Chimerix, Inc.
Q4 2018 Earnings Call Transcript

Published: 5 Mar 2019

[Operator:]

Good morning. Welcome to the Chimerix Conference Call discussing the Financial Results of the Fourth Quarter and Year-End 2018. Please be advised that today’s call is being recorded at Chimerix’s request. I would now like to turn the call over to Michelle LaSpaluto from Chimerix.

[Michelle LaSpaluto:]

Thank you, and welcome to the Chimerix fourth quarter and year-end 2018 financial results conference call. This morning at 7

[Garrett Nichols:]

Thanks, Michelle. Good morning, everyone, and thank you for joining us. It’s a pleasure to be reporting the important progress that we’ve made throughout 2018 and to discuss with you our plans for 2019. As you know, we’ve had a change within our leadership team with the establishment of the Office of the Chief Executive Officer, which consists of Tim Trost, Michael Alrutz and me. Over the year, we have built a strong cohesive team. Together, we continue to prioritize the advancement of our clinical development pipeline, which we continue to believe is the core to our success. But let’s turn to the advancements we’ve made across our brincidofovir programs. I’ll begin with our smallpox program. In 2018, we made meaningful progress by initiating our second rabbitpox efficacy study with brinci conducted under the FDA’s Animal Efficacy Rule. As you may know, this rule allows for testing of investigational drugs in animal models to support the effectiveness of a drug in diseases in which human clinical studies are not ethical or feasible. Today, I’m excited to report that the study met its primary endpoint of overall survival compared with placebo. Specifically, survival in groups of rabbits, who initiated treatments with oral brincidofovir three, four, five and six days after being infected with rabbitpox virus, were all significantly higher than those treated with placebo. 100% of the rabbits treated with brincidofovir three days post infection survived, while only 29% of the rabbits that were not treated with brincidofovir survived. Importantly, brinci showed efficacy even several days after the onset of symptoms in these animals, which is important for smallpox antiviral. And data from the study are consistent with those reported from our first pivotal rabbitpox study conducted in 2015. In February, we also initiated a pivotal study in the mouse ectromelia model, which constitutes the second animal model as required by the Animal Efficacy Rule. Data from the study is anticipated later this year. Assuming positive data from this final mouse study, alongside the strong survival data from our rabbit studies, we intend to submit marketing applications for approval in 2020. These data also position us well for continued discussions with BARDA regarding the potential for emergency stockpiling for brincidofovir as we advance this program towards regulatory approval. Turning now to our brincidofovir clinical programs. I’ll begin with our AdAPT study, which plans to enroll 141 pediatric allogeneic hematopoietic stem cell transplant recipients with confirmed adenovirus infection. In the study, patients are being randomized 2

[Tim Trost:]

Thank you, Garrett, 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 year-end 2018. Starting with our balance sheet, at the end of 2018, we remain well capitalized with approximately $186 million in capital to fund operations through the end of 2021. Note, this financial projection is based solely on continuing our ongoing clinical trials and non-clinical development program and could change to reflect any modifications to these activities. We also had approximately 50.7 million outstanding shares of common stock. Turning to our statement of operations, the Company reported a net loss of $15 million or $0.29 per basic and diluted share for the fourth quarter of 2018 compared with a net loss of $19.2 million or $0.41 per basic and diluted share in the fourth quarter of 2017. Contract revenue for the quarter was approximately $4.9 million as compared with $1.8 million for the same period of 2017, largely due to an increase in the fourth quarter of 2018 in reimbursable expenses associated with the Company’s ongoing development contract with BARDA. Research and development expenses increased to $15.3 million for the fourth quarter of 2018 compared with $12.9 million for the same period in 2017. This increase was primarily due to the ongoing animal studies under the smallpox program. General and administrative expenses decreased to $5 million for the fourth quarter of 2018 compared to $7.6 million for the same period in 2017. A few key components of the decrease in expense were reductions in commercial preparations, compensation and legal expense. Loss from operations was $15.4 million for the fourth quarter of 2018 compared to a loss from operations of $18.7 million for the same period in 2017, the change being primarily due to the increase in revenue, as previously discussed. Looking forward to the full year 2019, we currently expect both R&D and G&A expenses to remain consistent with 2018, although there may be unevenness from quarter to quarter. With that, I’d now like to turn the call back to Garrett for final remarks.

[Garrett Nichols:]

Thank you, Tim. So to recap, we are pleased to announce the positive top line data from our rabbitpox study and look forward to sharing top line data from our final pivotal study in the mouse model later this year. We continue to advance both oral and IV brinci to the benefit of patients suffering from adenovirus and a broad spectrum of other viral infections for which there are limited treatment options. We have submitted a Type C meeting request to the FDA to discuss surrogate endpoints in our AdAPT study with the expectation for that meeting to occur in the second quarter of this year. With that, operator, we’ll now open the line for any questions.

[Operator:]

[Operator Instructions] And our first question is from Katherine Xu from William Blair. Your line is now open.

[Katherine Xu:]

Good morning. So I’m just wondering with both oral pediatric brinci study and also AdAPT IV study – studies are delayed. Just curious, is it a general kind of just over-optimism on the planning side? Or is it something that about adenovirus this season or in recent months that have changed? Just curious about some more details on the delays. Thank you.

[Garrett Nichols:]

Thanks, Katherine. It’s not any one specific thing. We have definitely experienced regulatory delays. We are still opening sites in Europe and the United States, delays in securing regulatory approval with no one particular question, predominantly really being questions that address different parts of the program and/or the formulations. And then with regards to adenovirus infections, the sites that have been opened have experienced a lower-than-expected incidence of adenovirus infections. And there’s really nothing that they say has changed with regards to their practices in terms of screening for patients. They’re looking actively for adenovirus infections, but they’re experiencing lower rates of adenovirus infection than they have in previous years. So we’re trying to get a grip on that. That does not appear to be a factor that has affected the ongoing Compassionate Use Program, where we’ve had stable incidence and requests for adenovirus requests. And of course, we also track adenovirus in the community, which doesn’t appear to be different.

[Operator:]

Thank you. Our next question is from Yigal Nochomovitz from Citi. Your line is now open.

[Samantha Semenkow:]

Hi, this is Samantha on for Yigal. Thanks for taking our question. Just a bit of a follow-up there. So you’re seeing these hurdles you’ve just out-listed globally, both in the U.S. and Europe.

[Garrett Nichols:]

So as far as the regulatory approvals, the regulatory approvals in Europe have been slower than anticipated. We’ve had some delays at a variety of different countries. And we have countries that are now just now coming onboard and will be coming onboard within the next month. As far as the incidence is occurred – was mentioned, of the sites that currently are enrolling in the study, they have experienced lower than previous years incidence of adenovirus. It’s not necessarily across the board, but across the study sites. It’s just a lower-than-expected screening and enrollment rate, and we’re – we continue to explore reasons for that. The sites have said that they’re not doing anything different in terms of their practices, so we’re trying to understand the reasons behind the lower-than-expected incidence.

[Samantha Semenkow:]

Got it. And you mentioned that some of the sites are coming onboard hopefully this month were some of the larger sites to participate in AdVance. Is the reason these sites maybe weren’t that initiated earlier, that has to do with some of the regulatory hurdles? Or has that a different reason all together?

[Garrett Nichols:]

No, that’s correct. That’s correct. It’s just – the countries that have longer-than-usual regulatory cycles. You’ll recall that we ended up doing country-based submissions for these studies, and each country has its own regulatory process. Once the regulatory process is complete, then we usually have to go through sequentially final contract agreements with the sites, so that also delays site initiation.

[Samantha Semenkow:]

Got it. That’s helpful. And then on the Type C meeting, has the FDA provided you any comments now that you’ve requested the meeting officially after you’ve done the submission? And following the meeting, when should we expect an update? Will it be presumably soon after the meeting? Or do you expect to wait for the minutes? Or will there be some ongoing dialogues between you and the FDA that you expect to complete first?

[Garrett Nichols:]

So the meeting typically occurs 75 days after the submission of the briefing package. We’ve submitted a complete briefing package with our questions to the FDA. We generally don’t engage in dialogue with them beforehand. So the meeting would occur 75 days after the submission of the meeting. Just to set expectations that the FDA is not likely to provide a black-and-white answer with regards to the program. This is really about engaging in dialogue and providing all of the evidence that we’ve accumulated to date on the adenovirus viral burden endpoint of the AdAPT study, its correlation with mortality, not just in the AdVance data set, but also in a number of independent data sets, which are moving forward towards publication this year.

[Samantha Semenkow:]

Got it. Thank you for taking the question.

[Operator:]

Our next question is from David Leibowitz from Morgan Stanley. Your line is now open.

[David Leibowitz:]

Thank you very much for the taking my question. With respect to the animal studies and the resulting FDA submission next year, could you just run us through what items beyond these animal data you need to put together, and what other limiting factors there might be?

[Garrett Nichols:]

So the pivotal animal studies are in the two animal models. The first is the rabbitpox model; the second is in the mousepox or ectromelia model. So the important pieces are the results of those studies, you need to demonstrate efficacy in those two animal models. Obviously, there’s a lot more to be put into a package of information that goes to the FDA, including how the drug behaves in humans. So if there’s a number of healthy-volunteer PK studies that need to be included in that particular piece, the description of the safety of the drug, and then also the bridging between the animals and the humans in terms of drug exposures. Those are the key pieces for us to provide. Once we have the pivotal animal models, in general those pivotal studies undergo audit by the FDA and then are followed by a final report. And that can take up to a year for those particular pieces to come through, which accounts for the time between the data that’s available from our final animal model in the mouse to the time that we can actually submit the data to the FDA.

[David Leibowitz:]

Thanks for taking my question.

[Operator:]

Our next question is from Stephen Wiley from Stifel. Your line is now open.

[Stephen Wiley:]

Good morning. Thanks for taking the questions. I know one of the levers you mentioned being able to pull here to accelerate timelines is reconsidering the number of patients required for full enrollment. Do you have any regulatory feedback in hand regarding minimal number of patient exposures? And I guess, if not, do you intend to seek this type of guidance out over the coming months?

[Garrett Nichols:]

Yes. Thanks for the question, Steve. I mean, to be clear, no decisions to change the size of the trial have been made. We’re just saying that we’re considering all of our options to accelerate the time to completion. But we have said frequently that this study is overpowered for the primary endpoint. And we upsized the study in order to have as much data as we possibly could for the safety and the mortality piece of the endpoint as well. Should we decide to address a smaller sample size as far as the study is concerned, we would likely get regulatory feedback before we did so.

[Stephen Wiley:]

Okay. And I know the Type C meeting is really a discussion about endpoint selection. But is there any away you could potentially solicit some feedback from FDA regarding what that patient number might or could be?

[Garrett Nichols:]

Yes, depending on the type of dialogue we end up having with the FDA, that could be an opportunity for us to do so. Yes.

[Stephen Wiley:]

Okay. Thanks for taking my questions.

[Operator:]

Our next question is from Ed White from H.C. Wainwright. Your line is now open.

[Ed White:]

Hi guys, thanks for taking my question. So first on the rabbitpox study, when was that study initiated? And when did you get the data? I’m just looking at the timeline there. I’m wondering if it could be extrapolated to the mouse study.

[Garrett Nichols:]

Well, the rabbitpox study in terms of a number of animals that we have to treat in that study is smaller, so it doesn’t necessarily extrapolate directly. But that said, it was started in December, and we got data last month from that particular study. So the mouse study was started in February. And there will be a couple of months before we end up getting the in-life portion of that study reported.

[Ed White:]

Okay. Thanks Garrett. And looking just back to the AdAPT, you have mentioned approximately 40 sites and have new sites coming online by the end of this month. Can you tell us how many sites are currently enrolling patients?

[Garrett Nichols:]

Yes. So we have approximately 32 sites that are open and enrolling at this point. And we have an additional eight sites that are slated to open within the next month.

[Ed White:]

Okay. And then just lastly just on CMX521 in norovirus, can you give us an update there and when we can expect to see patients being enrolled in the multiple ascending dose study, and trying to get some timing to maybe the start of the Phase 2 study?

[Garrett Nichols:]

In our press release prior to the JPMorgan conference, we announced that we have received Part B of that first-in-human study, which was a study that conducted single doses of 521 in healthy volunteers. And then we obtained gastrointestinal biopsies from those individuals. Unfortunately, in that study, we found that the levels of 521 triphosphate, which is the active drug, were below the levels that we believe would be efficacious. And so we’re examining our options as far as formulation work, etcetera, for us to be able to move forward with that program.

[Tim Trost:]

Yes, Ed, I mean, it’s effectively that’s paused as of this time, but I mean, notwithstanding that there are certainly ideas of additional things we could do.

[Ed White:]

Okay. Thanks.

[Operator:]

Our next call is from Jessica Fye from JPMorgan. Your line is now open.

[Yuko Oku:]

Hi. This is Yuko for Jessica. Thank you for taking our question. Could you comment on your confidence in procuring a smallpox contract this year prior to filing an approval?

[Tim Trost:]

Well, no. I mean that’s an unknown. I mean, that historically, there’s always been the theoretical prospect of a preapproval BARDA contract, but animals is ongoing. And the work in animals carries, as mentioned earlier, a reasonably lengthy time frame from data from that pivotal trial to the audit of that data to the final, final report. So don’t know is the short answer.

[Yuko Oku:]

Thank you.

[Operator:]

Our next question is from Phil Nadeau from Cowen and Company. Your line is now open.

[Phil Nadeau:]

Good morning and thanks for taking my questions. First one on the AdAPT trial, you mentioned a number of factors you think may be contributing to this slower-than-expected enrollment. What about the enrollment criteria themselves? That was one thing you didn’t mention. Are you finding the same proportion of patients meeting the screening criteria that you expected? Appreciating that the overall rate is lower, are the patients having same characteristics that you thought when they do present?

[Garrett Nichols:]

That’s a good question. So we as you recall, we were targeting patients that are at high risk for adenovirus infection after pediatric adult stem cell transplant. The initial enrollment criteria for that study was thus T cell depleted transplants. And those could be patients who are either T cell depleted ex vivo using cell sorting machines, or patients who received T cell depleted transplants through the use of sero therapy like or Campath ATG. As the trial has enrolled, we expanded those criteria to include other high-risk patients, including those who receive cord blood and haploidentical transplants. Those changes to the protocol are in process, and we expect them to be able to increase the pool of pediatric patients who are eligible for the study.

[Phil Nadeau:]

Got it. Okay. That makes sense. And then on the IV brinci, you said that some of the same reasons for the delay there, like regulatory approvals. Is IV brinci happening in the same sites in countries as AdAPT? Or are you having the same issues, just with a whole different set of institutions and territories?

[Garrett Nichols:]

So there are overlapping sites and centers, although generally, pediatric transplant centers and adult transplant centers are separate institutions. So there’s a separate contract and we kind of have to start at square one with each one of these sites. These are large academic centers often with very bureaucratic systems that include a scientific review and operational review, a financial review, prior even to IRB reviews and final contracts. So it’s just been a long process for us.

[Phil Nadeau:]

Got it, okay. And then Tim, one last one for you the potential for a BARDA contract. You mentioned negotiations. What exactly is going on with BARDA? Are there ongoing discussions? And are there any milestones or events that those of us external can look for?

[Tim Trost:]

Well as far as discussions, I mean, there always our ongoing discussions with BARDA. We continue to actively with them on our development contract. Regarding the work that’s going on right now, that’s important. I mean, you heard about the mouse trial from Garrett. So we’re all anxiously awaiting the data from that, and then we’ll see what that says and go from there.

[Phil Nadeau:]

Got it, okay. Thanks for taking my questions.

[Operator:]

Our next question is from Stephen Wiley from Stifel. Your line is now open.

[Stephen Wiley:]

Can you remind how many patients you’re targeting again for enrollment into the IV brincidofovir study, so 210 and 211? And I think you also suggested that there might be an opportunity at an early read on multi-viral efficacy. Can you also just remind us again, just given the number of patients that you’re going to disclose here, what proportion of those you think you might actually get multi-viral read?

[Garrett Nichols:]

Sure. So 210 and 211 are dose escalation studies. Each one of these dose levels is 10 patients randomized four to one to IV brincidofovir or standard of care. We could enroll in anywhere from one to three cohorts in each one of those studies, and so up to 30 patients in each study in order to give us information with regards to PK/PD. And as far as reactivation rates for other viruses, as you know for CMV seropositive positive patients approximately 50% of those patients would reactivate in the time period that they would be receiving treatment for adenovirus. So that just kind of gives you general rate for that. BK virus infection is less common. Probably no more than one-third of the patients would reactivate BK virus in the plasma and give us a read, as far as that’s concerned.

[Stephen Wiley:]

That’s helpful. Thank you.

[Operator:]

At this time, I’m showing no further questions. I would like to turn the call back over to Garrett for closing remarks.

[Garrett Nichols:]

Well, we thank everyone for your time this morning, and we look forward to updating you in the coming months. Thanks for the call.

[Operator:]

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect.