Stealth BioTherapeutics Corp
Q2 2021 Earnings Call Transcript

Published: 7 Aug 2021

[Operator:]

Greetings, and welcome to the Stealth BioTherapeutics Q2 Earnings Conference Call. . As a reminder, this conference is being recorded Thursday, August 5, 2021. I would now like to turn the conference over to Henry Hess, Chief Legal Counsel. Please go ahead.

[Henry Hess:]

Good morning. With me on the call are Chief Executive Officer, Reenie McCarthy; Chief Clinical Development Officer, Jim Carr; Chief Business Officer, Brian Blakey; and Chief Financial Officer, Rob Weiskopf. Before we begin, I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please take a moment to review our earnings release on the Investors section of our website, which contains cautionary language regarding our forward-looking statements and factors that could cause our actual results to differ materially from those projected, and I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Now I'd like to turn the call over to Reenie McCarthy, Stealth's CEO. Reenie?

[Irene McCarthy:]

Thank you, Henry, and good morning to everyone on the line, and welcome for joining our update today. We've been extremely busy pivoting from a planned Phase III clinical trial in Barth to our upcoming NDA submission, which we expect to complete over the next couple of weeks. As Jim will explain a bit further, after numerous further communications with the FDA, FDA determined that additional clinical trial data from the patients remaining on our open-label extension is unlikely to add meaningfully to the evidence to support an NDA. Additionally, due to the ultra-rare nature of Barth, we were collectively unable to identify a feasible trial design to generate additional data. In June, the FDA provided us with feedback on the pre-NDA questions we had previously posed, and we eventually made the decision to submit our NDA, although there can be no assurance that the FDA will file the NDA. Jim will review the basis of the submission briefly in his slides. We've been closely partnered throughout this process with Barth Syndrome Foundation, which has attended most of our FDA meetings with us and has gone to great lengths to educate the FDA about both the unmet need in this disease through its patient-focused drug development, its petition to us to submit and for FDA to file and review our NDA, its collaboration with the many KOLs who wrote a letter of support to FDA and its recent first-of-its-kind listening session to educate FDA about its tolerance for lack of certainty of benefit. Consistent with the history of our strong engagement with the patient community, the Barth Syndrome Foundation is very supportive of our submission decision. We do have rare pediatric disease designation for elamipretide for the treatment of Barth, and we will be requesting priority review of our application. We are also making great progress on other elamipretide pipeline expansion opportunities. So we've reached alignment with the FDA on the rationale and design of our upcoming Phase III clinical trial in patients with mitochondrial myopathy due to nuclear DNA mutations, and we're expecting to enroll our first patient in that program by year-end. Our principal investigator at the Children's Hospital of Pennsylvania is incorporating FDA feedback into the protocol for the Friedreich's ataxia trial, which we still expect to initiate by year-end. And Jim is actively partnering with the Duchenne and Becker muscular dystrophy patient and key opinion leader communities as a member of the Cardiac Working Group updating the guidance for industry. This guidance, the development of which was spearheaded by the patient community, was first published by FDA in February 2018 to provide recommendations for sponsors developing therapies for these devastating diseases. We're also anticipating a very busy fall for our ophthalmic development initiatives as we look forward to completion of our Phase II clinical trial in geographic atrophy early next year. Our recent analysis of mitochondrial health in the mitochondria-rich ellipsoid zone of the retina supports the scientific rationale for our development initiative in AMD where we hope to be the first therapeutic with the potential to actually improve vision for the more than 5 million people affected worldwide by this devastating and progressively blinding disease. We are increasingly optimistic that our intravitreal development initiatives will result in a less onerous dosing regimen for the elderly patients affected by this disease and also to potentially pave the pathway for other retinal indications, such as glaucoma. Finally, we're making meaningful traction in our efforts to develop mitochondrial therapeutics to address novel neurodegenerative indications. SBT-272 continues to show promise in various preclinical models, and we're expecting to be back in the clinic in Phase I dose-ranging studies by early next year. Our SBT-550 series also offers a potential first-in-class dual mechanism of action to address the paraptosis and complex lung dysfunction observed across different neurodegenerative disease pathologies. We are anticipating numerous meaningful milestones in the coming months, and we believe this success on these initiatives could potentially be transformative for the field of mitochondrial medicine. I'll be turning over the call to our Chief Clinical Development Officer, Jim Carr, to provide more color regarding our pipeline update. Jim is going to start by walking you through how we reached our decision regarding the Barth NDA submission before turning to our other more commercially meaningful development initiatives. These obviously include our upcoming dry AMD data readout, our Phase III nuclear DNA myopathy trial indication, and these also represent near term albeit much larger opportunities. Jim?

[James Carr:]

Thanks, Reenie, and good morning to those on the line. I'll be focusing on Slide 6. As Reenie mentioned, when we met with the Division of Cardiology and Nephrology and the Office of Cardiology, Hematology, Endocrinology and Nephrology at their request in early April, we were advised that an acceptable approach to generate additional data to support a Barth NDA would be a Phase III randomized withdrawal trial with patients who had been taking elamipretide for almost 3 years in open-label extension, would receive either elamipretide or placebo until a minimum number of events leading to treatment failure occur. This was consistent with the advice we received from 3 prior FDA review divisions. The Division of Cardiology and Nephrology recently advised us that after further considering this trial design, they do not think the trial would be informative. While we recognize the FDA's advice that we should generate additional data to support our NDA, over the course of our multiple subsequent communications with office and division leaders at the FDA, we were unable to identify a feasible trial design to generate additional data. This is largely due to the fact that there are insufficient available patients in this ultra-rare disease to power new trials. Despite advising that we need to generate more data to support a decision to review our NDA, FDA did provide feedback on our various pre-NDA questions in June. We have since completed additional analyses the FDA requested during our February meeting, which we hope could support a decision to review. We accordingly decided to submit our NDA, and we have notified the FDA that our submission should be expected this month, although there can be no assurance that FDA will file the NDA. I'd like to spend a few minutes reviewing our thoughts regarding potential approval pathways. These are obviously our thoughts, and we are not fully aligned with FDA on these given its continued request that we generate more controlled data. However, we hope that with the thorough assessment of our submission, including the new analyses we are including, the FDA will appreciate the persuasiveness of our regulatory arguments. On Slide 7, I'm showing a slide summarizing the data from SPIBA-001, which was a Phase III retrospective natural history control study comparing the long-term interventional cohort from our OLE with natural history controls. It was designed and conducted in accordance with FDA's guidance for use of retrospective natural history controls for rare disease drug development and meets the definition in the FDA regulations of an adequate and well-controlled study. You'll note that the primary endpoint of change in distance walked in 6-minute walk test was met at multiple time points. These improvements in 6-minute walk far exceed those seen in multiple published cardiovascular trials for which have supported approval in indications like pulmonary hypertension, which are typically in the 30- to 40-meter range. Notably, left ventricular stroke volume, which is inherently -- an inherently objective endpoint that could not be influenced by patients' knowledge of treatment, declined in natural history controls versus the improvement observed with long-term elamipretide therapy. We believe that the SPIBA-001 data could provide a basis for approval, supported by efficacy data from the placebo-controlled portion of SPIBA-201 where acylcarnitines, which are prognostic markers of cardiac function, improved as did echocardiographic parameters for 10 of the 12 patients following elamipretide therapy. Data from numerous other preclinical and nonclinical studies in Barth and related indications as well as clinical data from related indications provides additional support. On Slide 8, the other potential approval pathway is an accelerated approval pathway. As recently explained by senior FDA officials in the context of another recent approval, the accelerated approval pathway was created to give earlier access to potentially valuable drugs for patients who have a serious disease with limited or no treatment options as these patients are often willing to accept some degree of uncertainty of clinical benefit. Generally speaking, this approval pathway turns on changes in surrogate endpoints or intermediate clinical endpoints that are considered reasonably likely to predict clinical benefit in serious diseases. Typically, although not always, as the recent approval illustrate, these surrogate endpoints should be validated. In our situation, we have several potential surrogate endpoints, several of which are well understood although not validated in Barth. On Slide 9, first, left ventricular stroke volume was extremely low in all patients enrolled in SPIBA-201. Stroke volume and heart rate create cardiac output, resulting in a mean cardiac output in these patients so low that it almost meets the definition of cardiogenic shock in these young boys, who are at median age of only about 17 years old. Stroke volume is known to continue to decline year-over-year in young men with Barth as we demonstrated in SPIBA-001. This left ventricular dysfunction has been reported to contribute to the progressive skeletal muscle myopathy in Barth, which makes sense since muscle is highly dependent on increased cardiac output during exertion. We have now demonstrated that elamipretide-mediated improvement in left ventricular function in SPIBA-201 improved the myopathic symptoms as it was increasingly correlated to improvements in the 6-minute walk test. We believe that an improvement in stroke volume, as we observed, is reasonably likely to predict clinical benefit consisting of improved exercise performance. This has also been shown in published data from other cardiac indications where improvement in stroke volume leads to improved exercise tolerance. What is also logical to expect that given its codependency with ejection fraction, improved stroke volume may also lead to improved outcomes, such as reduced incidence of death or heart transplants. We have already shown the correlation with clinical benefit with the 6-minute walk test data. Second, the 6-minute walk test, while itself a clinical endpoint, could also meet the definition of an intermediate clinical endpoint reasonably likely to predict improvement in the progressive and irreversible morbidity that affects Barth patients as they age. These young boys with Barth were only walking a mean of 395 meters at baseline, which is significantly impaired relative to the reference standard of a mean of 725 meters for healthy 16- to 18-year-old boys and even below the mean of 430 meters reported for middle-aged patients with mild to moderate symptoms of heart failure. You can see from this slide that all patients improved with longer treatment, and the improvements were large for most patients. Although there was not a placebo control for the more than 100-meter improvement observed in the SPIBA-201 open-label extension, we do have data to rebut any assumption that patient's knowledge of treatment influenced the efforts they expended on this assessment, leading to a more than 25% median gain from baseline. On Slide 11, the third point is the MLCL to CL ratio, which is diagnostic if the disease improved for every patient from their first to their last visit. Those improvements were statistically significant from baseline during the open-label extension portion of the trial. While this is not a validated target endpoint, it does represent the pathophysiologic basis of the disease and is directly related to elamipretide's proposed mechanism of action. As Dr. Woodcock has recently commented, ultra-rare diseases, such as Barth, are a place where mechanistic reason may really play a major role as we have to stop just thinking that empirical evaluation is the only way of determining truth. Finally, and this is on Slide 12, recent commentary by the FDA in the context of the accelerated approval pathway suggest that patient's acceptance of uncertainty of benefits is an important consideration. Notably, the Barth syndrome community met with the FDA in March of 2021 for a listening session dedicated to their thoughts regarding acceptability of uncertainty of benefit. We have summarized some of the resulting messages on this slide but also encourage you to visit the Barth Syndrome Foundation's more comprehensive report on this listening session. I'll ask Brian to say a few words about our launch planning in the face of these expedited submission time lines. Brian?

[Brian Blakey:]

Thanks, Jim, and thanks to those on the line for joining today. We are certainly making progress on Barth commercial launch planning in terms of broadening disease awareness among KOLs and prescribing doctors, payer education and distribution planning. That said, we will be cautious about ramping commercial spend until FDA's decision on filing the NDA to more prudently manage our financial resources. We think given the size of the disease, we can quickly recoup time once we have a better line of sight to FDA decision-making. One area we do plan to push forward is expanding our expanded access protocol into more of a treatment IND so that we can broaden access to elamipretide therapy for boys and young men with Barth. We're pleased to report that the FDA approved this intermediate expanded access protocol for Barth patients in June. This will also put us in a position to execute more efficiently on any post-marketing commitments the FDA may request in the context of an accelerated approval. I'll turn the line back to Jim to discuss our other clinical programs. Jim?

[James Carr:]

Thanks, Brian. As Reenie mentioned, we recently received constructive feedback from the FDA's Division of Rare Disease and Medical Genetics regarding our Phase III protocol for the subgroup of patients with primary mitochondrial myopathy who responded in our previous trial. I'm showing a slide showing the 6-minute walk test results for the patients who meet the criteria for our primary efficacy analysis in this upcoming trial, as agreed with the FDA. By focusing on patients with nuclear DNA mutations affecting the mitochondrial ellipsoid zone and by enriching for patients with predominantly myopathic disease presentation in which ophthalmoplegia is a clear clinical marker, we believe that we've meaningfully derisked the heterogeneity which we struggled with in our previous developmental efforts. FDA agreed with all major aspects of our proposed Phase III trial design, including increased dose due to the observed exposure response relationship, the 1-year trial duration and the proposed endpoints, which are depicted graphically on the slide. We're working now to get sites up, and we hope to be enrolling patients by year-end. We're also actively engaged in supporting initiation of the Friedreich's study where FDA proposed that instead of conducting an open-label study, that the investigator consider either placebo control or comparative dose, that is a low and a high dose of elamipretide, to help inform efficacy signals. The investigator opted to incorporate a comparative dose, and the treatment goal will increase from 10 to 16 patients. We are studying both ophthalmic and cardiac endpoints in this trial, as you can see from the depiction on the slide. I've also been honored to join a group of highly knowledgeable external experts, patient advocates and other industry luminaries in the Cardiac Working Group organized to update guidance for industry for Duchenne and Becker muscular dystrophy cardiovascular drug development. We're still planning to meet with the FDA later this year to discuss our proposed development efforts for Duchenne cardiomyopathy. Shifting to our ophthalmic franchise. The upcoming Phase II readout in our geographic atrophy study is a significant upcoming milestone, which could be highly disruptive relative to other therapeutic approaches for dry AMD. The progressive nature of dry AMD and the fact that retinal cells do not regenerate mean that most therapeutic approaches are seeking to slow down the course of progression of the disease, delaying the inevitable march towards blindness. What we saw in our analysis of the ellipsoid zone health recently presented at ARVO is that all stages of the disease, and you'll see Drusen on the left and geographic atrophy in the right, baseline ellipsoid zone health predicted improvement in visual function in our Phase I trial. That offers 3 key takeaways

[Brian Blakey:]

Thanks, Jim. Our market research suggests that patients with slowly progressing somewhat silent disease like dry AMD are not always enthusiastic about coming into the clinic every month or 2 to get an injection in their eye directly into the retina just to slow down that subtle disease progression. Frankly, patient willingness to put up with this inconvenience is likely related to their degree of progressive visual dysfunction and its impact on their lifestyle. Conversely, we presented data at ARVO suggesting that intervening earlier is better. So how do we get patients to comply? Our market research suggests that if patients are deriving tangible benefits, such as seeing better when they're driving at night or reading in low-lit restaurants, they will more likely stick with the course of therapy. We also think it's important to lower the burden of therapeutic intervention for these elderly patients. I'm going to ask Marty Redmon, our Chief Research and Development Officer, to speak on how our intravitreal target product profile is designed with this patient-focused goal in mind. Marty?

[Marty Redmon:]

Thanks, Brian. I'm speaking to Slide 20. As Brian mentioned, our data and industry data show that retina specialists prefer intravitreal administration for the care and treatment of their patients over the once-daily subcutaneous injection we're using in ReCLAIM-2. But for elderly patients who have already progressed to the wet stage of AMD and are having to go in monthly or every other month for injections with anti-VEGF therapy, it's a struggle to keep up with the need for such frequent injections into their eyes. We think the answer for elamipretide might be to design a matrix to release more slowly into the retina, so the window between doses could be extended to every 3 to 4 months rather than every other month or every month. We're making progress with early product development, as you can see from the slide, confirming that the rate of release of drug is controlled by the dissolution rate of the surrounding matrix, which met our feasibility criteria. We're hopeful that tolerability in pharmacokinetic studies using the prolonged release product prototypes as well as our ongoing pharmacology work will give us a fairly robust data package to support potential partnering discussions following the availability of ReCLAIM-2 data. So I'll hand it back to Jim.

[James Carr:]

Thanks, Marty. Just quickly, we are progressing SBT-272 back into the clinic early next year. We continue to see truly promising data with this compound in various neurodegenerative models, and we expect to be presenting some of that data this fall. Our work on SBT-550 series and our targeting platform remains on track. We remain very enthusiastic about the scientific potential of our approach to help patients suffering from diseases of mitochondrial dysfunction. With that, I'll turn the floor over to Rob to discuss our second quarter results.

[Robert Weiskopf:]

Thanks, Jim, and thank you all for joining us today. As we've issued our press release this morning with our full financial results, I will try to be brief and focusing on the highlights of the second quarter, which are summarized on Slide 22. Cash and cash equivalents were $30.8 million at June 30, 2021. In May 2021, the company received $8 million under the development funding agreement with Morningside and expects to receive an additional $22 million during the fourth quarter of 2021. The company is also eligible to receive an additional $5 million upon submission of its Barth NDA, which is currently anticipated to be in August 2021. The company expects that its cash, cash equivalents and investments as of June 30, 2021, together with the $22 million in expected proceeds to be received under the amendment to the development funding agreement, will be sufficient to enable it to fund its planned operations into the second quarter of 2022. R&D expenses were $5.9 million for the 3 months ended June 30, 2021, compared to $7.4 million for the same period in 2020. The decrease was due to a net decrease of $2.2 million in clinical costs primarily driven by the closeout of our PMM development efforts, offset in part by a $0.5 million increase in preclinical costs, an increase of $0.1 million in employee-related costs, an increase of $0.1 million in manufacturing costs. G&A expenses were $5.1 million for the 3 months ended June 30, 2021, compared to $4.5 million for the same period in 2020. The increase was primarily attributable to a $0.4 million increase in professional services, a $0.3 million increase in pre-commercial costs and $0.1 million increase in cost of insurance, offset by a $0.2 million decrease in facility-related costs. Other expense was $7.4 million for the 3 months ended June 30, 2021, compared to other expense of $0.4 million for the same period in 2020. Other expense in 2021 consisted of a $7.2 million loss due to the change in fair value of the derivative liability and $0.2 million in interest expense. Other expense in 2020 consisted of $0.4 million in interest expense. Net loss was $18.4 million or $0.03 basic and diluted net loss per ordinary share for the 3 months ended June 30, 2021, as compared to $12.4 million or $0.02 basic and diluted net loss per ordinary share for the same period in 2020. I'll now turn it back to Reenie to conclude.

[Irene McCarthy:]

Thanks, Rob. We remain incredibly enthused about our science, and we're deeply grateful for the commitment of our team. We believe we are on the cusp of milestones that may make a truly meaningful difference in the lives of the patients we are committed to serve and which have the potential to apply more broadly to many other therapeutic areas in which mitochondrial dysfunction is implicated as a key driver of human disease. With that, I'll turn the call over for any questions.

[Operator:]

. And our first question comes from the line of Matthew Luchini with BMO.

[Unidentified Analyst:]

This is Jean on for Matt. So just two for me. I'm just trying to understand more on what led to the change in submission plan since last quarter. Like -- so for the -- because at the last quarter, you guys planned on doing randomized withdrawal. So -- within the OLE portion. Are there -- like are there no remaining patients in the trial? Is that what led to the change in the submission plan? And then...

[Irene McCarthy:]

No -- go ahead.

[Unidentified Analyst:]

How much do you guys think you can leverage the patient advocacy group to support the review?

[Irene McCarthy:]

So great questions, and thanks for jumping on and asking those. So in terms of the change in submission plans, as Jim explained, FDA has actually -- had actually encouraged us to do the randomized withdrawal of the patients in OLE several times over the past two years, and there are still patients -- there's still 8 patients in the open-label extension. And so we submitted that protocol, as the FDA had been requesting. And when they actually sort of leaned in and reviewed the protocol, they basically came back and said that they didn't think that, that trial would provide additional evidence of benefit. So basically, they reversed their thinking on the utility of that trial design. And with that, collectively, with the back and forth we've had with the agency, we really haven't been able to identify another trial design that's feasible given the ultra-rare nature of this disease. And so that's really what's led to our change in submission plans. It's just that a trial design that, again, FDA had been pointing to for a couple of years, in the end, once they really kind of leaned in and reviewed it, they just didn't think it would add value. In terms of how much we can leverage Barth advocacy, I mean, I think the ability of patients to influence the FDA, FDA is obviously very interested in hearing from patients. One of the things that has really become quite apparent in some of the guidance recently issued in other context by the FDA about the accelerated approval pathway is patient tolerance for uncertainty of benefit in serious diseases. And certainly, in an ultra-rare disease like Barth, that becomes more important. And so there was a first-of-its-kind listening session held with the Barth Syndrome Foundation in March where the community made their tolerance for risk of uncertainty of benefit quite clear, and there is more information on that listening session available on the Barth Syndrome Foundation website. So I encourage you to take a look there.

[Unidentified Analyst:]

Okay. That's helpful. And then for GA, it sounds like you guys are looking to partner that up. Has there been any early preliminary discussions with potential partners in the GA? And then for IVT formulation, is it -- do you like expect potentially a better retina exposure than subcu, hence potentially better efficacy?

[Irene McCarthy:]

Yes.

[Unidentified Analyst:]

And then when the data reads out in the first half, what are your expectations on the data? That will be it.

[Irene McCarthy:]

Okay. Sure. So Brian, do you want to jump in first?

[Brian Blakey:]

Yes. So on the business development front, we have and are having very early discussions with folks that are interested in partnering with us. We are looking at more of a worldwide probably partnership where we may keep a piece of the U.S. in conjunction with the partner.

[Irene McCarthy:]

And then I think for the IVT question, Marty, do you want to take that?

[Marty Redmon:]

Sure. Yes, we do expect that we're going to get higher exposures from IVT administration. We've designed the sustained release dosage form so that it provides what we believe to be an efficacious concentration continuously. So we do expect that we're going to get a continuous and relatively high level of drug exposure in the retina.

[Irene McCarthy:]

So that said, Jim, I mean, I know we've done work on retinal exposure with subcu, and maybe your thoughts on that and expectations for the data.

[James Carr:]

So, yes, consistent with what Marty said, there's no question that we'll see better drug exposure by introducing the drug intravitreal versus subcutaneous. The expectation for the data is similar to what we found in Phase I. So the expectation is that we will see an increase in the number of letters read under low light conditions. And if that's true, and I do expect repeat performance of that, also reading speed should also increase as well. So our expectation, again, is consistent with what we observed previously.

[Operator:]

. And we do have a question from the line of Yi Chen with H.C. Wainwright.

[Yi Chen:]

So I just want to clarify that while FDA thinks an additional Phase III trial will not add meaningful data, they also believe that the current -- the existing data does not support an NDA review. So I'm just wondering what is the likely outcome once you submit the NDA.

[Irene McCarthy:]

Yes. Thanks for the question, Yi Chen. I mean I think we can't predict what the outcome is. I think that what we've had was a collaborative process with the FDA to try to identify another trial design and really weren't able to do that. And we do know that the FDA, when an NDA submission is received, will evaluate it and, in fact, told us that they would evaluate any additional analyses that we are able to provide. So some additional analyses were requested by the FDA, and we have completed those. So that will be new data in our submission that hasn't yet been seen. But again, I think given the feedback, as you noted, there is a bit of a disconnect in terms of whether FDA thinks there's sufficient data to review based on what they had previously reviewed.

[Yi Chen:]

Okay. With respect to the Phase III trial in nPMD starting by the end of this year, can you comment on the number of patients that you would like to enroll and how soon you can enroll those patients?

[Irene McCarthy:]

Jim, you want to take that?

[James Carr:]

Sure. Thank you for the question, Yi Chen. So for the primary analysis, which, again, will be comprised of patients with nuclear mutations, also to have evidence of PEO, that would be 90 patients. So we need 90 evaluable patients. We're hoping to enroll approximately 130 and again, 90 of those would be -- these are primary analysis population. We expect to enroll the trial within a year. So again, we hope to commence enrollment at the end of this year, and by the end of next year, we should be fully enrolled.

[Operator:]

. And I'm showing no further questions at this time. I'll turn the call back over to the presenters.

[Irene McCarthy:]

Great. Thanks, everyone, again, for joining this morning. We're looking forward to updating you on our continued progress in the coming, literally, weeks and then months and appreciate, again, that -- you joining the call today. With that, we can conclude.

[Operator:]

Thank you. That does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your lines.