CymaBay Therapeutics, Inc.
Q3 2015 Earnings Call Transcript

Published: 13 Nov 2015

[Operator:]

Good day. Ladies and gentleman and welcome to the CymaBay's Third Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we'll open the call for your questions. Please be advised that the call 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. Mr. Shah, please proceed.

[Sujal Shah:]

Thank you, Operator, and good afternoon, everyone. Welcome to the CymaBay's financial and operating results conference call for the third quarter of 2015. Earlier today we issued a press release announcing our third 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 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 will 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. 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 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. During our third quarter, I'm pleased to report that we continued to make significant progress in our clinical programs. Today, I'll begin with an update on MBX-8025, our potent, selective, PPAR delta agonist, which we are developing for the orphan indication of homozygous familial hypercholesterolemia, HoFH and primary biliary cholangitis, PBC. HoFH is an ultra-orphan genetic disorder caused primarily by loss-of-function mutations in the low density lipoprotein receptor gene. With the result, that patient's are unable to clear their LDL cholesterol, leading to severe hypercholesterolemia. HoFH patients develop atherosclerosis very early in life, which increases the risk of serious or failed cardiovascular events, including stroke, myocardial infarction, and aortic valve dysfunction. Currently approved therapies such as statins and PCSK9 inhibitors are only effective in patients with residual LDL receptor activity, while newer therapies have limitations due to tolerability or safety. CymaBay has developed an 8025 as a more broadly applicable treatment for the reduction of LDL cholesterol in patients with HoFH. 8025 is currently being investigated in an ongoing open label dose escalation Phase 2 study in patients with HoFH. The patients are initially receiving a 50 milligram dose of 8025, once daily for the first month that has increased first to 100 milligrams and eventually to 200 milligrams in successive months. Recruitment is always a challenge in an ultra-orphan disease and we're very pleased with the level of interest in this study among both patients and investigators. We originally opened clinical sites in three countries in Europe where he had indentified eight patients, who indicated the interest in participating in this study. These sites are all currently operational and all eight patients have now been enrolled. During the third quarter, we added two additional sites in Canada that involved an additional five patients. Thus, we have no expanded the study the 13 patients from our initial goal of eight. Given the expansion in size of the study, we now project top-line data release to be in the first quarter of 2016. MBX-8025 is also being studied in primary biliary cholangitis or PBC. This was previously called primary biliary cirrhosis and is an orphan autoimmune disease of liver that primarily affects women over the age of 40. The condition is characterized by inflammation and the immune-mediated destruction in bile ducts within the liver leading to cholestasis. This causes harmful substances to build up in the liver leading to irreversible scarring and potentially progressing to cirrhosis and hepatic failure. The only approved drug for PBC is ursodiol. However about 20% of patients do not adequately respond to ursodiol and there is a need for newer therapies. I'm pleased to report that last week; we initiated a placebo-controlled dose ranging Phase 2 study for MBX-8025 in PBC. In this study, patients who have had an inadequate response to ursodiol will be enrolled and randomized to receive either placebo or MBX-8025 either at a 50 mg or 200 mg dose for a duration of 12 weeks. The primary endpoint will be the change in alkaline phosphatase, a parameter that has been used in prior clinical studies with PBC in which is believed to reflect the status of the disease. A variety of secondary outcomes will also be studied. We expect to enroll approximately 75 patients in the U.S., UK, Canada, Germany, and Poland. We expect this study to be completed around the fourth quarter of 2016. Now let me turn to Arhalofenate, our oral, once daily, dual-acting drug candidate for the treatment of gout. Arhalofenate could be the first entry into a new class of gout therapy that we refer to as Urate Lowering Anti-Flare Therapy. We've demonstrated in an extensive Phase 2 clinical program that Arhalofenate has two clinically significant actions. First, it reduces serum uric acid, while we administrate it along or in combination with the xanthine oxidase inhibitor febuxostat. Arhalofenate lowest serum uric acid to a uric historic effect, and importantly, has not shown evidence of renal toxicity in studies in more than 1,100 patient's to-date. Second, arhalofenate decreases the incidence of gout flares in the absence of colchicine for flare prophylaxis. The Phase 2 data demonstrating this unique ULAFT profile for arhalofenate was summarized in two presentations given at The American College of Rheumatology Meeting which took place in San Francisco earlier this week. The presentations were very well received by KOLs and physicians that treat gout. Now there are approximately 2 million gout patients in the U.S. who are inadequately served by existing therapies because they either do not reach their serum uric acid goals or they continue to experience gout flares. The combination of arhalofenate and febuxostat could be a potential effective treatment option for these patients by enabling them to reach their serum uric acid targets and reducing the number of flares that they might otherwise experience. In addition, we believe that the combination could improve adherence to treatment by avoiding the ULT induced flare phenomenon and also potentially avoiding the need to take an inset of colchicine for flare prophylaxis. We held an end of Phase 2 meeting with the FDA in September to discuss our plans for the arhalofenate Phase 3 program. This was a productive meeting at which we reached agreement with the agency on key features of the Phase 3 trial design. As arhalofenate is a dual-acting drug an important discussion point was the efficacy endpoint that could be used to capture the dual benefit of serum uric acid lowering an anti-flare activity for the potential indications of the management of hyperuricemia and prophylaxis of flares in gout. We reached agreement on the co-primary endpoint of serum uric acid responder rate and flare rate that would allow the agency to assess efficacy. Further the agency agreed with single-dose definition of a flare and with our proposal together patient reported flare data using the same electronic diary used in our Phase 2 study of gout patients. In addition, it was agreed that a safety database of approximately 650 patients treated for 12 months with arhalofenate would be sufficient, together with the efficacy data to assess the risk benefit profile for arhalofenate. No specific safety concerns about arhalofenate will raise. Based on discussions with Gates Institute today we believe that the total number of patients in the Phase 3 trial would be approximately 1,500. We continue to have discussions with the agency on a number of points regarding clinical trial design and we plan to an issue of press release when final minute from our end of Phase 2 discussion are in hand. Our strategic plan is to secure a commercial partnership with arhalofenate prior to the start of our Phase 3 program. Gout, as you know, is predominately treated by primary care physicians. Therefore, partnering arhalofenate with one or more companies that have a presence in the primary care market is a priority for us. Now, on the financing front, we completed a successful public offering in July, raising net proceeds of approximately $21 million, including the exercise of the Greenshoe by the underwriters. We are thankful for the vote of confidence from the existing and new shareholders who participated in this offering. In August, we refinanced our loan facility with Oxford Finance and Silicon Valley Bank for an aggregate amount of $15 million drawing down the first $10 million tranche at closing. We went through the details on these transactions on the last earnings calls, so I won't spend any further time here but sufficed to say that the company is now well capitalized to at least the end of 2016. Finally, we announced in October, that Dr. Robert J. Wills has been appointed as Chairman of the Board of Directors. Robert has been on our Board since March of this year and brings a wealth of experience to his new role as Chairman. Rob replaces our retiring Chairman Dr. Lou Lange, who had been a Board member since 2003. On behalf of our team and the rest of the Board, I'd like to thank Lou, for his many contributions to the company. I would now 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 investments as of September 30, 2015, of approximately $47 million. As Hal stated based on our current operating plans, we believe our existing cash provides us the resources to fund operations through at least the end of 2016. For the three and nine months ended September 30, 2015, research and development expenses were $4.5 million and $13 million respectively compared to $3.8 million and $10.5 million for the same period in 2014. General and administrative expenses for the three and nine months ended September 30, 2015, were $2.2 million and $7.1 million respectively compared to $1.7 million and $5.9 million for the same period in 2014. The net loss for the third quarter was $5.9 million or $0.27 per diluted share compared to a net loss of approximately $6 million or $0.44 per diluted share in the same period of 2014. The net loss for the nine months period was $9.6 million or $0.58 per diluted share compared to a net loss of approximately $19.2 million or $1.72 per diluted share in the same period in 2014. The decrease in net loss for the nine months period ending September 30, 2015, was due in part to a non-cash gain of $11 million for the nine months ended September 30, 2015, compared to a non-cash loss of $2.3 million for the same period in 2014 from the mark-to-market valuation of the company's warrant liability. I will now turn the call back over to Hal.

[Hal Van Wart:]

Thanks, Sujal. Well let me close by highlighting our recent accomplishments and upcoming milestones. For MBX-8025, we have now expanded and completed recruitment into our ongoing Phase 2 proof-of-concept study in HoFH. With the expanded patient cohort, we project release of top-line data during the first quarter of 2016. Just within the last week, we've initiated a dose ranging placebo controlled study Phase 2 study in PBC which we expect to be completed by the end of 2016. For arhalofenate, we held an end of Phase 2 meeting with the FDA in which we agreed on key elements of the Phase 3 program that we believe, if successful, could enable us to get a label for the treatment of hyperuricemia associated with gout and gout flare prophylaxis. We are in active discussions with potential development partners with the goal of securing the right partner for development and commercialization would advance the drug into Phase 3 in 2016. Now we would be happy to take your questions and I will turn the call over to the operator.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions]. Our first question today is coming from Ted Tenthoff from Piper Jaffray. Please proceed with your questions.

[Ted Tenthoff:]

Great. Thank you very much for taking the question and thanks for the update. Two quick questions one is first on arhalofenate, based on the feedback from the FDA that certainly looks encouraging. Has this been something that from a business development standpoint, you've now been taking potential partners to discuss? And then, secondly what does the addition of five patients in the HoFH study do for your overall confidence and power. I know it's not really a placebo controlled study, but what are those additional patients feel excited on?

[Sujal Shah:]

Yes, thanks for the question, Ted. Let me address the first part of it relative to arhalofenate and our partnership process and I'll turn it to Hal to talk a little bit more about the HoFH study. So our discussions with potential parties has been ongoing since the conclusion of the Phase 2 clinical studies. We've got parties doing work at various stages, most at this point in fact under CDA. So certainly with folks that are under confidentiality it's been a very fluid process in which dialogue has been ongoing relative to the regulatory discussions as well. We do have some new parties that we're continuing to engage with. Just to give you a little bit of broader color on our partnership process, we did engage Locust Walk Partners which is a specialty advisory firm with very deep experience and relationship in the industry, they not help us with the coordination and execution of the partnership process, but ultimately to expand our outreach, as we look for parties interested in arhalofenate globally. So certainly as the regulatory discussions in fact are ongoing on some of the trial design types of consideration that dialogue with potential partners continues. I think it's certainly a reasonable assumption that any conclusions of the partnership process is going to also go in tide with the conclusion of those regulatory discussions. But certainly we think a little bit about moving arhalofenate and are confident we can move arhalofenate forward into Phase 3 in 2016 and that remains our goal with respect to concluding any sort of partnership with one or more parties.

[Hal Van Wart:]

Yes, Ted this is Hal. I will take the question on the HoFH study. So the major goal of this study which is a pilot study is to try to assess what the effect size is in terms of LDL lowering. We see whether or not this is a mechanism that's really going to help patients with HoFH. And we know that we're looking for something like 15% to 20% drop which KOLs have informed us would be clinical meaningful for these patients. And by the way that 20% drop in baseline is about what was observed for Locust and that advisory committee voted unanimously that that was a clinically meaningful effect. So while our goal is to see whether or not we're there in effect size in that ballpark. Now having 13 patients to measure that against versus eight is actually enormously helpful just because of the inherent noise in these measurements and it increases our confidence and ability that whatever the effect size is, its representative of a broader population. So we were enormously pleased when some of these investigators in Canada offered five additional patients for us to head into this study. And we would any day trade 13 patients worth of data couple of months later than eight patients worth of data because we think it will enable the company to make a better decision.

[Ted Tenthoff:]

Looking forward to data and potential partnership for arhalofenate.

[Operator:]

Thank you. Our next question today is coming from Mara Goldstein from Cantor Fitzgerald. Please proceed with your question.

[Mara Goldstein:]

Hello, thanks very much for taking the question. I have two and the first is related to arhalofenate and I’m just curious more than anything around some of the takeaways from the Lesinurad FDA Adcom meeting and how that informs anything for potential partnership in terms of what partners may have had notions about before them and about basically not in the end of Phase 2 meeting. And then, I just wanted to ask on MBX-8025. On the secondary endpoint, I know you just said how that the additional five patients could be meaningful in terms of looking at the primary endpoint. And I’m curious as to how proportional effects might be on some of those secondary endpoints basically as it relates to positive indicators of cholesterol and if you might be able to comment on that?

[Hal Van Wart:]

Sure. Well let me take the first question, first. We listened with great interest into the Lesinurad Arthritis Advisory Committee meeting that was held a week or two ago and we would of course prefer not to comment on Lesinurad itself but there were a tremendous number of things that were very important for us to hear and learn about. First of all, we were very clear from the discussion at the committee that both the committee members as well as the FDA are looking for a safe effective urate drug to be used in combination with XL inhibitors. And it's also clear that both the committee and the FDA were looking for clinical benefits such as flare reduction, focus resolution in addition to improvement in the surrogate markers serum uric acid. Now that made us all feel very good because this almost matches identically arhalofenate profile where we're able to get patients not only to the uric acid goal but do it in a way that reduces their flare way which is very clinically meaningful. And we do it so far with 1,100 patients of beta with no signal with regard to renal safety. So we came away feeling pretty good that we are synchronized with the medical community with regards to the unmet needs in gout and that arhalofenate truly has something to offer. Now we think of course that will play through very well to the pharma companies that may have well listened into that presentation or can access the documents and confirm to themselves that the advisory committee probably would have liked arhalofenate. Turning to your second question on 8025, yes, our primary endpoint is LDL cholesterol. However we are measuring a wide vanity of secondary endpoints all the liquids, SLD, triglycerides, whole host of other secondary parameters. That together with the reduction in LDL might also put then potential benefit for our patients with HoFH which are potentially dying of vascular sclerosis which may be contributed by a number of risk factors related to specific parameters.

[Operator:]

Thank you. [Operator Instructions]. If there are no furthers at this time, let's turn the floor over back to management for any further or closing comments.

[Hal Van Wart:]

No, I think at this point in time we like to thank everybody for listening into our presentation. I hope that you see the same amount of progress we had seen in these two programs and we look forward to our next earnings call in about three months from now. 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.