Acasti Pharma Inc (ACST) 2022 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Acasti Pharma Third Quarter Fiscal 2022 Business Update Conference Call. (Operator Instructions)

It is now my pleasure to turn the floor over to your host, David Waldman with Investor Relations. Sir, the floor is yours.

Thank you, Holly, and good afternoon, everyone. I'd like to welcome you to Acasti Pharma's fiscal 2022 third quarter conference call. On the call with us this afternoon are Jan D'Alvise, President and CEO; Brian Ford, Chief Financial Officer; Dr. Pierre Lemieux, Chief Operating Officer, Canada, and Chief Scientific Officer; Dr. George Kottayil, Chief Operating Officer, U.S.; and Prashant Kohli, Vice President of Commercial Operations.

Following our prepared remarks, there will be a Q&A session. Should any questions remain after the call, please contact Crescendo Communications at (212) 671-1020. I'd also like to remind everyone that statements on this conference call that are not statements of historical or current facts constitute forward-looking information within the meaning of the Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934.

Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of Acasti to be materially different from historical results or from any future results expressed or implied by such forward-looking statements.

In addition to statements which explicitly describe such risks and uncertainties, readers -- listeners are urged to consider statements labeled with the terms believes, belief, expects, intends, anticipates, potential, should, may, will, plans, continue targeted or other similar expressions to be uncertain and forward-looking. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call.

Forward-looking statements during this conference call may include, but are not limited to, the success and timing of regulatory submissions of the PK bridging study for GTX-104 and Acasti's other preclinical and clinical trials; regulatory requirements or developments; changes to clinical trial designs and regulatory pathways; legislative, regulatory, political and economic developments; Acasti's projected cash position and operating runway; and the effects of COVID-19 on clinical programs and business operations.

The forward-looking statements contained in this conference call are expressly qualified in their entirety by this cautionary statement. The cautionary note regarding forward-looking information section contained in Acasti's latest quarterly report on Form 10-Q, which is available on EDGAR at www.sec.gov on SEDAR at www.sedar.com and on the Investors section of Acasti's website at www.acastipharma.com.

All forward-looking statements in this conference call are made as of the date of this conference call. Acasti does not undertake to update any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in Acasti's public filings on the Securities and Exchange Commission and Canadian securities regulators, including today's quarterly report on Form 10-Q.

In addition, any forward-looking statements represent Acasti's views as of today and should not be relied upon as representing our views as of any subsequent date. While Acasti may update forward-looking statements at some point in the future, Acasti undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by applicable securities laws.

I'd now like to turn the call over to Acasti's CEO, Jan D'Alvise. Please go ahead, Jan.

Thank you, David. I'd really like to welcome everyone on the call today. During the fiscal third quarter, we made significant progress towards advancing our clinical pipeline of drugs to treat patients with rare and orphan diseases. Our proprietary drug delivery technologies and capabilities are supporting an ever-expanding intellectual property portfolio of more than 40 issued and pending patents and a growing pipeline of drug candidates targeted to treat rare and orphan medical conditions.

Our clinical and preclinical stage drug candidates have been specifically designed and formulated to enhance efficacy and safety by providing potentially faster onset of action, prolonged treatment effect and reduced side effects all while being more conveniently delivered, which can ultimately increase patient compliance and potentially lead to improved clinical outcomes.

Now as previously disclosed, during the second quarter, we commenced enrollment for our pivotal pharmacokinetic or PK bridging study for GTX-104, our novel aqueous formulation of nimodipine that's being developed as an IV infusion for patients experiencing Subarachnoid Hemorrhage, or SAH, that is triggered by an aneurysm. This PK study is the next required step in our proposed 505(b)(2) regulatory pathway, and it's being conducted in about 50 healthy subjects as a single center, randomized, 2-period crossover study.

The primary objective of the study is to evaluate and compare the relative bioavailability of GTX-104 with the marketed oral nimodipine capsules, which are currently the standard of care in the United States. The second objective is to assess the safety and tolerability of GTX-104 as compared to oral nimodipine capsules.

Now back in December, we were pleased to announce positive results for GTX-104 based on an interim analysis of the first 20 normal healthy subjects enrolled. GTX-104 met both primary endpoints for maximum concentration, or Cmax, on Day 1 and area under the concentration-time curve, or AUC, over a 24-hour period on Day 3. These interim data were very encouraging and allowed us to continue the study under the current infusion protocol to its pending near-term completion.

We believe that the tight correlation of the primary endpoint data for the first 20 patients is a strong indication that GTX-104 could achieve comparable bioavailability with oral nimodipine in the full study cohort of about 50 subjects. Very importantly and as we observed in the earlier PK study, the inter and intra-subject variability in the interim analysis was significantly lower for GTX-104 as compared with oral nimodipine. This could be a very important differentiator for GTX-104 as reduced variability of blood levels should correlate with better control of hypotension, which could result in better outcomes for patients with SAH, as well as improved economics for the healthcare system.

Since we reported these interim results, the study has now advanced significantly with 46 subjects having completed the full protocol. To date, there have been no serious adverse events observed and only mild adverse events such as headaches were reported in both groups, and they were resolved with common over-the-counter medications.

The last cohort of subjects required to complete the study have already been enrolled, and the study remains on track to report the full results in calendar Q2. Assuming the final study results are consistent with the interim results, we plan to proceed quickly to finalize the Phase III safety study design and protocol for GTX-104 with the FDA. We still expect to initiate the safety study in the second half of calendar 2022.

Based on its already favorable safety profile, we believe the safety study for GTX-104 to be relatively low risk and given the expected small number of patients to be enrolled, it should be completed relatively quickly and cost effectively. Importantly, the safety study is expected to be the final step required before submitting our new drug application, or NDA, to the FDA under the 505(b)(2) regulatory pathway.

Our NDA, if approved, would be enhanced by the previously granted orphan drug designation already assigned to GTX-104 by the FDA, which would grant the company 7 years of market exclusivity in the United States.

As we have discussed previously, we believe GTX-104 addresses an important and underserved market. SAH is caused by a ruptured aneurysm, and it's a rare and life-threatening medical emergency. It's estimated to affect about 50,000 patients per year, representing an addressable market of more than $300 million in the United States alone.

Nimodipine is currently only available as an oral dosage form in the U.S., and many of these SAH patients are unconscious or have a hard time swallowing during their hospital stay. We believe GTX-104 delivered intravenously could be a much more convenient and efficient way to deliver nimodipine. And importantly, because of its better absorption profile and more consistent blood levels, GTX-104 could potentially provide physicians with a more effective tool for hypotension management.

We really look forward to providing regular updates on how the GTX-104 PK study and the Phase III safety study protocol developed in the weeks and the months ahead.

Now regarding our other 2 clinical candidates, GTX-101 and GTX-102, we continue to make steady progress moving these 2 drug candidates forward towards their next major milestones. As a reminder, GTX-102 is a novel easy-to-use oral mucosal spray formulation of betamethasone intended to improve the neurological symptoms of ataxia telangiectasia or AT. AT is a progressive neurodegenerative genetic disease that primarily impacts children, causing severe disability for which no FDA-approved treatment currently exists.

Based on an independent study conducted in Italy with an oral liquid form of betamethasone, we believe GTX-102's novel concentrated betamethasone oral mucosal spray formulation has the potential to improve the symptoms of AT and simplify drug administration.

We recently selected a CRO partner to manage our PK bridging study for GTX-102. This study will be fully randomized open-label 3-arm crossover study designed to evaluate the comparative bioavailability, pharmacokinetics and safety of GTX-102 administered as a concentrated oral mucosal spray. And we will compare it to betamethasone administered as an intramuscular injection for filing purposes in the U.S. and Canada, and to an oral solution of betamethasone for filing purposes in Europe. This study will be conducted in healthy male and female volunteers. We expect this PK bridging study to be initiated on schedule in calendar Q2 and to report out before the end of 2022. If this study meets its primary endpoints, we expect to initiate our Phase III safety and efficacy study in 80 patients in the first half of calendar 2023.

Now turning to GTX-101. We're developing this drug candidate to treat patients with postherpetic neuralgia, or PHN, which is persistent and often debilitating neuropathic pain caused by nerve damage from the varicella zoster virus, the virus that causes both chicken pox and shingles. PHN can persist for months and even years after a shingles infection clears up. And some patients end up requiring opioids to relieve their severe pain.

Our GTX-101 is a novel bio-adhesive film forming topical spray formulation of bupivacaine that we believe could provide significant benefits over the current standard of care, which most often consists of oral gabapentin and prescription lidocaine patches, and refractory cases are often prescribed opioids to address persistent pain.

As you know, opioid abuse has continued to proliferate, and gabapentin and the prescription lidocaine patches are suboptimal for many reasons. According to third-party primary research commissioned by Acasti, approximately 40% of patients using lidocaine patches experienced insufficient pain relief. Lidocaine patches are also difficult to use. They fall off. They look unsightly and can cause skin sensitivity and irritation. Additionally, optimal pain relief can take up to 2 weeks to be achieved with the lidocaine patch.

The potential benefits of GTX-101 could include the faster onset of action because of our active ingredient with bupivacaine as compared to lidocaine and longer-lasting pain relief as the patch can only be used for 12 hours on and then must be taken off for 12 hours. This regimen can lead to breakthrough pain, while we expect that regular use of GTX-101 will provide continuous around-the-clock pain relief. Consequently, we believe our GTX-101 topical spray could be a very effective nonnarcotic, nonaddictive alternatives for PHN patients that could also provide greater ease of use and convenience.

Now our primary market research has shown strong physician receptivity towards GTX-101's value proposition with the majority indicating that they saw the potential for GTX-101 to not only replace but to potentially further grow the prescription lidocaine patch market. Note that in the U.S., lidocaine patches are only indicated for PHN. But in fact, are broadly prescribed and reimbursed for a range of pain indications, including back pain, osteoarthritis, diabetic neuropathy and other Neuralgia's. PHN is estimated to affect approximately 150,000 patients per year in the United States. And according to a third-party report commissioned by Acasti, the total addressable market for GTX-101 could be about 1.6 billion, consisting about -- of about 400 million for PHN pain and about 1.2 billion for non-PH pain.

As for our near-term clinical milestones for GTX-101, an IND-enabling 8-week skin sensitivity study in minipigs is underway now, which we expect will report out in calendar Q2. Results from this minipig study will enable us to start our multiple ascending dose ranging study in humans, which is a requirement for our Phase II study that's scheduled to start recruiting patients before the end of this year.

By the way, I should also mention that a previous PK study in humans showed no skin sensitivity from GTX-101. So we're very excited about our entire orphan drug portfolio and believe it holds tremendous potential that could drive significant value for our shareholders in the months and years ahead.

And as I mentioned, we're expecting to achieve multiple important milestones for each of our lead programs throughout 2022. With the exciting results we've seen thus far in our PK study for GTX-104 and the active development work now underway for GTX-102 and 101, I hope you share our enthusiasm for the outlook for our entire clinical portfolio as we continue to advance our lead drug candidates through clinical development and ultimately towards commercial launch. We look forward to reporting on further progress as it occurs as well as at our next quarterly and annual update.

So with those operational updates, I'll now turn the call over to Brian Ford, our CFO, to discuss our financial results for fiscal Q3. Brian?

Thank you, Jan. Please note that, unless otherwise indicated, all numbers that I mentioned are in U.S. dollars. The loss from operating activities for the 3 months ended December 31, 2021, was $4.5 million compared to a loss of $2 million for the 3 months ended December 31, 2020. The increase was due mostly to an increase in research and development expenses and an increase in general and admin expenses related to increased legal, tax, accounting and other professional fees.

The net loss for the 3 months ended December 31, 2021, was $3.8 million or $0.09 per share compared to a net loss of $3.2 million or $0.26 per share for the 3 months ended December 31, 2020. The increase in net loss resulted primarily from an increase in research and development expenses related to accelerating the development of the new clinical assets acquired from Grace.

Research and development expenses before depreciation, amortization and stock-based compensation expenses for the 3 months ended December 31, 2021, totaled $2 million compared to $62 million -- $0.62 million for the 3 months ended December 31, 2020. The net increase was again mainly attributable to increased contract research activities as the clinical program we got underway.

As I mentioned earlier, this increase was the result of increased legal tax, accounting and other professional fees. Cash equivalents and short-term investments totaled $46.3 million as of December 31, 2021, compared to $26.5 million cash and cash equivalents as of December 31, 2020. The company believes these funding resources provide at least 21 months of operating runway, based on management's current projections.

With that, I'll now turn the call back over to Jan.

Thanks, Brian. That concludes our prepared remarks. Now I'd like to open the call to any questions from our shareholders. Holly, can you open it up to questions?

(Operator Instructions) Your first question for today is coming from Alexandra Heller.

This is Alex Heller on for Leland Gershell, Oppenheimer. Congrats on the progress made this quarter. Recognizing that you will be completing the PK bridging study for 104 and moving into Phase III safety study as well as the Phase II safety study of GTX-101, what can we expect R&D expenses to look like in the upcoming quarters?

Yes. Maybe I'll turn that one over to -- by the way, Alex, thanks for the question, really appreciate it. I'll turn that over to Brian. Brian, do you want to comment on kind of the ramp of our overall expenses due to the ramp-up of the clinical programs?

Sure. For the next 12 months, we expect our R&D expenses to be growing moderately from roughly $1.5 million per month to almost $2 million per month. We have some incremental expenses above that with the department. We expect the R&D to grow again another further 12 months out as we get into more of the Phase III trial, so we begin to invest in commercialization activities for GTX-104. Does that answer the question?

Yes. I might add, Alex, that as we've said, the current cash that we have on our balance sheet will allow us to completely fund the full GTX-104 program and significantly advance both the 102 and the 101 programs.

Perfect. Yes, that was incredibly helpful. And then I guess the next question I have is, as there's no approved product for AT, have you had any discussions on what that pivotal trial design might look like into 2023 when you're looking at starting at with the FDA? And maybe when we might have clarity on that design for 102?

Yes. We've had preliminary discussions with the FDA about the trial design, and we expect that it will be a safety and efficacy study probably in a small number of patients. I would guesstimate about 100 patients, maybe less. We'll have to see how long the FDA wants us to treat these patients and follow them. We plan to have a meeting with the FDA once we complete the PK study to lockdown the study design for the Phase III. But based on the preliminary discussions, that's what I can tell you for now.

Your next question is coming from Sahil Kazmi.

Congrats on the quarter and all the progress has gone on. This is from Sahil Kazmi from B. Riley Securities. A couple of questions from us. Maybe focusing on the data that you have enhanced today on these 46 patients. Could you just provide a bit more granularity on what we're seeing in terms of the variability, both between patients and relative to the oral formulation? And how that might be both clinically relevant and also inform your costs with further type upgrades?

Thanks Sahil. Listen, thanks for the question. Really appreciate your attending today. I'll speak to it generally and then turn it over to Pierre and George. But we saw a dramatic difference in variability. GTX-104 showed really tight -- very little variability. So from patient or subject to subject and over time, the variability was very low compared to the oral, which it was no surprise. We've seen this before, and this is obviously the big complaint of physicians. It makes it very difficult to control blood pressure when you have the oral nimodipine causing huge swings in blood pressure, and that's what we saw. I mean, it was just significantly more variable.

Now I would just caution that this is based on 20 subjects. We do have 46 completed so far, but we don't have the data on those 46. We're still blinded. We should be finishing up the study in the next few weeks and then they've got to clean up the data. It will take some time to do that and then report out the results. But we expect to report out still on track in Q2. And I don't know, Pierre, do you want to add anything? Did I pretty much cover that or anything you want to add? Pierre, I think you might be on mute. Okay. We're not getting. George, are you there?

Yes. I'm here, Jan.

George, do you want to -- anything you want to add?

Yes, So essentially, exactly as Jan said, the interim data in 20 subjects showed very little variability both from a AUC perspective as well as from a Cmax perspective. We don't expect this to be any different after we complete the analysis of 56 or so subjects. And the clinical portion of the study should be complete by mid-February this month and the -- we'll have some kind of a draft report at the end of March, early April.

And then maybe 1 more from us, either Jan or Brian. Just as it relates to the cash position today and the guided 21 months of runway, just given what we're seeing in the 104 program, how you guys were actually able to go a little bit quicker than anticipated? Can you talk about how you might be able to use this capital to either focus on one of the emerging programs? And how you think about the pace of development for both AT and [HCl]?

Yes. So I'll jump in and then Brian, you can add more from a financial perspective. But yes, we expect the current cash to complete GTX-104. We are running a little bit ahead of schedule, I would say a few weeks, maybe a month or so. But I don't think it's going to have a significant impact on the bottom line cash projection. We are moving 102 and 101 forward very aggressively. But again, all of that was in our plan.

So having said that, we have a couple of other assets in the preclinical pipeline that are quite interesting. And we are looking at potentially moving one of those forward into clinical development later this year. But a lot more planning work has to be done before we say too much more on that. But Brian, do you want to make any additional comments on the cash runway?

No. I mean we've been tracking our cash a little better than planned from the date of the merger. And not the best necessarily going to continue as we start continue to build on these programs. But -- that we continuously look at our plans and revised the forecasts as new information and new agreements or new research agreements come into play, but so far, estimates has held up pretty well.

Yes. I would say, overall, we are running a bit ahead. In other words, we've managed our cash very well. So we are running a bit ahead of our projection in terms of cash runway. And I fully expect we'll continue to run these programs tightly and let's hope the data holds up, and we can move forward as planned. So I hope that answers your question, Sahil.

Yes. That's extremely helpful. Congratulate again on the progress in this environment and look forward to seeing the update on 104.

(Operator Instructions) There are no questions in queue at this time.

Okay. Well, again, I want to thank everyone for joining us today. We have, as you can tell, a lot of really exciting programs underway, and we look forward to continuing to provide updates in the very near future. So again, thanks, and have a good day.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.