Chimerix, Inc.
Q4 2020 Earnings Call Transcript

Published: 26 Feb 2021

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Chimerix Fourth Quarter and Year-End 2020 Earnings Conference Call. I would now like to introduce you to your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning & Investor Relations at Chimerix. Please proceed.

[Michelle LaSpaluto:]

Thank you. Good morning, everyone, and welcome to the Chimerix fourth quarter and year-end 2020 financial and operating results conference call. This morning, we issued two press releases on our fourth-quarter operating update and the second one on the ongoing COVID-19 trial of DSTAT. You can access these press releases in our Investors section of the website.

[Mike Sherman:]

Thanks, Michelle, and good morning, everyone. Thanks for joining us. I'm pleased to provide some additional color behind today's press releases. You'll note, we've positioned ourselves to deliver on multiple value-driving milestones in 2021 across all of our programs. That's a credit, of course, to the way this team is executing in every functional area. I'm happy to say that team is now even more capable as we've completed ahead of schedule the integration of the Oncoceutics staff into the Chimerix organization structure. We've quickly pivoted from organizing ourselves to the process of accelerating the Oncoceutics pipeline, particularly ONC201. Let me start my comments with the update we received in the last few days from the FDA on the extension of the PDUFA date to July. The extension is intended to allow FDA additional time to review new dose modeling we provided related to infants, newborns up to three months of age. The results of that modeling that we've already submitted supported the same weight-based suspension formulation dosing regimen we had already recommended for older pediatric patients. The fact that the FDA asked for this additional information highlights a key aspect of our program that satisfies an important unmet need, a formulation easily administered in a broad pediatric setting. We continue to feel very good about the NDA review process and look forward to the final steps. We confirmed with BARDA, their process remains on track and will not be impacted by the review timing. We still expect to see an RFP next month. The fact that we hadn't planned on shipping product into the stockpile until the second half of the year anyway means there's no financial impact to the updated review timing. We're still in a position to ship up to $100 million of product into the stockpile in the second half of this year.

[Allen Melemed:]

Mike, thank you, and good morning. Earlier today, we released a press release on top-line results from the first cohort of our Phase 2/3 study of hospitalized COVID-19 patients with ALI. This cohort randomized 12 patients one-to-one to receive 4 milligrams per kilogram bolus loading dose followed by a 0.25 milligram per kilogram per hour of DSTAT or a similar placebo infusion. All patients received the appropriate standard of care that was determined according to each individual hospital practices. Although the standard of care of COVID-19 continually changed during the course of the trial, that standard of care allowed for the following therapies

[Mike Andriole:]

Thanks, Allen, and good morning, everyone. As Michelle mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the fourth quarter and full-year 2020. Starting with our balance sheet. At the end of December 2020, we had approximately $79 million in capital to fund operations. Of course, we had two meaningful events, which occurred after year-end during the month of January. The first was the acquisition of Oncoceutics. This included $39 million in cash consideration, of which $25 million was paid immediately and $14 million is deferred up to one year from closing. The second event was the public stock offering in January, which included the sale of 13.5 million shares for total proceeds, net of underwriting fees and expenses of approximately $108 million. After taking into consideration the cash associated with the acquisition of Oncoceutics, the subsequent follow-on financing and operating expenses for January, our cash balances on January 31, 2021, were approximately $160 million. Turning to our statement of operations. The company reported a net loss of $11.7 million or $0.19 per basic and diluted share for the fourth quarter of 2020 compared with a net loss of $3.5 million or $0.06 per basic and diluted share in the fourth quarter of 2019. Revenues for the fourth quarter of 2020 decreased to $1.1 million, compared to $6.8 million for the same period in 2019. In 2019, that figure included a $5 million upfront payment from the out-license of brincidofovir to SymBio for indications other than the treatment of orthopoxviruses. Research and development expenses increased to $8.7 million for the fourth quarter of 2020 compared with $7.5 million for the same period in 2019. General and administrative expenses also increased to $4.2 million for the fourth quarter of 2020, compared to $3.1 million for the same period in 2019.

[Mike Sherman:]

Thanks Mike. We enter 2021 in a strong position, both financially and operationally to achieve a number of value-creating milestones. The brincidofovir NDA review will set the stage for the beginning of stockpiling of that drug in the second half of this year, which will further strengthen our balance sheet. We expect to report the results of the blinded assessment of the registration cohort of ONC201 in H3K27M mutant gliomas. And if positive, this would set the stage for a pre-NDA meeting with the FDA. The modest investment we've made in the COVID trial of DSTAT is now yielding data with a next update in Q2 covering the second cohort. We'll also monitor closely our enrollment of the Phase 3 dash AML trial of DSTAT as the year progresses, with an eye toward the first 80 patient analysis we expect to occur next year. This indeed is an exciting year for the company. With that, operator, we'll open it up for questions.

[Operator:]

Thank you. . Your first question comes from the line of Ed White with H.C. Wainwright.

[Ed White:]

Good morning, everyone, and congratulations on the data this morning. So maybe just asking about the COVID-19 study. While this data is excellent, you previously discussed that a Phase 3 trial could have 450 patients with ALI. And looking at the current COVID-19 environment changing due to the vaccines and potential competition in this space, how are you thinking about the commercial potential in the space? And how are you thinking about other studies in ARDS? Just wanted to get your thoughts on the potential for investment in a study that large, can you get a good return on it?

[Mike Sherman:]

Yes, no, it's the right analysis, Ed, and it's exactly kind of the way we're thinking about this. From the beginning, we had identified this as much an opportunity to evaluate the anti-inflammatory activity of DSTAT in an acute lung injury as it was a potential treatment for COVID. So the way we will look at this is it's all the factors you just identified. If indeed, infection rate is dropping dramatically. If indeed, and these -- these new variants could change that. Hopefully, they don't. But if the prospect for enrolling that trial is lower if they seem to have accumulated as there have been a few drugs that are demonstrating benefit in this population. To be clear, this drug DSTAT could be combined with those as it's been combined with a number of other therapies in this current trial. So there's still that opportunity. But we will assess the competitive landscape as well. So I think realistically, the real commercial opportunity long-term is in these acute lung injury or acute respiratory distress syndrome of other causes. And so what we'll be doing before we would pull the trigger on a Phase 3 trial is to say, does that make sense? Or does it make sense based on the data of both clinical outcomes and biomarker data to pivot to an alternative form of the disease. Now I should also add that the 450 patient trial was sized really a placeholder, I would say, at a time where we had no data on the drug. And so of course, a first step would be an assessment of what we think the likely outcome of such a Phase 3 trial would be and resize it accordingly based on the benefit that's been observed. So it's possible that that trial could be much smaller. But you've identified all the right things in terms of how we are going to look at that going forward. We would only trigger that investment of both -- we're investing not only money, but our people resources. When we've got some other very exciting programs that are nearing an NDA potential process that we want to make sure we give the appropriate attention to.

[Allen Melemed:]

And Mike, this is Allen. If it's -- it might be worthwhile just to continue to add, though, that as we are seeing more resistant strains out there, both resistant to the vaccine, as well as some of the treatments, it is still very important to have other treatment options in case patients do present with this disease.

[Ed White:]

Great. Thank you. And maybe just a question on DSTAT in AML. I'm glad to hear the sites are now opening. How should we be thinking about the enrollment of the 570 patients that you're targeting in U.S. versus outside the U.S.? When can we expect to see the first patient dosed? And once the enrollment starts up and you -- can you give more -- are you planning on giving more narrow guidance on the timing to the interim analysis?

[Mike Sherman:]

Yes. So we will -- maybe I'll start with your last question first, and that we'll give more guidance on the timing. Really, I'm as focused on that 80-patient analysis as anything because we look at this really as two stages. The first stage would be conducted in North America. And once we see a positive signal, I think we'll position to quickly expand it into Europe and other geographies. So, but as that trial enrolls and we -- it's really seeing the pace of the first dozen or so sites activating that will give us a better sense of how quickly that will enroll and what time next year we would expect that 80-patient analysis to readout. Remember that since we are looking at CR and MRD, those are early readouts. So really, the gating item is getting those patients enrolled, and it's within a few months of that that we would be able to report out on those early endpoints.

[Ed White:]

Great. Thanks Mike. And then, I always ask about brincidofovir and the BARDA contracts. I'm just wondering with the change in the administration, are you expecting to see any changes for the demand of having the second treatment for smallpox in the stockpile? And also, how should we be thinking about the rest of the world? I know it's not a target at first as you can only manufacture $100 million worth this year. But how should we be thinking about increased capacity and perhaps sales outside the U.S.?

[Mike Sherman:]

I'll answer the first question, and then I'll let Mike Andriole speak to the opportunity outside the U.S. And I see no change in the commitment to support this program on the part of BARDA. In fact, this FDA kind of update on the timeline gave us a fresh opportunity to confirm that. And they are very much on track and really probably as motivated as I've seen throughout the process to continue with the plan that they've identified from the beginning. And so I continue to feel very good and maybe even better than I did a few weeks ago just because we've had this fresh opportunity to get an update on the process. Maybe, Mike, if you want to speak to the OUS opportunity.

[Mike Andriole:]

Yes, I'm happy to, Mike. Hi, Ed. Well historically, biodefense stockpiling has been largely a U.S. phenomenon. And, as you know, there's been some sales outside of the U.S. for certain products, but relatively small in the grand scheme of things. We've seen more recently, sales in Canada and Scandinavia and other markets from others in the space that indicate that's shifting. I think post COVID-19; the case for stockpiling, certainly the economic case and the case from a medical perspective is obvious. We see changes in how Europe, collectively, is looking at it with perhaps an equivalent of BARDA being contemplated in Europe right now. And so, as we look out in the months and years ahead, I think post COVID-19, you could see shifts in international stockpiling that create a bigger opportunity outside of the U.S. Right now, we're -- obviously, we're focused on the U.S. market, but we do see opportunity longer-term in other markets, including, obviously, Europe but Asia as well.

[Operator:]

Our next question comes from the line of Soumit Roy with Jones Trading.

[Soumit Roy:]

Hi, everyone, and congratulations on successfully completing a busy quarter. One, first question is, could you remind us where you are on the Oncoceutics programs ONC201, where you are in the FDA interaction post-acquisition? Do you have a meeting scheduled, any response or anything on that side?

[Mike Sherman:]

Yes. So we have not scheduled or requested a pre-NDA meeting yet. And to me, that's the -- that's the pivotal discussion because we've had good discussions previously. And the Oncoceutics -- legacy Oncoceutics team has gotten great clarity as to what that cohort should look like and how the data should be analyzed. So really, we are in the mode now where we're preparing to lock databases and gather that data so that it may be subjected to that blinded independent central review. That would be the data then that we would prepare for a potential pre-NDA meeting. Of course, in the -- on the sidelines, there are the non-clinical CMC and the non-clinical discussions that would happen independently really just confirming the work that we believe needs to be included in the NDA. But our focus is, obviously, gathering and accumulating that data for a potential pre-NDA meeting. I don't have a -- I'm not ready to give a timeline for that. But we do expect to have that data from that blinded assessment here in the second half of this year.

[Soumit Roy:]

I see. So how comfortable do you feel that FDA will go with response rate being a primary endpoint in this and this result turns into a registration-enabling data?

[Mike Sherman:]

I think the feedback from the FDA, as evidenced by the minutes that we've reviewed, is definitive in terms of both the definition of patients that they want to see and the endpoints that they've defined as primary. Of course, beyond just the response rate, I think it will be as important that they see the durability of responses in these patients. They'll see the safety profile. They want to see the clinical benefits that associate with those responses. One element of evidence, I think, that maybe correlates or validates the endpoint that that the FDA has identified in this population is the way the cohort, the criteria for these patients was defined. It was really defined not as much about the patients that are expected to benefit. It was mostly defined to define a patient population where responses could be reliably assessed. It's one of the reasons RANO criteria is used and was specifically identified by the FDA as the means to measure the responses. And the trouble that was taken to exclude patients where those results or the ability to define responses would be challenged, either based on the location of the tumor or what have you or proximity to a prior therapy as another example, those all reinforce this plan that's quite straightforward and comprehensive at how you get to a reliable endpoint in these patients. So that's a long answer to a -- shorter answer is we are confident in how the FDA has defined this path and now it's a question of just preparing accumulating the data.

[Soumit Roy:]

Right. Thank you. Thank you for the color. Switching to the frontline AML trial, I know the trial is locked in on the patient characteristics locked in, but how are your thoughts on expanding or maybe starting a separate Phase 2 trial in unfit population maybe in combination with Venetoclax or HMA or agents like that? Do you see it's -- mechanistically, it's not something we should be thinking about?

[Mike Sherman:]

It's absolutely a -- there's a mechanistic rationale for that. And I think it's part of our longer-term development strategy. I think it's more likely that we would use the signal from the 80-patient trial to trigger that that additional work. That having been said, but it's not without question that we could potentially start that earlier. It's probably a loose connection, but the fact that we are seeing evidence in DSTAT that the mechanisms involved with this drug are having intended effects, it sort of builds our confidence in the way this drug works, albeit different in an AML population. So our confidence is somewhat boosted by this early COVID data. But I think our focus for the moment is going to be on that -- the frontline AML setting in combination with standard intensive therapy and let's confirm that we've got an MRD advantage. And I think that opens the door for really -- virtually any other combination and any other patient population setting in AML.

[Operator:]

Your next question comes from the line of Joseph Thome with Cowen and Company.

[Joseph Thome:]

Hi there. Thank you for taking my questions. The first one on the COVID data this morning. Congratulations on that. You did call out a couple of imbalances between the arms, specifically on the need for oxygen. How much of an impact do you think this could be -- just some physicians, I guess, intervene with oxygen more readily than others. I guess, just trying to get an idea of really the difference in severity between the two cohorts. And I guess, going forward, is there a way that these might be able to be a little bit more balanced in the future cohorts that are going to be enrolled?

[Mike Sherman:]

Yes. Let me -- I'll give a quick answer and then let Allen speak to the medical treatment. But for sure that these are elements of stratification that we would apply as the cohorts are larger. Really, when you've got 12 patients, it's hard to apply a stratification factor. So age and baseline status on this NIAID scale are key stratification factors. Let me let Allen speak to the way these patients are treated.

[Allen Melemed:]

Yes. So all of the patients were required to have a COVID-19 documented infection, as well as being on supplemental oxygen. The difference was really between being on high-flow oxygen versus standard supplemental oxygen. I think it's important to also note that there are other imbalances that did favor the placebo arm, which was the DSTAT arm had all male patients, which historically do a little worse in COVID-19. We didn't want to emphasize or overemphasize the results. We thought it was so compelling that we needed to release this. We are looking at the second cohort, and we want to see the similar trend is seen. We are quite reassured, though, that we had not just the clinical efficacies that we saw but was correlated with the biomarkers. And as that combination, it actually exceeded our expectations. We are expecting this safe. That's something we knew from the DMC who said safe to proceed to the next dose level. But we are quite reassured when we saw the efficacy and the biomarkers. So this combination gave us confidence.

[Joseph Thome:]

Great. Thank you. And then, maybe on 201, just thinking about how this could be incorporated in the treatment paradigm. You indicated it's already sort of on the sequencing panels. What sort of position edge education, I guess, would be needed then? Could you move sequencing up earlier in a patient diagnosis? Or is this going to be pretty easy just once this drug is out there and physicians know it's out there, it should see pretty good adoption?

[Mike Sherman:]

Josh, I'll go ahead and hand that one over to you if you want to answer that.

[Josh Allen:]

That's a great question. I think important to note for this population is that the diagnosis has worked up from a tumor biopsy that is part of standard practices now performed diagnosis and is not re-biopsied. So really, the sequencing events and other molecular profiling technology that's used to identify the H3K27M mutation, it's all ready, reflectively performed around the world at referral centers. And we've already seen very wide adoption of this following the definition of this disease that requires that molecular profiling, which was established in 2016. So I think the profiling is already happening. The profiling was already happening at diagnosis. So we don't need to move that further upstream. That's already a natural phenomenon. And I think what we'll see over time is not a need for increased adoption because it's already there, but rather increased technologies that allow you to monitor the protection of the mutation without the need to go in and biopsy the tumor. So in other words, liquid biopsy and we've already seen the first example of that with a foundation that is coming out with their FDA-approved liquid biopsy panel that includes this mutation on sequencing.

[Operator:]

There are no further questions at this time. Now I would like to turn the call back over to Mike Sherman for closing remarks.

[Mike Sherman:]

Once again, I appreciate everyone joining the call this morning and look forward to providing updates here in the coming weeks. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.