Concert Pharmaceuticals, Inc.
Q4 2020 Earnings Call Transcript

Published: 28 Feb 2021

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Concert Pharmaceuticals Fourth Quarter 2020 Investor Update Call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. And now, I'd like to introduce your host for today's program, Justine Koenigsberg, Senior Vice President, Corporate Communications and Investor Relations. Please go ahead.

[Justine Koenigsberg:]

Good morning, and welcome to Concert Pharmaceuticals' fourth quarter 2020 investor update. Joining me this morning with prepared remarks are Roger Tung, our President and CEO; Jim Cassella, our Chief Development Officer; and Marc Becker, our CFO. We will also be joined by Nancy Stuart, our Chief Operating Officer, for the Q&A portion of the call.

[Roger Tung:]

Thank you, Justine. 2020 was a year like no other. Our team stayed strong throughout the year, maintaining focus on executing on our goals. We successfully navigated through challenges unprecedented in the last century, and I'm proud of what our team accomplished to advance our business. One major milestone of 2020 was our evolution to a late-stage clinical development company. Based on the data generated to-date for CTP-543 across multiple Phase II clinical trials, we believe that we have a compelling and potentially best-in-class treatment for alopecia areata. We've moved to pace and are enrolling patients in our first Phase III clinical trial for CTP-543 THRIVE-AA1. As a reminder, FDA has granted breakthrough therapy and Fast Track Designations for CTP-543, based on the clinical data, the severity of alopecia areata as a disease and the unmet need to successfully treat it. We are fully committed to advancing CTP-543 to make a meaningful difference in the lives of patients with alopecia areata. Our current development strategy for CTP-543 is designed to support the filing of an NDA with the FDA in early 2023. Our team deserves recognition of successfully navigating our clinical trials during COVID-19. Earlier this month, we announced top-line results from our Phase II clinical trial of CTP-692 for the adjunctive treatment of schizophrenia. These results were not what we hoped for, or expected. The body of evidence in the field supporting D-serine as an adjunctive treatment of schizophrenia led us to advance 692 into a Phase II proof-of-concept study. Unfortunately, CTP-692 did not meet the primary or key secondary endpoints. Our team carried out a very well executed trial, but we're obviously disappointed with the results. Individuals with schizophrenia are in need of new treatments to improve outcomes across all of the symptom domains, and we hope that others exploring new opportunities will have success. We do not intend to further develop 692, and we'll reallocate those resources to CTP-543.

[Jim Cassella:]

Thanks, Roger. I want to reiterate Roger's commentary applauding our entire team for their efforts to advance our pipeline during unprecedented times. We were able to advance our CTP-543 clinical program in alopecia areata, and we completed our proof-of-concept Phase II study with CTP-692 in patients with schizophrenia. This past November, we began enrolling patients with alopecia areata in the THRIVE-AA1 trial. This is the first Phase III study for CTP-543 intended to support registration. Currently, clinical trial sites in the U.S. and Canada are actively recruiting patients, and we expect to continue seeing growing momentum there, as well as in the EU where sites will be coming online soon. We also intend to initiate our second Phase III study, THRIVE-AA2, in the first-half of this year, which will share a similar trial design to THRIVE-AA1, with the exception that we intend to enroll fewer patients for that study. In addition, we plan to initiate some other clinical studies to support and round out our overall NDA package and to support product labeling. Data from the first Phase III trial is expected next year, and under our development plan, the NDA is projected to be filed in early 2023. As Roger mentioned, we have a great opportunity with CTP-543 now in Phase III development. We are very excited about the progress we made and the impact CTP-543 have in the patient community. We believe we have the potential to offer patients a new treatment option, that is clinically meaningful and differentiated from existing therapies. We will be very focused on the continued execution of the THRIVE-AA program in alopecia areata this year, as we move closer towards registration. Before we open the discussion to questions, let me turn the call over to Marc to review the 2020 financial results.

[Marc Becker:]

Thank you, Jim. As I review our 2020 financial results, please reference the financial tables found in today's press release. Revenue was $7.9 million for 2020, primarily due to the recognition of non-cash deferred revenue under our previous agreement with Celgene. Research and development expenses were $61.6 million for 2020 compared to $59.8 million for 2019. The increase in 2020 was primarily related to CTP-692 Phase II clinical development expenses. R&D expenses are expected to increase in '21, as we continue to advance our CTP-543 program toward registration in alopecia areata. General and administrative expenses were $18.9 million for 2020 compared to $20.3 million for 2019. The decrease in 2020 is primarily attributable to lower legal fees. Our net loss for 2020 was $74.8 million or $2.40 per share compared to a net loss of $78.2 million or $3.29 per share for 2019. Finally, we ended 2020 with $130 million in cash, cash equivalents and investments. During the fourth quarter, we raised net proceeds of $22.5 million through our ATM. As a result, under our current operating plan, we expect our cash to fund the company through 2021. We are extremely pleased with the progress we have made to become a late-stage clinical company and the prospect of having our first NDA filing in early '23. We look forward to keeping everyone updated on our progress. This concludes our prepared remarks, and we would be happy to address any questions.

[Operator:]

Certainly. And our first question comes from the line of Maury Raycroft from Jefferies. Your question, please.

[Kevin Strang:]

Hi, this is Kevin on for Maury. Thanks for taking my questions. My first question was, you mentioned that you're looking at other clinical studies to support your NDA package. And product labeling, we noticed a drug-drug interaction study on clinicaltrials.gov with Itraconazole. Are there other drug-drug interaction studies you plan on starting and running? And what are your expectations for this study?

[Roger Tung:]

Jim, could you take that?

[Jim Cassella:]

Sure. Yes, good morning. This is Jim. So, that's right. As part of the normal NDA package, we will check the boxes on things like drug-drug interaction studies, so that we have all that information when we submit the NDA, and we can provide proper guidance for the labeling. So as we continue to progress the overall development program for 543, we will be doing those types of studies in parallel with our Phase III so that we will have all that information ready for the NDA submission.

[Kevin Strang:]

Great. Thanks. And then just a quick one on the patent front. Can you just talk about what the latest developments are there? I think it looks like the Arthrex case will be heard in March, on March 1. And can you talk about whether a ruling on patent 149 affects the rest of your pipeline?

[Roger Tung:]

Yes. This is Roger. Thanks for the question. So as you indicate, the Arthrex patent is proceeding through the courts in this -- depending upon how the Supreme Court rules on it, could have either narrower or broader ramifications. And, obviously, we can't comment on that until we hear what the Supreme Court's take is on it. As far as its effect on the rest of the pipeline, every compound is a case-by-case situation. And we don't believe that specifics related to the 149 patent necessarily relate to any other patents that we have. The tax differ on a case-by-case basis. And every illegal situation has to be taken on its own merits.

[Kevin Strang:]

Great. Thank you, Roger. And I'll hop back in the queue. Thanks.

[Roger Tung:]

Great.

[Operator:]

Thank you. Our next question comes from the line of Jason Butler from JMP Securities. Your question, please.

[Jason Butler:]

Hi. Thanks for taking the questions. Just another one on the NDA prep activities. Can you just remind us what work you'll be doing over the next year or 18-months in terms of manufacturing and supply chain preparations for commercialization?

[Roger Tung:]

Jim?

[Jim Cassella:]

Yes, sure. Hey, Jason. No, great question, because sometimes we focus on clinical, but we know that there's so many other things that need to be done. We have a great team, a lot of experience in that front. I can say that, we are doing all the things that are necessary and appropriate to make sure that we have our proper API batches, registration batches, commercial activities going on, and those things are all on track.

[Jason Butler:]

Okay. Great. And then just, Roger, in terms of thinking about the next pipeline assets and prioritization, obviously, you're looking for things, the compounds that the platform can have the biggest clinical impacts on or impacts on the profile. But apart from that, what are your other factors that you're focused on? For example, does it need to have some kind of therapeutic adjacencies to, for example, alopecia or other factors that you're thinking about when prioritizing the pipeline advancements?

[Roger Tung:]

Yes. Thanks for the question, Jason. Clearly, one of the benefits of the product platform that we have is that there's the ability to point it in a number of different directions. We had really an unusual situation with CTP-692 in that it had a type of differentiation, which was profound and unusual. Unfortunately, that didn't extend to the efficacy of the therapeutic modality, which is really -- of course, based on the underlying biology of the compound.

[Jason Butler:]

Okay. Great. Thanks for taking questions.

[Roger Tung:]

Absolutely.

[Operator:]

Thank you. Our next question comes from the line Joon Lee from Truist Securities. Your question, please.

[Leszek Sulewski:]

Yes. Good morning. Thank you. This is actually Les on for Joon. Just a quick one for me on dose selection. And is it possible that you can go with a different dose in the second Phase III study? And also is it possible to go beyond the 12-milligram? Thank you.

[Jim Cassella:]

Yes. So, Les…

[Roger Tung:]

Jim, do you want to speak to that? Yes.

[Jim Cassella:]

Sure. Yes. I think our dose selection is done. We've established the 8-milligram and 12-milligram BID doses in our Phase II trial. Those are the doses that we brought into our first Phase III. At this point in time, we are continuing to build the database for both safety and efficacy around both of those doses, so we will not be changing the doses going into the second Phase III program. The reason we have both of those doses is that, both doses have been efficacious and shown the safety profile that we are developing. And going with two doses into the Phase IIIs as well as potentially into the commercial environment, we will have the opportunity for physicians and patients to be able to have selection of doses and customize and optimize, whichever one is best for that patient. So these are the doses that we're studying based on the data we've generated, and we'll continue to have these doses in our registration package.

[Leszek Sulewski:]

Great. Thank you.

[Operator:]

Our next question comes from the line of Difei Yang from Mizuho. Your question, please.

[Difei Yang:]

Hi. Good morning. And thanks for taking my question. Just a couple of quick ones. The first one is around additional opportunities. Just for clarification, are you looking for indication extension beyond using same 543? Or are you thinking about new molecular entities?

[Roger Tung:]

Hi, Difei. This is Roger. Thanks for the question. I think the answer is both. We believe that due to its mechanism of action, CTP-543 has strong potential in other indications beyond alopecia areata, and that's something that we'll be exploring more in the coming quarters.

[Difei Yang:]

Thank you, Roger. So the next question is around opportunities ex-U.S. So 543 is in late development stage and how do you think about ex-U.S. opportunities on 543?

[Roger Tung:]

Well, we are going to be doing development of CTP-543 in Europe as well as in the U.S. and we think that there are longer term opportunities for us there. As we've made clear previously, our focus is on commercialization in the U.S., but we're certainly keeping an eye on the potential for the compound outside of the U.S.

[Difei Yan:]

Thank you for taking my questions.

[Roger Tung:]

Absolutely.

[Operator:]

Thank you. Our next question comes from the line of Esther Hong from Berenberg. Your question, please.

[Esther Hong:]

Hi. Good morning. Thanks for taking my question. So with CTP-543 moving forward in late-stage Phase III program, can you discuss any prelaunch activities taking place? And any comment on commercial strategy? Thank you.

[Roger Tung:]

Hi, Esther. Thanks for the question. We're working closely both with our Board, which has several members who are experienced in commercialization and marketing of agents, both in smaller and larger markets, as well as external advisers to put together a prelaunch plan. It's a little premature for us to be talking about it, but we're very active in that area.

[Esther Hong:]

Great. Thank you.

[Roger Tung:]

Sure.

[Operator:]

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to, Justine Koenigsberg, for any further remarks.

[Justine Koenigsberg:]

Thank you, Jonathan. And thank you, everyone, for joining us this morning. Please note our next healthcare conference presentation will be virtually at the H.C. Wainwright, and Oppenheimer Conference is next month. Details about these presentations will be available in the IR section of our website. This concludes today's call, and thank you again for joining.

[Operator:]

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.