Achieve Life Sciences Inc (ACHV) 2021 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Achieve Life Sciences Fourth Quarter and Year-end 2021 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Nicole Jones. Please go ahead.

Thank you, operator, and thanks, everyone, for joining us. On the call today from Achieve, we have John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; and Jerry Wan, Principal Accounting Officer. Achieve management will be available for Q&A after the prepared remarks.

I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to Achieve documents filed with the SEC concerning factors that could affect the company, copies of which are available on our website.

I'll now turn the call over to John.

Thank you, Nicole, and thanks, everyone, for joining us today.

During today's call, we will discuss updates on the cytisinicline development program for smoking cessation and nicotine addiction, including the status of the ORCA-2, ORCA-3 and ORCA-V1 studies. Additionally, Jerry will provide an overview of our Q4 and year-end 2021 financial results.

We are off to a great start in 2022 with the kickoff of our second Phase III trial evaluating cytisinicline for smoking cessation. We announced initiation of the ORCA-3 trial in January and are now enrolling adult smokers at 15 clinical trial locations across the United States.

ORCA-3 will serve as the confirmatory Phase III trial required for registrational approval and marketing of cytisinicline in the U.S. Given our confidence in the safety and efficacy we have seen with cytisinicline to date, our ability to quickly hire and onboard additional clinical operations personnel, and importantly, our successful securement of capital from Silicon Valley Bank in December, we were able to initiate this trial sooner than expected.

By expediting ORCA-3, we are not only reducing the overall capital requirements of the development program but also accelerating the overall time lines for cytisinicline and FDA submission for market approval. This is of critical importance to help the millions of smokers looking for additional treatment options.

Similar in design to the ongoing ORCA-2 trial, ORCA-3 participants will be randomized to 1 of 3 study arms to evaluate 3 milligrams cytisinicline dosed 3 times daily over a period of either 6 or 12 weeks compared to placebo. All subjects will receive standard behavioral support throughout the duration of the trial and will be assigned to receive either 12 weeks of placebo, 6 weeks of cytisinicline followed by 6 weeks of placebo or 12 weeks of cytisinicline.

The primary outcome measure of success in ORCA-3 will be biochemically verified continuous abstinence during the last 4 weeks of treatment in the 6- and 12-week cytisinicline treatment arms compared with placebo. Each treatment arm will be compared independently to the placebo arm, and the trial will be determined to be successful if either or both of the cytisinicline treatment arms show a statistical benefit compared to placebo. Secondary outcome measures will be conducted to assess continued abstinence rates through 6 months from the start of study treatment.

All clinical sites are now enrolling subjects, and we have just recently launched a number of recruitment activities in the cities surrounding the trial locations. We are seeing great interest from smokers who are seeking more information on the trial and who hope to kick the habit. We look forward to sharing additional details on the trial as we progress throughout this year.

Moving on to the highly anticipated ORCA-2 trial, like you, we are eagerly awaiting the results from the first Phase III cytisinicline trial in adult U.S. smokers. To recap, ORCA-.2 enrolled 810 smokers at 17 clinical trial locations. This trial completed enrollment in the summer of last year. And in December, the last subject last visit was completed in line with the 6-month follow-up requirement.

As part of ORCA-2, an independent data safety monitoring committee conducted 5 preplanned study conduct reviews which also included safety. They concluded there were no concerns regarding the study conduct, and the safety and adverse event profile remained favorable. Additionally, the DSMC members commented that compliance with study medication was excellent, and the study has progressed well despite the challenges of the COVID-19 pandemic.

With regards to efficacy, ORCA-2 has 2 independent primary endpoints that will evaluate the rate of smoking abstinence for both 6-week and 12-week durations of cytisinicline treatment compared to placebo treatment. Beginning at the second week of treatment, assessments for smoking abstinence were performed via weekly self-reporting of abstinence with biochemical verification of abstinence by exhaled carbon monoxide levels.

These weekly assessments occurred through the 12 weeks of blinded study treatment. Then similar monthly follow-up assessments occurred for smoking abstinence at weeks 16, 20 and finally, week 24.

For both primary endpoint comparisons, smoking abstinence is defined as continuous absence during the last 4 weeks of treatment, meaning for the 6-week treatment arm, biochemically verified abstinence is required at weeks 3, 4, 5 and 6. And for the 12-week arm, abstinence is required at the assessments conducted at weeks 9, 10, 11 and 12.

This 4-week continuous abstinence measure is the FDA approvable endpoint for smoking cessation medications. Secondary endpoint outcome measures will assess continued smoking abstinence from the end of cytisinicline treatment in both arms out to week 24 compared to placebo as well as reduction in risk of relapse at week 24 for subjects treated with 12 weeks of cytisinicline versus 6 weeks of cytisinicline. ORCA-2 was designed with over 95% power to be able to demonstrate a continued abstinence benefit compared to placebo at the long-term follow-up comparison at 24 weeks.

Finally, on ORCA-2, we continue to expect top line results to be announced in the second quarter of this year. And until then, we remain blinded to the outcome.

Concluding our updates on the development program is the status of ORCA-V1, which is the Phase II trial evaluating cytisinicline as a cessation treatment for nicotine e-cigarette users. Following the smoking cessation approval, our ultimate goal is to later expand the cytisinicline label indication to help nicotine vapors to quit.

With more than 11 million adult users of e-cigarettes in the United States and no currently approved treatment options available specifically for this population, there is a growing unmet need for a cessation therapy to help the significant numbers of vapers who want to quit.

Based on survey data that we have collected in partnership with IQVIA, approximately 73% of e-cigarette users expressed an interest in quitting. We announced last year that Achieve was awarded a grant from the National Institute of Health or NIH, to support the execution of the ORCA-V1 trial.

In addition to the preparation of trial-related operational activities, the first phase of the grant funding enables submission to the FDA of a new IND specific to e-cigarette cessation, which was accepted by the agency in November.

We have recently submitted documentation to the NIH, outlining our completion of activities associated with the first phase of the grants. Pending their review, we expect the second stage of the grant award of approximately $2.5 million to be released and to enable the initiation of the ORCA-V1 trial in the second quarter of this year.

As a reminder, ORCA-V1 is designed to enroll approximately 150 subjects and will be led by Dr. Nancy Rigotti, Professor of Medicine at Harvard Medical School and Director of the Tobacco Research and Treatment Center at Massachusetts General Hospital.

I'd now like to turn the call over to Jerry to discuss our financial results and our strong cash position that we ended with in 2021.

Thanks, John. I would like to provide an update on our cash position as of December 31, 2021, as well as review our operating expenses for the fourth quarter of 2021.

As of December 31, the company's cash, cash equivalents, short-term investment and restricted cash were $43.1 million compared to $33.4 million as of September 30, 2021.

The increase in cash over the prior quarter was due to our Silicon Valley Bank financing we closed in December. The Silicon Valley Bank agreement provided a total debt facility of $25 million, of which we drew down $15 million at the closing.

As John mentioned earlier, the funding from Silicon Valley Bank has allowed us to accelerate the ORCA-3 trial which we initiated in January of this year. We believe our current cash balance is sufficient to provide runway into 2023.

Now turning to our statement of operations. The company incurred a net loss of $7.2 million for the quarter ended December 31, 2021, as compared to a net loss of $4.7 million for the same quarter of 2020. Total operating expenses in the fourth quarter of 2021 increased to $7.1 million as compared to $4.7 million for the same quarter of 2020.

Operating expenses increased for the quarter ended December 31, 2021, due to higher costs associated with the ORCA-2 trial, along with pre initiation costs associated with the ORCA-3 trial.

We anticipate our operating expenses to increase during 2022 as we further execute on both the ORCA-3 and ORCA-V1 trials. As a reminder, approximately half the cost from the ORCA-V1 trial are expected to be funded through a grant from the NIH.

That concludes a summary of our financial results. I'll turn the call back over to John.

Thank you, Jerry.

In conclusion, and as you've heard, we continue to deliver on the ORCA program milestones on time or ahead of schedule. We are excited to have our first Phase III data readout next quarter, along with the expected launch of ORCA-V1 in vaping cessation.

We believe cytisinicline will continue to demonstrate best-in-class safety and offer efficacy in line with current treatments, enabling smokers to successfully quit and live healthier and better lives.

We appreciate your continued support of Achieve and we'll now open the line for questions.

(Operator Instructions) Our first question comes from the line of Thomas Flaten from Lake Street Capital.

Two quick questions. With respect to ORCA-3, do you have designs on expanding the number of sites to keep the trial moving forward given that you have capital on hand? Or is that something that will be driven by the ORCA-2 results?

Do you want me to get that John? Actually, right now with the 15 sites, we're looking that we would have no problem with targeted enrollment time lines. If it looks like we need to have more sites, we will. To remind you, we added 2 more sites because we were actually enrolling ORCA-2 during the pandemic, and that's where we needed more additional sites.

Got it. And then with respect to V1, is that -- is the start of that study intended to coincide with the release of ORCA-2? Or are those 2 things de-linked completely?

They're de-linked completely. The starting of ORCA-2 is really based on getting our second phase of our grant funding. And we've just put in all the documents to NIH that we've completed the Phase I so now we're just waiting for the release of the Phase I -- of the Phase II funding to start the vaping trial.

Our next question comes from the line of Francois Brisebois from Oppenheimer.

Just a couple here. So just to be clear between ORCA-2 and ORCA-3, I think they're very, very similar in terms of design. Are there any differences at all? I think I saw maybe a little less patients. Anything else that's different?

The only difference is the inclusion exclusion criteria have been loosened just a little bit. Otherwise, it really is exactly the same design. There may be one less clinical visit that was required in Day 3. But otherwise, yes, it is exactly the same.

Okay. Great. And then in terms of the endpoint, hitting either 6 weeks or 12 weeks, you mentioned that either or would be considered successful. But do you have any thoughts on the commercial potential, depending on whether it hits 6 weeks or 12 weeks or both or one or the other, just based on the competitive landscape?

Yes. Thanks, Frank. In terms of whether 6 or 12 is preferred, I mean I think ideally, we'd love to have both. And I think that's our expectation is that we'll hit on both 6 and 12 weeks. I think from a competitive landscape, I'm not sure it matters all that much. I think what we continue to see is a heavily pretreated group of smokers that have tried and relapsed multiple times to quit. And I think the safety profile, in particular, and better tolerability that comes with cytisinicline is going to resonate regardless of a shorter or slightly longer duration of treatment.

Okay. Great. And then I'll sneak in a last one here, if I can. In terms of the efficacy, we talked about being comparable and just maybe beating on safety. But can you just help us -- I know it's a cross comparison and it's difficult to do. And other than RAUORA, there hasn't really been a head-to-head with CHANTIX. But can you remind maybe the listeners of the efficacy in a similar kind of design that CHANTIX saw versus placebo?

Yes. Yes, great question and one that I'm sure is on everyone's minds going into data. And I think the best way to think about this is in terms of benefit over placebo. And I think the way that's typically viewed is looking at an odds ratio, which basically looks at the magnitude of effect of the drug over placebo.

And when we look at the currently available treatment options that are on the market today, we have NRT, bupropion and varenicline. And for NRT and bupropion, those are just below 2:1 in terms of their benefit. And varenicline are -- what's been known historically as CHANTIX before it was withdrawn from the market, has been just under 3.

And so what we continue to hear from key opinion leaders in the space is that kind of the baseline benefit needs to be a 2x over placebo. And I think we've seen across multiple trials, quit rates do range depending on trial design and subject demographics, things like that.

But I think that looking at the odds ratio is a way to kind of mute the differences between the trials. And there's been lots of publications out there from the Cochran Group and others that help articulate this. But that's really what we're looking for is at least a 2x multiple over placebo in this trial.

Our next question comes from the line of John Vandermosten from Zacks.

Actually, this is Richard Hantke calling for John. I just got 2 kind of topics that I want to discuss and then our John will follow up with you after the call. The first is just picking up some more on CHANTIX. Pfizer, I guess, reported -- disclosed that the revenues were down 56% in 2021. And we understand that it came off patent. We understand there's some contamination issues, but if there's anything more that you're aware of and what caused that kind of decline, that maybe translated obviously to your drug and how might that affect things down the road in commercialization. And then do you have any -- in terms of generics, any idea how they performed? So that was my first set of questions.

Yes. Thanks, Richard. So in terms of CHANTIX revenues, I think it's been compounded with 2 factors there. The first, obviously, was the first generics hitting last year that was launched. And I think probably more importantly is the fact that Pfizer pulled CHANTIX from the market last year that started early summer with some limited withdrawals and then went to full global withdrawal of CHANTIX. So the brand is currently no longer on the market.

So I think the combination of not being able to sell products and generic sitting is why we've seen that decline in revenues. I don't think there's any real read in terms of the market opportunity here. We don't have details in terms of the -- how the first generic has performed. It was a stub period anyway. We do know that it's out there. From what we've seen, it's about a 25% reduction of the list price of CHANTIX but something we will continue to monitor.

For us, we've always known we were going to be launching this product into a generic market. And I think the beauty of this indication is that the Affordable Care Act mandates that smoking cessation products be covered. And I think when you combine that with the fact that even with kind of the most efficacious products out there today, the majority of patients are still relapsing and going back to smoking and will need another treatment option down the road. So we still continue to feel strongly about the market opportunity here.

Excellent. And then the second question, the $2.5 million that you expect to receive in Q2 for the grant. Is that on track? My understanding through John is that you expected to launch the trial in Q2. Has that trial been backed up at all? Or is everything on schedule?

Yes. Good question. So we continue to believe that's on track. We are currently working through the grant logistics with the NIH. We've submitted the documentation showing that we've completed the initial stages that were -- of the milestones that were set out under the grant. And so we're just awaiting a response from the NIH that we can proceed into the next phase, which unlocks the $2.5 million for funding for the trial itself. So yes, at the moment, everything remains on track, but we are beholden to the grant process with the NIH to ultimately move that forward.

(Operator Instructions) Our next question comes from the line of James Molloy from Alliance Global.

I had a quick question on potential partners, U.S. partnerships. I know that much will depend on how the data looks in the second quarter. But is there any color that you could provide for outsiders looking in on how those discussions are going and sort of the nature of the process?

Jim, yes, thanks for the good question. So this is an ongoing process in terms of our outreach, looking for potential commercial partners. And we have continued to expand the outreach going into ORCA-2 data. I think the closer we get to data and, ultimately, to commercialization, we think there will continue to be more interested parties.

And we have seen an uptick in terms of interest here this year. And we would expect that to continue with data in hand as we get results from the ORCA-2 trial. But I think we're not going to get into individual conversations or details, but yes, we have a process up and running, and we will continue to push that forward and ORCA-2 results will be a big part of that.

Good. And maybe one question we touched on, I think last time we spoke, given what looks to be a significant AE advantage versus CHANTIX. Can you speak a little bit about potential for expanding the market beyond sort of -- a billion is a pretty good number to be sure. But beyond that, just given how many people dropped out with the AEs on CHANTIX.

Yes. So I think the safety and tolerability profile is clearly a key differentiator, and we continue to hear from not only physicians but also patients that the profile for existing products, in particular, for CHANTIX really is a big hindrance to uptake.

So we do see a product that is more tolerable and easy to utilize without the adverse events, to be something that patients are interested in. And when you couple that with the fact that there hasn't been a new product in over 15 years, I think there is a real opportunity to grow the market here.

And I think that's just within smoking cessation. I think that's why we're excited about expanding into e-cigarette cessation as well with ORCA-V1 because I think that really is an opportunity that has not been tapped into yet.

There was some recent data points that came across today indicating there's over 80 million e-cigarette users around the globe today, and that's one that continues to grow. And we know those e-cigarette users and vapers are looking to quit, and there's currently no products indicated to help them.

And I think that's where the market will go long term. It's been a rapid uptake, but it hasn't dented the cigarette consumption market, which remains high at over 1 billion smokers around the globe.

So I think when you combine those 2 markets together, we see a large market ahead of us with a product that should resonate with patients.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to John Bencich for closing remarks.

Thank you, and thanks, everyone, again for joining us today and the continued support of Achieve. We continue to be excited about what lies ahead for us, including the ORCA-2 results, which are right around the corner, the expected launch of ORCA-V1 in the second quarter and the continued execution of the recently launched confirmatory ORCA-3 trial.

So we look forward to continue to provide everyone updates throughout the year as things progress, and thanks again for joining us today.

This concludes today's conference call. Thank you for participating. You may now disconnect.