Prothena Corporation plc
Q4 2019 Earnings Call Transcript

Published: 13 Feb 2020

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the Prothena Fourth Quarter and Full Year 2019 Financial Results Conference Call. [Operator Instructions].I would now like to turn the conference over to your host, Mr. Randy Fawcett, Senior Vice President of Finance and Operations. Please go ahead.

[Randy Fawcett:]

Thank you, Joanna. Good afternoon, everyone, and welcome to Prothena's investor conference call to review our fourth quarter and full year 2019 financial results and business progress as well as our 2020 financial guidance. Please review the press release we issued earlier today, which is available on our website at prothena.com and is also attached to a Form 8-K filed today with the SEC.On today's call, Dr. Gene Kinney, our President and Chief Executive Officer, will discuss our pipeline programs and corporate progress. Following Gene's comments, Tran Nguyen, our Chief Operating Officer and Chief Financial Officer, will review our financial results for the fourth quarter and full year of 2019 and this year's financial guidance. Gene will then provide an overview of upcoming milestones and open the call for Q&A.Before we begin, I'd like to remind you that during the course of today's presentation, we will be making statements regarding Prothena's future expectations, plans and prospects that constitute forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on estimates, projections and assumptions that may prove not to be accurate, and actual results may differ materially from those anticipated due to known and unknown risks, uncertainties and other factors.For a discussion of the risks associated with our forward-looking statements, please see our press release issued today as well as our most recent Form 10-Q filed with the SEC and also the Form 10-K we will soon be filing with the SEC. We disclaim any obligation to update our forward-looking statements.With that, I'd like to turn the call over to Gene.

[Gene Kinney:]

Thanks, Randy, and thank you all for being on our call today for a discussion of our pipeline and the upcoming milestones we're looking forward to in 2020 and beyond. During the past year, we have continued to advance our pipeline focused on neuroscience and diseases caused by misfolded proteins. These are areas where our deep domain expertise intersects with an unmet and often increasing medical need, and we are applying our capabilities against novel targets with the potential to change the course of many of these devastating conditions.Our diverse pipeline is based on our expertise in neuroscience and the ability to integrate insights around brain function as well as the biology of protein misfolding and how to optimally target toxic confirmations. We leverage these areas of expertise to identify and design novel approaches that aim to impact the underlying pathogenesis across several disease states. We are also leveraging our neuroscience expertise and relationships through our business development efforts, where we continue to evaluate external opportunities to potentially expand our neuroscience pipeline.We ended 2019 with a balance sheet that enables continued development of our clinical, preclinical and discovery programs through key milestones, and we're excited about the breadth and progress of our pipeline. I want to start by providing an update on the clinical programs

[Tran Nguyen:]

Thanks, Gene. Today, we reported favorable 2019 cash burn from operating and investing activities of approximately $53.5 million, which was below our updated 2019 guidance of $57 million to $65 million. As of December 31, 2019, Prothena had approximately $378 million in cash, cash equivalents and restricted cash and no debt. Please refer to the press release issued today for further details regarding our fourth quarter and year-end 2019 financial results.Turning to our 2020 financial guidance, we expect the full year 2020 net cash burn from operating and investing activities to be $60 million to $76 million and to end the year with approximately $310 million in cash, which represents the midpoint of the range. The estimated full year 2020 net cash burn from operating and investing activities is primarily driven by an estimated net loss of $84 million to $106 million, which includes an estimated $23 million of noncash share-based compensation expense.With that, I'll turn the call back over to Gene to summarize our upcoming milestones. Gene?

[Gene Kinney:]

Thanks, Tran. So as we move forward in 2020 and beyond, we expect continued progress in our pipeline and look forward to coming back to you as we have data to report. Before we talk about our upcoming milestones, I'd like to first recognize 2 groups of people who make a measurable contribution towards our ability to execute our highly ambitious goals.I want to first thank the patients and clinicians who participate in our studies. Because without their support, we could not elucidate the potential value of the new medicines we're developing. I'd like to also acknowledge and thank our very talented employees for their ongoing commitment to helping patients by advancing our science.Now turning to a summary of our R&D milestones. For prasinezumab, the last patient last visit in Part 1 of the Phase II PASADENA study took place toward the end of 2019, and we continue to expect to report results from Part 1 of the study this year. For PRX004, the Phase I study is ongoing and we expect to report additional detailed data, including data from the 30 milligram per kilogram cohort and data from the long-term extension portion of the study later this year.We are also making important advances in our discovery pipeline. We are progressing our collaboration with Bristol-Myers Squibb and expect to advance our IND-enabling activities for tau this year. We also expect to initiate IND-enabling activities for our abeta program this year.So that said, at this time, we'll open the call for questions. Joanna?

[Operator:]

[Operator Instructions]. Your first question comes from the line of Christopher Marai from Nomura.

[Christopher Marai:]

Congratulations on the year and a great update, appreciate that. Firstly, I was just going to hit up on perhaps PRX004 and the next data that you might release and sort of plan. I'm assuming it's too late to present it at ISA later this quarter. And then secondarily, with respect to your clinical trial plans that it seems you laid out, did I hear correctly, in polyneuropathy, you look at patients who have progressed following knockdown agents or the RNAi or tafamidis?

[Gene Kinney:]

Thanks, Chris, for the question. So I think there's two questions there. The first was timing for more data with PRX004. And I think there, we'll be consistent with what we've done in the past. We want to make sure that we disclose additional data, notably the higher level cohort, the 30 mg per kg cohort, from the escalation phase of the study as well as some of the early long-term extension data, and we would likely do that at a scientific conference this year.As would be typical for us, we wouldn't commit to what that scientific conference would be until we've got that abstract done and accepted, and we'd let the street know at that point in time. So we don't have much more to add on that piece. I think in terms of the clinical trial plans for PRX004, what -- the way we're thinking about it at this point and I think what we tried to communicate is where we feel the residual unmet medical need is for patients with ATTR amyloidosis. And we see 2 groups of patients broadly, right? In one group, you're talking about both wild-type and hereditary ATTR patients with cardiomyopathy. And there, I think there's a significant medical need to prolong survival and have a survival benefit, particularly in patients that are in a more severe cardiomyopathy state. So these would be your New York Heart Association class III and IV patients and ultimately, potentially being able to see more rapid improvement, say, something that occurred in the first 18 months, even amongst the more milder patients.I think on the other side, when you think about polyneuropathy, what we look at here in terms of unmet need, there're a number of studies that plus or minus show that about 1/3 plus or minus, depending on the publication, of patients on silencer treatment are characterized as nonresponders and there are different ways that nonresponders are characterized. There's no standard definition of that across the field, just to be very clear. But we see, obviously, there being potential need to improve treatment for those patients as well.So that's where we see the potential need and space. And broadly, when we think about further development of PRX004, we think the depleter mechanism of action that PRX004 possesses is something that kind of lends itself well to think about both stand-alone kind of trials, where we can think about PRX004 by itself, but we can also think about it as a potential additive approach to the existing therapeutic approaches in as much as the biology is complementary and not competitive.

[Christopher Marai:]

Okay. Great. And then just to sort of follow-up, with respect to that polyneuropathy population, is there any indication that some of those patients may have irreversible damage and that you wouldn't be able to sort of reverse it or help now even with your differentiated approach? And then lastly, when we think about you guys kicking off some of these trials, presumably sort of these 2, 3, if you will, given the [indiscernible], you started on Phase I? And what sort of timing should we think about with respect to those trials kicking off? Or would you wait for a partnership or something to that effect to get those settled?

[Tran Nguyen:]

Well, I think we will continue to look at the dose escalation data from the higher doses, and we'll look at the long-term extension data. But that being said, we'll let the data guide us in terms of ultimate timing. And clearly, some of these conversations need to be done with regulators in terms of the next steps.In terms of reaching the broadest patient population, clearly, cardiomyopathy would be a major first step, given the size of that opportunity, and hereditary neuropathy is clearly a little bit smaller or a lot smaller.But in terms of our belief in terms of reversal of damage in maybe sicker patients, I think what we -- we don't have exact data in ATTR patients to understand that and even the clinical data that's being shown hasn't really borne that out in terms of -- where we get our confidence from is we go back to our NEOD001 data in terms of our Mayo Stage IV patients, who are the sickest patients in the AL population, where, in the wild, I think there are -- the median OS is about 6 months. And then, of course, in our trial, the control arm was about 8 months. And so, of course, on our treatment side, it was not reached, I think, at a 9-month period. I think we had a hazard ratio below just 0.5.

[Gene Kinney:]

On all-cause mortality.

[Tran Nguyen:]

That's right. On all-cause mortality. So that gives us a belief that at least in -- from a cardiomyopathy perspective, in a patient population, although different, that dies a lot sooner that you -- that we were able to intervene there with an antibody with a similar mechanism, clearly. But we'll have to continue to look for data here in the Phase I to give us that signal. We clearly like where -- what we showed at the end of the year last year, where we've showed proof of mechanism, where we've shown we can interact with the misTTR, which we believe is the pathogenic species in a very short period of time.

[Operator:]

Your next question comes from the line of Charles Duncan from Cantor.

[Charles Duncan:]

Thanks for that detailed update on the platform and the pipeline. I need to take another approach to trying to understand kind of news flow. I doubt you'll really be able to give us much granularity, but I'll give it a shot any way. And that is if you think about the PASADENA data, you said you anticipate data this year. And yet for PRX004, you qualified it by saying later in the year. And so I guess, I'm wondering if you anticipate updates out of PASADENA before PRX004? Or did I misread that?

[Gene Kinney:]

No. Thanks for the question, Chaz. Yes, I mean, so right now, with PASADENA, we're saying 2020. And I think what we can do is kind of reiterate some of the timing on that. Clearly, that study was fully enrolled with 316 patients in late 2018. As I mentioned on the call, the last patient visit for Part 1 was towards the end of 2019.All that said, Roche is operationally in charge of that study. So ultimately, those time lines are theirs. And at this point, in terms of granularity, I think all we're comfortable saying is 2020. But PASADENA is -- again, just to remind everyone, PASADENA is a study that is 80% powered with -- at a one-sided alpha of 0.1 to detect a 37.5% benefit at week 52 for each of the dose levels against placebo. So it is very much a signal-detection study. It's meant to be directional and informative and really to guide us in terms of what it would take to design an appropriate Phase III, if, in fact, the data indicates that we should be moving forward. So that's where we are. And again, we can't provide any more detail than that at this point in time, but we'll be excited to see the data when it comes.

[Tran Nguyen:]

Chaz, in regards to your relative question between PRX004 and PRX002, I think you're reading too much into that. I think both datasets will land at the appropriate scientific or medical conference this year.

[Charles Duncan:]

Okay. Okay. That's fair. And that makes sense to me. And then one additional question on prasinezumab and Part 1. Not that you need the cash, but can you remind us whether or not there could be a milestone payment with the completion of Part 1? Or would it be perhaps later in the program?

[Tran Nguyen:]

Actually, the -- we haven't disclosed the size of the milestone, but I'll give a little bit of a recap. We received a milestone for Phase 1 start, which was $15 million. And we received another milestone for initiation of Phase II, which was $30 million. We will -- if there is a Phase III and it initiates, we'll receive the third clinical milestone upon the initiation of Phase III.

[Operator:]

Your next question comes from the line of Michael Yee from Jefferies.

[Michael Yee:]

Two questions. One is following up on the Parkinson's study. Could you just provide some color and thoughts around what you think is a great scenario? And what you think is -- or what do you think the key data you'd like to see and these endpoints are to support an active drug? Maybe just talk about that, and how you're thinking about it with your partner?And then the second question is a little more off the radar -- I guess, off the rails, which is, as you mentioned in your press release, you added 2 new Board members, one of which is a known biotech investor. I think there's questions around would you be thinking about monetizing assets, thinking about various forms of monetization of things? Maybe just talk to that addition to the Board. And how you guys are thinking about where that could create value and monetization of some of the assets?

[Tran Nguyen:]

Well, let's start with the first part of your question and then -- oh, you might have to remind us on the second part, but I think I know where you're going there. But in regards to PRX002 and what we would be looking for, I think it's good here to take a step back and think about the totality of data that will be produced by PASADENA. I mean, the way you can think about that, too, is Biogen, who is about 6-plus months behind us, they have a safety, tolerability, primary where they look at secondary and exploratory endpoints such as DAT-SPECT and other endpoints. It's the same thing here. I mean, although we have a primary endpoint of MDS-UPDRS, we'll be looking at the primary, select secondaries like DAT-SPECT, and of course, the digital biomarkers that are in the exploratory bucket. So we'll be looking at all of that comprehensive data to understand how to move forward to a Phase III. So I think that would be -- for us, home run data is -- we have data that we can move forward with.

[Gene Kinney:]

I agree completely. And just -- I just want to make sure I remind everyone as well. This is not a study that was powered in a traditional way that you would power an efficacy study. This study is powered at 80%, again, with a one-sided alpha 0.1 to detect relatively large effects at 37.5%. We really are asking -- what we really are asking from this study is can we derisk the approach to a Phase III by designing an appropriate Phase III trial.And across the multiple endpoints, many of which we think could be informative, that's what we need out of the trial in order to be able to continue to move the program forward. So I think that's what we're looking for, and I think that's what anyone was thinking about how you would move this through the Phase II to Phase III setting would be thinking about.

[Tran Nguyen:]

And I think in terms of your second question regarding EcoR1 Oleg Nodelman's appointment to the Board, clearly, the Board -- it was a very welcomed addition to the Board and his decades-long expertise around financial and strategic investing is clearly very additive. And it's a perspective that the Board welcomes.In terms -- you said something about monetization. I mean, I think at the end of the day, not just Oleg, but other Board members and also the senior management team, we're going to do what's in the best interest of both patients and, of course, our shareholders as a derivative of all that.So the point is, I think he continues to be very productive for us. I think our BD efforts have actually been turned on a little bit higher to continue to add to our neuroscience pipeline, although, clearly, the major thing we'll always stick to is our expertise in neuroscience and also protein misfolding from an understanding of the biology. So that's -- we're really excited by having him on the Board, and he's been clearly very helpful. Including, we also had another addition of Paula Cobb, who has also operational expertise, ex-Biogen, and she's been very helpful and instrumental from an operational perspective, too.

[Operator:]

Your next question comes from the line of Kennen MacKay from RBC.

[Bikramjot Singh:]

This is Bikram on for Kennen. Just on the early pipeline, maybe you can elaborate on what is guiding your confidence in amyloid beta program, that would be really helpful?

[Gene Kinney:]

Yes. Well, I mean, I think we are clearly encouraged by the October announcement from Biogen around aducanumab and further by the data that they shared at CTAD in December, particularly around the EMERGE and ENGAGE trials.I think what the data appear to indicate is that an antibody like aducanumab that would be expected to interact with both the soluble and insoluble forms of abeta that at appropriate concentrations for appropriate length of time that there may be some impact on clinical endpoints. And obviously, we'll see what happens as Biogen continues to move that program through now the regulatory process. There's a lot of unknown there, a lot to occur even this year, and we'll certainly see what happens there.Nonetheless, I think there's consistency of data now across several programs, and it encourages us that at some point, a molecule in this space will be a first entrant in the treatment of neurodegeneration in Alzheimer's disease. When we look at the slate of candidates currently undergoing clinical trial, we think, for a number of reasons, that there are opportunities to continue to push that science forward in the interest of patients and their families. One angle on that is, obviously, patient access. We think that will be a significant issue. There are some estimates that up to 35 million individuals across the world suffer from Alzheimer's disease. And with those kinds of numbers, making sure that you maximize patient access to potential useful treatments will be critical. And so we, obviously, think about that quite a bit as we think through our programs targeting abeta, including our abeta monoclonal antibodies that I discussed in the call.And as I said on the call as well, we think that tau continues to be another very important pathological driver of the cognitive decline that you see in Alzheimer's disease. I think there's a lot of literature around that, that supports that statement. And from our perspective then, understanding how intricately those 2 proteins interact with each other in the context of the disease, i.e, abeta and tau are not separate entities per se. It's known, for example, that abeta can actually lead to the phosphorylation of tau. There's a number of studies out there that look at that. And those kinds of pathways lead us to believe that approaches that target both abeta and tau are maybe a potential opportunity to continue to push treatments forward.So we see a lot of opportunity in that space. We see that opportunity around both monoclonal antibodies as well as potential vaccines, and we see the opportunity both in the treatment as well as the potential prevention of the disease.

[Operator:]

Your next question comes from the line of Jay Olson from Oppenheimer.

[Jay Olson:]

Since prasinezumab is in the lead and you'll be reading out the first clinical efficacy endpoints for an alpha-synuclein antibody in Parkinson's diseases here, could you maybe comment on the potential registrational path forward? And do you expect to conduct two pivotal Phase III studies? Or do you think that you'll only be required to conduct one and maybe PASADENA could count as one of your pivotal studies?

[Gene Kinney:]

Yes. So those are great questions and obviously, will be subject of much discussion not only with Roche, but obviously, regulators as well. I think it's premature at this point to really speculate on what a Phase III clinical program would or could look like. Clearly, we would want to do that fully informed by the Phase II data in as much as we expect it to be directionally informational in terms of how we think about those things. So I think the questions you're asking are great questions. I think it's just a little bit premature on this call to really speculate as to what regulators might require or what a fulsome Phase III program would look like.

[Tran Nguyen:]

But clearly, all of those alternatives are on the table. And Jay, they'll be data dependent. So that's a great question, but we need to have more data in order to answer that.

[Operator:]

Your next question comes from the line of Bert Hazlett from BTIG.

[Robert Hazlett:]

Just with regard to the BMY-Celgene collaboration, could you remind us of the structure of that collaboration and the decision-making process that you'll need to go through to advance tau and TDP-43 to IND studies? And then are the same people at the table now that, that collaboration is closed? Just interested to find out a little bit more about the dynamic now that Celgene is part of BMS?

[Tran Nguyen:]

Yes. Maybe, I'll answer the last part of that question a little bit first and then get to the first part last, which is the team that's on the ground in terms of the joint steering committees are the same, and they moved on over to Bristol, which has been welcomed -- a welcomed effect. And so we're still working on a collaborative basis every day. And so we continue to move all the programs forward.From an economic and decision-making perspective, as you can recall -- well, as you do recall, we had an upfront of $100 million across 3 different targets and, of course, an equity investment of $50 million, which allowed us to take control over decision-making of how to move those 3 programs forward.In terms of how BMS -- Celgene/now BMS, we participated at IND of each of the programs, they would have the ability to opt in -- or exercise their option right for U.S. rights at IND, and then for ex U.S. rights after Phase I.. And then from there, they can choose one way or the other, but they can choose to basically operate the program from there in terms of execute the Phase IIs and the Phase IIIS, depending on the clinical plan going forward.And then, of course, there's downstream clinical, regulatory, first commercial sale, and then we have royalties after that. So that's kind of how it all is both governance and economically spread between the three programs.

[Operator:]

I'm showing no further questions at this time. I would now like to turn the conference back to you, Mr. Gene Kinney, CEO.

[Gene Kinney:]

Thanks, Joanna. Appreciate it. And thank you all for joining us this afternoon. We appreciate your interest in Prothena, and we look forward to sharing future updates on our programs. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for participation, and have a wonderful day. You may all disconnect.