Carisma Therapeutics Inc (CARM) 2014 Q3 法說會逐字稿

Welcome to Eleven Biotherapeutics third-quarter 2014 financial results conference call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investor & Media section of Eleven's webcast at ir.elevenbio.com. This call is property of Eleven Biotherapeutics, and recordings, reproduction or transmission of this call without the express written consent of Eleven Biotherapeutics is strictly prohibited.

As a reminder, today's call is being recorded.

I would now like to introduce Leah Monteiro, Corporate Communications Manager of Eleven Biotherapeutics. Please go ahead.

Thank you. Good morning. The press release of the Company's third-quarter 2014 financial results became available at 7:30 a.m. Eastern time today. It can be found on the Investor & Media section of the Company's website at ir.elevenbio.com.

Before we begin, I will read Eleven Biotherapeutics' Safe Harbor notice regarding forward-looking statements. During today's call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations, plans and prospects, clinical development and regulatory timelines, the potential and success of our product candidates, financial projections for 2014, 2015 and 2016 milestones and upcoming events and presentations. Actual results may differ materially from those indicated by the statements as a result of various important factors, including those discussed in the Risk Factors section in our most recent quarterly form, 10-Q and other reports filed with the Securities and Exchange Commission.

Any forward-looking statements represent our views as of today only and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. These forward-looking statements should not be relied upon as representing our views as of any subsequent date to today.

Joining me on the call is Abbie Celniker, PhD, President and Chief Executive Officer of Eleven Biotherapeutics, who will discuss recent Company highlights and review our product pipeline development products. Following Abbie, Greg Perry, Eleven Biotherapeutics' Chief Financial and Business Officer, will review the Company's financial results for the third-quarter 2014, after which we will open the call for Q&A. For Q&A, Dr. Michael Goldstein, Eleven Biotherapeutics' VP of Clinical Research, will be joining us.

I would now like to turn the call over to Abbie.

Thank you, Leah, and good morning, everyone. This quarter we are very pleased by the accomplishments in our EBI-005 clinical program. We were especially encouraged by the topline safety and efficacy results of EBI-005 in the modified conjunctival allergy and provocation test or CAPT model, which was modified to mimic the late-stage response in the Phase 2 clinical study.

Importantly, this enrolled patients with much more severe allergic conjunctivitis than are typically evaluated. Half of the study population had not responded adequately to antihistamines or mast cell stabilizers and as such are different than the patients typically enrolled in the studies testing therapies for the early acute-phase response in allergic conjunctivitis.

We believe these data, which showed biological activity in treating the symptoms of late-phase allergic conjunctivitis, further validate EBI-005 as a clinically active anti-inflammatory ocular agent. As a reminder, EBI-005 is a topical novel interleukin one or IL-1 receptor blocker that's in development for the treatment of moderate to severe dry eye and allergic conjunctivitis.

This is a Phase 2 trial with the goal to study the safety and efficacy of EBI-005 in patients with moderate to severe allergic conjunctivitis and to identify an appropriate model to study the late-phase response in this disease. We ran this Phase 2 study using two clinical repetitive allergen challenge models that were modified to drive the late-phase allergic response, a modified direct conjunctival allergen challenge or CAPT model and a modified environmental exposure chamber exposure or EEC model.

Patients treated with EBI-005 in the modified CAPT model showed statistically significant improvements in three clinically meaningful symptoms that were named as secondary and exploratory endpoints in the trial. These were reduction in ocular itching, ocular tearing and associated total nasal symptoms. In these models, patients were challenged with allergen at multiple time points throughout the study, including the two and a half week period after commencement of treatment with EBI-005 or vehicle.

Patients treated in the EEC did not show the same statistically significant improvements in these endpoints, including ocular itching, which was the main primary endpoint in the study. The EEC model has not been routinely used for the development of ocular drugs, but rather has been used for the development of therapies for nasal allergy. Based on our results, we believe the appropriate model to assess EBI-005 going forward is the CAPT model. In the CAPT model, we noted that the observation of statistically significant results at the second to last and the final allergen challenge assessment time point support our hypothesis that EBI-005 is impacting the late-phase response to allergen in this patient population. We believe EBI-005 could be a potentially useful treatment option for the subset of patients that are not adequately controlled by antihistamines or mast cell stabilizers or would prefer not to go on to steroids.

Importantly, EBI-005 was generally well tolerated with no treatment-related serious adverse events and no drug-specific antibodies detected.

Allergic conjunctivitis or AC is an inflammatory disease of the conjunctiva, which is the membrane that covers the white part of the eye, and it is caused primarily from a reaction to an allergen such as pollen or pet dander. This information results in acute itching, redness, tearing and other symptoms. According to a study on the management of seasonal allergic conjunctivitis published in 2012 in the peer-reviewed journal Acta Ophthalmologica, allergic conjunctivitis affects 15% to 40% of the United States population and ranges in clinical severity from relatively mild common forms to more severe chronic forms that may cause impaired vision or even blindness.

Our research indicates that there are about 11 million patients in the US suffering from allergic conjunctivitis that seek diagnosis and medical treatment. Of the 11 million patients, we believe there are approximately 4 million patients with moderate allergic conjunctivitis and 1.8 million with severe allergic conjunctivitis. We believe that prolonged and severe cases of allergic conjunctivitis are characterized by an inflammatory process that is mediated by IL-1. IL-1 stimulates the maturation and recruitment of antigen-presenting cells, eosinophils, T cells and other inflammatory cells that perpetuate or exacerbate the allergic response. IL-1 also mediates the expression of other cytokines and key chemokindes that activate and direct white led cells to the ocular surface or directly result in the symptoms of allergic conjunctivitis.

Once again, the team here at Eleven is excited about these data, which will help us determine our path forward with EBI-005 and the potential new treat options for patients with moderate to severe allergic conjunctivitis. We believe the CAPT model would be an appropriate model for future development. We look forward to providing more clarity on our plans for allergic conjunctivitis in early 2015.

While allergic conjunctivitis and dry eye disease are different diseases, the Phase 2 results further support IL-1 as a target for ocular inflammation and help confirm the safety profile of the EBI-005. These data also help further validate the mechanism of action of EBI-005. The inflammatory provocations are different in allergic conjunctivitis and in dry eye disease, involving an allergic reaction versus desiccating stress in dry eye. But we believe that IL-1 levels are elevated in the tears and tissues in both diseases and that blocking IL-1 can treat symptoms of both diseases. We look forward to presenting allergic conjunctivitis data at the Medical Contact Lens and Ocular Surface Association's annual meeting on Friday, November 28, 2014.

Recently, another very exciting milestone for the EBI-005 clinical program was achieved. We completed patient enrollment in our first pivotal Phase 3 study of EBI-005 in patients with dry eye disease and expect to report topline results of that trial in the second quarter of 2015. The study is being conducted at over 40 study centers across the United States, and over half of the subjects have completed the study at this time. 669 patients with moderate to severe dry eye disease have been enrolled and randomized for treatment with either EBI-005 or vehicle control for a period of 12 weeks followed by a three-week safety assessment period. The co-primary endpoints of this study are a change in total corneal fluorescein staining score, which is a sign of dry eye disease, and improvement in ocular pain and discomfort, which is a symptom of dry eye disease. The safety and tolerability of EBI-005 compared to vehicle control will also be evaluated using the same drug product that was used in the Phase 2 study in allergic conjunctivitis.

This pivotal Phase 3 trial was designed based on the results observed in our Phase 1b/2a trial of EBI-005 in patients with moderate to severe dry eye disease that was completed in 2014. We also plan to begin our 12-month Phase 3 safety study of EBI-005 before the end of this year.

Dry eye disease or simply dry eye is a potentially debilitating disease of the eye that may in its most severe forms have sight threatening corneal complications. Dry eye is one of the leading causes of patient visits to the eye care professionals of the United States. According to MarketScope, approximately 68 million people in the United States, European Union and Japan and other developed markets have dry eye, including approximately 26 million who suffer from moderate to severe forms of dry eye. Approximately 19 million people in the United States have dry eye, including approximately 7 million people who suffer with the moderate to severe form of dry eye.

We believe that dry eye is a chronic ocular surface inflammatory condition and is initiated and maintained by inflammatory processes where IL-1 is a key player. We believe that stress on the ocular surface leads to excess production of IL-1, resulting in increased ocular surface inflammation and hypersensitizeation of peripheral corneal nerves.

Lastly, we are pleased to announce that earlier in the third quarter we were granted a US patent for EBI-005 which contains both composition of matter and method of use claims with a patent life through 2031.

We turn now to our second program, EBI-031, our novel IL-6 inhibitor for treatment of back of the eye diseases such as diabetic macular edema and uveitis. Previously we discussed an earlier candidate antibody, EBI-029, for the same indication. EBI-031 is an analog of EBI-029 that was further optimized using our AMP-RX platform. We believe that EBI-031 binds to the identical binding site on IL-6 and has the same mechanism of action of EBI-029.

However, evidence suggests that EBI-031 is more potent than EBI-029, which may extend the time between required administrations.

Additionally, we have engineered EBI-0312 have a prolonged half-life in the vitreous compared to other antibodies but to be cleared more rapidly from the systemic circulation. This is an example of our overall strategy to design and engineer protein therapeutics specifically for the treatment of eye diseases.

IL-6 is a cytokine that has previously been shown to be present at high concentrations in the back-of-the-eye diseases such as DME and contributes to both the angiogenic and inflammatory components of diabetic macular edema and correlates with disease severity. By inhibiting IL-6, EBI-005 can offer an alternative to standard of care either as a standalone drug or in combination with VEGF blockade for patients. We continue to perform the preclinical studies and market analysis work necessary to make the next-step development decision with the goal of moving this product candidate towards clinical development.

Eleven also continues to strengthen its Board of Directors with the addition of Wendy L. Dixon, PhD, a senior biopharmaceutical executive with commercial leadership experience formerly at Bristol-Myers Squibb, Merck and other companies. In addition to the addition of Wendy, two board members who have been with us since our inception and have been instrumental in helping to move Eleven forward, Mark Levin of Third Rock Ventures and Noubar Afeyan of Flagship, are stepping down. We continue to have representation from Third Rock and Flagship with Cary Pfeffer and David Berry staying on the board.

This is part of Eleven's evolution as we bring on board members with later-stage product development and commercial perspective such as Dr. Dixon. Thank you to Mark and Noubar for guiding us through these transformative years.

And now I will turn the call over to Greg Perry to provide a review of the financial results for the third quarter of 2014. Greg?

Thanks, Abbie. As Leah mentioned, earlier this morning we issued a press release detailing our financial results for the third quarter of 2014. I will review the financial highlights and then speak to our cash position and our financial guidance.

For the third quarter of 2014, we reported a net loss of approximately $10.7 million compared to a net loss of $4.7 million for the same quarter in 2013. Total revenue for the second quarter of 2014 was approximately $500,000 compared to $600,000 for the same period last year.

Research and development expenses for the third quarter of 2014 were $8.9 million compared to $3.4 million for the same period in 2013, an increase primarily driven by EBI-005-related development expenses. G&A expenses for the third quarter of 2014 were $2.3 million compared to $800,000 for the same period in 2013. This increase was driven primarily by higher expenses related to operating as a public company since February 2014 and an increase in stock-based compensation expense.

We ended the quarter with $35.9 million in cash and cash equivalents, and based on current operating plans, we believe that we have sufficient cash and cash equivalents to fund our operating expenses, debt service obligations and capital expenditure requirements into the first quarter of 2016.

As a reminder, this guidance does not include additional spending on any development costs associated with allergic conjunctivitis or EBI-031. Additional spend in these programs will be linked to securing additional capital.

And lastly, we plan to file our 10-Q by the end of this week, and I encourage you to read this 10-Q as it will include additional disclosure supporting our comments on EBI-005 in AC and EBI-031.

And with that, we can open up the call for questions. Operator?

(Operator Instructions). Ken Cacciatore, Cowen and Company.

So my question is maybe you could remind us of the patient's entry criteria into the dry eyes study. It seems as if the FDA clearly has set up high hurdles with the two endpoints, and a lot of the work needs to be done in ensuring we have the right patients and ensuring the sites are as well prepared and as tight as possible. Can you take us a little bit behind the sausage making, so to speak, of the clinical trial? How do you get these sites prepared and nuance us again behind the entry criteria for the patients?

Thanks, Ken. Great questions, things we think about every day. So just to divide it into a couple of different portions, one is the site criteria and how we set up the sites and confirm that the sites are prepared to really make the assessments of the patients both as they enter the study as well as measuring endpoints. And we have some training programs that assure that our physicians are able to, for example, measure our signs reproducibly, and systems that ensure that patients are instructed appropriately when they are taking some of the surveys. And I will let Mike Goldstein answer a bit more about how we manage sites.

And then with regard to the patient inclusion criteria, as you know, we used the data that we received from our Phase 1b/2a to really understand the patient population that was most responsive from an efficacy perspective but also had the diminished or least variability so as we could really tighten up our probability of success in reaching both the sign and symptom endpoints. And Mike will talk about that briefly.

And then finally, I think it's very important to acknowledge that we know that careful management of the use of artificial tears is important in how we qualify patients for the study. And using tears in the study is something that we have prohibited, as I think we've announced previously. And Mike can talk a little bit more about the fact that we have worked closely with the sites to assure that we are enrolling patients that we will be able to manage tear use with.

So I'll hand it over to Mike to talk about the sites, the inclusion criteria and then some of the other aspects of how we are really addressing patient compliance, et cetera.

So the trial really is predicated upon finding the right sites. So we have spent an extensive amount of time vetting and training each of the sites. And the sites we have been able to recruit for the study are very experienced in dry eye trials.

We've stacked up a very extensive training program both for the site coordinators, as well as for the investigators. And our monitors work very closely with the sites on continuous training for this trial.

As far as the investigators go, we, of course, have the investigator meeting. At the beginning of the trial, we did something that was a little unique in that we also had a pre-investigator meeting where we were able to get investigator feedback and buy-in into the trial before we actually even got things going.

Once the trial was going, we actually have, as Abbie mentioned, extensive training, which involves online training modules which have to be passed in order for investigators to be involved with the trial, and that is on an ongoing basis. We have retraining requirements where investigators have to continue to retrain on our endpoints in order to stay involved in the trial. So, as Abbie mentioned, a lot of thought and work has gone on, in this trial, and we are very proud that we work very closely with the sites in ensuring the highest-quality data possible.

On your second point, in terms of the inclusion and exclusion criteria, as you have said, the FDA does have a high hurdle in that you have to meet statistically significant improvements in both signs and symptoms of dry eye. And where a lot of studies have run into trouble is that the inclusion criteria don't actually meet up with that.

What we have done is we require subjects to enroll in the study based on having moderate to severe dry eye based on inclusion criteria around the sign and the symptom. So we have required both, so again lining up our inclusion/exclusion criteria with the endpoints that are required in these trials, and we have informed those decisions based upon our Phase 2 trial.

And then the final question, around rescue artificial tears, as we all know, this is a known confounder in many trials. And what we found in our Phase 2 trial is that those patients who were on the active drug use far fewer rescue artificial tears than those who are on the vehicle control.

What we've done in the Phase 3 trial is to say, okay, we know it's the confounder. We know those for the active arm aren't really using many rescue artificial tears. So we have restricted rescue artificial tear use in the Phase 3 trial. And by that we mean we're not providing rescue artificial tears and subjects are not to use it. But if they do use rescue artificial tears, we are asking about it at each of the visits and reporting that. I don't know if that answers your question.

It does. It's great. It's very helpful, very comprehensive. Thanks, guys.

Jason Gerberry, Leerink Partners.

Thanks for taking the questions. Just a couple. On the composition of matter patent, could you just comment is there the potential for any patent term extension on that, or should we be modeling 2031 as the backstop for the IP?

And then just on the cash burn, just wondering -- as you talk about where you sit right now with cash and runway to 1Q 2016, should we be thinking about a little bit of moderation relative to the burn this quarter? I assume that that sort of -- you have run into some big cost items in the quarter and just how to think about quarterly burn going forward?

Thanks, Jason. I'll take the composition of matter and then hand it over to Greg to talk about the cash burn.

So I think with all patents, especially biologics or small molecules, there's always strategy built into how the patent is constructed to look for some extensions. So those are things that we will be doing. But I think that the 2031 is a nice long patent runway.

So the ability to get extension much beyond that may be challenging, but we will continue to prosecute that strategy. But right now I think the 2031 is the point that we are really focused on. And probably within the next year or so, we will understand if we have more ideas.

One of the things I do want to point out, though, is that it's not just on the molecule that we have an IP portfolio developing. We also have a priority example, which is comprised of all previously used pharmaceutical agents for ophthalmic diseases, and is a very comfortable, well-tolerated vehicle that we have filed IP around. And we do believe that there will be potentially a way to get some extension in our IP based on how we think about the formulation and then, further, more configuration of our molecule in preservative-free delivery files.

So just sort of a ring fence of protection around the molecule that we're constantly working on.

Abbie, if I can just follow up on that real quick, I guess the assumption being that if you have got IP around vehicle, that there would be some sort of FDA mechanism requiring Q1/Q2 sameness for any generic. So IP on vehicle would be pretty strong in this space, I'd have to assume.

Yes. That is true. But also the very interesting challenge for us as a protein therapeutic applied topically for ocular disease is that from our composition of matter perspective, we are under biosimilar legislation as opposed to under small molecule generic legislation. So we have a way of using both approaches with the vehicle, as well as the requirement for the demonstration, what's required for the demonstration of the biosimilar, which is a much higher hurdle than it is for a small molecule.

Okay.

And Jason, on the cash burn, clearly the last couple of quarters we were pushing hard on Phase 3 enrollment, successfully completed enrollment there and then ultimately the AC trial. So clinical spend and CMC spend are the two really big drivers here.

So we do see a moderation of the cash burn a bit, kind of a down slope as we enter 2015. So that can give you maybe a little bit of the profile of what that cash burn looks like. So a little bit moderated going through the next couple of quarters and then through the middle of 2015, and then it drives up a little bit but getting us into 2016.

Okay. And then if I could just ask one more question, just on AC, I know after the last time we got together and spoke, there was a little bit of uncertainty around whether the next step would be a Phase 2 or a Phase 3. I'm wondering if you guys could comment in terms of where you are leaning towards in terms of the next development step or we should wait till early 2015 for that update? Thanks.

Yes, thanks, Jason. I do think it's appropriate to wait till early 2015 because we are going to be pursuing the development plan discussions with the health authorities, primarily with the FDA.

But I just wanted to point out that, as we've talked before, the trials for allergic conjunctivitis, similar to dry eye, are very capital-efficient trials, and they can be enrolled and completed very quickly. So it's one of those scenarios where there's great opportunity to do some very interesting work on a really good budget and still keep on very aggressive timelines.

Right now all of the timelines for the approval of EBI-005 in dry eye are really linked more closely to some of our CMC work and our long-term safety assessment. That long-term safety study that we would be running to support the dry eye trial would also help us or serve for some safety coverage in our allergic conjunctivitis program. So anything that we did do would all be done within the considerations of what we are doing to develop in dry eye and wouldn't be rate limiting in the approval timelines for EBI-005 in AC.

Okay. Great. Thank you very much.

(Operator Instructions). Liav Abraham, Citi.

Just a follow-up question on the allergic conjunctivitis program. Abbie, in the past you've said that you anticipate that the AC indication would be a approved, assuming all goes well, also dry eye. Just following on from your previous -- the comments that you just made regarding the efficiency and the duration of the AC trials, which are quick and fairly simple and capital efficient, is there not a scenario under which the AC indication could be approved before dry eye, and what are the considerations in timing here? Would it be from a pricing perspective that you would want to potentially, even if it were ready for approval before dry eye, to launch it after? Just interested in your thoughts around those dynamics.

Great. Thanks, Leah. Actually, it's a great question, and the really interesting thing for us has been in some of the pricing and reimbursement research that we've been doing, where we feel very confident that the pricing of the EBI-005 in allergic conjunctivitis could really be at parity with the pricing for dry eye, even if it were to stand on its own. And as a result, we are really not using pricing as the rate limiting step in the development decisions. It has been really some excellent work that our team has been doing to understand this and understand the price of other allergic conjunctivitis drugs and how we would be considered.

So we are feeling pretty confident about not having to be controlled by staging things or staggering things by price anymore. I do think that from our perspective the question you asked of, is it possible that you could accelerate, I think it's certainly a possibility.

But as I mentioned in the response to Jason's question, there are really just rate limiting aspects of our BLA program that are tied to validation of the commercial manufacturing, as well as some of the other required safety assessments that are longer-term studies that we mentioned earlier in the call that we are going to be initiating by the end of this year.

So I think that having it happen before those activities are completed would be difficult. But if for some reason we were really looking at opportunities to change the way we were developing in dry eye or look at different opportunities there and get AC on the market first, we certainly would have that opportunity.

Thanks. Thanks very much.

Thank you. Ladies and gentlemen, this concludes today's presentation. Thank you once again for your presentation, and you may all disconnect. Everyone, have a great day.