Concert Pharmaceuticals, Inc.
Q1 2021 Earnings Call Transcript

Published: 4 May 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Concert Pharmaceuticals First Quarter 2021 Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. I'd now like to hand the conference over to your speaker today, Justine Koenigsberg. Please go ahead.

[Justine Koenigsberg:]

Good morning, and welcome to Concert Pharmaceuticals' first quarter 2021 investor update. Our prepared comments today will be brief so we can jump right into the Q&A portion of the call. Roger Tung, our CEO will provide the CTP-543 key highlights; and then Marc Becker, our CFO, will walk you through the first quarter financials. We will then be joined by Nancy Stuart, our Chief Operating Officer; and Jim Cassella, our Chief Development Officer for the Q&A portion of the call.

[Roger Tung:]

Thank you, Justine. We're committed to advancing CTP-543 through the Phase 3 program and anticipate filing our NDA in early 2023. We're very happy with the efficacy and safety profile CTP-543 has shown thus far. And based on the competitive data we've seen to date continue to believe that it may be best-in-class treatment for alopecia areata currently in development. We're pleased with the overall progress of the CTP-543 program, which is advancing as planned. We are on track to initiate THRIVE-AA2, our second Phase 3 trial this quarter as projected. The study will enroll approximately 440 patients with moderate-to-severe alopecia areata and is similar to THRIVE-AA1 in design. The Phase 3 data are expected next year. As a reminder, our robust clinical results, which have been presented in a number of medical meetings including most recently data from our open-label long-term extension study show that CTP-543 treatment maintains or improves hair regrowth beyond 52 weeks. We plan to present an update on the ongoing long-term extension study during the 2nd JAK Inhibitors Drug Development Summit on July 1. Additionally, looking at our SALT 20 analysis in the Phase 2 study, which is the primary efficacy endpoint in our Phase 3 trials, we saw statistically significant differences from placebo for the CTP-543 8-milligram and 12-milligram twice daily cohorts at 24 weeks. Specifically, 42% of patients treated with 12-milligrams of CTP-543 twice daily achieved an absolute SALT score of less than or equal to 20. In the 8-milligram cohort, 26% of patients achieved an absolute SALT score of less than or equal to 20. These results are clinically meaningful. Based on the data presented to-date from interest responsive trials, we believe our findings represent the most robust efficacy results of any compound being developed to treat alopecia areata. A recent epidemiological assessment of alopecia areata in the U.S. indicates that between 700,000 and 1.6 million patients currently have the disease with upwards of 40% of those patients suffering scalp hair loss of 50% or greater. It's becoming increasingly widely recognized that alopecia areata is an important medical condition with no approved treatment and in many patients exert significant, emotional, and psychological impact including depression or anxiety and is associated with other comorbid autoimmune conditions.

[Marc Becker:]

Thank you, Roger. As I review our first quarter 2021 financial results, please reference the financial tables found in today's press release. Research and development expenses were $18.5 million during the first quarter of 2021, compared to $14 million during the same period in 2020. The Q1 '21 increase was primarily related to the ongoing CTP-543 Phase 3 THRIVE-AA clinical program. We expect R&D expenses to increase as we initiate our second Phase 3 trial for CTP-543 this month. General and administrative expenses were $5.5 million during Q1 '21, compared to $4.7 million for the same period in 2020. The Q1 '21 increase is attributable to higher external professional service expenses and non-cash stock-based compensation. Our net loss for Q1 '21 was $22.7 million or $0.67 per share compared to a net loss of $20.5 million or $0.70 per share during the same period in 2020. Finally, we ended the first quarter of 2021 with $111.8 million in cash, cash equivalents, and investments. Under our current operating plan, we expect our cash, cash equivalents and investments to fund the company through 2021. This concludes our prepared remarks, and we would be happy to address any questions.

[Operator:]

Our first question comes from Maury Raycroft with Jefferies. Your line is now open.

[Maury Raycroft:]

First one that I wanted to ask on is just with recruitment for the first 543 Phase 3 particularly on topic COVID, just if you can provide any more specifics on how it's going and how is site activation is going in the U.S. and internationally?

[Jim Cassella:]

Sure. Hi, Maury. This is Jim. So, great question. We are doing very well. The trial is ongoing. We have our U.S. and Canadian sites are all doing very well and we brought on the European site. So I think given the experience we had last year running trials on their COVID, we learned a lot, we have a great team that is now experienced under these conditions. So I think things are going according to plan.

[Maury Raycroft:]

Got it. And just…

[Roger Tung:]

This is Roger, sorry, I apologize, I dropped off the call.

[Maury Raycroft:]

Yes, first question was just on the first Phase 3 and how enrollment is going for that one. And I guess your comments Jim as follow-up, I'm just wondering for the second Phase 3 as you get that started what the strategy is there for activating sites and enrolling patients internationally. If there is any more specifics you guys can mention on that?

[Jim Cassella:]

Yes, look, it's a very competitive space out there right now. And John, we have our sites selected, things are progressing very nicely. We have good data that drives our enrollment and we also have an ongoing open label extension study, which has been very, very useful in our recruitment activities because patients know that even though we have placebo-controlled trials that we are able to flip people into the open-label extension study where they will go on active treatment. So I think we've optimized all of our trial designs in our program to really facilitate enrollment into the program. So running these trials simultaneously, we don't believe is going to be any issue.

[Maury Raycroft:]

And also wanted to ask a question about cash runway and financing strategy over the next 12 to 18 months. Just wondering if you guys could talk about scenarios like milestone payments from partners or potentially how a trial delay could impact your decisions going forward?

[Roger Tung:]

Marc, can you take that?

[Marc Becker:]

Sure. Yes, thanks, Maury. So look we are a late-stage company now. We're in Phase 3, we've got second Phase 3 about to kick off, and so no doubt we'll have to bring in capital. There is a capital need. And so we do have cash at the end of this year and we're always assessing dilutive and non-dilutive opportunities. We also have an ATM out there. So we're exploring all those options as we speak.

[Maury Raycroft:]

And last quick question just on the DDI studies that are being conducted alongside the Phase 3s as part of the normal NDA packaging and labeling support. Just wondering if you can comment on the progress with those?

[Jim Cassella:]

Sure, Maury. Jim again. So yes, those are going to be studies that will support the NDA, things are moving very nicely there, we have a great early development team in our clinical team and those studies are progressing very nicely. We will have a number of those that will support the NDA and we're on track to have all those completed by the time we file.

[Operator:]

Our next question comes from Jason Butler with JMP Securities. Your line is now open.

[Jason Butler:]

Hi, thanks for taking the questions. First one, just a quick one on the second Phase 2 trial, you're about to start. I know you said that, Roger they were similar. Can you just remind us of any meaningful differences in the trial designs? And then also, can you talk about the overlap and potentially an enrollment sites between the two studies?

[Roger Tung:]

Well, I'll start and then kick it over to Jim. Thanks very much for the questions, Jason. So the endpoints will be the same for the two studies. The second one will be smaller because we'll have enough patients who will have been exposed to CTP-543 to produce what we believe will be a quite robust safety database, and it will also be more - there will be more sites in Europe for the second study. And Jim do you want to comment further.

[Jim Cassella:]

Yes, that's basically right. I mean we have picked centers that will meet our enrollment criteria. So in some cases we have high enrolling centers that are capable of participating in more than one study. In other cases, we have the centers just responsible for one study. So I think part of that process of selecting our centers is really geared towards being able to run both studies efficiently. As Roger said, we are taking opportunities to run some more European centers for the second Phase 3 trial. As you know, there is not a lot of going on in Europe at this time. So there is a lot of fresh patients there.

[Jason Butler:]

Great, helpful. And then second question from me, just can you give us any update on the PTAB review of the 659 patent. I think you've said last quarter that there was a potential for a post grant review in mid-May is that still possible. And then what would be the next steps following that? Thanks.

[Roger Tung:]

Sure, so PTAB is currently reviewing the PGR petition that Insight had filed against the 659 patent. They filed their initial petition and we have responded to it, there has been additional back and forth on that. We expect that they should have decision on whether or not to initiate a PGR review around the middle of this month. So if they do decide to initiate that review, our expectation is that it will be conducted and completed within the calendar year of the initiation of that time. We believe that we have good arguments for why the argument petition by Insight is really not valid, so our hope is that it will not be instituted. But even if it is, we think that that's a strong patent that will survive any challenges.

[Operator:]

Our next question comes from Esther Hong with Berenberg. Your line is now open.

[Esther Hong:]

Two questions from me. First on, can you speak about the competitor treatments in development for alopecia areata. And then second separately regarding additional pipeline opportunities, can you speak about any clinical or preclinical results for CTP-543 in other therapeutic areas? Thanks.

[Roger Tung:]

Hi Esther, so I'll take a first crack at that and if Jim wants to follow-up - welcome his thoughts on that. So the only entities, which currently are in development that have any clinical data associated with them are baricitinib and ritlecitinib. The data for those has been available for a while. The most recent release has been by Lilly earlier this year, I think might actually be this month they had released Phase 3 data on baricitinib. And the data that they have indicates that there is statistically significant responses at the SALT 20 score. But we feel that based on the data that we've seen across multiple Phase 2 studies with CTP-543, we believe that 543's results are more robust than baricitinib both at the 2-milligram and at the 4-milligram dose strength. So specifically what Lilly really indicated is in that the THRIVE-AA1 and THRIVE-AA2 studies they are seeing between 33% and 35% SALT 20 response at the 4-milligram level and between 19% and 22% response at the 2-milligram level. And those are both at 36 weeks. In contrast, our responses have been measured at 24 weeks. So it's significantly earlier timeframe and at our 8-milligram and 12-milligram twice daily doses, we saw 26% and 42% responses respect to. So I'll just leave it at that. For ritlecitinib, we are awaiting the readout from their Phase 2/3 study. And so, we don't have an appropriate late-stage comparison there yet.

[Esther Hong:]

And then just additional pipeline opportunities of CTP-543 beyond autoimmune disorder?

[Roger Tung:]

Right, so clearly with a JAK 1/2 and 2 profile of activity of CTP-543 is expected to be active in additional disease states beyond alopecia areata, as you noted. We have really focused our efforts to-date on the treatment of alopecia areata. So we don't have additional disease state information to share at this time. We have spent quite a bit of time looking at follow-on indications for 543 and if identified here a very short list of our indications, which would be of high interest to us as we go forward, but for competitive reasons, we're really not going to talk about those at the present time.

[Operator:]

Our next question comes from Difei Yang with Mizuho Securities. Your line is now open.

[Difei Yang:]

Just a question on the JAK in general, wondering if you could comment a bit on how you think about the safety of JAK inhibitors in general versus CTP-543 even in the recent developments around safety in this space. Do you think about the differentiation between - among these compounds versus a potential class effect?

[Roger Tung:]

Hi Difei, thanks for the question. So with respect to JAK inhibitors it's clear that there are both class effects associated with our JAK inhibitors to-date or there appear to be class effects and there are also some credit effects with the individual compounds as one would expect to see with small molecule inhibitors that may be related to either off target effects or differences in terms of the relative inhibition of different JAKs that that differ from molecule-to-molecule. We think that FDA is clearly trying to understand the relative similarities and differences and we've seen now a couple of PDUFA dates that have been pushed back, so that FDA can get additional information and better assess those aspects. We think with respect to JAK's there, well first of all, there are numerous JAKs that are JAK inhibitors that are approved now across multiple indications and it's clear that they have great utility and that it will continue to be used in the future. The specifics around the classes in the individual compounds, I think will be addressed over the course of the next, probably half a year as FDA assesses its information. And of course individual compounds will be assessed over time as their data becomes clarified in a larger population. Our view is that this will largely be a case-by-case situation where the safety and efficacy profiles of compounds in individual disease states will be addressed and assessed by FDA. One of the facts of alopecia areata, is that some of the mechanisms of action of treatment of other disease states or other inflammatory disease states are not as effective in alopecia areata is they are in for instance, some rheumatoid arthritis. And so, the choices of compounds that will be effective in alopecia areata for the foreseeable future will be fairly limited. JAK inhibitors have shown the greatest efficacy to-date that I'm aware of in the treatment of alopecia areata versus other modalities. And so, it's our expectation that the risk benefit profile will skew favorably for the use of JAK inhibitors. And of course as we've discussed before with respect to CTP-543 itself, we've been very happy with the overall safety profile of the compound and are developing a quite substantial safety database with long-term exposure to 543 that we'll be able to provide to FDA at the time of our NDA submission.

[Operator:]

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Justine Koenigsberg for closing remarks.

[Justine Koenigsberg:]

Thank you, Juan. We'd like to thank everyone for joining us this morning and we look forward to keeping everybody updated on our progress. For our list of upcoming investor conferences, please visit the events page within the Investor section of our website. This concludes today's call. Thank you.

[Operator:]

This concludes today's conference call. Thank you for participation. You may now disconnect.