Brickell Biotech Inc (BBI) 2021 Q1 法說會逐字稿

Greetings, and welcome to Brickell Biotech, Inc. First Quarter 2021 Financial Results Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garth Russell with LifeSci Advisors. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. Joining me on today's call are Brickell's Chief Executive Officer, Rob Brown; Chief Financial Officer, Bert Marchio; Chief R&D Officer, Deepak Chadha; and Co-Founder and Chief Operating Officer, Andy Sklawer.

Before we begin, I would like to remind everyone that this conference call and webcast will contain certain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release. These results are the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our most recent filing on Form 10-K and other periodic reports on Form 10-Q and 8-K as filed with the SEC.

I would now like to turn the call over to the company's Chief Executive Officer, Rob Brown. Rob the floor is yours.

Thanks, Garth. Good afternoon, everyone, and thanks for joining us on our call. Beginning of 2021 has been a very exciting time here at Brickell. We continue to steadily advance our lead program, sofpironium bromide through Phase III pivotal clinical trials evaluating its safety and efficacy as a potential best-in-class treatment option for primary axillary hyperhidrosis, also known as excessive underarm sweating.

This year, we have achieved some key milestones for sofpironium bromide. First, we announced that patient enrollment was completed in the Cardigan I study and the Cardigan II study surpassed 70% enrollment. As a reminder, both Phase III pivotal clinical studies are evaluating sofpironium bromide gel 15% against placebo in approximately 350 patients each with primary axillary hyperhidrosis.

Both Cardigan studies remain on track, and we expect to announce top line results from the Phase III program in the fourth quarter of 2021.

Second, we are pleased to have the results of our Phase III open-label long-term safety study of sofpironium bromide gel highlighted during a late-breaking oral presentation by Stacy -- Dr. Stacy Smith at the American Academy of Dermatology's 2021 Virtual Meeting Experience in April. These results are important as they further support the safety, tolerability and efficacy data we previously observed in our Phase IIb study. Considering primary axillary hyperhidrosis is a chronic condition, we expect this long-term data, along with the 2 Phase III pivotal clinical studies, to form the basis for our prospective NDA filing.

Third, in March, we hosted our first ever hyperhidrosis KOL event for investors, analysts and other interested stakeholders. The event was led by 2 highly distinguished hyperhidrosis thought leaders and doctors Adam Friedman and Joel Cohen. Through this event, we were able to share what many hyperhidrosis patients deal with in managing their daily lives, what the current treatment options are and why we believe that hyperhidrosis remains an undertreated medical condition adversely affecting the quality of -- their quality of life. If you were unable to attend the event, I encourage you to watch a replay, which can be found in Events and Presentations on the Investors section of our company's website.

Now turning to our Japanese development partner, Kaken Pharmaceuticals. As we previously announced, Kaken is still in the early stages of its commercial launch of sofpironium bromide gel 5% in Japan under the brand name ECCLOCK for the once-daily treatment of primary axillary hyperhidrosis. The ECCLOCK launch is an important milestone for both companies, with Japan being the first country to approve sofpironium bromide for any indication and ECCLOCK being the first topical prescription product for the treatment of primary axillary hyperhidrosis in the country.

As a reminder, Brickell is entitled to receive sales-based milestone payments as well as tiered royalties based on a percentage of net sales of ECCLOCK in Japan.

Finally, as a result of certain warrant exercises and proceeds raised through our ATM offering program, we strengthened our balance sheet with $34.8 million of cash as of March 31, 2021. This added financial stability provides us with sufficient cash runway to fund our operations into next year and allows us to continue executing on key activities that will enable us to submit a new drug application with the FDA for sofpironium bromide gel in 2022, pending a successful outcome in Phase III pivotal programs.

Let's now turn the call over to Deepak to provide a clinical update. Deepak?

Thanks, Rob. Greetings, everyone. As stated by Rob in his opening remarks, we have been pleased with patient enrollment today in the 2 U.S. Phase III pivotal studies evaluating sofpironium bromide gel 15% for the treatment of primary axillary hyperhidrosis in approximately 350 patients each study. As announced in April, the Cardigan I study completed its enrollment, and the Cardigan II study, which started enrolling patients approximately 2 months after Cardigan I, has now exceeded 70% enrollment.

Based on the current enrollment rate for Cardigan II, we remain on track to complete enrollment in the third quarter and report top line data for both studies in the fourth quarter of this year. As a reminder, each subject participating in the Phase III Cardigan studies will be treated with either sofpironium bromide gel 15% or placebo for 6 weeks with a 2-week follow-up period.

The co-primary efficacy endpoints, as agreed with the U.S. FDA, are the proportion of subjects achieving at least 2 point improvement on the patient-reported outcome assessment that is the Hyperhidrosis Disease Severity Measure-Axillary, or HDSM-Ax, scale and the change in gravimetric sweat production each from baseline to the end of treatment.

This is a good time to mention that we have recently published validation results for Brickell's proprietary HDSM-Ax scale in the peer reviewed Journal of Drugs in Dermatology. The published psychometric analysis concludes that the HDSM-Ax scale is a well-defined, reliable and consistent measure that is expected to improve the assessment of hyperhidrosis treatment effect compared to preexisting scale, such as the hyperhidrosis disease severity scale, or HDSS. Furthermore, the results demonstrate that a 1 point change in HDSM-Ax severity score on a 5 point scale of 0 to 4 represents a clinically meaningful change in primary axillary hyperhidrosis severity.

Turning now to our previously completed Phase III open-label long-term safety study. It's worth noting that the stand-alone study was not conducted as a conventional Phase III open-label extension study where patients from pivotal studies roll over into an open-label extension study. Hence, this study provides a more complete clinical data set evaluating treatment-naive, primary axillary hyperhidrosis patients who were not previously acclimated to sofpironium bromide gel treatment. As many of you may already be aware, the results from the study were presented last month in a late-breaking oral presentation at the American Academy of Dermatology's 2021 Virtual Meeting Experience.

This study assessed the long-term safety and efficacy of sofpironium bromide gel 5% and 15% for 48 weeks of treatment in patients 9 years and older with primary axillary hyperhidrosis. 300 patients across 30 U.S. sites were randomized in 1:2 ratio to receive either sofpironium bromide gel 5% or 15%.

Based on the outcome of the study, daily treatment in sofpironium bromide gel was generally well tolerated, and efficacy assessment showed clinically meaningful and sustained improvements in sweat severity through the 48 weeks of treatment.

For those interested in reviewing the results of this study in further detail, feel free to visit the Events and Presentations page in the Investors section on our website for a replay of the conference call we hosted in April discussing the data.

Finally, the past few months have been very productive for the company, and we are well positioned to execute on our goals this year. The progress we continue to make speaks not only to the strength and resilience of our efficient and committed team, but also the excitement we have about the potential of sofpironium bromide to be an important treatment option for the millions of patients in the U.S. that suffer with primary axillary hyperhidrosis.

With that, I will now turn the call over to Bert to provide a financial overview. Bert?

Thanks, Deepak, and good afternoon to everyone on the call. Before I provide a summary of the first quarter financial results, I want to encourage you to read our full consolidated financial statements and MD&A contained in our quarterly report on Form 10-Q, which can be accessed through the Investors section of our website once filed with the SEC.

Starting with cash and investments. As of March 31, 2021, we reported $34.8 million in cash and cash equivalents, having spent $5.9 million in cash for operating activities during the first quarter of 2021. We believe our current cash position will support our operations beyond the top line results of the U.S. Phase III pivotal program and into 2022.

Revenue for the first quarter was approximately 17,000, which was the royalty revenue we recognized from the sales of ECCLOCK in Japan by our Japanese development partner, Kaken. This was compared to $1 million in total revenue reported for the same period in 2020, which was attributable to the recognition of an R&D payment we received pursuant to our license agreement with Kaken.

R&D expenses were $6.1 million for the first quarter of 2021 compared to $2.7 million for the first quarter of 2020. This increase was primarily due to an increase in clinical costs related to the Phase III Cardigan studies that were initiated in the fourth quarter of last year. G&A expenses totaled $3 million for the first quarter of this year compared to $2.5 million for the first quarter of the prior year. This increase was primarily attributable to increases in compensation-related expense and professional fees.

Lastly, net loss for the first quarter of 2021 was $9 million compared to $4.1 million for the first quarter of 2020.

With that, I will now turn the call back over to Rob. Rob?

Thanks, Deepak and Bert, for your recap. This is really an exciting time for Brickell as we continue to work together and build momentum behind our ongoing Phase III pivotal clinical program.

This concludes our prepared remarks. I'll now turn it over to the operator to open it up for questions. Operator?

(Operator Instructions) Our first question comes from the line of Leland Gershell with Oppenheimer & Company.

Sorry, I thought I unmuted. Here we are. Sorry about that. Hope you can hear me okay now. I have a couple of questions for you. One, looking back to the long-term safety study update you provided and talked through at the end of last month. I wanted to ask you, as we look at the data from that, I understand that obviously, there wasn't a formal efficacy study but a long-term safety study. Nonetheless, if you look at the 2 different doses of the 5% versus 15%, it looks like you approached efficacy of the 15% with the 5%, albeit, with perhaps a much more favorable tolerability profile. I'm wondering how that information may affect your thoughts going forward with product development.

Could that be perhaps an extension strategy in the future for the U.S. market? Obviously, 5%, I believe, is the Japanese strength. So I wanted to hear your thoughts there. And then also the question with regard to the sale of -- by Lilly of QBREXZA to another company and how that may affect marketplace dynamics in the hyperhidrosis space going forward.

Sure. Thanks for the questions, Leland. I'll start with the long-term safety. And Deepak, if you want to add, feel free. So obviously, we were excited about the efficacy data we saw. The fact that both (inaudible) did quite well and held and sustained their efficacy over the whole study. The PRO that was used for the long-term safety study was similar to the one we used -- the same as we used in the IIb and is one of our primary endpoints in the Phase III.

And in the IIb, we also saw that the 5% and 15% on the PRO had relatively similar efficacy. We didn't see that in the reduction of sweat measurement, the GSP tool, which is why we focused on the 15%. But it does give us encouragement that there may be the potential to look at a 5% down the road for the company. Deepak, anything you'd like to add?

I think, Rob, you've covered the aspects with the GSP and meeting the second co-primary endpoint, the reduction in sweat with GSP and that's the primary reason we are taking the higher concentration, 15%, as part of the Phase III. And always like we will be interested as part of the life cycle management to bring down lower concentration of sofpironium bromide.

And then in terms of the second question, Leland, the -- in terms of the sale of QBREXZA, we were encouraged by that. Obviously, the launch of QBREXZA has been hindered by Dermira's decision to focus their resources on a different asset, sell the company, then obviously a pandemic and then Lilly acquiring the asset right at the beginning of the pandemic. So never really got fully engaged, if you will, and then obviously, them selling it to another party. That's a pretty tough launch for some of -- for a product to go through. So we're encouraged that there's a company that's focused on dermatology that's going to go out and talk about hyperhidrosis.

When you have a marketplace like this, where there's a big unmet need and a lot of people who aren't seeking treatment, awareness of the condition and that there are treatments is the most important challenge. And in many ways, all the companies involved help each other in the sense that they create greater awareness and greater noise. And when you do that, you get a bigger marketplace.

So we see one of our bigger competitors being ignorance or a lack of understanding that there's treatment out there. And so having somebody who's committed, dedicated and excited about the space I think can only help us as we go forward.

There are no further questions. I'd like to hand it back to Robert Brown for closing remarks.

Okay. Thank you, operator, and thanks for everyone taking the time this afternoon to listen to our update. I wanted to close out the call by thanking the clinical trial sites and the hyperhidrosis patients for their ongoing interest in support of our Phase III clinical program.

As I mentioned, the (inaudible) Brickell team follows the contract research organization for their outstanding commitment and tremendous contributions. We look forward to keeping you all updated on the progress of these studies over the coming months. As always, please feel free to reach out to us any time with any questions, and we hope you all have a great rest of your day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.