH and primary biliary cirrhosis or PBC, and I would like to provide brief updates on each of these programs. HoFH is a rare life-threatening orphan disease characterized by loss-of-function mutations in both copies of the LDL receptor gene. Patients with HoFH have severe hypercholesterolemia because they are unable to clear their LDL cholesterol. As a result, they develop markedly premature cardiovascular disease usually in the first decades of life and are prone to myocardial infarction, ischemic stroke and premature death. Despite some new advances in this area, current therapies are generally unable to bring these patients to their LDL-cholesterol goal of less than 70 mgs per deciliter and there continues to be an urgent need for a therapy that will safely lower LDL-cholesterol in these patients. In a previous clinical study in patients with mixed dyslipidemia, MBX-8025 showed an LDL-cholesterol lowering activity and one that was particularly robust in patients with high baseline level, typical of HoFH. We subsequently evaluated arhalofenate in an animal model of HoFH and showed that it produced substantial lowering of LDL-cholesterol. Based on these observation, the FDA granted us an orphan drug designation for our MBX-8025 or HoFH indication earlier this year. Now, in April, we initiated an open label dose escalation Phase 2 study of MBX-8025, targeting enrollment in eight to ten patients with HoFH in Europe and Canada. Patients in this study will start on a 15-mg dose of 8025 once-daily for the first month. That will be increased initially to 100-mg and then to 200-mg in each successive month. We’ve already identified all of the patients and enrollment is progressing very well. We expect to announce topline data by year-end. Now, today, I will like to announce that we are moving ahead with the Phase 2 proof-of-concept study of MBX-8025 in primary biliary cirrhosis (NYSE

[Sujal Shah:]

Thanks, Hal. In today’s press release, we reported cash, cash equivalents and short term investments of $27 million as of June 30, 2015. As Hal mentioned, on July 27th, we completed a public offering of 8,188,000 shares of common stock at $2.81 per share adding a net of approximately $21.3 million of cash to our balance sheet. In addition on August 7th, we refinanced our loan facility with Oxford Finance and Silicon Valley Bank for an aggregate amount of $15 million. The first $10 million tranche was drawn at closing with a portion of the proceeds used to retire debt outstanding under the previous loan facility. Based on our current operating plan, we believe our existing cash provides us with sufficient resources to fund operations through at least the end of 2016. Research and development expenses for the three and six months ended June 30, 2015 were $4.3 million and $8.4 million respectively compared to $4.1 million and $6.7 million for the same period in 2014. General and administrative expenses for the three and six months ended June 30, 2015 were $2.3 million and $4.9 million respectively compared to $1.7 million and $4.2 million for the same period in 2014. Net loss for the three and six months ended June 30th, 2015 were $1.4 million and $3.7 million respectively compared to $3.2 million and $13.2 million for the same period in 2014. The decreases in net loss over the prior year’s period were due in large part to non-cash gains of $5.3 million and $9.9 million for the three and six months ended June 30, 2015, attributable to the mark-to-market valuation of the company’s outstanding warrant liability. Hal?

[Hal Van Wart:]

Thanks, Sujal. Well, let me close by recapping our recent accomplishments. For arhalofenate, we’ve now completed a robust Phase 2 program in which we’ve demonstrated a unique dual acting profile enabling us to characterize arhalofenate as the first ULAFT drug for the treatment of gout. We designed a Phase 3 program that we believe, if successful, will enable us to get a label for the treatment of hyperuricemia and management of gout flares. We have an end-of-Phase 2 meeting scheduled with the FDA in the third quarter to discuss this program. In parallel, we’re talking of potential development partners with the goal of securing the right partner for development and commercialization Regarding MBX-8025, recruitment in to our ongoing proof-of-concept study in HoFH is going very well and we’re committed to releasing that data during the fourth quarter of this year. We also plan to start a Phase 2 study in PBC in the fourth quarter of this year with the preliminary goal of releasing headline data in late 2016. We’re confident that we’re well positioned to deliver on our clinical goals, increasing shareholder value as we go. With that, I’d like to open up the call for your questions. Operator?

[Operator:]

Thank you. We’ll now be conducting a question-and-answer session. In addition to Hal and Sujal, the management team will be joined by Chuck McWherter, Chief Scientific Officer and Pol Boudes, Chief Medical Officer. [Operator Instructions] Our first question today is coming from Phil Nadeau from Cowen and Company. Please proceed with your question.

[Phil Nadeau:]

Good afternoon. Thanks for taking my question and congratulations on the progress. Just the first question is, at your end of Phase 2 meeting for arhalofenate, what areas of uncertainty do you expect to discuss, it sounds like you’re pretty far down the road of designing the trial. So could you give us some sense of what you think will be important to get the FDA’s input at?

[Hal Van Wart:]

Yeah. Thanks, Phil. This is Hal. Well, I think the one benefit that we have going in to talk to them about our program is that we can build on the recent Phase 3 program as we completed for Lesinurad, which is reasonably similar in its mechanism of action for uric acid lowering because it is also uricosuric drug and we’re envisioning a Phase 3 program very similar to that, so we don’t expect there to be a lot of differences. The main place that it is different is that we will have a second end point in addition to looking at serum uric acid responder rate; we’re going to be looking at reductions in flare rate. So we’ll want to understand how we can set those co-primary endpoints and evaluate them. I’d say that’s our principle strategy.

[Phil Nadeau:]

And then second is on 8025, you call it going forward with PBC, can you give us some sense of why refractory hypertriglyceridemia wasn’t chosen, I know you talked about the benefits of PBC but was there anything in hypertriglyceridemia that you felt was unattractive.

[Hal Van Wart:]

No, I wouldn’t, I think we’re still very interested in severe hypertriglyceridemia. I would say that we got a greater sense of enthusiasm and support from KOLs when we talked to them about our PBC data and I think we narrowly prioritized PBC a little bit higher. The thing about hypertriglyceridemia is that it’s more of a prevention of pancreatitis indication and I thought that since the end points for PBC study looked like they’re rapidly clarifying right now, we just narrowly prioritized that a little bit higher.

[Phil Nadeau:]

Okay that’s fair enough. And then last question from me is just on the partnership negotiations or discussions. We get the sense that partners are waiting for the results for the end of Phase 2 meeting before formally signing on, is that a gating factor to partnerships or is that not necessary to completing discussions.

[Pol Boudes:]

Yeah, Phil, so I’ll certainly say that of course it’s an important diligent consideration. I think as Hal mentioned, after completing the clinical studies in our last two Phase 2 studies, we really set out to initiate and advance partnership discussions in parallel to frankly our preparation for the end of Phase 2 meetings. So we’ve got a well-established process in place, in fact, I think it’s worth noting that while all situations are unique, the team here at CymaBay has in fact been involved in forging multiple strategic partnerships in the past and I can tell you we feel very good about the process that’s underway now. So the discussion themselves in fact are ongoing and progressing well, we’ve already gotten some feedback around the Phase 3 study design as we approach the end of the Phase 2 meetings. So I think certainly it’s an important diligent consideration and it will ultimately really serve as primarily the key catalyst for us in driving the process forward.

[Phil Nadeau:]

Great, thanks for taking my questions and congratulations again on progress.

[Hal Van Wart:]

Yeah, thanks Phil.

[Operator:]

Thank you. [Operator Instructions] We have reached the end of our question-and-answer session; I’d like to turn the floor back over to management for any further closing comments.

[Hal Van Wart:]

Yes, thank you very much everybody for attending our call today, we’re very pleased with our progress and we look forward to our third quarter update, where we should have even more information about how our programs are going. Thank you very much everybody.

[Operator:]

Thank you that does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.