Astria Therapeutics Inc (ATXS) 2016 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Catabasis Pharmaceuticals Fourth Quarter and Full Year 2016 Earnings Call. (Operator Instructions) I would now like to introduce your host for today's conference, Ms. Andrea Matthews, Executive Director of Corporate Affairs. Ma'am, you may begin.

Thank you, Skylar. Welcome to today's Catabasis Pharmaceuticals conference call where we will provide a corporate update, and review of our fourth quarter and full year 2016 financial results. With me today are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer; Ted Hibben, Chief Business Officer; and Andrew Nichols, Chief Scientific Officer.

We issued a press release after the market close today summarizing our corporate update, and our Q4 and full year 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 recent annual report on Form 10-K, which we filed this afternoon 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, who will provide the corporate and financial update. This will be followed by Joanne Donovan, our Chief Medical Officer, who will provide an update on our clinical programs for edasalonexent. Jill?

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 2016. 2016 and early 2017 have been a productive time for us at Catabasis. We've gained important scientific insight that will help us going forward with our programs. We are excited about what is ahead in 2017 and beyond as we continue our mission to bring life changing therapies to patients affected by rare diseases.

Taken as a whole, the recently reported data for edasalonexent in patients with Duchenne muscular dystrophy from Part B of the MoveDMD trial are encouraging, and Part C of the trial is continuing on track. Although we did not achieve the MRI T2 composite endpoint at 12 weeks in the Part B of the study, we are encouraged by the numerical improvements in the function associated endpoints including three timed function tests, North Star Ambulatory Assessment, PODCI, and muscle strength. We also reported good safety and tolerability. We believe the potential treatment associated effects on functional endpoints warrant further evaluation, and we are excited to evaluate the longer-term Part C portion of the trial.

We designed Part C of the MoveDMD trial to collect longer-term functional data for 36 weeks of edasalonexent treatment and provide important information about dose and activity with extended duration as well as endpoints for possible future clinical trials with edasalonexent. Following data analysis from Part C, we will determine the next steps for edasalonexent in DMD.

Though not powered to show statistical significance, we are encouraged to see that all six of the function associated exploratory endpoints that we assessed in Part B showed numerical improvement in the higher dose group compared to placebo. This includes the four function associated endpoints that we presented at the end of January in the top line results, the four-stair climb, 10-meter walk/run, time to stand in North Star Ambulatory Assessment, as well as two additional exploratory endpoints for which we obtained data recently, PODCI and muscle strength.

Joanne Donovan, our CMO, will present the PODCI and muscle strength data at the 2017 Muscular Dystrophy Association Scientific Conference next week. We are also encouraged by the numerical improvements at the lower dose on multiple-function-associated exploratory endpoints. Results for the function-associated exploratory endpoints for this dose group were mixed compared to the higher dose group.

Now that we have a more complete analysis of the Part B data, what really stands out is the consistency of the possible treatment effects across the range of functional measures and assessments after only 12 weeks of dosing. Our expectation coming into this trial was that it would take longer than 12 weeks of dosing to see functional impact as this has been the case in our animal studies where functional effects were seen at six to nine months. Other therapeutic approaches in DMD have also found that changes in function take time to develop.

Last year, we initiated a joint research collaboration with Sarepta. In the Catabasis and Sarepta joint research collaboration established to explore a combination drug treatment approach for DMD, we saw increased dystrophin protein expression in combination with an exon-skip modality in combination with edasalonexent in the mdx mouse model of DMD. The companies believe that these results warrant further research.

In January, we announced the publication of two manuscripts about edasalonexent. The first published in JCI Insight described pre-clinical research on the edasalonexent program. This research was led by our collaborator, Professor Lee Sweeney, and the data demonstrated that edasalonexent and in analog, CAT-1041, both oral inhibitors of NF-?B were effective in ameliorating the dystrophic process in both mouse and dog animal models of DMD. The second manuscript published in the Journal of Clinical Pharmacology described data from our Phase 1 trials in adult subjects. The Phase 1 trials demonstrated that edasalonexent was safe, well tolerated, and inhibited and activated NF-?B in adult subjects.

We have a lean team at Catabasis, and expect this to continue as we collect and assess longer-term data and determine the next steps for the development of edasalonexent. We plan to report analyses from Part C in 2017 with an interim update expected in Q2. In terms of corporate strategy for 2017, partnering continues to be a priority for Catabasis this year.

For an update on our pipeline programs, we shared information on our rare disease pipeline program, CAT-5571, for the first time in the fourth quarter last year with a presentation of positive pre-clinical data 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 the homozygous delF508 mutation, the most frequent CFTR mutation, which is present in more than 85% of patients in the U.S. We also showed that CAT-5571 enhances the clearance of Pseudomonas infection in pre-clinical models of CF irrespective of the CFTR mutation status.

In January, we announced the publication of data from our 5571 program in the Journal of Medicinal Chemistry. This data demonstrate an increase in the activity and function of the cystic fibrosis transmembrane conductance regulator. We expect to initiate a Phase 1 trial with CAT-5571 in 2018.

Pre-clinical activities are ongoing to explore the potential of CAT-4001 in rare neurodegenerative diseases such as ALS and Friedreich's ataxia. In the fourth quarter, we also held our first Investor Day in New York. This event was focused on our corporate strategy and pipeline in rare diseases, and included presentations on edasalonexent and DMD by Professor Lee Sweeney and Dr. Craig McDonald, international experts in the Duchenne community, as well as Catabasis leadership team members. We also provided more information on our CAT-5571 and CAT-4001 programs.

Turning to our financials. Our fourth quarter and full year 2016 press release provides the details. So I'll provide a brief update here. As of December 31, 2016, we had $38.5 million of cash, cash equivalents, and marketable securities which we expect to be able to fund our operating expenses, debt service, and capital expenditure requirements based on our current operating plan through March 31, 2018, assuming no unscheduled repayment of indebtedness prior to such date. In the fourth quarter of 2016, our net cash used in operating activities was $8 million, and for the full year net cash used in operating activities was $32.9 million net of financing proceeds.

Our R&D expense was $6.3 million in Q4 2016 compared to $6.7 million in Q4 2015. For the full year 2016, our R&D expense was $25.5 million compared to $23 million in 2015. The increase in research and development expenses for the full year of 2016 relative to the full year 2015 was primarily attributable to increased direct program costs related to the MoveDMD trial. The decrease in research and development expenses for the fourth quarter of 2016 relative to the fourth quarter of 2015 was primarily attributable to having one program in active clinical trials in Q4 2016 compared to two in Q4 2015.

Our G&A expense was $2.4 million in the fourth quarter of 2016 compared to $2.7 million for the same quarter in 2015. For the full year 2016 our G&A expense was $10.1 million compared to $8.6 million in 2015. The increase in general and administrative expenses for 2016 relative to 2015 was primarily attributable to increased employee compensation costs.

Our operating loss was $8.7 million in Q4 2016 compared to $9.3 million in Q4 2015. For the full year, our operating loss in 2016 was $35.6 million compared to $31.7 million in 2015. Our net loss was $8.8 million or $0.47 per share in Q4 this year compared to $9.6 million or $0.63 per share in Q4 2015. For the full year, our net loss was $36.1 million or $2.22 per share compared to $32.6 million or $4.06 per share in 2015.

For the fourth quarter, we had weighted average common shares outstanding of 18.7 million. And for the full year 2016, the weighted average common shares outstanding figure was 16.2 million. Additional financial information is available in our 10-K, which we filed with the SEC earlier today.

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

Thank you, Jill, and good afternoon, everyone. Next week at the MDA Scientific Conference, I will be presenting additional data from Part B of the MoveDMD trial, including the pediatric outcomes data collection instrument or PODCI, and muscle strength assessment. For these assessments, there was a numerical improvement for both of the edasalonexent treatment groups compared to placebo at 12 weeks. The PODCI has a questionnaire completed by parents about their son's functional ability. It has separate scales for upper extremity function, basic transfers and mobility, sports and physical function, comfort and pain, happiness and satisfaction, as well as a global composite score. We focused on the basic transfers and mobility scale since this has been shown to correlate with disease progression and loss of important milestones. And this scale had numerical improvements in both of the edasalonexent's treatment groups compared to placebo in Part B.

Now Jill took you through a summary of the results from Part B of the MoveDMD trial. So I'm now going to focus on where we are in Part C. For an update, the majority of the boys have been on edasalonexent for at least 24 weeks at this point. Subject to the IRB approval, we intend to extend Part C of the MoveDMD trial for an additional 24 weeks to be on to the original 36-week open label extension so that the first boys that started the open label extension in July of last year are able to continue to receive edasalonexent treatment. Also subject to IRB approval, we intend to transition all of the boys in Part C to the 100 milligram per kilogram per day dose so that we have the opportunity to assess the higher dose in all of the boys in Part C.

Now, remember, the 67 milligrams per kilogram day dose is administered at 33 milligrams per kilogram twice a day, and the 100 milligrams per kilogram a day dose is given at 33 milligrams per kilogram three times per day. So once on the 100 milligrams per kilogram dose, all of the boys will be receiving edasalonexent three times per day.

In Part B, the compliance with the three times a day dosing was over 95%. Importantly, safety signals were not seen in Part B in boys in either of the 67 milligrams or 100 milligrams per kilogram per day treatment group.

In Part C, we're collecting longer-term data with edasalonexent approximately every 12 weeks with the same assessments as we did in Part B. In order to provide a robust interim assessment of the open label extension data, we are planning to analyze the open label extension data when all of the boys have completed 24 weeks in the MoveDMD trial. At which time, substantially all of the boys, taking into consideration those that received placebo during Part B will have completed 24 weeks of dosing with edasalonexent.

As we planned when we designed the MoveDMD trial, we will be comparing the changes in Part C with the values from the largely off treatment time period between baseline Part A to baseline of Part B of the MoveDMD trial as an internal control group in the trial. We will also look at data relative to information on the natural history. The comparisons in Part C were not designed to be powered for statistical significance. However, we do expect that they will provide valuable information for the future of clinical development of edasalonexent.

Lastly, thank you to all of the patients and their families for the participation in the MoveDMD trial. We appreciate the continuous support we see from the patients' families as reflected in the sustained participation in Part C to date. We also want to say thank you for the support and enthusiasm that we have received for the program from the Duchenne community and the dedicated clinical trial staff site. We have had enduring support from the advocacy groups, which has greatly helped us to relay the results from the MoveDMD trial to date to the Duchenne and patient community.

That concludes our prepared remarks, and we would now be happy to take your questions. Skylar, can you now please repeat the instructions and poll for questions? Thank you.

Yes, ma'am.

(Operator Instructions) And our first question comes from Ted Tenthoff with Piper Jaffray. Your line is now open.

I just wanted to get a sense with the upgrades coming later this year, what other readouts can we expect in 2017 from the programs, from the other programs beyond edasalonexent too?

Right. So with -- so beyond edasalonexent, so as we said, with the Part C of the MoveDMD trial ongoing, we will be reading out data through 2017. We will give an interim update in Q2. For the other programs in the pipeline as we'd mentioned, for CAT-5571, our work continues with that program in cystic fibrosis, and we will continue in 2017 with IND enabling activities and plan to initiate a Phase 1 in 2018. And our work with CAT-4001 will continue with preclinical assessments in two different neurodegenerative diseases with that program, ALS and Friedreich's ataxia. So we likely will be presenting at upcoming scientific conferences updates around those programs.

Okay, excellent. I will look forward to that. It looks to me like with DMD, the exploratory MRI endpoint might have been a challenge. But I look forward to getting more data and as you present that, so that will be helpful.

Great, thanks.

Our next question comes from Joel Beatty^ with Citi. Your line is now open.

Hi, thanks for taking the questions. The first one is just, can you tell us what data points you'll be looking for from the [extension] trial data that will help assess and decide what the next steps with edasalonexent are.

Hi Joel, this is Jill. I'll start and then I'll hand it over to Joanne. So in the Part C, we'll continue to assess the same endpoints that were assessed in Part B. What we're really looking at, though, Part C was designed to allow us to look at longer-term dosing on functional test and maybe Joanne can give a summary of which functional tests are going to continue to be read out through 2017.

So we'll be continuing to look at the time function tests that are appropriate for this age group, the four-step climb, the 10-meter walk/run, time to stand, as well as the North Star, PODCI, and muscle strength. We will also be looking at MRI fat fraction, and we'll continue these assessments every 12 weeks during the remainder of the year. And we will be providing updates at scientific meetings. And, of course, these are the functional endpoints that we need to understand better in order -- for future trials.

Okay, great. And then maybe one other question, you mentioned how partnering is a priority for this year. Can you tell us about what you would be looking for a potential partner? Thank you.

Sure. And we had given an update on our partnering strategy at our R&D Day in last November. And so, our partnering is clearly a priority for us going forward. We have an interest in exploring the potential partnerships around our platform technology and also for some of our early stage product candidate programs. As we've articulated previously, our intention with edasalonexent is to continue developing that for commercialization in North America on our own but have not made a decision whether we would partner for ex-U.S. rights to help bring that program to market.

And our next question comes from Hartaj Singh with Oppenheimer. Your line is now open.

Yes, hi, just a quick question -- I am sorry, just a couple quick questions. One is, Jill, what is your interaction in terms of with regulators, in terms of the Part C trial? When would you talk to them, after it reads out, before it reads out? And then how do you see those interactions playing out for the next step assuming it works out? And then for your cystic fibrosis trial, the landscape is changing fairly rapidly. How do you sort of see your product being in combination therapy next year? If you can just kind of give us a little bit more kind of color there, I would appreciate it. Thank you.

Yes, thanks for the question. Yes, so let me start and Joanne will chime in with any additional details. But, typically, as it is relatively standard, we don't comment on FDA meetings. However, we continue to take advantage of our fast track status with the FDA. And so, when appropriate, we get in front of the FDA to assess current status of the program and update to next steps.

With that said, it would be pretty typical for a company to interact with the FDA post the Phase 2. And obviously the MoveDMD trial was a Phase 1/2 to explore the safety, tolerability, and efficacy of edasalonexent in DMD. So that might be a time when we would take advantage of getting in front of the FDA to obviously talk about next steps for this program. Your second question was around combination. And I think what you were asking about was with regard to a combination with Sarepta Exondys 51. Was that right, Hartaj.

No, no sorry. I mean the cystic fibrosis project --

Oh, I'm sorry.

-- meaning, like with lumacaftor/ivacaftor, plus I think Galapagos and AbbVie have some therapies out there. Just what are your thoughts? I mean how do you see? I know it's fairly early, but how do you sort of see your therapy? I mean would that be sort of an add-on therapy to these therapies, which would be very interesting? How would you see that sort of playing out?

Yes, and that's a great -- yes, sorry for mishearing that. Great question. So CAT-5571 is a pretty intriguing molecule and that it is a novel mechanism that we are going after for cystic fibrosis. We are targeting a cellular process called autophagy, and it's known in cystic fibrosis that autophagy is suppressed. And autophagy is a normal cellular process. It is a way a cell deals with debris. And, in fact, when it's suppressed in CF, what ends up happening is it contributes to the degradation of the CFTR intracellularly and also affects the ability of lung epithelial cells to deal with bacterial infections.

So what is exciting about this approach is that it actually plays in two different areas in CF. And one that it helps promote the trafficking of the CFTR to the cell surface. So that's where in combination with lumacaftor/ivacaftor, we would think that would be a great place to explore or alternatively in collaboration or in combination with the AbbVie-Galapagos program where our agent in combination with theirs could lead to enhanced trafficking of CFTR to the surface and increased function.

But interestingly, with respect to the increase in bacterial clearance that we hypothesized with this mechanism and that we've demonstrated pre-clinically, what's exciting about that approach is, of course, it has the potential to be agnostic to the underlying mutation that causes CF, and it could work in combination with some of the antibiotics that are used in CF. So we definitely see CAT-5571 as being an agent that would be a good candidate to use in combination with some of the currently available therapies but also some of those in development. And that's something we are very interested in exploring.

Got it. I appreciate that. And then I just had a one quick follow-up just from a modeling perspective. Is there any thoughts, Jill, and maybe you might not have thought about this or maybe you have, your team, assuming Part C sort of when it reads out, how do you kind of see your runway in terms of passion? How do you see yourself sort of managing that now that the development [populace] becomes a little bit more complex?

Yes. So we -- in terms of the Part C readout, so we'll have an interim readout in Q2 of this year and then we'll continue to read out data throughout 2017. And obviously from a cash perspective, we will -- our cash runway takes us, as stated, at least through March of 2018. So we feel like there is some good runway for us. But also we'll be exploring through a variety of different mechanisms how to enhance that cash position. And I think the key for us is as we collect this data from Part C is to -- this data will inform what the right next step is for edasalonexent in DMD. With that information enhanced, then we have an idea of what is the right next trial that we need to design and fund.

Great, fantastic. Thank you so much.

Our next question comes from Jeff Chen with Cowen and Company. Your line is now open.

Hello, thanks for taking my question. So quick one from me. In terms of the IRB approval for the additional 24 weeks of dosing in Part C, when do you expect to hear back or get the clearance for that? And also as you continue to assess any improvements, functional improvements in Part C, I think you mentioned you are making the assessment every 12 weeks. Will you expect to provide investors updates and eventually on every 12 weeks data? Or would you wait for sort of a more comprehensive data point? Thanks.

Okay, this is Joanne. So, on the first question, we are already in the process of moving some of the boys from the 67 dose to the 100. So that's already started. And the second question, we anticipate presenting data at scientific meetings as they come up so we will be doing that through the year.

Our next question comes from Kelechi Chikere with Wedbush Securities. Your line is now open.

Hello, thanks for taking my questions. Just a couple here. I guess now that you've completed some of your marketing [depth] analysis of the Part B data, can you provide any color as to whether, I guess, the positive functional endpoint results were driven by an entire group or versus outliers? And also just to confirm, were there any discontinuation or withdrawals from Part B to Part C of the study? Thank you.

Hi, Kelechi, I'm going to let Joanne answer both of those questions.

Okay. So all 31 boys completed Part B, and they were in the per protocol assessment for the study. To the question about whether or not there are outlier groups, we have started to look at -- we have looked at some subgroup analysis. We don't see that. What we do know, though, is that the higher dose, the edasalonexent 100 milligrams per kilogram dose, those boys were diagnosed earlier with Duchenne. They exhibited symptoms earlier in their life. And when we looked at their functional status, both the time function test, the four-step climb, the time to stand, as well as the North Star, they were decreased compared with the placebo group. So they started kind of a little bit with a headwind. So we will be presenting more data at the MDA to try to give you a better sense of our sessions there.

All right. Thank you.

Our next question comes from Carol Werther with H.C. Wainwright. Your line is now open.

Thanks for taking my questions. So I was just wondering, do you think that perhaps a higher dose might be more effective or that it is matter of time we've seen the effect?

Yes, hi, Carol. I'll start and let Joanne finish. So what we did see is it appears from the data that we've collected to date through the Part B of the study is that the 100 milligram per kilogram per day group seemed to perform more consistently better than placebo than the 67. So we think and hence the reason for us wanting to move all the boys from the 67 to the 100 to give the best chance of success for the remainder of Part C.

What we do know from our biomarker studies where we looked at the effects of edasalonexent at the 67 milligram and 100 milligram dose on NF-kB activity is that at both doses, we see inhibition of NF-kB and there is a dose response. So we know we're getting target coverage. And so, we feel good about the 100 milligrams per kilogram per day group and what we've seen to date with the functional tests.

And duration we think is also important, and that in the JCI Insight publication that Dr. Sweeney published earlier this year through some of our longer-term preclinical studies in Duchenne, we saw that longer-term dosing was required to see functional improvements in both the mouse and the dog models of Duchenne. And so, we do believe that longer-term dosing for functional readouts is the way to go. And just also to be clear, I think also as we think forward to the next steps for the program, we do believe that a Phase 3 study would have to be at least six months or longer for getting approval of an agent in this space.

Thank you. That's really helpful.

At this time, I am showing no further questions. I would like to turn the call back over to Ms. Jill Milne for closing remarks.

Thank you, Skylar. At Catabasis, we have chosen as our mission to focus on rare diseases where therapies are either nonexistent or do not serve the entire patient population. We recognize that drug development in rare diseases can present challenges, and that there is not always a straight lines for clinical development to approval. Nevertheless, we remain steadfast in our commitment to make a difference in the lives of patients and families affected by rare diseases.

We are encouraged by the data generated to date from the MoveDMD trial and believe that edasalonexent has the potential to provide benefits to patients affected by Duchenne. We're excited about Part C of the MoveDMD trial of edasalonexent, collecting data in patients following 36 weeks of open label dosing. We observed potential treatment associated functional effects at 12 weeks in Part B, which we believe warrant further evaluation. From Part C, we expect to learn important information about dose, duration, and endpoints that will inform us about future clinical trials with edasalonexent. We plan to report analyses from Part C in 2017 with an interim update expected in Q2.

We've been developing edasalonexent as monotherapy but are also optimistic about the potential of combination therapy in DMD. We are encouraged by the preclinical combination data that was generated in collaboration with Sarepta. We think this is a significant step for the DMD community to have companies working in collaboration to advance therapy options for this devastating disease.

We also announced preclinical data from our new program, CAT-5571, an activator of autophagy, as a potential treatment for cystic fibrosis. This mechanism represents a novel approach in CF that we believe could be developed as monotherapy or in combination with currently available therapies. Preclinical research on this program was published recently in the Journal of Medicinal Chemistry.

In addition to edasalonexent and CAT-5571, we are also continuing preclinical development of our rare disease pipeline. Thank you, everyone, for joining us on today's call and for your support of and interest in Catabasis. Andrea?

That concludes today's call. 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. Everyone, have a great day.