Astria Therapeutics Inc (ATXS) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Catabasis Pharmaceuticals Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded.

I would now like to hand the conference over to Andrea Matthews, Executive Director of Corporate Affairs. Please go ahead.

Thank you, Karen. Welcome to today's conference call to provide a corporate update for Catabasis Pharmaceuticals and to review our fourth quarter 2015 and full year 2015 financial results. With me today from Catabasis management are Jill Milne, Chief Executive Officer; Ian Sanderson, Chief Financial Officer; Joanne Donovan, Chief Medical Officer; and Rick Modi, Chief Business Officer.

We issued a press release after the market close today summarizing our corporate update and our Q4 and 2015 financial results, which will be referenced on today's call. This press release is available on our Web site.

I would like to note that during today's call we will make statements related to our business based on current and future expectations that may be considered forward-looking statements under federal securities laws. Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties, including those that were discussed in our most recent quarterly report on Form 10-Q, which is on file with the SEC and is also available on our website. Such statements represent our judgment as of today, and Catabasis undertakes no obligation to publicly update any forward-looking statements except as required by law.

With that, let me pass the call over to Jill Milne, Chief Executive Officer, for the corporate update.

Thank you, Andrea. Good afternoon, everyone, and thank you for joining us today for our corporate and financial update for the fourth quarter and full year 2015. We've made a lot of progress across our pipeline since our last conference call in November. I'll provide a brief summary of the key accomplishments. Joanne Donovan, our Chief Medical Officer, will give an update on our MoveDMD trials for CAT-1004 in Duchenne muscular dystrophy, and discuss our Phase 2a trial for CAT-2054 in hypercholesterolemia. Ian Sanderson, our Chief Financial Officer, will provide a review of our financial performance for the fourth quarter and full year of 2015.

We're very excited about our two programs in the clinic, CAT-1004 for Duchenne muscular dystrophy and CAT-2054 for lipid disorders. We believe both of these product candidates have the potential to be transformative in the treatments of the diseases that they target.

We're also developing a pipeline of earlier stage programs in rare diseases led by CAT-4001 in neurodegenerative diseases. All of these product candidates have been engineered using our internally developed SMART Linker drug discovery platform which allows us to simultaneously impact multiple targets in the disease.

We believe CAT-1004 has the potential to become a disease modifying therapy in Duchenne muscular dystrophy that not only slows the degeneration of muscle but also enhances muscle regeneration regardless of the underlying mutation. As a reminder, CAT-1004 is an oral, small molecule that targets NF-kB, a protein that is activated in the very early stages of DMD and is instrumental in the progressive muscle degeneration in DMD and is important in a number of other rare diseases.

CAT-1004 has a strong, strongly differentiated profile for most of the DMD drug candidates and development, with the potential to become a foundational treatment and a new standard of care in Duchenne. CAT-1004 has the potential to be used either as monotherapy or in combination with dystrophin targeted approaches.

We're currently conducting the MoveDMD Phase 1/2 trial of CAT-1004 in DMD, boys age four to seven, who are at a relatively early stage of their disease. We recently released positive topline results from the Part A dose ranging portion of the MoveDMD trial and plan to initiate the Part B efficacy portion of the MoveDMD trial in the first half of 2016, subject to regulatory and IRB approvals of our proposed protocol. Assuming patient enrollment proceeds as anticipated, we plan to release top line results from our MoveDMD trial of CAT-1004 late this year. I'm pleased to report that Catabasis received grant funding from the Muscular Dystrophy Association to support Part B of the MoveDMD trial, which is in addition to the Parent Project Muscular Dystrophy support we received for Part A of the trial.

Our second clinical program CAT-2054 has been engineered to target SREBP, a master regulator of lipid metabolism. By targeting SREBP, we believe CAT-2054 may demonstrate significant effects on LDL cholesterol with additional benefits on triglycerides, glucose, and liver fat. We are currently conducting a four-week Phase 2a trial of CAT-2054 in addition to statins in patients with hypercholesterolemia. We initiated patient dosing in December of 2015 and plan to release top line results in Q3. We have previously demonstrated in Phase 1 safety, tolerability and LDL cholesterol effects for CAT-2054 and have also demonstrated that CAT-2054 does not affect the PK of concomitant statin therapy.

To explore the potential utility of CAT-2054 in NASH, we've run a number of preclinical experiments, testing the CAT-2000 Series product candidates in NASH model. And the early data are promising. We intend to share these preclinical results at an upcoming scientific conference.

Our previously announced research collaboration with UT Southwestern is focused on studying the CAT-2000 Series in SREBP-mediated diseases including NASH and is advancing well. CAT-2054's LDL-Plus Profile, that is the potential for significant impact on LDL cholesterol, triglycerides, glucose, and liver fat, could be highly differentiated. Many patients have concomitant elevations in LDL cholesterol, glucose, and triglycerides leading to NASH and fatty liver disease. As a reminder, our strategy is to out-license CAT-2054 prior to Phase 3.

Stepping back to our earlier programs for CAT-4001, we are advancing our preclinical activities in ALS and Friedreich's ataxia. In January, we announced a grant from the Friedreich Ataxia Research Alliance to help fund our exploratory and preclinical work. We're conducting further clinical studies with CAT-4001 in both ALS and Friedreich's ataxia, and plan to conduct IND-enabling activities. Assuming continued success with these activities, our goal is to advance CAT-4001 into the clinic next year. We continue to apply our SMART Linker technology to discover and develop candidates for additional rare diseases. We're targeting of multiple biologic pathways may yield important enhancements in efficacy.

On the publication front, we're proud to share that a paper on our SMART Linker drug discovery platform is featured in the February issue of Journal of Medicinal Chemistry. We feel that this publication provides additional scientific validation for our core technology that generates our pipeline of development candidates. Our vision is to become a premier rare disease company, and the progress we've made shows we are executing well towards this vision.

I'll now ask Joanne Donovan, our CMO, to provide a bit more color on our clinical programs.

Thank you, Jill, and good afternoon, everyone. To start with our CAT-1004 program, the MoveDMD trial with CAT-1004 is being conducted in two sequential parts, Part A and Part B. In Part A, 17 ambulatory boys between ages four and seven, with a genetically confirmed diagnosis of DMD with the range of dystrophin mutation received CAT-1004. The boys were steroid naive or had not used steroids for at least six months prior to the trial.

Part A of the trial was conducted at three sites in the U.S., and it assessed safety, tolerability, and pharmacokinetics of CAT-1004 in patients of three dosing levels during seven days of dosing. In January, we completed and announced positive top line results from Part A of the MoveDMD study. All three doses of CAT-1004 were generally well tolerated with no safety signals observed. The majority of adverse events were mild in nature, and the most common adverse events were gastrointestinal, primarily diarrhea. There were no serious adverse events and no drug discontinuation.

Notably, CAT-1004 average plasma exposure levels were consistent with those previously observed in adults. Moreover, exposures were consistent with those at which inhibition of NF-kB was observed in adults as well as with exposures seen in preclinical studies where disease modifying effects were seen.

Based on these results and subject to regulatory and IRB approvals of our proposed protocol, we plan to initiate Part B of the MoveDMD trial in the first half of 2016. We also plan to submit the data from Part A of the trial for presentation at an upcoming scientific conference.

It's worth highlighting that we have received significant support and enthusiasm for our MoveDMD trial from parents, from advocacy groups, investigators, study staff, and thought leaders, and we want to express our appreciation to them for their participation and support.

Part B is expected to be a randomized double-blind placebo-controlled trial to evaluate the safety and efficacy of CAT-1004 in DMD over a 12-week period. We expect to enroll approximately 30 boys age four to seven affected by Duchenne muscular dystrophy in Part B. The boys enrolled in Part A will be asked to participate in Part B, and we are also now identifying additional patients.

Entry criteria are expected to be similar to those in Part A. The planned primary endpoint for Part B of the MoveDMD trial will be MRI with age-appropriate timed functional tests as secondary endpoint. These will include 10-meter walk/run, time to stand, and four-stair climb. Note, that we are not including the six-minute walk test as this test is not really appropriate for boys at this age due to attention requirement. We're also measuring the North Star Ambulatory Assessment, PODC, and muscle strength to provide a really full picture. With positive data and after regulatory discussions, we would then design and conduct a placebo-controlled pivotal Phase 3 study. We expect that this study will be six months in duration with one of the timed functional tests as the primary endpoint.

Importantly, our approach is differentiated from the programs in late stage development for Duchenne in a number of ways. First, we engineered CAT-1004 to inhibit NF-kB, a protein that's activated in muscle in all patients affected by Duchenne, making CAT-1004 potentially effective in all patients. Second, we've selected MRI as a biomarker, and the primary efficacy endpoint in our MoveDMD Part B trial. MRI is objective, quantitative, correlated with functional measures, and avoids the heterogeneity seen with muscle biopsies, which we will not be including in the MoveDMD trial.

Lastly, our MoveDMD trial has enrolled and will in the future continue to enroll early-stage DMD patients in the four-to seven-year-old age group, a group that is more homogenous in disease progression than older DMD patients. Moreover, the MoveDMD trial has been designed based on a natural history study with corticosteroids that demonstrated a statistically significant change in the MRI endpoint. This natural history study was of the same duration, had fewer patients, and was conducted by the same imaging DMD investigators as Part B of our MoveDMD trial.

Our second clinical program is CAT-2054. We're currently conducting a four-week Phase 2a randomized, double-blind, placebo-controlled trial of CAT-2054 in addition to high intensity statins in patients with hypercholesterolemia.

We began dosing patients with CAT-2054 in December. At this point, enrollment is largely complete, and we are on schedule to report topline results from this trial in the third quarter. Patients are being randomized to doses of 250 milligrams or 400 milligrams daily, or 250 milligrams or 400 milligrams twice daily of CAT-2054 or placebo, all in addition to a stable dose of a high intensity statin, atorvastatin 40-milligram.

The primary endpoint for this trial will be percent reduction in LDL cholesterol and will also explore the activity of CAT-2054 on other metabolic parameters such as triglycerides and glucose. We've demonstrated safety, tolerability, and LDL effects with CAT-2054 in the Phase 1 trial as well as evidence of no impact on statin PK. As Jill mentioned, we are also conducting preclinical studies for the CAT-2000 series in NASH and we've seen promising results that we plan to present at an upcoming scientific meeting.

Now, Ian Sanderson, our Chief Financial Officer, will provide an update on our financials for the fourth quarter and full year of 2015.

Thanks, Joanne, and hello, everyone. Our press release provides details of the financials for the fourth quarter and full year 2015. So, I'll just provide a brief summary. We completed our IPO in June of last year raising $61.7 million net of expenses, and as of December 31st, we had $62.8 million of cash and equivalents, which we expect to provide us runway through Q1 of '17. Importantly, we expected our current cash balance will provide funding well beyond both the CAT-1004 MoveDMD Part B readout later this year and the CAT-2054 Phase 2a readout in the third quarter.

In the fourth quarter of 2015, our cash used from operations was $8.7 million. And for the full year cash used from operations was $29.8 excluding net financing proceeds.

Our R&D expense was $6.7 million in Q4, that's an increase of $2.3 million over our R&D expense in Q4 of '14. For the full year 2015, our R&D expense was $23 million, and that was an increase of $7.3 million year-over-year. In both periods, the increase was primarily due to the initiation of the CAT-1004 MoveDMD trial in June of 2015 and expansion of our research, development and the clinical teams.

Our G&A expense was $2.7 million in Q4, and that was an increase of $1.1 million over our G&A expense in Q4 of '14. For the full year 2015, our G&A expense totaled $8.6 million, and that was a $2.6 million increased year-over-year. This increase was primarily due to increased head count and increased consulting and professional expenses. Our operating loss was $9.3 million in Q4, and that was an increase of $3.5 million versus Q4 of '14.

For the full year, our operating loss was $31.7 million and that was an increase of $10 million over 2014's operating loss. So our net loss was $9.7 million or $0.63 per share in Q4, and that was an increase of $3.7 million over our net loss in Q4 of '14. And for the full year, our net loss was $32.6 million, and that was a $10.7 million increased over our net loss in '14.

So for the fourth quarter, we had weighted average common shares outstanding of $15.3 million. And for 2015, the weighted average common shares outstanding figure was $7 million due to our IPO on June 25th.

So that concludes our prepared remarks, and we'll now be happy to take your questions. Karen, can you please repeat the instructions and poll for questions? Thanks.

Certainly. (Operator Instructions) Our first question comes from the line of Chris Marai from Oppenheimer.

Hi, good afternoon, guys. Congrats on the quarter and the year, and thanks for taking the question. First, I was wondering if you could perhaps elaborate on some of your discussions with the FDA regarding looking at endpoints for the DMD trial and specifically perhaps looking at the MRI marker. Obviously, you're going to be looking at clinical outcomes, but -- yes, I think we know there are some controversies around certainly other surrogates. And I'm wondering how comfortable the regulators appear to be with MRI data and just how robust you think that is given that some of it is pretty early. Thanks.

Thanks Chris, this is Jill. I'm going to let, hand this question over to Joanne who's been the most active in this, in dialogue with the FDA.

Great.

Thanks, Chris. So the FDA really has been great in terms of recognizing the profound unmet medical need in Duchenne, and they seem very supportive of an approach that incorporates well conducted placebo-controlled studies. We certainly want to make sure that we have a good natural history or comparators that are identified in advance in supporting biomarker data including [MR]. We've had the opportunity to design our trial based on the 2015 FDA draft guidance. And in addition, we've actually been able to see their thoughts on this guidance as a respond to others.

We are seeing that the age-appropriate time functional tests that we're using, they're described in detail in the draft guidance -- the 10-meter walk/run, the time to stand, and the four-step climb. They are our secondary endpoints in the proof of concept Part B of the study, and we expect one of those to be the primary endpoint in the pivotal study. We are using the MRI as proof-of-concept, and we're doing that based on the previous study, the natural history study, that showed it was able to see changes in a relatively small number of boys. And I think the FDA has been very supportive of MRI use in that context.

Okay. And then with respect to using MRI more broadly to sort of get an idea of the activity of your drug, have you looked at potentially other indications outside of DMD or beyond DMD like FSHD or others where MRI might be potentially be useful to help derisk product development? Thanks.

Yes, sure, Chris, this is Jill again. That's a great question because clearly NF-kB has been implicated in a number of rare diseases and disease; rare diseases including other neuromuscular diseases where as you said MRI could be a great way, a great surrogate biomarker to assess the potential therapeutic, the therapeutic potential of CAT-1004 in these diseases. And I can tell you that at Catabasis, we've been actively evaluating other rare disease indications where we believe the CAT-1004 could be an important therapeutic. And so, that is -- that is work that is under evaluation at Catabasis.

Great. And one more, if I may, just real quick on (inaudible), maybe for Joanne. Joanne, when you think about next steps, I think you alluded to it, but for endpoints, for your trial, what's your opinion with respect to talking to the FDA? I mean are you guys going to have to go for a six-minute walk and then would they be amenable to a predefined either subgroup or just a predefined population in, for the primary endpoint on a six-minute walk? Or would you be looking at completely different but still validated primary endpoints in the potentially pivotal trials for the DMD drug? Thanks.

Yes. Thanks, Chris. This is Joanne. We think that based on the guidance that FDA has given in that guidance document, the draft form that they put out last year, that these secondary -- these are going to be the secondary endpoint to the study, the timed functional tests, are the clinical endpoints that would be appropriate for a pivotal study. We are using the MRI biomarker, very important marker in our Phase 2 study, but ultimately we think that is these timed functional tests that will be appropriate.

We're not anticipating using the six-minute walk in four- and five-year-old boys. You can imagine that's really not a great measure in terms of just their attention. And you've certainly seen issues in terms of the variability and the reproducibility of the six-minute walk. So, we will be using one of these endpoints based on our data in the Phase 2 study.

Great. Thank you.

Okay.

Thank you. And our next question comes from the line of Phil Nadeau from Cowen and Company.

Good afternoon. Thanks for taking my question. And let me add my congratulations on all your progress. In terms of Part B's initiation, is there anything that you need to determine what the FDA or any feedback that you're waiting for from the clinical trial sites in order to finalize the design? Or at this point, is the design pretty much finalized and you're just going through the paperwork of getting it up and running?

Yes, hi, [Chris], I'll start and let Joanne fill in anything I leave out. So, we're currently working on preparations with the sites for initiation of Part B. But in the meantime what we have done is submitted our Phase 2 package and protocol to the FDA. And so, we're waiting on response from the FDA to begin to initiate that study. And as you can imagine getting the study sites up and running requires a lot of pre-work, and that's work is ongoing now. Have I left anything out, Joanne?

We are on target to start the study first half of the year. And as Jill mentioned, there's a lot of legwork involved in getting that up and running.

Great. And then the second, over the last three or four months, we've seen the FDA's opinion on a number of DMD filings and applications. Has anything surprised you? Have you seen anything that has caused you to reconsider any elements of your clinical trial program?

So I'll take this initially, so this is Jill. So I think, yes, it's been an interesting time in the world of DMD for certain over the past two months. I think what is clear is -- it is clear that the FDA does recognize Duchenne as a profound unmet medical need that needs to be addressed with the therapeutic or therapeutics. I think what -- we certainly at Catabasis have had the opportunity to design our trial based on the 2015 FDA draft guidance.

And in addition to that, as we have designed our MoveDMD trial, we've also taken full advantage of our fast track designation to be in dialogue with the FDA during that process. So, I think what is clear is that the FDA does recognize this as a significant unmet need and does appear supportive of well conducted trials, prespecified analyses, and natural history comparisons, and also supporting biomarker data and seems highly supportive of biomarker data including MRI.

Okay, fair enough. Then one last question, Ian, for you in terms of 2016 expenses, could we just expect a gradual increase in expenses for the year as the trials get up and running? Or is there anything more dramatic in storm?

No, I think that's exactly right, Phil. The first half will probably look pretty similar to Q4 and then with the second half seeing a ramp-up with the trials.

Great. Thanks for taking my questions.

Thank you. And our next question comes from the line of Liana Moussatos from Wedbush Securities.

Thank you for taking my questions. This is on CAT-2054. What are the steps to get into the clinic with NASH and the timing? And are you in any potential partnership discussions now? Or are you going to wait until after the data comes out in Q3?

Great. Thanks, Liana, this is Jill. So, currently, as you know, so we're in our Phase 2a with CAT-2054, which we'll read out in the third quarter. In addition, we have been conducting preclinical studies in NASH with the idea of really developing a data package to support the potential of CAT-2054 in NASH. And I can say that those results are promising. What we would like to do before we would initiate a clinical study in NASH, of course, is to see the results of that Phase 2a trial and to complete the ongoing preclinical work as well. And so post that readout in Q3, I think then there would be the opportunity to do so.

And as you know, we have indicated that our intention with CAT-2054 is to partner this prior to initiation of Phase 3. We have had some initial dialogues with potential partners for CAT-2054. And of course we want to certainly maximize the value of that program. And so we'll be waiting until the readout of our Phase 2 study before we really engage in serious partnering discussions.

And NASH will be part of that partnership?

Yes, that would certainly be one of the supporting data for a potential partnership and I think a great way to really make sure that we fulfill the potential of CAT-2054.

Thank you.

Thank you. And our next question comes from the line of Joel Beatty from Citi.

Hi, good afternoon. Thanks for taking the questions. For CAT-2054, this has been described as an LDL-plus therapy. So what are some of the secondary endpoints in the Phase 2 trial that might be able to highlight the plus side of the agent and might differentiate the agent beyond solely LDL lowering drugs?

Yes. Hi, Joel. Thanks for the question. This is Jill. I'll start and then let Joanne finish. So, yes, so when you pick -- so this LDL-plus profile we think is really what makes CAT-2054 a very interesting product candidate for us. And the way we define that LDL-plus is that we believe CAT-2054 has the potential to not only reduce LDL cholesterol but also to have a positive impact on triglyceride, glucose, and also liver fat so really a pretty broad profile. And I'll let Joanne comment on what we're doing in the Phase 2 to begin to explore that potential.

So, as you know, many of the patients in hypercholesterolemia studies also have features of the metabolic syndrome and indeed features of NASH. So, we are able to monitor a number of biomarkers including things like liver function test as well as indices of insulin-resistance that are very much linked to NASH and are predictive of NASH. So, we'll be able to get early information on triglycerides, on glucose, on hemoglobin A1c in the study, and those are some of the things that we will be looking at in addition to the LDL endpoint.

Okay, great. And then one more question on MoveDMD trial, I know it's still early but are you able to give a sense of how many patients in Part A will continue on to Part B?

So, we had 17 patients in Part A. We have gotten a great response from patients and during the enrollment period for Part A. So we are very much confident in terms of our ability to enroll Part B.

Very good. Thanks for taking my questions.

Thanks, Joel.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Jill Milne for any closing comment.

Great. Thank you, Karen, and thank you to everyone for being on the call today. In summary, 2015 was an exciting year for Catabasis and 2016 looks to be even more so. In 2015, we completed our IPO in June. We advanced our two-lead programs, CAT-1004 and CAT-2054, in the clinic. We initiated a research collaboration for our CAT-2000 Series, and we advanced CAT-4001 closer to the clinic.

Most importantly, we initiated our MoveDMD Phase 1/2 trial with CAT-1004 in Duchenne. In December, we initiated dosing for the Phase 2a trial of CAT-2054 in hypercholesterolemia. Already in 2016, we reported positive top line results from Part A of the MoveDMD trial in January. Aspects of our SMART Linker drug discovery platform approach were published in the Journal of Medicinal Chemistry, and we received grant funding from the Friedreich Ataxia Research Alliance for CAT-4001. As 2016 progresses, we plan to report top line results for Part B of the CAT-1004 MoveDMD trial late this year and top line Phase 2a results for CAT-2054 in Q3.

Thank you for joining us on today's call, and thank you for your support of and interest in Catabasis. Andrea?

That concludes today's call. A replay of the call will be available at the dial-in number listed in the press release, and a webcast replay will be available for 90 days via the Investor Relations page on our website at www.catabasis.com. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect.