Idera Pharmaceuticals, Inc.
Q3 2014 Earnings Call Transcript

Published: 12 Nov 2014

[Operator:]

Good morning and welcome to the Idera Pharmaceuticals’ Third Quarter 2014 Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open up the call for your questions. Please be advised that the call is being recorded at the company's request. At this time, I'd like to turn the call over to Mr. Jim Baker, Executive Director of Corporate Affairs at Idera Pharmaceuticals. Please proceed. Jim Baker Thank you, Michelle. Good morning and welcome to Idera’s third quarter 2014 conference call. You can listen to a live webcast of today’s call and download a set of reference slides by going to the Investors Section of the Company’s Web site at iderapharma.com. Joining me for today’s call from Idera are Dr. Sudhir Agrawal, our Chief Executive Officer; Lou Arcudi, our Chief Financial Officer; Dr. Lou Brenner, our Chief Medical Officer and Kath Haviland, Vice President of Rare Diseases. Also joining us is Jim Geraghty, Chairman of Idera's Board of Directors. I would like to remind you that today’s discussion will include statements about the Company’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995 and that involve a number of risks and uncertainties. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the Risk Factors Section in Idera’s quarterly report on Form 10-Q for the quarter ended September 30 2014. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views at 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 following today's discussion. With that, let me pass the call over to our Chief Executive Officer, Dr. Sudhir Agrawal.

[Sudhir Agrawal:]

Jim thanks very much. Good morning everyone and thank you for joining us today's conference call. As you know Idera is focused on the discovery, development and commercialization of nucleic acid therapeutic for patients with rare diseases. Our lead programs are in genetically defined forms of B-cell lymphoma and rare auto immune inflammatory diseases. Since our last update we have made tremendous progress across multiple programs. In our B-cell lymphoma program, we have achieved enrollment of the first two dose cohort in our Phase 1/2 trial in patients with Waldenström. In addition, we have activated multiple additional clinical sites and expanded patient screening in our Phase 1/2 trials in patients with DLBCL harboring MYD88 L265P oncogenic mutation. In our rare disease program, we have specified a clinical development strategy focused on dermatomyositis a form of myositis that includes both muscle and skin involvement. Furthermore, as announced earlier today we have expanded our rare disease program to include Duchenne muscular dystrophy a muscle disorder in which inflammation plays a critical role in the disease pathogenesis. In the last few years independent investigators have reported that Toll-like receptors are early mediators in the inflammatory cascade central to muscle dysfunction in Duchenne. A growing body of evidence suggests TLRs are appropriate drug targets to reduce inflammation in this disease. These data include results from early preclinical studies of TLR antagonist candidate in well-established small model of Duchenne showing a decrease in inflammation and increase in muscle strength importantly we believe TLR antagonism is potentially applicable to a broad population of Duchenne patients irrespective of their genetic mutation. In this endeavor we are very pleased to announce today plans to collaborate with Parent Project Muscular Dystrophy. PPMD is one of the largest and most comprehensive Duchenne patient advocacy group in the U.S. and their team has decades of experience working with Duchenne family, global scientific and clinical leaders and regulatory agencies. We look forward to working with PPMD closely. In few minutes Kath Haviland our VP of Rare Diseases will provide an overview of our plans in Duchenne as well as update on clinical for development strategy in myositis. However, let me turn the call over to Lou Brenner our Chief Medical Officer to highlight the progress we have made in our B-cell lymphoma program. Lou?

[Lou Brenner:]

Thanks Sudhir and good morning everyone. We are really pleased to announce today that we have achieved enrollment in the first two dose cohorts and our Phase 1/2 clinical trials of IMO-8400 in Waldenström's macroglobulinemia. The progress with enrollment of this trial highlights the unmet need in Waldenström's and the scientific appeal of our novel TLR antagonist treatment approach. As a reminder, we are seeking to address genetically defined forms of B-cell lymphoma in which the MYD88 L265P oncogenic mutation is present. Data have shown that the MYD88 L265P mutation over activates TLR's signaling involve in malignant B-cell survival and proliferation. Our goal in developing a TLR antagonist drug candidate is to inhibit mutation directed TLR signaling in order to slow or stop the growth of tumor cells. Our current focus is on Waldenström's and diffuse large B-cell lymphoma or DLBCL. About 90% of Waldenström's patients and 10% of DLBCL patients harbor the MYD88 L265P mutation respectively. Importantly, independent research has shown that DLBCL patients harboring the MYD88 L265P mutation had worst outcomes including decreased overall survival compared to patients without invitation. Based on these data we believe there is a significant unmet need in this genetically defined patient population. Our ongoing Waldenstrom's trials include three escalating dose cohorts. The study is designed to enrolled patients with relapsed or refractory Waldenstrom's and treat them ones weekly with subcutaneous injection of IMO-8400 for 24 weeks. Following four weeks of treatment in each cohort an independent data review committee evaluates the available safety data and makes a recommendation on whether to continue dose escalation. Recently the DRC review data from the first dose cohort of 0.6 milligrams per kilogram recommended that we continue to the second dose cohort of 1.2 milligrams per kilogram. Subsequently we have initiated enrollment in the second dose cohort and have now enrolled a sufficient number of patients to enable a DRC reviewer data for this cohort later in the fourth quarter. If supported by the safety review we planned to continue dose escalation and initiate enrollment of the third and final dose cohort of 2.4 milligrams per kilogram before year-end. We are also making progress with our clinical program (adaptations) [ph] with DLBCL harboring the MYD88 L265P mutation. We are excited to announce today that we have completed the initial development of a prototype companion diagnostic for the MYD88 L265P mutation under our ongoing collaboration with Abbott Molecular. We plan to incorporate this prototype diagnostic into our DLBCL trial to augment the patients screening that is already underway. In addition we have activated several clinical sites in this trial today and we expect additional clinical sites including major academic centers to activate in the fourth quarter and early 2015. Molecular screen for eligible patients with relapsed or refractory DLBCL harboring the MYD88 L265P mutation is underway. As with all studies in which genetic screening is required there are complexities with identifying eligible patients. We are executing multiple strategies in collaboration with our investigators in contract research organizations to facilitate enrollment. Earlier this week we were also pleased to announce several scientific abstracts have been accepted for presentation at the upcoming American Society of Hematology Annual Meeting. At the meeting we expect to safety data for multiple Phase I and Phase II clinical trials of IMO-8400. These data are important because they have the potential to inform the dose escalation in the Waldenström's trial and the DLBCL trial and to support clinical development of IMO-8400 and other indications including rare diseases. Pending continued progress with trial enrollment we expect to complete the Waldenström's study and report final 24 week safety and efficacy data for all dose cohorts in the second half of 2015. In addition to evaluate the potential role of IMO-8400 in earlier line lymphoma therapy it studied IMO-8400 in combination with rituximab in preclinical models. We planned to these data at the ASH meeting as well. With that I would like to turn the call over to Kath Haviland to talk about our standard Rare Disease Program. Kath?

[Kath Haviland:]

Thanks Lou, and good morning everyone. I am very pleased to review the significant progress we have made in advancing and expanding our programs in rare dieses. This progress includes specifying a clinical development strategy in dermatomyositis and expanding our Rare Disease program to include Duchenne muscular dystrophy. Dermatomyositis is a form of matomyositis characterized by both muscle and skin involvement. As a consequence we believe a Phase II trial and patients with dermatomyositis can imply multiple clinical endpoints to evaluate the anti-inflammatory activity of IMO-8400. As a reminder dermatomyositis is an inflammatory muscle disease characterized by muscle weakness, skin rash, joint pain, fatigue, shortness of breath and difficulty in swallowing. These complications significantly impact the ability of a patient to perform activities of daily living and impact their quality of life. Current treatment options are limited and there is significant unmet need for new therapy. Independent research has shown that expression of TLR is up-regulated in patients with dermatomyositis providing evidence that inhibition of TLR activity is a potentially important treatment approach. We believe our focus on dermatomyositis provides several attractive features for a clinical trial program. First, dermatomyositis is more prevalent and the diagnosis is more easily confirmed compared to polymatomyositis, facilitating patient identification for our clinical trial. In addition the Coetaneous Dermatomyositis Disease Area and Severity Index or known as the CDASI is a well-established clinical outcome measure of disease related activity and damage in skin. Importantly the CDASI outcome measure is comparable to the Psoriasis Area and Severity Index or PASI which has been used to approved drugs for psoriasis. When combined with manual muscle testing and various other established clinical endpoints and biomarkers of inflammation we believe there is a potentially attractive path forward from a Phase II proof of concept trials to a registration directed trial in this disease. We intend to have interactions with regulatory authorities regarding this clinical development strategy in early 2015, with a goal of initiating patient treatment in a Phase II clinical trial of IMO-8400 in patients with dermatomyositis. As Sudhir mentioned we are very excited today to announce plans to collaborate with PPMD to advance a potential new treatment approach for Duchenne muscular dystrophy based on our TLR antagonism technology. This expansion of our Rare Disease program to include Duchenne is supported by existing preclinical data. In addition, we believe the overlap of scientists and clinicians in Duchenne and myositis is potentially attractive in both the development and commercial setting, as we seek to educate healthcare providers about the potential role of TLR antagonism and the treatment paradigm of both diseases. Duchenne is characterized by a progressive muscle weakness beginning in proximal muscle groups. Eventually this leads to severe disability and compromised pulmonary and cardiac function. It is a universally fatal disease with death typically occurring before age 30. There is strong scientific evidence to suggest that over activated TLRs are one of the key drivers of inflammation in Duchenne patients. Independent research has revealed a more than 6-fold increase in the expression of TLR 7 and the muscle fibers of DMD patient age 5 to 12 years old. In addition, similar observations have been seen in pre-symptomatic infants with DMD suggesting that TLR activation is an early trigger of inflammation in the DMD disease process. Earlier this year, researchers from Children's National Medical Center in Washington DC and Idera published preclinical data that showed a TLR 7and TLR 9 antagonist compounds from Idera's significantly decreased inflammation and improved muscle strength in the MDX mouse model of DMD. In a separate preclinical study in the MDX mouse model, the role of TLR's in the pathogenesis was demonstrated. The genes from MYD88 which is required for TLR signaling was knocked out, leading to significant improvements in skeletal and cardiac muscle function. We share the belief of experts in the field that multiple therapies addressing different aspects of Duchenne will be required to effectively treat the disease. The reduction of inflammation is a critical component of this strategy. This is not well addressed today as corticosteroid is balanced by limited efficacy and significant side-effects. Importantly, an effective anti-inflammatory treatment may have utility in a broad patient population irrespective of genotype. In addition, there is scientific evidence that suggests immune suppression can theoretically induce immunologic torments to dystrophin. This mechanism may offer an additive effect of potentiating mutation directed dystrophin restoration therapy. Overall, we believe the preclinical studies conducted today provides strong support for developing a TLR antagonist in DMD. Moving forward, we are very excited to work with PPMD as well as other experts in the field to conduct additional preclinical research and develop plans for the clinical investigation of a TLR antagonist compound in DMD. With that, I'd like to turn the call back over to Sudhir.

[Sudhir Agrawal:]

Thanks Kath and thanks Lou. We believe TLR antagonism has important potential role in the treatment of multiple diseases. Our corporate strategy is to focus on clinical development in rare diseases with well-defined patient populations and high unmet medical needs. We believe Idera is well positioned to advance our drug candidate through late stage development and following approval potentially commercialize in these areas. However, we also recognize that our significant opportunities to apply TLR antagonist as potential treatments for broader disease indications to enable us to pursue these opportunities and potentially seek collaborative alliances with other pharmaceutical company. We have expanded our pipeline of candidates with addition of a second TLR antagonist candidate referred to as IMO-9200. We are very pleased to announce today that we have initiated dosing in the Phase 1 trial of IMO-9200 and healthy volunteer following FDA acceptance of an IND for this trial. In addition, we plan to select a lead indication for further development of this drug candidate in the first half of 2015. In addition to our programs in B-cell lymphoma and rare diseases, we've also made progress on preclinical studies with our third generation antisense technology, which we refer to as gene silencing [indiscernible] or GSOs. GSOs are specifically designed to avoid immune-toxicity observed with earlier generation technology. We've developed an understanding that immune-toxicity is largely due to non-specific activation of Toll-like receptors and require the 5-prime end of the DNA. We specifically designed GSOs to lack 5-prime end to avoid immune-toxicity. Furthermore, in preclinical studies conducted to-date GSOs have shown 5-fold or higher improvement in gene silencing activity compared to earlier generation gene silencing technology. Currently we are working on optimization of GSOs for further development in selected disease indications. I'd like to turn the call to Lou Arcudi to review our financial results for the quarter. Lou?

[Lou Arcudi:]

Good morning Sudhir and thank you everyone for joining. In this morning's press release we reported a net loss applicable to common stock of -- applicable to common -- sorry third quarter of 2014 of $9.6 million or $0.11 per share compared to the net loss applicable to common stock shareholders of 5.0 million as of the end of the quarter compared to the last year at $0.11 per diluted share. For the nine months for the period we reported net loss applicable to common stockholder shares of 27.1 million or $0.33 per diluted share compared to the net loss applicable to common stockholders of 14.7m or $0.40 per diluted share for the same period. Research and development expenses for the third quarter of 2014 totaled $6.7 million compared to $2.5 million for the same period in 2013 for the nine months period, research and development expenses totaled $19.2 million compared to $6.8 million for the same period in 2013. General and administration expenses for the third quarter of 2014 totaled 2.9 million compared to 2.2 million for the same period in 2013. For the nine months G&A expenses totaled 7.6 million compared to 5.3 million for the same period in 2013. We ended the quarter in a very strong cash position in cash and cash equivalents with investments totaling 58.3 million compared to 35.6 million as of December 31, 2013. Overall we had a significant cash to progress the continued to build our operational infrastructure along with clinical infrastructure to support our ongoing and planned clinical and preclinical initiatives. As highlighted in our 10-Q we believe that we are well capitalized and have the resources in place to execute on our current business objectives. I will now turn the call over to our Chairman, Jim Geraghty for a few remarks.

[Jim Geraghty:]

Thanks Lou. I think the team has covered very well, actually the significant advances, I think Idera has made, I think you'll agree this quarter on multiple fronts. As we turn to questions and discussion I thought it might be worth offering one final observation. As Sudhir said at the outset a year-ago we set out a strategy focused on clinical development along two paths in genetically defined lymphomas and rare diseases. And as we have been talking to investors recently, what we hear is that today investors have been -- have understood and been able to value the company’s lymphoma programs, and our valuation today reflects pretty much exclusively the value of those programs. But people have told us that on the rare disease side we haven’t really provided significant clarity. So the indications in the clinical trial plan to allow those to be fully understood and appreciated. And I think what you’ve heard today is based on lot of work over the last quarter, I think the company has been able to provide what I think of is a step function increase, in clarity and value around those programs. What you heard is that focusing on -- we talked about myositis earlier, today we talked much more about dermatomyositis, I think you heard much more about the severity of that disease, about the endpoints that we are targeting, about the clinical path and the timeline for that clinical plan, and of course hearing lot more about Duchenne which I think it’s important to recognize as the data that has been referred to reflects company’s working line for a number of years, but it has reached the point today based on extensive discussions with leaders in the field KLLs patient organizations and others, where we think it has reached the point of visibility and our ability to provide clarity to investor that how we see ourselves moving forward. So our hope is and our belief is that this information should allow investors to understand these programs significantly better and add their value to the valuation that people think about the company today and going forward. So we look forward to talking with people about those matters and others on the Q&A coming up and then our discussion to the investors going forward.

[Sudhir Agrawal:]

Thank you Jim for closing remarks. As Jim stated we have made tremendous progress given the last quarter in the execution our corporate strategy to our programs in Genetically Defined Forms of B-cell Lymphoma, and more clarity on the Rare Diseases we are committed to developing meaningful advantage in treatment of patients and creating value for our shareholders. Operator we would like to open the call for question.

[Operator:]

[Operator Instructions]. First question comes from the line of Ted Tenthoff from Piper Jaffray. Please go ahead.

[Ted Tenthoff:]

Great, thank you very much, and congratulations on all the progress, really thorough update. Just a clarification first and then a question if I may. So congratulations on the abstract at ASH, just to be clear the Phase I/II data that you will be showing is not new from the Waldenström study, but rather Phase I experienced with 8400 and Phase II experienced from the psoriasis patients shelling on our target TLR activity. Is that correct just to set expectations appropriately?

[Lou Brenner:]

That is correct. Thanks for your question Ted. The data from our previous healthy volunteers and our psoriasis study will be presented in aggregate. As you know this is the data that has informed the starting dose and the dose escalation process that we are going through in Waldenström and in DLBCL.

[Ted Tenthoff:]

Well I do think it's important to get that out in some of the hematology committees and this is ultimately the target audience. And then when would you expect to start to report efficacy and safety data from the Waldenström's and or DLBCL studies.

[Sudhir Agrawal:]

Yes, so as we mentioned before the dose escalation is proceeding, the first analysis occurs in four weeks, but really substantially you don't expect the data on a safety and efficacy basis to come together later. So we've committed to being able to present that data in the second half of 2015.

[Ted Tenthoff:]

And then when it comes to again, congratulations on the alliance with such a fantastic organization, PPMD is the really a leader in the field in my opinion and just a great group to be working with. Is this strategy there to use 8400 or 9200 to go after per the TLRs, or is it potentially be even used the new GSO platform to go after Duchenne more broadly?

[Sudhir Agrawal:]

So Ted, that's a good question. Again we're very pleased to be working with PPMD and our preclinical studies in Duchenne model have shown very promising results with the treatment of TLR 7 and 8 and 9 antagonists. And based on the need and we are conducting additional preclinical studies to further optimize the dose and the schedule of the treatment. Based on these data, we plan to advance IMO-8400 and to treatment for Duchenne, because this is allocated for rare disease indication where 9200 is for larger auto-immune disease indication.

[Operator:]

Thank you. The next question comes from the line of Boris Peaker from Cowen. Please go ahead. Your line is now open.

[Boris Peaker:]

Good morning and thank you very much for this update on the rare disease plans. I'll start maybe with DMD, given the mechanism of action that you mentioned. I'm just curious how long do you anticipate for the impact of the drug to be evident and in that context what end points would you consider in future clinical studies?

[Kath Haviland:]

Thanks Boris for the question. So we are really starting to have those discussions with key opinion leaders now and working with PPMD to think through what the clinical plan could look. Our initial assumptions that will refined overtime will be that it'd be a six months study and that we'd look at some of the traditional end points that you see in Duchenne now, so functional end points such as the 6-minute walk, the 10-meter run/walk, 4-stair climb as well as the North Star Ambulatory Assessments will be done and then of course we'll also be looking at a series of biomarkers including serum CK and also cytokine levels that are directly related to the mechanism action of our TLR antagonist.

[Boris Peaker:]

So based on that, I'm just curious, what your thoughts are on the timeline for seeing some kind of proof of concept data on DMD?

[Kath Haviland:]

I think it's premature to talk about timeline as we haven't -- we're still executing the preclinical work. We're doing some of this clinical planning in parallel in conjunction with PPMD and some of the key opinion leaders in the field. Until we get through this planning in the preclinical results that Sudhir mentioned we're working on, we won't have a timeline to advise until that point.

[Boris Peaker:]

Great and my last question and just -- in terms of your dose escalating studies from a tolerability perspective, I'm just curious if there's any reason to believe that the maximum tolerated dose would be different in Waldenström versus DLBCL?

[Sudhir Agrawal:]

It's a good question, thank you. As you know that Waldenström is a more indolent chronic disease and DLBCL particularly in the [indiscernible] refractory setting that we're studying is a more severe disease, you could imagine that these will be related because they're both B-cell malignancies, but the threshold through what would be considered tolerability in those settings might be different as well. So we expect that the Waldenström's data will clearly inform the DLBCL trial, Waldenström is ahead in its progress, it was earlier and is moving through its dose escalation. So we do plan to be able to utilize some of that information DLBCL, but [indiscernible] we don’t expect any differences.

[Operator:]

I'd now like to turn the call back over to Sudhir Agrawal.

[Sudhir Agrawal:]

Thank you, Michelle. Thank you again for joining us today's on conference call. We appreciate your interest in Idera and look forward to sharing additional progress review in the months to come. Thanks again.

[Operator:]

Thank you for your discussion in today's conference. This concludes the presentation. You may now disconnect and enjoy the rest of your day.