Brickell Biotech Inc (BBI) 2021 Q4 法說會逐字稿

Greetings, and welcome to Brickell Biotech's Fourth Quarter and Full Year 2021 Financial Results Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to Garth Russell of LifeSci Advisors. Thank you. You may begin.

Thank you, operator, and good morning, everyone. Joining me on today's call are Brickell's Chief Executive Officer, Rob Brown; Chief Operating Officer; Andy Sklawer, Chief Financial Officer, Bert Marchio; Chief Medical Officer Dr. Monica Luchi; and Chief R&D Officer, Deepak Chadha.

Before we begin, I would like to remind everyone that this conference call and webcast will contain 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 obligation to revise or publicly release 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 filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K 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 morning to everyone, and thank you for joining our call today. The past year was an exciting period in our company's history as the entire Brickell team executed against our growth strategy and successfully delivered on several key milestones that we believe will strengthen our ability to create long-term value for shareholders. This is highlighted by our recent partnering activity through which we have now established our presence in the field of immunology and inflammation by expanding our pipeline with multiple proprietary new chemical entities that modulate promising and novel targets.

These include our Phase I ready oral DYRK1A inhibitor, BBI-02, preclinical stage STING inhibitor portfolio, including our lead STING inhibitor candidate, BBI-10 and our next-generation kinase inhibitor platform, all of which we acquired over the past 7 months. We believe that our team's clinical and regulatory experience and track record of operational execution is what sets Brickell apart as a trusted partner to lead the development of these assets.

A perfect example of this is sofpironium bromide, our most advanced program, which the Brickell team developed from an early preclinical stage to its current NDA-ready stage. As you may recall, during the fourth quarter of last year, we announced positive data from our 2 U.S. Phase III pivotal clinical studies for sofpironium bromide gel 15%, or SB gel for short, for the treatment of primary axillary hyperhidrosis also known as excessive underarm sweating. In both studies, all primary and secondary efficacy endpoints achieved statistical significance and SB gel was generally well tolerated over 6 weeks of treatment.

We believe the results of these studies further support the potential for SB gel to become a best-in-class treatment option. Earlier this quarter, we held a pre-NDA meeting with the U.S. FDA for SB gel. Based on the outcome of this meeting, we remain on track for NDA submission in mid-2022 as we continue to evaluate in parallel all available options to maximize commercial product success. Now I'd like to pass it over to Deepak for an update on our pipeline. Deepak?

Thanks, Rob, and good morning, everyone. As Rob just mentioned, we are encouraged by the positive results from our Phase III pivotal clinical studies of SB gel. In addition, we were pleased to announce last week that these results of our Phase III pivotal clinical studies for SB gel will be highlighted during a Late-Breaking oral presentation at the 2022 American Academy of Dermatology Annual Meeting being held in Boston at the end of this month. These results are important as they further support the safety, tolerability and efficacy data that has been observed with SB gel and will form the basis of an NDA submission, which we remain on track to file with the FDA in mid-2022.

Moving on to our lead development stage program, BBI-02. BBI-02 is a highly selective and orderly bioavailable DYRK1A inhibitor that we plan to develop for the treatment of a broad range of autoimmune and inflammatory diseases. Based on the scientifically robust data package, the promising preclinical validation that has been observed with this compound, we believe that BBI-02's tool mode of action, moderating both the adaptive and innate immune systems could represent a paradigm shift in the way we currently treat these debilitating diseases.

The team has made great progress since bringing in this program from Voronoi, a South Korean biotech company focused on the discovery and development of novel kinase inhibitors. We are on track to initiate a Phase I clinical trial in Canada in second quarter of 2022, which we'll refer to as BBI-02-101 or the 101 study. The 101 study is designed to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of BBI-02 in both healthy volunteers and subjects with atopic dermatitis. Part Ia of the study is a single ascending dose assessment or SAD in healthy volunteers. Part Ib is a multiple ascending dose, or MAD, assessment in healthy volunteers and Part II will compare BBI-02 to placebo in moderate to severe atopic dermatitis patients and will also include a preliminary assessment of efficacy.

We expect to report top line results from the SAD and MAD portions of this 101 study by year-end. As announced just last month, we acquired exclusive global rights to a portfolio of novel, potent and orderly available STING inhibitors from Carna Biosciences, a drug discovery company in Japan. STING stands for stimulator of interferon gene, is a unknown mediator of innate immune responses. Excessive signaling through STING is linked to a number of high unmet need diseases ranging from autoimmune disorders, such as systemic lupus, erythematosus and rheumatoid arthritis to a set of rare genetic conditions known as interferonopathies.

Several established pharmaceutical companies have recently invested in this space, and we are excited to develop these next-generation STING inhibitors that we believe are differentiated by the equivalent inhibition of STING palmitoylation. Preclinical development activities are underway for our lead STING inhibitor BBI-10, which has shown proof of mechanism, resulting in significant reduction in key pro-inflammatory cytokine. We also expect to conduct experimental characterization of STING inhibitor library throughout 2022.

I would like to briefly touch on our next-generation kinase inhibitor platform that we also acquired last year from Voronoi. The platform encompasses hundreds of new chemical entities that inhibit DYRK1A, LRRK2, TTK and CLK kinases with some penetrating the blood-brain barrier. We are currently engaged in research to identify, characterize and optimize these kinase inhibitors with the goal of progressing them as potential treatment options for autoimmune, inflammatory and other debilitating diseases. I would like to now turn the call over to Bert to provide a financial overview. Bert?

Thanks, Deepak, and good morning to everyone on the call. Before I provide a summary of the fourth quarter and full year 2021 financial results, I want to encourage you to read our full consolidated financial statements and MD&A contained in our report on Form 10-K, which can be accessed through the Investors section of our website once filed with the SEC.

First, I'll cover the fourth quarter results, then I'll move to the full year. Starting with cash. The company reported $26.9 million in cash and cash equivalents as of December 31, 2021. We believe our current cash position will support our operations beyond the receipt of Phase I SAD and MAD top line results for BBI-02, which are anticipated year-end 2022. Revenue for the fourth quarter of 2021 was approximately $104,000 compared to $27,000 for the fourth quarter of 2020, both of which consisted of royalty revenue we recognized from the sales of ECCLOCK in Japan by our partner Kaken. R&D expenses for the fourth quarter of 2021 -- R&D expenses were $3.1 million for the fourth quarter of 2021 compared to $4.6 million for the fourth quarter of 2020. The decrease was primarily due to a $2.9 million reduction in clinical costs related to SB gel, which is partially offset by a $0.9 million increase in regulatory, personnel and other expenses and a $0.5 million increase related to development of the company's DYRK1A inhibitor programs.

G&A expenses totaled $3.3 million for the fourth quarter of this year compared to $2.9 million for the fourth quarter of the prior year. The increase was primarily due to higher compensation and administrative expenses. Our net loss for the fourth quarter of 2021 was $6.1 million compared to $7.4 million for the fourth quarter of 2020.

Turning to the financial results for the full year of 2021. We reported revenue of $0.4 million for the year ended December 31, 2021, compared to $1.8 million for the year ended December 31, 2020. Revenue in 2021 consisted of royalty revenue recognized related to the sales of ECCLOCK in Japan by Kaken, while revenue in 2020 was driven primarily by collaboration revenue recognized for research and development activities under the Kaken agreement, pursuant to which Kaken provided research and development funding to the company.

Research and development expenses for 2021 were $28.2 million compared to $11.2 million for 2020. This increase is primarily due to an increase of $10.7 million in clinical costs related to the company's U.S. Phase III pivotal clinical program for SB gel, an increase of $5.4 million in upfront cost and development of the STING inhibitor, BBI-10 and the next-generation kinase inhibitor platform -- sorry about that. Company's DYRK1A inhibitor program in next-generation kinase inhibitor platform and an increase of $0.9 million in personnel and other expenses. Moving forward, we expect our R&D expenses this year to decrease as we focus our R&D efforts on our development stage programs.

General and administrative expenses for 2021 were $12.4 million compared to $11.6 million for 2020. This increase was primarily due to higher compensation and administrative expenses. Total other income for 2021 was $0.8 million compared to $0.1 million for 2020. This -- the increase was due to a gain on extinguishment of debt of approximately $0.4 million from the forgiveness of the PPP loan in June 2021 and other miscellaneous income of $0.3 million. Our net loss for 2021 was $39.5 million compared to $20.9 million for 2020. And with that, I'll turn the call back over to Rob for closing remarks. Rob?

Thanks for the recap, Bert. As I stated at the beginning of the call, the past year was a pivotal one for the company as we broadened our strategic focus by expanding our pipeline in immunology and inflammation and delivering positive Phase III results for SB gel. Looking forward, we have several exciting near-term milestones this year, including the Phase I SAD/MAD top line results for BBI-02, further development of our STING inhibitor, BBI-10 and the next-generation kinase inhibitor platform.

In addition, we remain on track for the submission of an NDA for SB gel in the coming months. And as previously mentioned, we continue to evaluate all options to maximize the commercial success of SB gel. This concludes our prepared remarks. I'll now ask the operator to open the call up for questions. Operator?

(Operator Instructions) Our first question has come from the line of Tim Lugo with William Blair.

Congratulations on the Late-Breaker coming up at AAD. First, however, on the 101 study, can you give us a little more color on how many patients will be involved in the Part -- guess, in the Part Ia as well as the 2 parts of the Ib and also kind of the duration of exposure in the Phase Ib Part II part of the study?

It gets a little complicated, Tim, though. Yes. Let me turn that over to Monica to give a little more detail on the Phase I study design, Monica?

Sure. I'll answer the first part of your question first, and I'm not sure I quite got the second part, so let me try. We expect the first part of the study is a single ascending dose portion of the study to a 56 patients. That's 5-6. The Phase Ib or multiple ascending dose portion will have at least 33 patients that will be in 3 different cohorts. And we plan to enroll about 30 to 40 patients with atopic dermatitis for Part II of the study, which will be a patient portion of the study. Does that answer all of your questions? Or was there another part?

Yes. I guess for the -- and it's -- how many doses, I guess, for the 1B portion? Will it be -- I know that there's a single ascending dose portion, but how many in the multiple ascending dose portion?

So we'll have 3 different cohorts. So we expect to have likely 3 different doses. Obviously, that's going to be informed by the SAD portion. Within the single ascending dose portion, we had 7 doses and ascending from 10 milligrams through 600 milligrams, and determined by the PK and the window that you see there, the therapeutic window in terms of safety and some of the other signals that we're looking at, we'll select 3 doses for the MAD study provided that data support requiring to look at 3 doses.

Okay. Great. And we'll get some efficacy data from the Part II portion, hopefully, by year end?

No. It will be the Part Ia and the Part Ib, which are the single ascending dose and the multiple ascending dose, that data, top line data will be available by the end of this year. The Part II was patients that won't be available until mid next year to Q3 next year.

Okay. And I assume that will be easy scores and maybe will we get any kind of cytokine data at all as well?

Well, we'll certainly be assessing that, absolutely. We have a whole host of data that we'll be collecting, which will inform us and what is going about the DYRK1A. We'll certainly be looking at the clinical outcomes. Remember, this is a -- it's only a 28-day study for now. This is because that's what we have talks to support. So the EC readout that will be preliminary in the study.

We'll have the data, but I don't know that we're actually going to see our most effective impact at 4 weeks. And I want to stress that because as you know, many drugs in AD take maybe 8 weeks to come up with their best possible effect. But we'll be collecting that data. We'll also have cytokine data. We'll also have a variety of different pharmacodynamic markers with regard to the different cell populations and cellular surface markers.

On top of that, we'll have histology data, which will tell us about inflammatory cells within the tissue themselves. So we're learning about the resident T cells. And we'll also have data from tape stripping, which will give us genetic data from the skin surface of patients with AD.

Great. And I guess kind of looking bigger picture for Rob, can you just talk about kind of the status of sofpironium bromide partnering discussions?

Yes. We've -- as you might imagine, we're kind of looking at all of our alternatives at this stage of the game in terms of using a contract sales organization, doing it ourselves or having a partner. So we haven't made any call on this yet. But specifically in terms of the partnering conversations, we've had multiple conversations and are pretty encouraged by what we've heard from several of the players, but nothing has been decided yet.

Our next question is come from the line of Mitchell Kapoor with H.C. Wainwright.

I just wanted to ask about BBI-10 and if you can kind of just give us some more context on the landscape and where this asset sits in the context of the other cGAS STING inhibitors from AstraZeneca and Novartis. And how you think about positioning and differentiation in the context of those inhibitors?

Sure. Well, maybe I'll turn it back over to Monica. I mean, first off, remember, obviously, these are all really early. I don't believe any of the STING inhibitors have entered man yet. So to have a real specific comparative of where they are or where you're going to go is a little tricky. But Monica, why not -- do you want to provide a little more context to my comments?

Sure. I absolutely want to reemphasize what you just said, Rob, we don't know our STING molecule, so it's going to be difficult to say exactly how we'll differentiate. We do have -- it's covalently bound and inhibits the palmitoylation site, which is a bit different from several of the STING inhibitors, although not so different from the Novartis inhibitor. We haven't seen any clinical data on those 2 STING inhibitors. So I don't feel we're that far behind, although we haven't started our IND now studies that we probably have 1.5 years, 2 years to go before we get into the clinic.

Okay. Great. And just one more kind of on the decline in R&D. I know you mentioned that you foresee potential further declines. Could you kind of talk about the cadence of how you expect R&D to trend in 2022?

Yes. I'll handle this. As you might imagine, our R&D expenses are down because last year, we were running a Phase III study. And this year, we're running a Phase I study. So the -- in general, what you'll see is there's a bit of a tail on the Phase III that runs into the first quarter of this year, not a lot, but some. And then we will have some pickup in R&D expenses as the Phase I MAD/SAD get going. But the overall expenses, obviously, will be substantially less than previous years.

Our next question is come from the line of Leland Gershell with Oppenheimer.

My congratulations on the progress. A few questions for me. On BBI-10, just curious, as you continue with your preclinical development activities with that asset. Is that -- are you looking to have specific learnings there with respect to the compound and the directions you may take it as you enter the clinic? Is it more just blocking and tackling for the kind of regulatory requirements to get to an IND? And at what point, if you have an expectation to bring that into the clinic, can you see that enter perhaps in 2023? And then I have a follow-up.

Yes. Leland, let me kind of answer the first question. Our current target is 2024 when we get it into plan. Obviously, it's a soft target because the asset is so early, and we're still learning a lot about it. We've only had it in our hands now about a month, and so a lot of the things we're doing right now is really looking at what's been done validating, verifying, seeing the whole package, obviously, greater detail than you do during diligence and then developing that plan to go forward. But best guess, it's going to be 2024 in terms of when we get into main.

All right. Terrific. And then as you guys have been on a role with business development and expanding the pipeline with these various assets, wondering as you look at company evolution further, wondering if you are looking at any mid-stage compounds to bring in perhaps those that are in the clinic kind of fill in that gap between what you have on the preclinical side with STING and DYRK1A and the other kinases -- kinase inhibitors. And obviously, your pre-commercial candidate sofpironium.

Yes. Thanks for the question. And you're right. Obviously, we have an early pipeline, and we're always on the lookout for interesting, exciting assets. Obviously, once you get into more of that mid-stage pipeline, the price tag goes up quite dramatically. So it has to be the right asset and the right situation for us to do that. We want to make sure that we're spending our money on things that are truly innovative though. And we wouldn't want to just bring something in because it's closer, we think there's more value in being a truly innovative company than doing that.

We also now have a library of almost 1,000 assets that we're going to be screening and looking at, and we're excited about this. We think there's some very unique things in there. Obviously, they're very early. So they don't fill the hole you're talking about. But we don't have a desire to sell it just to fill it, if we found the right asset at the right value, we will certainly take a hard look at that.

Our next questions come from the line of Thomas Flaten with Lake Street Capital.

With respect to the NDA submission, any significant outstanding components of the NDA that remain on the to-do list? Or kind of can you -- midyear is still a bit of a squishy target. I was wondering if you could maybe frame up some of the critical path items there that are ongoing before that submission is ready.

Sure. Why don't I -- Thomas, why don't I turn it over to Deepak as he's been leading that activity for us. Deepak.

Thomas, so regarding the SB gel, the NDA prep, I think that's going in full throttle. Earlier this year, we met with FDA for the pre-NDA meeting. And the meeting went according to the plan. And we have a complete package, and we are still on track to file by mid-2022. And more so, there were no additional clinical studies required coming out of the pre-NDA meeting. So the package is complete, and we are putting all the modules together to file by mid-22.

Yes. Great. And...

The Only thing I'd add to that is the FDA asked for a couple of different data analysis, and we're doing that. That takes a little bit of time. But everything is really on track, and we feel really good and confident about our ability to get this package put together.

And then with respect to -- and I know we're probably 15, 18 months out. But with respect to prepping for commercial launch, whether you go alone or go with a partner, where are we with manufacturing readiness, things like that? Is that all moving forward? Or is that TBD based on the strategic decision you make?

Yes. I mean the manufacturing, obviously, we have our manufacturing all aligned and have the right partnerships in place to be able to commercialize the asset. There are some things, obviously, that are dependent on how you go to market, that not being one of them, frankly, because if we were to license it out, they're going to -- whoever license it, is going to want to take advantage of that. But we're excited about the progress we've made. We're happy to be presenting the Phase III data at the upcoming meeting. And we're encouraged by the interest we've gotten from various potential partners.

And then one final one. What is the qualitative or quantitative, whatever you have, feedback you're getting from patient experience in Japan at this point?

In general, it's been positive. The -- obviously, the Kaken sales have been impacted a bit by the limitation of a 2-week script in Japan, which is a Japanese anomaly, if you will, if patients have to come back and get it -- get a new prescription every 2 weeks. That limits the type of patient you get, that went off in the end of the year. So we're hoping to see, obviously, sales grow as you get out of that.

It's also been significantly impacted by COVID. The number of patients who are willing to go see doctors has gone down a bit and some market demand because obviously, you're sitting on the Zoom, hyperhidrosis isn't as condition. But the feedback on the product and the feedback on the experience has been very, very positive. Some of that translates to in the U.S., some of it doesn't because remember, they're a 5% dose in the U.S. is as a 15% dose. But overall, I think Kaken has been happy with the experience patients have had and they're still very committed and excited about the potential of the product.

Thank you. There are no further questions at this time. I would now like to turn the call back over to Rob Brown for any closing comments.

Thanks for taking the time this morning to listen to our update. As always, please feel free to reach out to us at any time for further questions, and have a great day. Bye.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.