Urovant Sciences Ltd
Q3 2018 Earnings Call Transcript

Published: 14 Feb 2019

[Operator:]

Hello, and welcome to the Urovant Sciences Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. And I now like to introduce your host for today's call, Christine Ocampo. You may begin.

[Christine Ocampo:]

Thank you, Towanda. It is my pleasure to welcome you to our conference call to discuss our financial and operating results for the fiscal 2018 third quarter. I am joined today by several members of our leadership team; including Keith Katkin, Chief Executive Officer; Dr. Cornelia Haag-Molkenteller, Chief Medical Officer and Michael McFadden, Chief Commercial Officer. After the close of market today, Eurovent issued a press release containing detailed information on results. You may access the release on our company website, Eurovent.com. Today's remarks contain forward-looking statements, including statements regarding our plans and strategies for the clinical development of vibegron, another treatment for urologic diseases. I direct your attention to the forward-looking statements disclosure in today's press release in the Risk Factor section of the quarterly report on Form 10-Q, which was filed with the SEC in November 2018 as well as the Form 10-Q, which will be filed with the SEC by tomorrow. For a review of various risks and uncertainties that could cause actual results to differ materially from projections. With that said, I'll turn the call over to our CEO, Keith Katkin.

[Keith Katkin:]

Thank you, Christine and my thanks to each of you for joining us today. The third fiscal quarter was a productive quarter as we continue to advance key clinical programs. We were pleased that we made significant progress across all of our development programs. In November we completed enrollment in our international Phase 3 trial for vibegron, called the EMPOWUR Study and we expect topline data by the end of March 2019. In December, we initiated enrollment in the Phase 2A program for vibegron for IBS-related abdominal pain. We were pretty pleased to reach this milestone by the end of 2018. In January, we gained alignment with the FDA to our trial protocol for a pivotal phase 3 study for vibegron in men with overactive bladder and benign prostatic hyperplasia. This is an important supplemental program for vibegron as there are currently no approved treatments for men with concomitant OAB and BPH. Also in January, we submitted a request to the FDA to discuss the development of a phase 2A study for novel gene therapy URO-902, which was previously called [indiscernible]. And finally we presented our clinical programs in view of the commercial opportunity in urology at our first Research and Development Day held last week in New York City. A replay of that event is available on the Eurovent website. With that, I'll turn the call over to our Chief Medical Officer, Dr. Cornelia Haag-Molkenteller who will provide more detail on our clinical programs, Cornelia?

[Cornelia Haag-Molkenteller:]

Thank you, Keith. First I would like to talk about international Phase 2 trial of EMPOWUR for vibegron for adults with overactive bladder. During our last earnings call in November, I shared that we completed enrollment in our large international phase 3 pivotal study for vibegron for OAB and only problem in 530 patients. During the third quarter, we continue to make progress on how to top line data by November 2019. In December 2018 we started enrollment into the ambulatory blood pressure study for vibegron, which is being conducted to assess vibegron's potential effect if any on blood pressure. We anticipate to enroll about 200 subjects in the U.S. and results are projected for the second half of 2019. New drug application preparations are continuing, including the work on the registration of batches. A target for submission is the first quarter of 2020. Next we have our OAB program for men with benign prostate hyperplasia or BPH. This is an important supplemental development program for vibegron because currently there are no FDA approved product, specifically indicated for overactive bladder in men with BPH. Last year we met with the FDA and reached an agreement to conduct one pivotal phase 3 study of approximately 1,000 patients testing by 75 mg of vibegron versus placebo. This is the same does studied in the EMPOWUR Phase 3 trial for OAB. Earlier this year we received FDA feedback to our proposed trial protocol. I am pleased to share the agency has accepted the protocol for a pivotal phase 3 study in patients with OAB and BPH. The co primary endpoint will be reduction micturition frequency and urgency episodes in 25 hours at least 12 of the total double-blind study duration will be 24 weeks based on FDA feedback. Key secondary endpoint proposed will be reduction in nocturia episodes, awakening at nights devoid, prostate symptom scores and safety. Given the limited clinical data available in men with OAB and BPH, we proposed a two-part trial. In part one, we will assess initial safety in 80 patients. In Part 2, we will assess efficacy and safety. We expect this study to begin in late first quarter of 2019. Now to proceed to our clinical program for vibegron for IBS-associated abdominal pain. In December 2018, we started enrollment into the US phase 2A study. We plan to enroll 200 female patients with IBS associated pain due to IBS with diarrhea or mixed IBS. Patients will be randomized to either 75 mg of vibegron or placebo. The primary endpoint is a 30% reduction in abdominal pain intensity on 11 point rating scale at week 12 for IBSP. The respond is to find a subject with at least 30% decrease in worst abdominal pain, compared to the leasing baseline average. Secondary endpoints included global rating skill and safety in particular lack of negative effects on stool frequency or stool consistency. We expect to report topline data from the study in 2020. Regarding the novel gene therapy for products for OAB URO-902 formerly called [indiscernible], we have submitted a meeting request to the FDA to discuss the development of the Phase 3 study earlier this year. The goal is to start patient enrollment into the Phase 2a study in the second half of 2019 pending FDA response. With that, I would like to turn the call over to Michael McFadden, our Chief Commercial Officer.

[Michael McFadden:]

Thanks Cornelia. We continue to be excited about the commercial opportunity for overactive bladder. The market continues to grow with 19.2 million prescriptions written for pharmacologic agents in 2018, the year just concluded. Beta-3 agonist growth continues to make strides in the OAB marketplace increasing its market share and new patients continue to enter pharmacologic treatment for overactive bladder. High patient cycling from one agent to another continues to happen representing a great opportunity for a new treatment options in the therapeutic category. Our market assessment continues to inform our approach and our plan is to commercialize vibegron in the United States with urology and long-term care specialty sales force that will focus on urologist, and long-term care physicians who treat large numbers of OAB patients. We feel we can deliver sales footprint with significant reach in both segments and do so in a cost effective way to maximize revenue. Our plan is to add additional sales people for another HCP segments as payers provide coverage and we increase sales of vibegron. Our marketing and business operations team continues to make strides with our commercial plan completing patient and managed care segmentation and continuing to ascertain learnings from both patients and physicians in urology and OAB segment. The research continues to provide insights that a new therapy is needed for this therapeutic area. Many patients have failed Myrbetriq or oxybutynin therapies and are looking for the next innovation in overactive bladder. A significant portion of patients stop anticholinergic and Myrbetriq within six months and these patients continue to represent a significant opportunity for vibegron when we launch. We see that beta agonist prescription growth continues to be a robust with Myrbetriq growing at 17% volume growth for the calendar year 2018. In addition pricing for the brand grew by 9% last year resulting in a current Myrbetriq flat price of $384 at the beginning of 2019 which is consistent with the research that says OAB medicines have pricing flexibility. Additionally in 2019 coverage for Myrbetriq and the other brands in this therapeutic areas consistent and that they continue to be managed primarily by copay differential, Our quantitative formulary analysis validates this as the currently promoted brands have greater than 80% unrestricted coverage. This data will inform our work for pricing and discounts strategies and continues to reinforce the strong market opportunity for both beta 3 and new agents in the OAB class. Now I'll pass to Christine for financial update.

[Christine Ocampo:]

Thank Michael. In addition to the financial results summarized in the press release you can find additional information including full year information at our upcoming Form 10-Q. which will be filed by tomorrow. Research and development expenses were $21.3 million for the third quarter of 2018 compared with $8 million for the same period in the prior year. In the third fiscal quarter of 2018, research and development costs were primarily attributed to our ongoing Phase 3 EMPOWUR trial of vibegron in adult with OAB. General and administrative expenses were $4.9 million for the third quarter of 2018 compared with $1.4 million for the same period in the prior year. When comparing the two quarters, the third quarter of 2017 did not reflect G&A cost associated with the establishment of our U.S. headquarters in Irvine, California and the related personnel costs as the office were not opened in the third quarter of 2017. Total operating expenses for the quarter were $26.2 million compared with $9.4 million for the same quarter in fiscal 2017. Cash used in operation increased by $17.2 million to $40.7 million for the quarter ended December 31, 2018 as compared to the previous quarter. The increase in cash used is attributed to a decrease of $8 million an amount due to Urovant Sciences, an increase of $3.4 million in prepaid expenses associated with our ongoing clinical studies, a decrease of $4 million in accounts payable, and an increase of $1.8 million in operating expenses. The $8 million payment to Urovant was comprised of $4.9 million attributed to operating expenses paid by Urovant on our behalf prior to the initial public offering and $3.1 million for services provided by Urovant in the first half of fiscal 2018. Our net loss for the third fiscal quarter of 2018 was $26.4 million or $0.87 per share compared with a net loss of $9.4 million or $0.47 per share for the same quarter in fiscal 2017. We closed our initial public offering last October raising total gross proceeds of approximately $144.2 million resulting in net proceeds of approximately $131.8 million. As of December 31, 2018 our total cash balance was $95.6 million. Now looking ahead to the fourth quarter of 2018, we currently expect our total operating expenses to increase to $31 million to $33 million as amounts currently classified as prepaid will be recognized as expense concurrently with the close-out of our Phase 3 EMPOWUR trial. We expect our cash used in operations in the fourth quarter 2018 to be approximately $25 million. With that summary of our financial results, I'd like to turn the call back over to Keith for closing remarks.

[Keith Katkin:]

Thank you, Christine. To reiterate we're making progress in our clinical development programs which are important catalyst to develop Urovant into a leading urology company. We are driving towards that goal through progress with our Phase 3 trial for vibegron for overactive bladder with topline data expected by the end of next month. Second, initiated enrollment in our Phase 2a study for vibegron in patients with IBS associated pain late last year. Third, gain alignment with the FDA earlier this year on a trial protocol for our pivotal Phase 3 trials in patients with OAB and BPH. And finally, anticipating FDA's response to oppose Phase 2a study of our novel gene therapy URO-902. With that summary of milestones, I'll now open the call to questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from the line of Ritu Baral with Cowen. Your line is open.

[Ritu Baral:]

One question and one follow-up. Keith can you talk about the bogey EMPOWUR or what you want to see that will, the minimum that you want to see that will drive commercial success. The delta on the coprimary, but also on urgency of which you want to be the marketing differential, how much less urgency episodes do you think will meaningfully resonate with prescribers?

[Keith Katkin:]

Yes, I'll start and then Michael can add from a commercial vantage point there. So I think the minimally acceptable profile obviously will be achieving statistical significant in the study such that we can move forward with FDA approval. And all of the market research that we've done we've taken very conservative assumptions as it relates to the treatment effect for the product whether it's across nutrition's, urgent incontinence or urgency. And in those profiles what resonates really well with the doctors as we've discussed is the lack of drug-drug interactions. No potential impact for UTC and the onset of action. And so we think that even with conservative outcome in the clinical study, the vibegron can be quite successful from a commercial perspective. I think a upside case one that which we think could easily turn vibegron into blockbuster as we are able to replicate those treatment effects that we saw on the Phase 2b study from Merck. Those effects were quite dramatic and arguably some of the best effect that have been observed by any product. So that would certainly be are upside case. We're not planning on it, but that would be great to see.

[Michael McFadden:]

And obviously add two things. We know that OAB is a constellation of symptoms. Patients suffer and go see their doctor primarily when they have urge episodes and suffer from incontinence and they are hoping to ultimately have dry rate, which seldom occurs in the therapeutic class. So if we can achieve significance and urge for incontinence, doctors and patients have both implied this as a very meaningful outcome for them as this is primarily why they are going to see their doctor and the scores in the market research that we've done show this is - Class V is a very important characteristic because it is a driver for them to spend money to go see their doctor and take the effort to go seek medical treatment.

[Ritu Baral:]

And then a follow-up why are their CMC issues are outstanding? I think you mentioned that you are producing stability loss. What else is left to be done.

[Keith Katkin:]

No, that's really it. Getting those lots offline upon stability and then starting that stability clock. So that's what leads to an NDA filing in the first quarter of 2020. Cornelia and team are doing everything they can to just try and accelerate that timeline and plan to meet with the FDA later this year to see it bodes up with something less than 12 month stability, which may allow us to accelerate that filing into 2019. So stay tuned for more information on that as we get it.

[Ritu Baral:]

And I'll ask one last question I am sorry, on your Phase 2 for IBS, I guess your mixed idea, why not do dose ranging? What's driving the confidence in the 75 milligram dose, the same one that you're using in OAB, does it make any clinical dose range up?

[Keith Katkin:]

Yes that was a discussion point that we had. So a good question. Really the reason we're not doing dose ranging is cash conservation. So because the 2A is a true proof of concept study, if you wanted to do dose ranging, then it would have increased the study cost fairly dramatically. So we know from a PKPD perspective of the 35 milligram dose provides significant efficacy within OAB and so we believe that that would translate to IBS pain as well and if we're successful phase 2A study and can demonstrate an impact on pain, then we'll roll into a 2b study were we do more dose finding. We just didn't want to put incremental capital at risk until we had some proof of concept on that study.

[Ritu Baral:]

So basically the data that's going to come on the far end of that, are you looking for specifically significant data? Are you looking for a signal here to continue IBS?

[Keith Katkin:]

I think we're looking for a signal. The stronger the signal, the more likelihood that we would proceed further. So I don't want to say that it's only a 200 patient study, or 100 patients per arm. So I want to say that we require statistical significance, but we would need to see a strong trend and other data, which will provide us conviction that the product is - that vibegron is delivering a benefit to these patients.

[Operator:]

Our next question comes from the line of Eric Joseph with JPMorgan. Your line is open.

[Edward Marks:]

Hi guys, this is Edward Marks on for Ram. Just a few questions and a couple of follow-ups based on what's been discussed. Just looking at Solabegron as well, I was wondering if there are any notable differences particularly within the pharmacology between the two compounds.

[Cornelia Haag-Molkenteller:]

Solabegron is a different compound. It also has different profiles. So vibegron is by its nature due to its long half once daily drug. Solabegron as you may know, needed to be reformulated to a once daily compound. Of course we main inside we have Solabegron is also Beta 3 agonist. We have not tested the data ourselves but we did test versus vibegron where we saw in the in vitro assay positive signals, but we don't have any access to Solabegron, but the main difference probably to the profile as far as we know as of now.

[Edward Marks:]

And then in terms of the dosing that was just discussed, what is the relative advantage of using the 75 milligram versus the 100 milligram and these are that cash conservation, or is there enough to be signal there as well?

[Keith Katkin:]

Let me give you - and as it relates to the IBS pain study…

[Edward Marks:]

For the EMPOWUR study, I am sorry.

[Keith Katkin:]

Oh so for the EMPOWUR study, a 75 milligram dose was selected because we thought it gave us the greatest probability of a single dose solution for patients with overactive bladder. So just as a reminder, Mirabegron is Telesis product, has to be dose titrate, starting there at 25 milligram dose and then dosed hydrated up to a 50 milligram dose. So given that precedence from the FDA, we wanted to try and move forward with what will be as I mentioned a single dose solution. We felt that if we tried to move forward just the 100 milligram dose then the agency would almost certainly put us in a similar scheme to Mirabegron where we have start at 50 milligram and then dose titrate up a 100 milligram and so in an attempt to avoid that, that's why we decided to move forward with this study at 75 milligram dose and our PKPD modeling shows that that 75 milligram dose gets us about 90% of the efficacy of the 100 milligram dose. So we have a high confidence in its ability to perform similarly to the 100 milligram but can provide the agency with incremental comfort in terms of a maximum dose given the amount of patients that we studied at 100 milligrams.

[Edward Marks:]

Excellent. And then just from the commercial efforts that you were discussing earlier. I was wondering if or what the differences might be between the assisted living facilities and the urologist in terms of any sales initiative?

[Keith Katkin:]

Well I think from a promotional message standpoint, the messages will be some similar except that in the LPC because it's an elderly population, safety issues are probably higher on their concern list because patients are only thrown even more higher number of medications than patients are typically compromised with other illnesses and they're fragile, From a sales force deployment standpoint, urology will be a typical retail promotion where our sales people go into the urology offices. Those are typically large group practices. They focus on urology issues. LPC is more of an account sales, very difficult challenging market to work. It's complicated and that difference uses a variety of different stakeholders, but it's primarily driven by the primary care medical director and/or their staff and so we'll be - that is a lot of experience in long-term care and so we'll be deploying an account team to manage the long-term care segment.

[Edward Marks:]

And then just final question on timing, when will the data be available for the extension portion of the EMPOWUR trial? Is that going to be before the filing next year or afterwards?

[Cornelia Haag-Molkenteller:]

Before. It needs to be part of the file.

[Operator:]

Our next question comes from the line of Turner Kufe with JPMorgan. Your line is open.

[Unidentified Analyst:]

It's Eric actually on for Turner. Sorry about the phone issues earlier. I was just curious to know just getting a sense from you guys where you think the gap is in terms of vibegron awareness or awareness of the Beta 3D class among urologist today and sort of what opportunities there are to showcase the EMPOWUR data beyond the top line release next month and heading into an NDA filing?

[Keith Katkin:]

Yes, I think when we look at the urology - urologist's awareness for Beta 3, they are the most aware segment of the market and probably the most adapt using Beta 3 agonist. They account for over 30% of all Beta 3 prescriptions in the market in the US and more commonly they are moving of Beta 3 up in their treatment continuum from a third line to second line and now urologist used as a first-line agent and is primarily driven by the fact that the tolerability is much better than anticholinergics the long-term risk of dementia is not been shown with the Beta 3s and there's significant evidence that is a growing that use of anticholinergics increases has the potential to increase risk of dementia. And so your urologist being aware of those things and then also being used as a second line of defense for most patients who have seen a primary care doctor failed the initial therapy and are now being referred to a specialist to oversee management of their OAB. They're more adapt and astute with the data and use of beta-3.

[Unidentified Analyst:]

I guess kind of looking beyond the top line, should we be anticipating presentations - fuller presentations at EMPOWUR at medical conferences in 2019?

[Cornelia Haag-Molkenteller:]

Yes, this is Cornelia. Certainly we will try to present it at as many congresses as possible. We're also planning of course the full manuscript and of course the study will have many sub analyses which we'll also then publish. Yes, we have a full publication plan in place.

[Unidentified Analyst:]

And maybe just final question on the IBS Phase 2, just any sense of recruitment time lines that you can provide at this point?

[Keith Katkin:]

No, I think it's too early right now given we just started enrolling the study at the end of December. Right now we're guiding towards data in 2020. We'll certainly refine that timeline as we move forward with the enrollment. But since this is our first endeavor into the IBS space as a Company, we just want to get some more data in terms of what enrollments are looking like before we tighten up that timeline.

[Operator:]

Our next question comes from the line of [indiscernible] with Jeffries. Your line is open.

[Unidentified Analyst:]

Just on the dimension risk with anticholinergics and the publication that have been coming out over the last 12 to 24 months. I just want to maybe if you have any insight to when AUA/SUFU guidelines would be updated to reflect those risks? That's first question. Second question is on the managed care pair side, have you seen any pair shift as a result of these data to beta-3 agonist?

[Cornelia Haag-Molkenteller:]

Well, I'll take the first question on the guidelines. So certainly already two organizations have already adopted the guidelines. The first one is the AUGS, American Urogynecological Association, these are the gynecologist treating mainly women with bladder issues. So they've updated their guidelines also the [indiscernible] criteria for older people have also been updated. The AUA is currently updating their guidelines as far as we know, we'll see when the adopt it. So I think guideline update is probably at some point will happen as more publications come out and again already two organizations have already updated their guidelines and I think just see when the next update comes. I'll hand over on the other question.

[Keith Katkin:]

Yes, not to say the comment on guidelines, they typically take 4 to 5 years post confluence of data on a particular issue to make sure that the data is complete, represented samples large enough to make a guideline decision. I think we're seeing that process. We're in the middle of that process right now and so we'll it continue to change. Regarding the managed care payers and how they are modifying coverage, currently the beta-3 and quite frankly the other promoted agents in the class are covered really well. Over 90% coverage from a - for the coming year both in [indiscernible] and commercial and over 80% for all branded agents cover with no restriction. So the payers are covering those agents really well and as mentioned before they don't see OAB as highly managed class. It would be unusual for them and I think it would only follow broad guidelines support where they would make a negative formulary adjustment for any therapy despite the safety concern or potential long-term issue with something like dementia. So we'll see how they choose to manage this on a go forward basis. But it probably - there'll be no adjustment by the payers until guidelines are very clear, absolute and broad across all governing bodies that manage OAB therapies.

[Unidentified Analyst:]

So just to follow-up on that; when you say one guideline changes are absolute and broad across all governing bodies. Besides AUA, what other governing bodies are out there?

[Cornelia Haag-Molkenteller:]

The European Association of Urology which also updates their guidelines and then of course subsequent other American Geriatrics Society for example, so there are quite a few governing bodies.

[Unidentified Analyst:]

And then just a question on the pipeline with 902. Just want to understand a little bit in terms of how that's being administered into patients and can you just provide some description of that and whether you think that could hinder a patient enrollment into the trial?

[Cornelia Haag-Molkenteller:]

So it is being - it's an injectable therapy. It's being administered basic like BOTOX into the bladder. If you pull out the BOTOX package insert, you can see there's a depiction of the bladder how BOTOX is being injected. BOTOX is now licensed for several years and widely used for the treatment of OAB for patients who do not respond to our old therapies. So all of this is in place including reimbursement codes all of these codes are in place and doctors are very familiar. There's sufficient number of injection needles from the various companies, so we don't think this is going to hinder enrollment. This would be administered just as BOTOX is currently being administered by cystoscopy via direct injection into the bladder.

[Unidentified Analyst:]

And then just question on the balance sheet with cash balance of $95 million and it seems to burn about 25, how the Company think about additional raises to increase the cash balance?

[Keith Katkin:]

Yes, our current findings will provided us cash into the first quarter of 2020. So it goes through a number of milestones obviously including the Phase 3 data, which is most important. So certainly we recognize that there'll be the need for incremental capital. I think the nice thing of the Phase 3 asset, we looked at lot of different options as it relates to capital whether it's debt convertible debt door or straight equity. And so we're going to evaluate all of those different options and determine what makes the most sense as we move forward.

[Operator:]

I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Keith Katkin for closing remarks.

[Keith Katkin:]

Well, appreciate everyone and we look forward to our next discussion with Phase 3 data in March. So thank you for joining us this afternoon.

[Operator:]

Ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.