CymaBay Therapeutics, Inc.
Q4 2014 Earnings Call Transcript

Published: 19 Mar 2015

[Operator:]

Good day, ladies and gentlemen and welcome to the CymaBay fourth quarter and Full Year 2014 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 of CymaBay. Sujal, please proceed.

[Sujal Shah:]

Thank you, operator and good afternoon everyone. Welcome to CymaBay's fourth quarter and full year 2014 financial and operating results conference call. This afternoon, we issued a press release announcing our fourth quarter and full year 2014 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, who will provide an operational update covering our clinical programs. I will return to review the company’s financial results. I will then pass the call back over to Hal for a summary of our upcoming milestones, and finally 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 risks set forth in today’s press release as well as the risk factors set forth in CymaBay's quarterly and annual report 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.

[Harold Van Wart:]

Thank you, Sujal. Good afternoon, everyone and thanks for joining us on the call. Today I would like to update you on the progress that we have made on our two clinical programs. Let me begin with arhalofenate program. Since our last quarterly call, we have delivered significant new clinical data in this program and are now able to describe what we believe to be an exciting new path forward. Arhalofenate is being developed for the treatment of gout. The two primary goals of gout therapy are the lower serum uric acid and to prevent and retreat flares. With regard to the serum uric acid approximately 60% of gout patients or about 2 million people in the U.S. are unfortunately not able to reach their goal of less than 6 mg/dL on the commonly used uric acid lowering therapies allopurinol or febuxostat. Moreover because these therapies paradoxically make flares worse or at least the first six months, there is significant non-compliance. For the American College of Rheumatology recommendations this IL ULT and this flare problem can be addressed in some patients with colchicine prophylaxis. Colchicine, however, is counter indicated in over 40% of gout patients and is generally not well tolerated with the high non- compliance rate. With regard to flaring, approximately 1 million gout patients experienced little more flares per year in spite of current therapy. Thus there remains a significant unmet medical need in gout patients, first, for more effective serum uric acid lowering; and second, for better flare control. We believe that our lead product candidate arhalofenate can address both of these unmet needs, because it has two activities in the same molecule. Arhalofenate lower serum uric acid by blocking the re-absorption of uric acid in the kidney by the urate transporter URAT-1. This urate in fact increases excretion of uric acid into the urine and thereby lower serum uric acid levels. Arhalofenate also has an inherent anti-inflammatory activity. It blocks the urate crystal induced production of IL-1 data preventing the trigger for gout flares. This dual mechanism differentiates it from all available and emerging treatments for gout and defines what we believe to be a new class of therapy which we refer to as Urate Lowering Anti-Flare Therapy or ULAFT. Since the beginning of this year, we have announced data from the last two of the total of five completed gout studies that provide clinical evidence to support both of these actions. First we have shown that arhalofenate can address the need for additional serum uric acid lowering. In January, we announced results from our Phase 2 study of arhalofenate at six and 800 milligrams administrated in combination with febuxostat at 40 or 80 milligrams in patients with gout. The minimum goal of treatment has reduced serum uric acid levels to below 6 mg/dL. However, for patients with tophaceous gout, there is a need to more quickly eliminate tissue deposits of crystals and a need patient target of below five or even four are desirable. The combination of 40 milligrams of febuxostat with 80 milligrams of arhalofenate produced serum uric acid responder rate of 100% and 93% for the six and 5 mg/dL targets respectively. In combination with the higher 80 mg dose of febuxostat responder rate of 100%, 93% and 79% were achieved for the goals of six, five and 4 mg/dL respectively. These responder rate data show that the arhalofenate/febuxostat combination therapy is striking and effective in getting gout patients to their serum uric acid target goal. The use of combination therapy for patients to confidently achieve treatment goal will be an important component of our development strategy and I will return to that in a moment. A second important result from this study was the demonstration that the serum uric acid lowering contributed by the uricosuric activity of arhalofenate was produced in a safe manner. This is reflected by the observation that the increases in fractional excretion of uric acid produced by arhalofenate are gradual with low intraday variations that do not exceed the normal range, a property that we believe explains arhalofenate's lack of demonstrated renal toxicity. Earlier this month, we announced the results of our Phase 2b flare study that confirmed that arhalofenate has anti-flare activity and can address the unmet need for better flare control. This randomized, double-blind, active and placebo-controlled study was designed to evaluate the efficacy and safety of arhalofenate for reducing gout flares in 239 patients that had experienced three or more flares in the prior year. The study met its primary endpoint of demonstrating a reduction of 46% in flare rate for the arhalofenate 800 mg group compared to allopurinol with the highly statistically significant p value of 0056. Arhalofenate also showed a reduction of 41% of flare rate relative to placebo which was also statistically significant. This is the first study to show that arhalofenate produces reductions in flares without concomitant dosing of colchicine. In serum uric acid lowering observed for arhalofenate in this study was somewhat lower than allopurinol and we do not intend to position arhalofenate to replace allopurinol in responders mainly those patients who can achieve the serum uric acid goal on allopurinol. However, this incremental serum uric acid lowering when combined with at produced febuxostat is enough to get great majority of allopurinol inadequate responders to their serum uric acid goals. I will note that the arhalofenate was well tolerated in both of these studies and the overall safety profile is favorable and continues to be consistent with those earlier studies. Collectively the five Phase 2 studies completed today have enabled us to advance the target profile for arhalofenate. We now believe that the major target population in 2 million gout patients who are inadequate serum uric acid responders on their current uric acid lowering therapy. We believe that we can convert a great majority of them to responders by treatment with the combination arhalofenate 800 milligram and febuxostat for the subset of approximately 1.4 million of these patients with chronic gout and whose serum uric acid goal was less than 6 mg/dL, the ideal combination would be arhalofenate 80 mg with the 400 mg dose of febuxostat. For patients with tophaceous gout that need a more aggressive goal of less than 5 mg/dL, we will combine arhalofenate with the 80 mg dose of febuxostat. We believe that not only would these patients be able to reach their serum uric acid goal, but the Anti-Flare activity of arhalofenate will decrease their flare rate, making them better able to stay on treatment and also possibly allow them to avoid the need for colchicine prophylaxis. Finally, for the approximately 300,000 gout patients that either can't take or tolerate allopurinol, we are contemplating a development of arhalofenate mono therapy as a treatment option to this patient population that has very limited choices. Within these markets the competitive landscape in gout has continued to evolve. AstraZeneca has now completed the Phase 3 program for Lesinurad, the only other uricosuric drug in late-stage development. Although the study involved in 200 mg and 400 mg doses of Lesinurad, they have recently announced that their EMA submission was only for the lower 200 mg dose in combination with allopurinol. We believe that the combination of arhalofenate 800 milligrams with febuxostat has a superior profile to the combination of Lesinurad 200 milligrams with allopurinol with respect both to achievement of serum uric acid targets and also flare control and may very well be the better option for the gout patient. This arhalofenate target profile can be confirmed in a very straightforward Phase 3 program in which we contemplate studying these three target patient populations those with chronic gout, tophaceous gout and those patients that can't take or are intolerant to allopurinol. All in all we are very excited about where this program is headed and are currently targeting an end of Phase 2 meeting with the FDA for the third quarter of this year with the goal of being in a position to start a Phase 3 study in the first half of 2016. In parallel we are running a very active effort to explore potential partnerships either territory based or global as an option for advancing our Phase 3 program. Now, I would like to change gears and provide a brief update on MBX-8025. This compound is an oral, potent and selective PPAR-δ agonist with really exciting potential for the treatment of the number of high unmet need indications. MBX-8025 had previously completed a Phase 2 study in patients with mixed dyslipidemia and demonstrated positive effects on lipids including reductions of LDL cholesterol. Our strategy for MBX-8025 is to redirect development for indications with high unmet needs. We've identified homozygous familial hypercholesterolemia, 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 levels of LDL cholesterol, early cardiovascular disease and early mortality. Two recently introduced therapies, Juxtapid and Kynamro, are able to provide LDL or cholesterol lowering in to rep patients. However, both drugs have tolerability and safety issues, including black box warnings. Thus there continues to be a need for a therapy that will safely lower LDL cholesterol in these patients. We observed significant reductions in LDL cholesterol in our earlier study in patients with mixed dyslipidemia. But we were not sure whether the mechanism would be relevant to HoFH. In disease the patients didn’t had a functional LDL receptors. In January we announced results from a preclinical study indicating that MBX-8025 decreased LDL by approximately 45% in an accepted animal model of HoFH. This data indicate that the LDL cholesterol lowering of MBX-8025 is not dependent on having a fully functional LDL receptor and could be viable treatment for HoFH. We are in the process of initiating a pilot study in up to eight patients with HoFH. This open-label, dose escalation study would be conducted in Europe. Patients will be sequentially dose escalated up to 200 milligrams with treatment effects being evaluated relative to baseline as well as to the period while on the end of treatment. We are actively engaged with health authorities and investigators and expect to start the study in the first half of this year. We also continue to explore potential opportunities with small focus to our proof-of-concept studies in other indications. Based on the clinically demonstrated effects of MBX-8025, potential indications include primary biliary cirrhosis, severe refractory hypertriglyceridemia and NASH. For NASH we are monitoring the progress of ongoing clinical studies of other drug candidates in this indication, including the GenFit, mixed PPAR-α/δ agonist, GFT505. As our plans become more firm, we will issue additional guidance. With that, I will 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 34.8 million as of December 31, 2014 compared to 31.2 million for the year ended 2013. Subsequent to December 31, 2014 cash increased by 4.3 million from the net proceeds related to the sales of common stock under our aftermarket facility in the first quarter of 2015. We believe this provides with sufficient resources to fund operations through at least the end of 2015. Research and development expense for the three and 12 months ended December 31, 2014 was 5.3 million and 15.8 million respectively. R&D expense for the same period in 2013 was 1.4 million and 4.5 million respectively. The increase in R&D expense for both periods was primarily related to the increased spending associated with the conduct of Phase 2 arhalofenate-febuxostat combination study and our Phase 2b arhalofenate gout during 2014. General and administrative expenses for the three and 12 months ended December 31, 2014 was 2.3 million and 8.2 million respectively. G&A expense for the same period in 2013 was 2.1 million and 4.9 million respectively. The increase in G&A expense in 2014 compared to 2013 was primarily related to an increase in personnel cost to both support our transition from a private to a public company and to resume our clinical development activities. Net loss for the three and 12 months ended December 31, 2014 was 12.7 million and 31.9 million respectively. Net loss for the same periods in 2013 was 3.9 million and 10.1 million respectively. Increase in net loss was primarily due to the increase in R&D expense and G&A expense. The net loss for the three and 12 months ended December 31, 2014 included non-cash losses of 4.9 million and 7.2 million respectively from the mark to market valuation of the company’s warrant liability. The net loss associated with these non-cash charges was 0.5 million for the three and 12 months ended December 31, 2013. Hal?

[Harold Van Wart:]

All right. Let me close reiterating the company’s near-term value generating milestones. Since the beginning of the year we provided strong rational for moving both of our programs forward aggressively. Arhalofenate into the registration studies in gout and MBX-8025 into a pilot study into HoFH. We expect the HoFH study to begin rolling in the first half of the year and hope to have clarity on our next indication for 8025 within that same time period. We are also targeting the third quarter for end of Phase 2 meeting with the FDA to discuss arhalofenate. Throughout the coming quarters we will also be conducting extensive review of other options for advancing arhalofenate in the clinic, including potential partnerships and we look forward to updating on our progress as these efforts evolve. I would now like to open the call up to your questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Brian Klein with Stifel. Please proceed with your question.

[Brian Klein:]

Hi guys. Thanks for the comprehensive update and for taking my questions. I guess first how -- on arhalofenate I know you want to meet with your CA in the third quarter and I assume you'll have some clarity on Phase 3 trial design. Are you prepared to start Phase 3 program prior to landing a partner for arhalofenate?

[Sujal Shah:]

Hey Brian, this is Sujal. Let me take articulate I think our thoughts behind this. We're optimistic given the data we now have in hand and the current level of interest that we may in fact be able to get a partner for arhalofenate before entering into Phase 3. Both the public market and pharma specifically, vert recently assigned significant value for uricosuric drug that simple address the additional serum uric acid lowering needs of non-responders to allopurinol, that's a patient population of about 1.5 million to 2 million patients. And that's particularly a higher dose as this has had some significant safety issues. So, we look at our profile and we believe we have a highly differentiated uricosuric and anti-inflammatory drug with very good safety profile. The right deal is on the table, we'll look best ways to move our -- if the right deal is not on the table, we'll look best ways to move up Phase forward in the best interest of our shareholders. The end of the day we're very open to looking at different types of structure Brian, and we'll firmly look to make those decisions at that point in time.

[Brian Klein:]

Okay, great. Thanks. Along those lines, what's preferable to you guys internally? Are you looking for a worldwide partner how would help fund the Phase 2 program, or do you think regional base [ph] something makes more sense?

[Harold Van Wart:]

I think at the outset, we're relatively agonistic to that. We want to see what kind of options we're given and decide which direction we want to go into. We certainly would not be adverse to a global partnership with the right partner. We're not specifically trying to carve out any regions for ourselves if that's what you're asking.

[Brian Klein:]

Great. A couple of questions quickly on 8025, I know you're targeting enrolment with eight patients maybe starting in the first half of this year, when do you anticipate we might see initial data from that study?

[Harold Van Wart:]

We're in very final stages of getting our protocol through the regulatory agencies and the ethics committee. And while we're going to stick with the guy that we planned to start at to the first half of this year, we're hoping that it might even be a little bit sooner. I think it's realistic to assume that we could get that data before the end of the year.

[Brian Klein:]

Great. And I know you mentioned GenFit and their upcoming data, would you be anticipating possibly starting a trialing match [ph] sooner depending on the outcome of that competitor trial?

[Harold Van Wart:]

Yeah, that's a very good question Brian. So, it turns out the relevant fact related to that is that we only have 13 weeks of toxicology coverage right now for being able to do clinical studies with MBX-8025. We have directed our current toxicology program is in progress and we will have that data in the first quarter of next year, in which case, we will no longer be limited by that. And since most of the exciting data from NASH has come from serial biopsies in studies of year or longer duration, it's difficult to see what kind of study you could do in NASH that would be informative in only three months. So, our likely preference would be to delay a start of any potential NASH study until we could go for the -- on for the length of time waiting to see biopsy data.

[Brian Klein:]

Great. Thanks. And just one final question for Sujal. I was wondering if you could give you a little bit of guidance here on R&D spend for the year, thanks.

[Sujal Shah:]

Sure Brian. So, bulk of what you see here little over a $11 million, the $15.8 million reported for yearend was really towards project cost. Great majority of that of course was arhalofenate, both the febuxostat and arhalofenate combination study as well as the gout flare study. The remaining somewhere around $4.1 million was really the personnel cost that support our R&D.

[Brian Klein:]

Great. Thank you. Thanks for taking me.

[Harold Van Wart:]

Thanks Brian.

[Operator:]

Thank you. Our next question comes from Jeff Chen with Cowen & Company. Please proceed with your question.

[Jeff Chen:]

Thanks for taking the questions. So, question around the discussions of partnerships, so are you still kind of having ongoing discussions about Phase 3 designs with potential partners, or is this something that you await until what you see in terms of the interested parties?

[Harold Van Wart:]

No, Jeff, I think we have a very clear idea what our Phase 3 program would look like for arhalofenate and we actually have touched upon that in today's dialogue. Having said that as we engage pharma partners and start to learn how they might view the program, we could be influenced by that and that could shift us in one direction or another. We’re always trying to stay -- keep in open mind as to what better and more effective ways to develop a drug could be. But I don't think we could assume that we'll have a pharma partner before we go to our end of Phase 2 meeting, so we're checking a view that we're going to go there negotiate what we think is the best possible program to support the strongest possible label. And along the way and parallel have discussions with pharma to be able to get their input and assess their level of interest.

[Jeff Chen:]

That's very helpful. Thanks. And a follow-up question on 8025, so for Phase 2 in EU, what would you consider to be acceptable spender in terms of LDL lowering that you're looking for?

[Harold Van Wart:]

Yeah, to this question, so we have had extensive calls with KOL and asked them that question, what amount of LDL lowering you believe would be clinically meaningful for this patient population. And the numbers tended to gravitate around 25%, 20%, 25% because you need to remember also that that's 25% off of very high baseline level. So, the absolute reduction analogy and is actually quite significant and meaningful from that percentage drop. So, I think if we still -- I think in that vicinity, we consider that to be a victory.

[Operator:]

[Operator Instructions] There are no further questions in queue at this time. I will like to turn the call back over to management for closing comments.

[Sujal Shah:]

Thank you, operator. Thank you everyone for joining our call today. We look forward to sharing with you more in the upcoming quarters. If you'd like to know more about our progress, please feel free to reach out to us directly.

[Operator:]

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time and have a great day.