Altamira Therapeutics Ltd.
Q2 2016 Earnings Call Transcript

Published: 18 Aug 2016

[Operator:]

Good day, ladies and gentlemen and welcome to the Auris’ Second Quarter 2016 Financial Results and Business Update Conference Call. At this time, I would like to turn the conference over to Cindy McGee. Please go ahead.

[Cindy McGee:]

Thank you, operator and thanks to everyone on the call for joining. I am Cindy McGee, Head of Investor Relations and Corporate Communications at Auris Medical. With me today are Thomas Meyer, Auris Medical’s Chairman and Chief Executive Officer and Sven Zimmermann, Chief Financial Officer. Earlier today, we announced the top line results from the top two trials and issued a news release with the business update in our second quarter financial results. The releases are available on our website, aurismedical.com and filed with the SEC. During today’s call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial our operational performance for our strategies or expectations. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, but are not limited to the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approvals, our intellectual property position and our financial position as well as those described in the Risk Factors section in our Annual Report on Form 20-F and future filings with the Securities and Exchange Commission. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our view as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. With that, I hand the call over to Thomas.

[Thomas Meyer:]

Thank you, Cindy. Good morning to our listeners in the U.S. and good afternoon to our listeners in Europe. Earlier today, we announced the main outcomes from our Phase 3 TACTT2 trial with Keyzilen. As a reminder, TACTT2 was designed as a randomized, double-blind, placebo-controlled trial in acute inner ear tinnitus following traumatic cochlear injury or otitis media. The trial was conducted primarily in North America and randomized a total of 343 patients to receive either Keyzilen, 0.87 milligram per ML or placebo in a 3

[Sven Zimmermann:]

Thank you, Thomas. So before reviewing our financial results for the first 6 months of 2016, I would like to briefly note that this information as usual has been prepared using the same accounting policy and methods of computation as compared with the most recent annual financial statements. The financial statements are presented in Swiss francs, the company’s functional and presentation currency. All amounts shown are in Swiss francs, unless otherwise specified. Our research and development expenses decreased from $15 million in the 6 months ended June 30, 2015 to CHF13.4 million in the 6 months ended June 30, 2016. The decrease is mainly due to lower clinical expenses due to the progression towards completion of the Keyzilen Phase 3 program. This decrease was partially offset by higher clinical cost due to the initiation of the AM-111 ASSENT Phase 3 trial as mentioned by Thomas in the second quarter of 2016. General and administrative expenses increased from CHF1.9 million in the six months ended June 30, 2015 to $2.9 million in the six months ended June 30, 2016. The increase was partially due to higher expenses in relation to our controlled equity offering and putting the health facility in place. With regard to our net financial income and expenses, in the 6 months ended June 30, 2016, we recorded a net unrealized foreign exchange loss of CHF1 million, whereas we had recorded a loss of CHF2.1 million in the same period in 2015. The lower loss in ‘16 is mainly due to the lower depreciation of the U.S. dollar against the Swiss franc compared to 2015. The reported net loss for the first six months of 2016 was CHF17.3 million compared with CHF19 million in the same period of 2015, corresponding to a net loss per share of CHF0.50 versus CHF0.62 in the previous period. However, keep in mind that both of these figures include the results from unrealized foreign exchange gains or losses. Our cash and cash equivalent as of June 30, 2016 was CHF32.8 million, which does not yet include the $12.5 million received in July 2016 as the first tranche of the loan facility. We continue to expect that our operating expenses for the full year ‘16 will be in the range of CHF33 million to CHF38 million, as guided earlier in the year. We believe that our current cash position, including the proceeds received from the loan facility, will enable us to finance operations onto year end 2017. With that, I would now like to turn the call over to Thomas, who will conclude our presentation and afterwards open the line for questions.

[Thomas Meyer:]

Thank you, Sven. Before opening the call to your questions, let me highlight two additional points. First, we plan to participate this year again in the American Academy of Otolaryngology-Head and Neck Surgery Annual Meeting, which will take place in San Diego next month. Dr. Henry will review the safety profile of Keyzilen during an oral presentation on Sunday, September 18. And we will host a corporate symposium titled Advancing Pharmacotherapy for Tinnitus on Monday, September 19. We look forward to this event. Furthermore, as previously announced, Bettina Stubinski is transitioning out of her role as Chief Medical Officer. We thank Bettina for her great contributions to Auris Medical and wish her well in her future endeavors. Looking forward, I am pleased to announce that we have appointed Thomas Jung to our management team as Chief Development Officer. Dr. Jung will join us in September to lead our clinical, preclinical and pharmaceutical development activities. He previously served as the Chief Medical Officer at Delenex Therapeutics and spent 13 years at Novartis, most recently as Head, Translational Medicine for the European Union. Dr. Jung is a board-certified dermatologist and has established an impressive track record in moving development projects forward in both existing and novel therapeutic indications. In closing, we reiterate our disappointment in the TACTT2 results. As pointed out earlier, analysis of the trial data are ongoing and we continue to be committed to the Keyzilen program. We look forward to reviewing TACTT2 outcomes with regulatory agencies and to receiving a wealth of additional clinical data through the upcoming TACTT3 trial. In addition, we plan to keep you updated on our progress as we continue to enroll patients into the HEALOS and ASSENT trials for our AM-111 program. With that, I would now like to turn the call back to the operator who will open the line for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Serge Belanger from Needham & Company. Please go ahead.

[Serge Belanger:]

Hi, good morning. I guess first, a question on the TACTT2 results, just wanted to know if you could provide a little more color than you gave in the press release in terms of maybe some of the secondary endpoints and whether there were any irregularities regarding the placebo rates or variability around the endpoints that led to the core primary endpoint miss?

[Thomas Meyer:]

Well, good morning Serge. Well, typically we are very transparent about outcomes and these things. Now we have discussed this internally at length. And as I already indicated, since we still have about 40 patients in the TACTT3 study, we would like to avoid introducing any bias. So as we are dealing here with patient reported outcomes and the primary efficacy endpoint is at day 84 and it has still to be reported. This is why we are not disclosing further details here on secondary endpoints or subgroups. Analyses are ongoing. That’s what we can say here.

[Serge Belanger:]

Okay. So should we expect more detailed results prior to TACTT3 results readout?

[Thomas Meyer:]

Okay. So we will provide more detailed information only after the last TACTT3 patient will have had his or her last visit and after meeting with the regulatory agencies, at the very latest, together with the TACTT3 data.

[Serge Belanger:]

Okay, alright. Thank you.

[Operator:]

Our next question comes from Liisa Bayko of JMP Securities. Please go ahead.

[Liisa Bayko:]

Hi, can you just review any feedback you have gotten from regulators on the necessity for one trial versus two trials and that’s my first question?

[Thomas Meyer:]

Okay. Good morning, Liisa. Well, the standard assumption is that you need two trials. Obviously, now as I pointed out, we will analyze the TACTT2 data. We will discuss them with the agencies. We still have the TACTT3 trial coming up. So we will see, based on the outcomes, the results from these additional analyses and the TACTT3 results.

[Liisa Bayko:]

And so just, is there any thing you can say on kind of individual compliance of the co-primary endpoints or certain subsets of patients or anything going along those lines?

[Thomas Meyer:]

Well, I am afraid we cannot – we don’t want to disclose here further details. I mean we have stated we failed on both endpoints and we have not been significantly different from the placebo group for either endpoint in the improvement in tinnitus, whether it’s the loudness or the questionnaire.

[Liisa Bayko:]

Okay, alright. Well, thank you very much.

[Operator:]

[Operator Instructions] Our next question comes from Joseph Schwartz of Leerink Partners. Please go ahead.

[Joseph Schwartz:]

Hi. Sorry to see this outcome. What are the main reasons that you are considering exploring why the results here did not replicate what you saw previously?

[Thomas Meyer:]

Hi Joe, so just to clarify, are you interested in well, why we are doing the further analysis or are you thinking of TACTT3...?

[Joseph Schwartz:]

Yes. On TACTT2, what are the hypotheses that you are thinking of exploring to see whether it was this result, which differed from Phase 2, was due to patient selection or endpoints or center effects or things like that, is there anything that strikes you as more likely than others, knowing what you know about these results, which I understand you can’t share detail TACTT3 or bias TACTT3, but knowing what you know, what are the types of things that you are interested in exploring and maybe what are the most likely things that you think could have driven the surprising result?

[Thomas Meyer:]

Yes. Well obviously, I mean we are dealing here with some unexpected variability. And we want to understand okay, the sources of this. I think when we compare Phase 2 with the TACTT2 design and the conduct of the study, I think what we know is that there are some differences. There have been some changes. I mean, overall, the patient population has been the same. I mean, the changes that we introduced, that was the 2-week screening period, the switch from 0 to 100 to 0 to 10 rating scale for tinnitus loudness, but let’s say that’s smaller changes. As you know, we also are utilizing an electronic patient diary for daily ratings of tinnitus loudness and annoyance. And we are using the TFI. So, I mean, these are the changes that we made. In terms of geography, we added a number of countries, so Canada, Czech Republic, Israel, Turkey and South Korea. And I mean, the TACTT2 here, the U.S. accounted for 60% of the study population. It goes without saying that we also had a substantially larger number of trial sites than in Phase 2. But I think, at this point, it’s premature and we do not want to speculate here on why the TACTT2 data did not meet our expectations based on what we saw in the Phase 2 program as analysis that were still ongoing.

[Joseph Schwartz:]

Thanks very much.

[Operator:]

Ladies and gentlemen that will conclude today’s Q&A session. I would now like to hand the call back to Thomas for any additional or closing remarks.

[Thomas Meyer:]

Okay. Thank you very much, operator and thanks to everyone for joining the call today and your interest in Auris Medical. Have a great day, and take care of yours as always. Thank you.

[Operator:]

Thank you. Ladies and gentlemen, that will conclude today’s conference call. Thank you for your participation and you may now disconnect.