Astria Therapeutics Inc (ATXS) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Catabasis Pharmaceuticals Inc. Q3 2016 Earnings Conference Call.

(Operator Instructions)

I'd like to introduce your host for today's conference, Miss Andrea Matthews, Executive Director of Corporate Affairs.

Ma'am, please begin.

Thank you, Vince.

Welcome to today's conference call to provide a corporate update for Catabasis Pharmaceuticals and to review our Third Quarter 2016 Financial Results.

With me today, from Catabasis Management are Jill Milne, Chief Executive Officer, Joanne Donovan, Chief Medical Officer, Rick Modi, Chief Business Officer and Andrew Nichols, Chief Scientific Officer.

We issued a press release after the market closed today, summarizing our corporate update and our Q3, 2016 financial results, which we will reference on today's call. This press release is available on our website.

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 recently quarterly report on form 10-Q, which we filed this afternoon with the SEC and 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, who will provide the corporate and financial update. This will be followed by Joanne Donovan, our Chief Medical Officer, who will provide a brief update on our clinical program.

Jill?

Thank you, Andrea.

Good afternoon, everyone and thank you for joining us today for our corporate and financial update for the third quarter of 2016. We believe that Catabasis has made important progress since our last call. We announced a new pre-clinical program in a rare disease and have achieved important milestones in our DMD program with edasalonexent. We'll keep today's call brief as we look forward to discussing our programs in more detail at our Investor Day next week.

Our focus, as an organization, continues to be our lead program edasalonexent for the treatment of Duchenne Muscular Dystrophy. Edasalonexent, which we also call edasa was previously known as CAT-1004. We believe edasalonexent has the potential to be transformative in the treatment of DMD and offers a strong value proposition. We are seeking to develop edasa as a new standard of care for Duchenne Muscular Dystrophy. And based on its mechanism of action, believe that it has the potential to be effective in all patients with Duchenne as a monotherapy, regardless of mutation site.

Edasalonexent has the potential to be disease modifying, meaning that it can slow the typically relentless degeneration of muscle, while enhancing muscle regeneration. We are pursuing this program via a well thought out development plan that we believe is consistent with regulatory guidance, using the rigor of randomized double blind placebo controlled trials. As a reminder, edasalonexent is an oral small molecule that inhibits NF Kappa B, a protein that is activated in the very early stages of DMD and is critical in the progressive muscle degeneration in DMD.

Catabasis has achieved multiple milestones in the edasa program since the start of third quarter. Last month, we announced the completion of enrollment for our phase two Move DMD trial, which is the part [B] efficacy portion of the trial. Now that patient enrollment is complete and scheduling of visits is planned, we expect to report top line data for edasalonexent from the phase two portion of the trial after the JP Morgan conference in the first half of Q1 of 2017.

We also presented positive gene expression biomarker data from part A of the Move DMD trial at the World Muscle Congress. In July, we initiated an open label extension to the Move DMD trial that is expected to provide additional safety and efficacy data on edasa when administered for up to 48 weeks.

The patients that have completed part B are continuing on open label extension. We expect to generate a rich and informative data set in DMD based on the design of the Move DMD trial, along with the open label extension. We are confident in the potential of edasalonexent as monotherapy for the treatment of Duchenne and also believe that a combination drug approach may be able to offer additional benefits to patients.

We announced a joint research collaboration with Sarepta Therapeutics to explore a combination drug treatment approach for DMD. The two companies are contributing their respective expertise to study edasalonexent, together with an [exon skipping] treatment developed by Sarepta in a mouse model of DMD.

In addition for our work in DMD, we are considering other diseases where the inhibition of NF Kappa B may be beneficial as potential indications for edasalonexents. There are a number of other rare diseases where NF Kappa B plays an important role and edasa could have the potential to positively impact patients affected by these diseases.

We recently expanded the breadth of our rare disease development efforts with the presentation of positive preclinical data for CAT 5571, an activator of autophagy, as a potential treatment of cystic fibrosis. This positive data for CAT 5571 was presented at the North American Cystic Fibrosis Conference. CAT 5571 activates autophagy, and in combination with lumacaftor, ivacaftor enhances cell surface trafficking and function of CFTR with a homozygous delta 508 mutation], the most frequent CFTR mutation present in more than 85% of patients in the US.

We also showed the CAT 5571 enhances the clearance of pseudomonas infection in preclinical models of CF, irrespective of CFTR mutation.

In our other pipeline program in rare disease, CAT 4001, preclinical activities have continued. Several preclinical studies, exploring the potential of CAT 4001 in rare and neurodegenerative diseases such as ALS and Friedreich's ataxia are ongoing. We expect to provide an update next year on the potential timeline for CAT 4001 in the clinic.

We are excited to host our first Investor Day, which is one week from today on November 17 in New York. We believe that this will be an excellent opportunity for members of the professional investment community to learn more about our corporate strategy and pipeline in rare diseases. This event will include presentations on edasa and DMD, both by professor Lee Sweeney and Dr. Craig McDonald, international experts in the Duchenne community, as well as by several members of the Catabasis leadership team.

We will also provide more information on our program CAT 4001 and CAT 5571. We hope that many of you on the call today will be able to join us in person for this event, to register, please via our Q3 earnings release, which we issued this afternoon. For those of you that may not be able to join us in New York, the event will also be webcast.

For our third quarter of 2016 financial update, our earnings release provides details, so I'll provide a brief summary. As of September 30th, 2016 we had $47.3 million of cash, cash equivalents and marketable securities, which we expect to provide us [run way] through at least September 30th, 2017.

Our cash position was increased earlier this year in September when 2,875,000 shares of common stock were sold in an underwritten registered direct offering and generated net proceeds of $10.6 million. In addition, during Q3 2016, 368,015 shares were sold under an at the market offering program for net proceeds of $1.3 million.

In the third quarter of 2016, our net cash used in operating activities was $6.9 million. Our R&D expense was $5.9 million in Q3, 2016 compared to $5.8 million in Q3, 2015. Our G&A expense was $2.3 million in the third quarter of 2016, compared to $2.4 million for the same quarter in 2015. Our operating loss was $8.3 million in Q3, compared to $8.2 million in Q3, 2015. Our net loss was $8.4 million or 54 cents per share in Q3 this year, compared with $8.5 million for a net loss in Q3 2015.

For the third quarter, we had a weighted average common shares outstanding of 15.5 million, and at the end of the quarter, we had 18.6 million shares issued and outstanding. Additional financial information is available in our 10-Q, which we filed with the SEC earlier today.

I'll now ask Joanne Donovan, our CMO to provide an update on our edasalonexent clinical program.

Thank you, Jill.

And good afternoon, everyone. I'm going to speak briefly about lead program edasalonexent, which we will discuss in more detail next week. As a reminder, we previously presented that in the one week part A of the Move DMD trial in boys affected by Duchenne, edasalonexent was generally well tolerated with no safety signals observed, and exhibited adequate PK. Last month, at the World Muscle Society Congress, we presented positive gene expression and serum proteomics biomarker data that demonstrated successful NF Kappa B target engagement in boys with DMD after one week of dosing in part A of the Move DMD trial.

In October, we announced completion of enrollment of part B, the phase two portion of the Move DMD trial. This phase two trial is evaluating the safety and efficacy of edasalonexents in DMD over a 12 week period. We enrolled 31 boys aged 4 to 7 who had not been on steroids for at least six months. We greatly appreciate the support and enthusiasm that we've received for this program from the Duchenne community and the dedicated clinical trials staff that enabled completion of enrollment.

The primary end point for part B of the Move DMD trial is change in T2 MRI of the lower leg muscles. We've worked closely with imaging DMD to develop a thorough T2 MRI analysis plan that we will discuss in more detail next week. We're also assessing age appropriate time function tests as secondary end points, including 10 meter walk run, time to stand and four stair climb. In addition, we're measuring the North Star ambulatory assessment, PODCI and muscle strength. We announced in July the initiation of an open label extension to the move DMD trial, in which patients continue on open label edasalonexent for 36 weeks, following completion of the 12 week placebo controlled portion of the trial.

At this point, more than half of the boys in the Move DMD trial part B have progressed on to the open label extension phase.

That concludes our prepared remarks, and we'll be happy to take your questions now.

Operator, can you please repeat the instructions and poll for questions? Thank you.

Yes, thank you.

(Operator Instructions)

Our first question's from Liana Moussatos of Wedbush. Your line is open.

Thank you for taking my question. So, presuming part B works in Q1, how long - what would be the next steps after that, and how long they would take before you could start a phase three?

Yes, hi Liana, this is Jill. So, our intention with positive data from the part B portion of the trial would be to initiate the phase three trial and our intention is - would be to initiate that in 2017. And we'll - we're going to plan to give more update next week at our Investor Day.

Okay, thank you very much.

Thank you.

Our next question's from Phil Nadeau of Cowen and Company. Your line is open.

Thanks for taking my questions and congratulations on the progress. I guess first one question on the part B data, you mentioned that the primary end point is the T2 MRI of the lower leg muscle, are you also going to be assessing MRI of other muscles? And if so, which ones?

Yes, that's a great question, Phil. This is Jill, I'll take that question, so yes, that's right. So, the primary end point will be a composite of muscles in the lower leg. We are measuring the MRI T2 signal in other muscles in the low - in the upper leg as well. And, I'll again put a plug in for next week's Investor Day and Joanne is going to go into some great detail on the MRI T2 analysis plan and the data that is being collected. Because you know, we've certainly worked very closely with the imaging DMD group to develop that plan and certainly want to highlight that.

Good. And on the lower leg muscles, have there been studies that have looked at the predictive power of MRI changes in the lower leg muscles before changes in some of the time function tests that you're also assessing? Is there - has that correlation been made?

Yes, that's a great question. And that's one reason why we really like the MRI T2 signal of the lower leg, so the imaging DMD group in fact, has published and presented on data that demonstrates that changes in the MRI T2 signal of the lower leg muscles does correlated with changes in the time function test.

And in fact, in approximately the same age range of patients in which our Move DMD trial is being run, so we're in 4 to 7 year old boys with Duchenne and the imaging DMD group studied boys in the 5 to 7 year old range and also explored the same three time function test that we are exploring as - in our Move DMD part B portion of the trials and one of which of those would become a primary end point in the phase three.

Got it. Okay. On the extension study, do you have a sense for how many patients they'll be moving from part B into the open label extension - is it --

Yes...

... most patients so far or it too early to tell?

So we're not giving real granularity on that, but all the patients - the intention is all the patients will move over. And that so far, is what we've seen. And so...

Okay.

... Joanne will certainly be giving more details next week.

Great. And then last question's on the CAT 2000 series, are you still planning to look for a partner for that series? And if so, are negotiations or discussions beginning?

Yes, so we are in discussions around potential partnerships for the CAT 2000 series, and I can say that the interest from most partners has been in the [NASH] indication, which you may remember, we had presented positive preclinical results last year, actually was yes - this year...

This year.

-- year - yes earlier this year, demonstrating our proof of concept for inhibition of SREBP with CAT 2003 in [nash malsen], so those discussions are ongoing, so we hope in the - in the future to be able to give more detail around that.

Great. Thanks for taking my questions.

Thank you.

Our next question's from Ted Tenthoff, Piper Jaffray. Your line is open.

Great. Thank you very much for taking the question and at the risk of stealing next week's thunder, I wanted to ask about the recent Sarepta agreement, and obviously all eyes are focused on the - [reed] outcome early next year, but can you give us a sense of what you intend to do - or what your goal is with respect to the upcoming data - or you know, with Sarepta? I mean what kind of studies could we envision?

Yes, that's a great question, [Ted]. And so - our - so first we continue to think that edasalonexent has great potential as mono therapy in treading boys with Duchenne muscular Dystrophy, but we also see the importance of exploring the potential combination of edasalonexent with other agents such as [exon skips] and there - you know, you may be familiar with some of the literature that's come out in this area that has demonstrated that inhibition of NF Kappa B actually controls the expression of some regulators of dystrophin expression.

So, the concept has been that if you can combine an NF Kappa B inhibitor like edasalonexent with an [exon skip] approach, you might be able to enhance the amount of dystrophin that gets expressed. So, that's really the concept that we're trying to test in these preclinical models that we're conducting in collaboration with Sarepta.

So, clearly we have that study that's ongoing and hopefully that will lead to more. And you know, the ultimate hope is that if we can enhance the expression of dystrophin via the combination of these two mechanisms, that would be something we'd certainly want to explore in the clinic at a later date.

Great. That makes a lot of sense. I'm look forward to seeing you in New York next week.

Yes, great. Thank you for the question.

Thank you.

At this time, I'll turn the call over to Miss Milne for any closing remarks.

Great. Thank you, Vince.

And thank you, everyone for being on the call today. We're excited on executing on our mission to bring hope and life changing therapies to patients and their families suffering from rare diseases. Correspondingly, we are building robust rare disease pipeline. We're excited about our lead program, edasalonexent and DMD. And since the beginning of third quarter, this year, our - with our focus on edasa, we have completed enrollments in our phase two Move DMD trials, presented positive biomarker data in boys affected by Duchenne at World Muscle Society Congress. And we also initiated a 36 week open label extension for edasalonexent.

We believe that edasalonexent has the potential to [be the disease] modifying mono therapy and could be transformative in the treatment of DMD. We also announced data from our new program CAT 5571, an activator of autophagy as a potential treatment of Cystic Fibrosis.

We look forward to discussing our corporate strategy and pipeline in rare diseases on November 17th.

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

Andrea?

That concludes today's call. The webcast replay will be avail 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 concludes your program. You may now disconnect.