Chiasma, Inc.
Q2 2019 Earnings Call Transcript

Published: 10 Aug 2019

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the Conference Call to discuss Chiasma's Second Quarter 2019 Operating and Financial Results. All lines are in a listen-only mode.

[Glenn Garmont:]

Thank you, operator. Please turn to Slide 1. Today, we will be making certain forward-looking statements about events and circumstances, including, but not limited to, statements regarding our development and potential commercialization of Mycapssa, our expectations on timing of release of clinical data and regulatory submissions and review periods, our plans to seek regulatory approval in the United States and European Union, our anticipated cash runway and the size and composition of potential markets for Mycapssa, if approved.These statements are based on current expectations. Actual results may differ materially due to numerous risks and uncertainties, including those detailed in the Risk Factors section of our Form 10-K filed with the SEC for the year ended December 31, 2018, as well as our subsequent filings with the SEC. Chiasma disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.And now I would like to turn the call over to Chiasma's Chief Executive Officer, Raj Kannan. Raj?

[Raj Kannan:]

Thanks, Glenn, and thank you, everyone, for joining our call this afternoon to review our second quarter results. Joining me on this call is Bill Ludlam, our Senior Vice President of Clinical Development and Medical Affairs, who will review our exciting CHIASMA OPTIMAL results; and Mark Fitzpatrick, our President, who will review our financial results. This is my first quarterly update since joining the company in June, and I'm pleased to join the organization at such an exciting and transformational time. There are 3 key points I want to highlight. Please turn to Slide 2.First, the positive top line results we recently announced from our OPTIMAL pivotal trial, which met its primary endpoint as well as all 4 secondary endpoints. It is important to note that we conducted this Phase III trial under a Special Protocol Assessment agreement with the FDA in order to address the clinical concerns that the agency raised in 2016. Second, we believe the capital that we raised following the OPTIMAL data relief positions us to successfully execute our planned commercial launch of Mycapssa in the U.S., if approval is obtained and through the planned completion of our ongoing Phase III MPOWERED trial of Mycapssa in acromegaly which is designed to support EU approval and the top line data is expected in the second half of 2020.We believe there is an attractive global acromegaly market opportunity for Mycapssa beyond the U.S. The global market for SSA, for all indications, is approximately $2.7 billion annually. And as a first step with Mycapssa, we plan to target the estimated $800 million global annual opportunity for acromegaly. And third, we believe now we are well positioned with Mycapssa and our TPE technology platform to begin planning for our growth beyond acromegaly.Let me add some context to the 3 points I highlighted. Injectable SSAs are currently considered the gold-standard therapy for acromegaly patients who are not cured by surgery. They have significant and well-documented treatment burdens, including significant pain at the injection site, which lasts for several days, other injection site reactions, inadequate acromegaly symptom control and inconvenience, both in terms of the need of schedule and travel for monthly injections.Here, we believe that statistically and clinically meaningful results of the CHIASMA OPTIMAL trial provide us with the confidence that Mycapssa could potentially address many of the significant treatment burdens in adult acromegaly patients that are on injections. In particular, as Bill walks you through the results, it is important to note that 75% of the patients randomized to the Mycapssa treatment arm in the OPTIMAL trial completed the study on Mycapssa, and 90% of these patients elected to continue into the open-label extension. We believe this speaks to a strong patient preference for an oral option in an injectable-only market.Thus, if approved, we believe Mycapssa will be a positive disruptive agent and provide a new standard of care for adult patients maintained on SSAs. With the positive OPTIMAL data now in hand, we are moving rapidly to build our commercial organization and infrastructure. By targeting fewer than 1,000 endocrinology accounts, we believe we can reach approximately 90% of SSA-treated acromegaly patients. If approve, we plan to market Mycapssa ourselves in the U.S. with a small orphan specialty sales force.The key point I want to make here is that our planned acromegaly launch is unlike many prior rare-disease launches where patients need to be identified. We plan to target patients who are already on treatment with SSAs. This is a relatively readily identifiable patient population, and if approved, we believe we will have a preferred oral treatment option that is positioned to eliminate the injection pain and injection site reactions and many of other treatment burdens with the leading injectables. The bottom line here is we can afford to be very targeted and efficient in our 2020 launch plan investments with our existing capital.As we have indicated previously, we plan to submit an NDA for Mycapssa by the end of this year, and with an anticipated 6-month PDUFA-review window, we expect the PDUFA decision in mid-2020. In parallel with our U.S. regulatory and commercial preparations, we continue to advance our second Phase III trial MPOWERED, which, if positive, will support a potential regulatory approval and an attractive commercial opportunity in the EU and in other markets that condition access to either U.S. or EU approvals. Enrollment in the MPOWERED trial was completed in the second quarter.Lastly, we believe our TPE platform and the potential future indications, under consideration for octreotide capsules, position us well for meaningful growth beyond acromegaly. In summary, we demonstrated statistically significant results in a well-run, rigorous trial conducted under an FDA agreement with the FDA. The acromegaly market is a commercially attractive market where we expect to have a compelling product profile for a well-defined patient population. We are now well financed to execute on a planned successful U.S. launch in acromegaly. If approved, we believe Mycapssa will become a new standard of care in the maintenance treatment of adults with acromegaly. I look forward to guiding the company as it transitions into planning for a successful launch and begins to lay the foundation to support our future growth beyond acromegaly.With that, I will turn the call over to Bill Ludlam to recap the exciting results from the OPTIMAL trial for the maintenance treatment of adult patients with acromegaly. Bill?

[Bill Ludlam:]

Thanks, Raj. Please turn to Slide 3. The CHIASMA OPTIMAL Phase III trial was a randomized, double-blind, placebo-controlled 9-month trial of Mycapssa. The primary endpoint was the proportion of patients treated with Mycapssa, who maintained their biochemical response compared to the placebo-treated patients at the end of the 9-month trial period. The trial enrolled 56 patients, 38% of which were from the U.S. which exceeded the 20% minimum progress SPA agreement.Patients were randomized one-to-one into the Mycapssa arm and the placebo arm. The primary endpoint of the 36-week trial was the proportion of responders in each treatment group, Mycapssa versus placebo, at the end of the study, defined as IGF-1 less than or equal to 1.0x the upper limit of normal. All study subjects completed the 36-week trial and as a result, there were no missing primary endpoint data. Importantly, baseline characteristics were well balanced between the 2 groups.Please turn to Slide 4. We are very pleased to report that the trial met the primary endpoint, the proportion of patients who maintained IGF-1 response at the end of the study; 58% in the Mycapssa group and 19% in the placebo group met the response criteria with a statistically significant p-value of 0.008. Response was defined as the average IGF-1 level of weeks 34 and 36, less than or equal to 1.0x the upper limit of normal. In addition, there were 4 important hierarchical secondary endpoints.Please turn to Slide 5. The first secondary endpoint was growth hormone response at the end of study of GH responders at screening, defined as a GH level less than 2.5 nanograms per mill. 78% of patients on Mycapssa maintained their growth hormone below the defined threshold versus 30% in the placebo group, with a statistically significant p-value of 0.001.Please turn to Slide 6. The second and third secondary endpoints are time to loss of response for IGF-1 greater than 1.0 and greater or equal to 1.3x the upper limit of normal, respectively. For the placebo-treated group, the median time to loss of response for both endpoints was 16 weeks, while the Mycapssa-treated group, the median time of loss to response was not reached by the end of the study for both IGF-1 criteria. These had statistically significant p-values of less than 0.001.Please turn to Slide 7. The fourth secondary endpoint was the proportion of patients requiring rescue medication with injectable somatostatin analogs any time throughout the study comparing the 2 treatment groups. 25% of patients treated with Mycapssa switched to rescue medication versus 68% of patients on placebo, with a statistically significant p-value of 0.003.Please turn to Slide 8. As Raj indicated, one of the more compelling findings from this study is that 75% of the patients that were randomized to the Mycapssa-treated arm completed the 36-week study on Mycapssa, and 90% of those patients elected to enter the open-label extension phase. Mycapssa appeared to be safe and well tolerated, and no new or unexpected safety signals were observed.Turning now to our second Phase III trial illustrated on Slide 9, MPOWERED, which is being run pursuant to a trial protocol accepted by the European Medicines Agency. This is a randomized global open-label, active control trial of 146 adult acromegaly patients that is designed for regulatory approval of Mycapssa in the EU. The MPOWERED trial consists of a 6-month run-in phase, followed by a 9-month randomized control phase where responder patients per protocol are randomized to either remain on Mycapssa capsules or return to prior injectable somatostatin receptor ligands, either lanreotide depot or octreotide LAR.The primary endpoint is the proportion of patients who maintain their biochemical response to Mycapssa and patient-reported outcomes in patients treated with Mycapssa as compared to patients treated with injectable SSAs. This trial is progressing as planned, and as Raj indicated, we continue to expect to report top line data from MPOWERED in the second half of 2020. If positive, data from MPOWERED could support a planned MAA submission in 2021. The key point I would like to make here about this study is that the findings from this study may further strengthen the product profile for Mycapssa and potentially be complementary to the findings from the CHIASMA OPTIMAL trial.Now I'd like to turn the call over to Mark Fitzpatrick to provide a financial update.

[Mark Fitzpatrick:]

Thank you, Bill. Please turn to Slide 10. In April, we closed a follow-on public offering of our common stock, which raised net proceeds of approximately $32.2 million. The funds raised in this offering extended our planned cash runway through our anticipated mid-2020 PDUFA date and into late 2020. In July, we completed a second follow-on offering of common stock that raised net proceeds of approximately $51.5 million which further strengthened our balance sheet and lengthened our runway beyond the expected release of top line data from the MPOWERED trial in the second half of 2020 and well into our planned U.S. commercial launch.Turning now to our second quarter financial results. General and administrative expenses were $2.6 million for the quarter ended June 30, 2019, compared with $2.6 million for the same period of 2018. The current period results include increased professional service fees, which were primarily offset by a reduction in legal costs. Research and development expenses were $5.5 million for the quarter ended June 30, 2019, compared with $6.3 million for the same period of 2018. The decrease in clinical trial costs was partially offset by an increase in manufacturing costs. For the quarter ended June 30, 2019, net loss was $7.8 million or $0.25 per basic share compared with $8.7 million or $0.36 per basic share in the same period of 2018. Cash, cash equivalents and marketable securities as of June 30, 2019, were $58.1 million compared with $41.7 million at December 31, 2018.I will now turn the call back over to Raj.

[Raj Kannan:]

Thanks, Mark. That concludes our remarks. We will now open the call to your questions. Operator?

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Yasmeen Rahimi with Roth Capital Partners. Please go ahead.

[Yasmeen Rahimi:]

Hi, team. Thank you for taking my questions. So first question is, team, have you had the chance – I know the data is very fresh off the path, but at least shared with some of the endocrinologists and maybe hear their perception of – or their views on the data? And then the second one is, walk me through what is the best-case scenario, what the label is going to look like? And specifically, what is the chances to get the symptom data from the 01 study into the label? And if you are not going to get it into the label, how are you going to utilize the existing data until MPOWERED becomes available to sort of educate the endocrinologists on the improvement of symptoms beyond biochemical control that Mycapssa delivers?

[Raj Kannan:]

Thanks, Yasmeen. This is Raj. A very good questions. Let me see if I can remember all 3 of them if I forget, feel free to remind us. So the first one was the feedback from endocrinologists and KOLs. I think the early feedback, and Bill can attest to this, was very positive. In fact, unanimously, almost every single KOL that we talked to were quite pleased with the data, and were actually more eager to wait for – looking forward to the approval and integrating it into their practice.In terms of the question on the label, I would say that our label would reflect what our clinical trial population is. So we went after SSA patients so that would what our label would be reflective of. And within that label, the inclusion of symptoms, obviously, our intent would be to include the 01 study because we feel the MPOWERED – the OPTIMAL trial had validated the 01 study, we would want to include the data from the 01 study where the symptoms data was very well laid out. So that is their intent. But again, that is an FDA decision after the review as to what gets included in the label. Hope that answers all of your questions, Yasmeen.

[Yasmeen Rahimi:]

And then I guess if it is not in the label, can you maybe remind us – sorry, in how much of the symptom improvement is built into MPOWERED and the timing of the use of the MPOWERED data, not only for the safety data set, but actually utilizing that to get into the label for symptom improvement?

[Raj Kannan:]

So on the MPOWERED trial, as you know, we have a quality-of-life tool that we have integrated into the trial itself. I think we would look for opportunities, absolutely, to put that into the medical education, but we will also follow all of their requirements in terms of, say, what we can promote and what we cannot promote within the U.S., but I think that data would be very useful because it will complementary to what OPTIMAL generated.

[Yasmeen Rahimi:]

Thank you, so much Raj.

[Raj Kannan:]

You’re welcome.

[Operator:]

The next question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

[Brandon Folkes:]

Hi, thanks for taking my question. But firstly, can you give us some color on the nonresponders in OPTIMAL who elected to remain on Mycapssa into the open-label extension? And how does this support the symptom – the control symptoms you talked about in the prior question?

[Bill Ludlam:]

Thanks, Brandon. So the – as you know, the overall response rate in the Mycapssa arm is 58%. However, 75% of the patients completed on oral. And so I think what that really becomes as a reflection of the overall patient experience on the oral, and don't forget, there is variability in IGF-1s, they bounce around, this is what you see in clinical practice. It's what one would see in a clinical trial. And the fact that these patients are staying all the way out to week 36 is suggesting their overall experience, their experience and the clinician experience has been positive to stay on that treatment.

[Brandon Folkes:]

Okay. And from a commercial perspective, post the data, the people you have shared it with, what has their reflection been? Are they focused on the 58% response rate or do they actually look at the number of people who remained on oral, that higher response rate?

[Raj Kannan:]

So the early feedback has been that they are looking at the clinical implications of that, as we noted before, very few doctors actually do what we did in the trial, which is to take an average of week 34 and week 36. That's an artifact of how we conducted the study with strict criteria, but in the real world, physicians will look at the 75% as a marker for how many patients would remain within the range of what they would consider biochemical control. In the real world, as you know, they do not look at 1.0 strictly at a certain time point in a binary fashion, they would look at various time points and look at the level of biochemical control that a patient is within.

[Brandon Folkes:]

Maybe one more, if I may, and I apologize if you did cover this, I was finishing up now with a call. But Raj, could you help us think about the commercial build time frame, given that time – approval could be midyear? And in the past, you were ready to launch, how quickly after approval, could you be ready to launch?

[Raj Kannan:]

So our intent is to get drug into the hands of patients by quarter 4. So that's roughly – from the time of the approval in June, that's July and August, and we would hope that we would get drug out in the marketplace before the fourth quarter kicks off.

[Brandon Folkes:]

Great, thanks so much and congratulations on everything this quarter. Thank you.

[Raj Kannan:]

You’re welcome.

[Operator:]

The next question comes from Douglas Tsao with H.C. Wainwright. Please go ahead.

[Douglas Tsao:]

Hi, good afternoon. Thanks for taking the questions. Just – Bill, just curious in terms of OPTIMAL. Were you measuring or will you eventually present what sort of percentage of patients were kept at certain IGF levels? Meaning, would – will you be able to say that if the cut-off have been, say, 1.3, you would have had 75% response rate?

[Bill Ludlam:]

So great question, Doug. So we are continuing to analyze data. We will be making all the patient profiles and the details available, and it will be quite interesting to look at that and to see in the view and the lens of a real-world practice, how these patients are doing on the drug. In terms of a 1.3 cutoff, that really would not be something we would be able to do because that – if you remember, this is a maintenance of response trial, and we would – since the entry criteria was 1.0, we want to match that endpoint to be the same 1.0.

[Douglas Tsao:]

Okay, great. That's helpful. And then Raj, you did mention in the prepared remarks, sort of thinking about taking the company beyond acromegaly. Just curious at what point we'll start to see more about that. And I know before sort of the complete response letter, there's an intent to seek approval for neuroendocrine tumors with Mycapssa, and I'm just curious if there's any thought to revisiting that.

[Raj Kannan:]

I would say, absolutely, yes, to the question that we are in the planning stages, and we hope to announce both our indications and our portfolio expansion in the first half of 2020.

[Douglas Tsao:]

Okay. And that would be – and that portfolio expansion will be using Mycapssa?

[Raj Kannan:]

Yes, for both – so our intent is first to look at extending the benefits of Mycapssa beyond sort of acromegaly, would be our first priority, and then starting to think about our TPE platform because now we've got octreotide capsules validated with the TPE platform. We will be looking at other molecules that we can leverage the TPE platform to bring it into oral form.

[Douglas Tsao:]

Okay, great. Thank you so much to that clarity.

[Operator:]

[Operator Instructions] The next question comes from the Deepankar Roy with Brookline Capital Markets. Please go ahead.

[Deepankar Roy:]

Hi, congrats on your trial success and thanks for taking my questions. So I had a few questions about the OPTIMAL. So how many patients received the highest dose of Mycapssa? And how many patients from the placebo trial are in the open label?

[Bill Ludlam:]

Let me answer those in reverse. We've only given top line data for the core study, the 9-month study. We've not reported on the open label. We have said that of the patients that completed the 36 weeks, 90% went into the open label. In terms of dose distribution, 9% of the patients were on 40 milligrams, 29% were on 60, and 62% were on 80. Remember, this is a relatively small sampling and may not reflect the real-world experience.

[Deepankar Roy:]

And – so for those who needed rescue, how many of them were closer to the end of the trial, towards 36 weeks? And how many of the patients who needed rescue in the treatment arm responded on the rescue medication?

[Bill Ludlam:]

So on the Mycapssa arm, there were 7 patients that required rescue, 5 of those were for treatment failure and 2 were for AEs. Of the 5 that were treatment failures, 3 of those met the predefined withdrawal criteria. Was there another part of your question?

[Deepankar Roy:]

Yes. I wanted to ask how many of them were actually closer to the end of the trial period? And the last one was – yes.

[Bill Ludlam:]

So as we – we'll be continuing to roll out additional data. We have conferences coming out. There will be opportunities to publish the data in meetings coming up. We have not yet presented the patient profiles. And as we do that, I think that will become evident, you'll be able to see exactly the timing. At this point, we just presented the top line data, the primary and the secondaries.

[Deepankar Roy:]

Okay. And one last one is like how many of them who needed rescue actually responded to the rescue medication afterwards?

[Bill Ludlam:]

Yes. We – it's a great question, and we look forward to being able to present that as we continue to analyze. We have not presented that yet, but that will be a very interesting thing to discuss.

[Deepankar Roy:]

Okay, thank you.

[Operator:]

This concludes the question-and-answer session. I would like to turn the conference back over to Raj Kannan, Chief Executive Officer, for any closing remarks.

[Raj Kannan:]

Thank you, operator. Before I conclude, I wanted to highlight something extraordinary that happened today. We had an opportunity to hear from a patient directly on her journey from symptoms to diagnosis to treatment. Her inspirational story strengthened our results even further to work tirelessly in bringing to market more therapeutic options for patients with acromegaly. Thank you, and we look forward to speaking with you all again at our next quarterly update in November. Have a good evening.

[Operator:]

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