CymaBay Therapeutics Inc (CBAY) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the CymaBay fourth-quarter and full-year 2015 financial results conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the Company's request. It is also being webcast live on the Investors section of the CymaBay website at www.cymabay.com.

At this time, I would like to turn the call over to Mr. Sujal Shah, Chief Financial Officer at CymaBay. Mr. Shaw, please proceed.

Thank you, operator, and good afternoon, everyone. Welcome to the CymaBay financial and operating results conference call for the fourth quarter and full year of 2015.

Earlier today, we issued a press release announcing our fourth-quarter and full-year 2015 financial results, and you can access that we release on our website under the Investors tab.

Leading the call today is Hal Van Wart, President and CEO of CymaBay, who will provide an operational update covering our clinical program. I will return to review the Company's financial results and pass the call back over to Hal for a summary of our upcoming milestones. And then we will open up the call for Q&A.

Before we begin, I would like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay's expected future performance, future business prospects, or future events or plans, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of CymaBay.

CymaBay expressly disclaims any duty to provide updates to its forward-looking statements, whether as a result of new information, future events, or otherwise. Participants are directed to the risk factors set forth in today's press release, as well as the risk factors set forth in CymaBay's quarterly and annual report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statement.

This conference call is the property of CymaBay, and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. With that, let me turn the call over to Hal.

Thank you, Sujal. Good morning, everyone, and thank you for joining us on the call today.

I am pleased to report that we have made continued progress on a number of fronts. Let me begin with an update on MBX-8025, our potent selective PPAR-delta agonist, that we are developing for the orphan indications of homozygous familial hypercholesterolemia, or HoFH, and primary biliary cholangitis, or PBC.

HoFH is an ultra-orphan genetic disease caused primarily by loss of function mutations in low-density lipoprotein or LDL receptor gene, resulting in markedly elevated LDL cholesterol, premature atherosclerosis, and increased risk of serious and sometimes fatal cardiovascular events. Currently approved therapies such as statins and PCSK9 inhibitors are only effective in patients with residual LDL receptor activity, while other newer therapies have limitations due to tolerability or safety. Thus, there remains an unmet need in these patients for new ways to lower LDL.

Two weeks ago we announced top-line data from our pilot Phase 2 study of 8025 in patients with HoFH. The primary draw was to evaluate the potential for 8025 to lower LDL in patients with HoFH, but we also measured the effects on a wide variety of lipid-related parameters, including PCSK9 levels and also collected safety data.

This was an open-label dose escalation study of 12 weeks duration conducted at five centers in Europe and Canada in 13 patients with genetically confirmed HoFH. The patients received once daily treatments with 50 milligrams of 8025 for the first four weeks after which the dose was escalated to 100 and 200 milligrams in the successive four-week periods. All other patients were on acetamide and maximum statin therapy. None of the participants received lomitapide, mipomersen or a PCSK9 inhibitor. Eight patients were undergoing concomitant apheresis on either a weekly or biweekly schedule.

Despite being on maximum conventional lipid lowering therapy, the average baseline LDL cholesterol in these patients was 368 mg/dL.

One patient missed multiple apheresis sessions and could not be included in the efficacy analysis. Two different per particle analyses were carried out on the remaining 12 patients. First, responder analysis was conducted in which the proportion of patients achieving certain target reductions of LDL at any time during the study was calculated. Seven subjects or 58% exhibited a greater than or equal to 15% decrease in LDL cholesterol, including one patient that was LDL receptor negative.

The absolute increase in LDL cholesterol in these seven subjects was in the range of 109 to 126 milligrams per deciliter. Given the rule of thumb that every 40 milligrams per deciliter increase decrease in LDL reduces the risk of cardiovascular events by approximately 22%, these reductions in LDL cholesterol are likely to be clinically significant.

Five subjects had a less than 15% decrease. The average maximum decrease in this study was 19%.

In the second analysis, the LDL for each subject was calculated by averaging all values while on treatment, given equal weight to all doses and time periods. The overall mean change in LDL cholesterol for all subjects was a decrease of 10%. Eight subjects exhibited a decrease in LDL with a group mean decrease of 16%, including three that showed a greater than or equal to 20% decrease. This was offset by four patients who showed a mean increase of 4%.

A wide spectrum of lipid-related parameters has also been measured and is currently under analysis. Interestingly, PCSK9 levels were elevated by an average of 43% by MBX-8025 treatment. Increases in PCSK9 have been seen with other lipid-lowering therapies and do not raise any safety concerns, but it does suggest that the increase may be limiting the LDL lowering observed in this study. This raises the question of whether treatment with MBX-8025 on background PCS canine inhibitor therapy would neutralize PCSK9 and, therefore, increase the LDL lowering benefit of MBX-8025.

It is very likely that in the next few years, most patients with HoFH in the US and the rest of the world will be on background PCSK9 inhibitor therapy so this would make sense as a therapeutic strategy. The Company plans to explore the feasibility of conducting such a study.

With regard to safety, the study was carried out under the review of a data facing monitoring committee that conducted an interim review of the data and proposed note changes to the study. Thus, the study was completed as planned. There were three SAEs, non-drug-related and pretreatment discontinuations for AE possibly related to study drug.

Now, MBX-8025 is also being studied in primary biliary cholangitis or PBC, previously called primary biliary cirrhosis. PBC is an orphan autoimmune disease of the liver characterized by inflammation and destruction of the intra-hepatic bile ducts leading to a condition called cholestasis. This causes harmful substances to build up in the liver, leading to irreversible scarring and potentially progressing to cirrhosis and hepatic failure.

The only drug approved for PBC is ursodiol. Approximately 40% of patients have an inadequate response to ursodiol, and additional therapies are needed for these patients.

Now, we have consistently observed reductions in markers of cholestasis, namely alkaline phosphatase and gamma glutamyl transferase and earlier clinical studies with 8025. This includes studies in healthy volunteers and also patients with mixed dyslipidemia.

Most recently, in our HoFH study, we also observed significant decreases in the mean levels of alkaline phosphatase of 30% of gamma glutamyl transferase of 27% and also of total bilirubin of 22%.

As previously reported in the fourth quarter of 2015, we initiated a placebo-controlled, dose ranging Phase 2 study for MBX-8025 in PBC patients who have had an inadequate response to ursodiol.

Patients in the ongoing Phase 2 study are being randomized to receive either placebo or MBX-8025, either 50 or 200 milligrams, once daily for 12 weeks. The primary endpoint will be the change in alkaline phosphatase, the primary that I mentioned before, that has been used in prior clinical studies in PBCP patients and which is believed to reflect the status of the disease. A variety of secondary outcomes will also be studied. We expect to enroll approximately 75 patients in the US, UK, Canada, Germany and Poland. We expect this study to be completed in late fourth quarter of this year.

Now let me turn attention to Arhalofenate, our oral once daily dual-acting drug candidate for the treatment of gout. Arhalofenate is a dual-acting investigational drug that simultaneously addresses the two major unmet needs in gout, namely the need for better control of serum uric acid and better control of painful flares. CymaBay believes that Arhalofenate could be the first entry into a new class of gout therapy that we refer to as Urate Lowering Anti-Flare Therapy or ULAFC.

We have completed a Phase 2 clinical program in which we demonstrated clinically meaningful and statistically significant reductions in both fumaric acid and gout flares. A paper describing the results of our Phase 2b flare study has been accepted for publication in the Journal, Arthritis and Rheumatology, and will appear soon.

In studies to date in over 1100 patients, Arhalofenate has not shown evidence of renal toxicity that is observed with some uricosuric drugs.

In January of this year, we completed our end of Phase 2 discussions with the FDA and have come to agreement on all of the key elements of the planned Phase 3 program. This program will consist of two Phase 3 studies of Arhalofenate in combination with febuxostat in patients with chronic gout and a third study in patients with tophaceous gout.

Agreement was reached on the two co-primary endpoints of serum acid responder rate and flare rate used to evaluate the two separate clinical actions of Arhalofenate. Data from these endpoints could support indication for the management of hyperuricemia and flare prophylaxis, respectively, the two parts of the ULAFC mechanism.

In total, the planned Phase 3 program will enroll approximately 1300 patients intended to receive treatment for at least six months. Approximately half of these patients will receive Arhalofenate and will enter into an extension phase for an additional six months to collect safety information.

We believe that Arhalofenate is now a highly de-risked, Phase 3 ready asset that can address major unmet medical needs in the growing gout market. Our strategic plan is to secure a partnership for Arhalofenate that would enable the start of Phase 3 in 2016. Gout, as you know, is predominantly treated by primary care physicians. Therefore, partnering Arhalofenate with one or more companies that have a presence in the primary care market will be a priority for us.

Finally, I would like to report that the Company has recently strengthened the board with the addition of three new directors whose terms will begin on April 1. The first is Dr. Evan Stein, a world-renowned expert in the area of lipid metabolism, who has had a particular focus during his distinguished career on the development of therapies to treat familial hypercholesterolemia. Dr. Stein has been serving as a consultant for us in the lipid space, and we expect his knowledge, experience and networking in the industry to be of significant value to the Company.

Mr. Paul Truex, currently President and CEO of Anthera Pharmaceuticals, Inc., has also been appointed to the board. Paul has held a number of senior operational positions in the biotechnology and pharma industries, including being President and CEO of Peninsula Pharmaceuticals, sold to Johnson & Johnson; Vice President of Commercial Development at Versicor Pharmaceuticals, now part of Pfizer, and in the corporate business development group at Eli Lilly and Company. Paul brings both business acumen and operational experience to the board.

Finally, Mr. Robert Weiland will be joining the board. Most recently, Bob served as Vice President for Strategy and International Business Development at Baxter International. Over the last 20 years, Mr. Weiland has served as Vice President of Commercial Operations at Takeda Pharmaceuticals North America, as General Manager and Vice President of the Surgery Business Unit at The Medicines Company, and as Diabetes and Metabolics Franchise leader at Abbott Laboratories. Bob has a wealth of experience in business and commercialization strategy and will be a valuable addition.

I'm very pleased with the addition of these three board members who have the background and experience to guide CymaBay through the next stage of its development.

I would now like to hand the call back to Sujal to go over the financials.

Thank you, Hal. In today's press release, we reported cash, cash equivalents and short-term investments at December 31, 2015 of $41.5 million compared to $34.8 million as of December 31, 2014. Based on our current operating plan, we believe our existing cash is sufficient to fund operations through at least the second quarter of 2017.

Research and development expenses for the three and 12 months ended December 31, 2015 was $4.1 million and a $17.0 million respectively. R&D expense for the three and 12 months ended December 31, 2014 was $5.3 million and $15.8 million, respectively.

The increase in R&D expense for the full-year 2015 was primarily related to the increased spending associated with the initiation and conduct of two Phase 2 studies of MBX-8025. One in HoFH and another in PBC.

General and administrative expense for three and 12 months ended December 31, 2015 was $1.8 million and $8.9 million, respectively. G&A expense for the three and 12 months ended December 31, 2014 was $2.3 million and $8.2 million, respectively. The small increase in G&A expense in 2015 compared to 2014 was primarily related to an increase in personnel costs to support the Company's expanded clinical development program of MBX-8025.

Net loss for the three and 12 months ended December 31, 2015 was $6.0 million and $15.5 million, respectively. Net loss for the three and 12 months ended December 31, 2014 was $12.7 million and $31.9 million, respectively. The decrease in net loss for both periods was primarily due to non-cash gain of $0.1 million and $11.1 million for the three and 12 months ended December 31, 2015, respectively, from the mark-to-market valuation of the Company's warrant liability.

For the three and 12 months ended December 31, 2014, the mark-to-market valuation of the Company's warrant liability resulted in non-cash losses of $4.9 million and $7.2 million, respectively. These 2015 non-cash gains more than offset the small increases in R&D and G&A expenses in 2015 versus 2014.

Now I will turn the call back to Hal. Hal?

Thanks, Sujal. Well, let me close by highlighting our recent accomplishments and upcoming milestones.

For MBX-8025, we have reported our positive top-line data from the powered Phase 2 study in HoFH. We will be completing the analysis of the full data set and be presenting it at an upcoming scientific meeting. The intriguing increase in PCSK9 suggests to us that we conduct another pilot study on top of a PCSK9 inhibitor before making the decision on how or whether to advance the program. We are currently investigating the feasibility of such a study, which we believe could be carried out cost effectively and without the need to raise additional capital.

We have also initiated a dose ranging placebo-controlled Phase 2 study in PBC, which we expect to be completed by the end of the year. We remain encouraged by the consistent reductions in markers of cholestasis observed in a variety of previous clinical studies, including our most recent study in patients with HoFH.

Last, for Arhalofenate, we have had a positive conclusion to our end of Phase 2 discussions with the FDA. The program is now Phase 3 ready, and we are in active partnering discussions that we hope will enable us to start Phase 3 before the end of the year.

Now, we would be happy to take your questions, and I will turn the call over to the operator.

(Operator Instructions) Ed Tenthoff, Piper Jaffray.

On the heels of the 8025 data in HoFH, can you further articulate what the plans were? Did you see enough in terms of LDL lowering to pursue the path forward with PCSK9 and tell us a little bit more about what that study could look like?

Sure. Good question. So I think we are overall very pleased with the results of our Phase 2 pilot study, which showed us that in this very difficult to treat population the PPAR-delta mechanism definitely produces significant LDL lowering in our subset of patients. Over 50% of the patients got a 50% or more decrease. And given that they are starting from such a high baseline value, this corresponds to actual absolute decreases in LDL above 100 milligrams per deciliter, which is clinically very significant.

Having said that, there were also a number of patients that responded minimally or very little and on average their cholesterol decreases probably between somewhere the lower 10% and the upper estimated 18%.

So we think that to be commercially viable, we will probably need to be closer to the upper end of that range. I think Dr. Stein, our expert consultant, suggested above 20%, and we believe that if it is true, that the increases in PCSK9 were blunting the LDL lowering response that are very plausible -- which is very plausible. Then I believe that would be a significant rationale for studying the drug on top of a PCSK9 inhibitor, and we are currently evaluating the feasibility of that right now.

Excellent. Thank you. And then, just for Sujal, with respect to the cash guidance through the second half of next year, does that include next step for 8025 (inaudible) (inaudible) and obviously it includes the readout in PBC?

Yes, absolutely. Thanks for the question. Certainly, we believe that cash on hand at the end of 2015, a little over $41 million, is sufficient for our current operating plans around PBC, as well as the potential for an additional study to look at the effects of 8025 on top of PCSK9 inhibitor therapy for HoFH patients. And when we had our call highlighting the data results, one of the things we had mentioned is the overall cost of this pilot study that is now being completed was less than $2 million. While we are currently continuing to assess the feasibility of a study on top of PCSK9 inhibitor, we do believe there is an opportunity for us to do it in a very cost-effective manner that would not require us to raise additional capital or really change that guidance of cash runway to the middle of next year.

Ed Arce, H.C. Wainwright.

(technical difficulty) 8025 in HoFH, again just following up on Ted's previous question. Given the overall mean reduction of 10% in LDL and the increases of about 43% in PCSK9, is there a view yet that would allow you to interpolate the amounts of additional LDL lowering that you can see if you were able to neutralize the effect that you saw in this trial? In other words, would it be closer to the 20% that would probably be required for a commercially viable product?

Yes. That is an excellent question, and I am going to ask our Chief Scientific Officer, Chuck McWherter, to comment on that.

Thanks for the question. I think it is quite interesting that, if you look in the literature, there is quite a bit of mechanistic information that relates PCSK9 levels and their effects on LDL. So there is a strong relationship there. Even in patients who have HoFH, there is publication that make a relationship there.

Now, what we don't know is in the setting of HoFH, where there is defective LDL receptor function, it is a bit difficult to extrapolate at this point in time to the magnitude of the effect that we would see. But we do think it is highly plausible, based upon the data, that if you neutralize PCSK9 that you would negate any offsetting effect from MBX-8025 leading to the PCSK9 increase. And, therefore, the hypothesis is that the LDL lowering effect could become larger. The magnitude of that would have to be established, but it does feel like a 43% increase. PCSK9 is something that could be important.

Okay. And then, following up on that, just given the physiological rationale of this combination, and, as you mentioned, Hal, the likely broad use of PCSK9 in the future, what would be the limiting factors as you explore the feasibility of this as it seems cost certainly doesn't seem to be one?

You are asking what are the important considerations to make this a practical study to conduct?

What are the (inaudible) criteria that you need to define before you decide to move ahead with conducting the study?

Yes. So for us, this is a matter of conducting a feasibility as to how this study would be conducted. So we would prefer to find a site, do it at a single site. So we are investigating what sites around the world there may be where we could get 10 to 12 patients on the drug. We'd like to identify a patient set that is already on background PCSK9 inhibitors. So there is a lot of practical investigations that go into deciding how feasible it would be to conduct it.

If we had to conduct a 12-patient study at 12 different centers, we may consider that to be difficult, if not impossible. Preliminarily we are very encouraged by what we found, but we don't want to say anything definite until we have made a complete decision.

Okay. All right. So operationally, it could be -- it could vary widely depending on what you find?

Yes.

I apologize just to jump in here. This is specifically an area now having had Dr. Evan Stein join our board, obviously been a consultant to the company for some time, where our interactions with Dr. Stein continue to progress along this specific run in understanding the feasibility. So he has been an important advisor to the Company, and we continue to press forward here.

Understood. Okay. Just one last question, just to confirm. Hal, you mentioned the completion of the second pilot study in PBC in late fourth quarter. When would the readout itself be?

Yes. So what we said is that we are currently on track to finish the PBC study in late fourth quarter. We don't know anything about the timing for a second pilot study in HoFH yet.

No, actually, what I meant to say was the completion of the study, as you said, is fourth quarter, but when would the readout of the results be? Also fourth quarter or into 2017?

Well, when we say readout, we usually refer to top-line data, which is the primary endpoint, and right now we are still targeting that for late fourth quarter.

[David Boucher], [IDRS Securities].

Thank you. Sujal, I would like to start out with a couple of quick financial questions for you. In terms of the spending in R&D for the PBC proof of concept trial, do you anticipate a sort of steady spending over the quarter or will it be varied? Will there be one quarter be more than another?

You know, there is always a bit of variation as enrollment really picks up. A lot of our overall expenses really gets ties to the execution of that study and how that progresses through the remainder of the year.

I think if you look historically over the past year or two, our burn has been relatively consistent quarter to quarter. There isn't a great deal of fluctuation. This is a 75-patient study. So as enrollment, again, ramps up, you will see some fluctuation, but it won't be a wide variability through the rest of the quarters of 2016. We do believe that if you think about a little over $41 million of cash on the balance sheet at the end of 2015 and a runway to middle of 2017 -- and I will give you a bit of a proxy on how that expense will be measured over the next six quarters.

So can you tell us about what percentage of the enrollment has been completed so far?

Well, you know, we don't give specific guidance as of yet on enrollment. We started enrolling this study in November of last year. We continue to progress. We have seen quite a bit of interest in MBX-8025 in the setting among key investigators, both in the US as well as globally. Our interactions have encompassed investigator meetings in the US and EU, really some of the key individuals in this space that continue to be very excited about the potential. So things continue to progress.

I didn't think you would give me a number, but, hey, I took a shot. Now, let's go to 8025. As you are thinking about going forward in a study in combination with Repatha, if that is the one you choose, how would you -- or what do you have in your thinking, in your mindset, in terms of dosing both for 8025 and for Repatha

Well, the way we would do this is we would find patients who are already on a fixed regimen of Repatha, which we assume would be one of the two registered regimens, and then we would add 8025 on to it. We have not yet decided whether that would be a single dose or whether we would look at a couple different doses, and when we finalize that trial design, we will be sure to disclose that.

Okay. And, in terms of things like safety issues looking at liver chemistries, how did that look in the proof of concept study that you just released the top-line data for?

(multiple speakers). Pol Boudes.

Yes. I am the Chief Medical Officer. Hi. There was really no signal on (inaudible) or liver function test study. Actually, what we saw was -- I don't know if you really know to do that. We saw the confirmation of the signal for decreasing cholestasis enzymes, which is a good thing because that is the first time of that population where we see that we have a signal that isn't (inaudible) PBC population.

Okay. Thank you. One last question, we will talk about our Arhalofenate. Obviously, you can't discuss much in terms of what is going on with a partnering decision. But if you could design another trial, just something to keep going forward, what would you look at? Because you have gotten a couple of different studies in combination with febuxostat, and in the Phase 3, it looks like you're going to have a run-in with febuxostat before you randomize. And in the two trials you have used, one of them -- they were both sequential, but one started with febuxostat, the other started with Arhalofenate and then added on. Would you look at doing something that is more along the Phase 3 proposed protocol? Would you look at doing something that is a head to head against [lucinuride], which I personally think would be very interesting.

Well, Dave, let me maybe answer a little bit of that around the context of the fact that, of course, discussions with potential partners are, in fact that, ongoing, progressing actively.

We are very confident, frankly, in what we have been able to see out of our Phase 2 development program with Arhalofenate. And, specifically on the outcome of our end of Phase 2 meeting discussions with the agency, we certainly believe that the Phase 3 program that we have agreement on from the agency is the right program in terms of next steps for the compound. We certainly believe that its design would really offer the opportunity for the agency to potentially evaluate our Arhalofenate to have this dual-acting ULAFC label.

And so we are very confident about what this next step really should be with respect Arhalofenate. I think we recognized that ideas like you have proposed relative to head to head studies like with lucinuride are certainly interesting ideas, particularly from a concept of marketing studies that sometimes come after approval. I think those are things that certainly are interesting as we think about the broader aspects and design and potential for our Arhalofenate.

But with respect to next steps, we certainly are firmly in the camp that Arhalofenate is Phase 3 ready. We have got signoff from the agency on the registration program, and that is the area in which we are progressing at this time.

Ed Arce, H.C. Wainwright.

Just one on the recently completed HoFH pilot study. Were you able to see any need for difference in the LDL lowering patients between those who were on apheresis and those who were not?

No. First of all, it is a relatively small study with only a dozen patients being analyzed. And I think there were seven on and seven -- I think seven -- it was five and eight? Okay. Five were on apheresis and eight were off it, and there were responders in both groups. So there was really no meaningful difference in the LDL lowering between the two groups.

At this time, I would like to turn the conference back over to management for any closing comments.

Everyone, I would just like to thank you for participating in our call today. I hope that you appreciate as we do that we have been making steady progress on these programs, and I look forward to our next quarterly call.

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