CymaBay Therapeutics Inc (CBAY) 2023 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the CymaBay's Third Quarter 2023 Financial Results and Business Update Conference Call. (Operator Instructions) Please be advised that the call will be recorded at the company's request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com. Now I would like to turn the call over to Mr. Paul Quinlan, General Counsel at CymaBay. Mr. Quinlan, please proceed.

Thank you, operator, and good afternoon, everyone. I hope that you've had a chance to review the press release we issued announcing our third quarter 2023 financial results and business updates. You can access that release on our website under the Investors tab. Joining me on the call today are Sujal Shah, Chief Executive Officer; Chuck McWherter, Chief Scientific Officer and President of R&D; Lewis Stuart, Chief Commercial Officer; and Harish Shantharam, Chief Financial Officer.

Following our prepared remarks, we will open the call for Q&A. Before we begin, I'd like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay's expected future performance, business prospects, events, or plans, including clinical plans, regulatory approvals, funding and repayment schedules, anticipated time lines and data release dates, cash runway and planning for commercialization are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

Although the company believes that the expectations reflected in such our forward-looking statements are based on reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors. The company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Participants are directed to the cautionary statements set forth in today's press release as well as the risk factors set forth in CymaBay's quarterly and annual reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. This conference call is the property of CymaBay, and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay.

At this time, I'd like to turn the call over to Sujal.

Thank you, Paul, and good afternoon. We appreciate everyone taking the time to listen to our update at CymaBay in the midst of a busy earnings period.

2023 has been a remarkable year for CymaBay, and the third quarter was especially momentous with the achievement of multiple significant milestones, advancing us towards our goal of improving the lives of people living with PBC. First, seladelpar met its primary and 2 key secondary endpoints with high statistical significance in the Phase III pivotal RESPONSE trial for patients with PBC. The consistency and depth of the clinical data set generated from Phase II, ENHANCE and now RESPONSE, demonstrates that seladelpar has the potential to be the first-ever approved treatment for patients with PBC to significantly reduce both markers related to the risk of disease progression and symptoms. Reaching this milestone required focus, resilience and perseverance by our team here at CymaBay, but it would not have been possible without the commitment of our partners, including the patients who participated in all our clinical trials, their family members and caregivers, investigators and patient advocacy groups who are part of this journey.

The reactions from all quarters on the RESPONSE results have been very positive, and Lewis will provide color on some of the feedback we've received from the medical community and patient advocacy groups later in his remarks. Our team is now working with singular focus to deliver high-quality regulatory applications for approval as soon as possible, and are actively engaged with FDA, MHRA and EMA. We were very encouraged by the FDA's granting of a revised breakthrough therapy designation for seladelpar in PBC that now covers the treatment of PBC, including pruritus in patients who are inadequate responders or intolerant to UDCA without cirrhosis or with compensated cirrhosis. The unmet needs for people living with PBC today are for treatments that provide a significantly lower risk of disease progression, while also reducing symptoms across a broad spectrum of patients, including those with compensated cirrhosis.

We believe that seladelpar is the only drug in development for PBC that has received a breakthrough designation that includes pruritus and compensated cirrhosis. We look forward to working with the FDA and other regulatory agencies as they conduct their regulatory review post completion of our submissions. Our commitment to PBC runs deep, and we will continue to add to what we believe is already the largest clinical development program in PBC. The IDEAL study that we announced earlier in the third quarter targets partial responders to first-line treatment with alkaline phosphatase levels between 1 and 1.67x the upper limit of normal, who continue to have higher risk of disease progression and negative outcomes. We believe that this study has the potential to be transformational for this neglected population, potentially resetting expectations for second-line treatment.

In September, we also announced the initiation and design of our long-term outcome study, AFFIRM, that will serve as our post-marketing regulatory commitment. Leveraging years of dialogue with regulators and work interrogating rich data sets gathered by the global PVC study group, we designed a unique event-driven fixed duration study, evaluating seladelpar in patients with compensated cirrhosis, assessing its benefit on outcomes relative to placebo. The design of a firm attempts to also address the challenges inherent in recruiting placebo-controlled outcome trials in PBC. These studies demonstrate our unwavering commitment to advancing care for people living with PBC. We are too early in start-up for us to comment on the time lines for enrollment and results, but Chuck will provide more detail on these studies during today's call.

We now have a majority of our U.S. medical field team in place, and they are actively engaging with the community on disease education and seladelpar clinical data and have initiated additional collaborations with the scientific community to fully understand the potential of seladelpar. We have also made significant progress this year with pre-commercial planning efforts, and we'll be accelerating these activities with positive Phase III pivotal results now behind us. We are currently determining the size and structure of our commercial field team to optimize its reach for effective coverage of health care providers, while also enabling patient activation in preparation for a potential seladelpar launch.

On the manufacturing and distribution front, we have now established our commercial supply chain and will soon finalize our distribution channel partners in the U.S. In summary, I'm extremely proud of our achievements to date. With a quality team we have put in place and a strong balance sheet, we are ready to execute on our key near-term deliverables and continue to march towards our goal of helping people with PBC live potentially longer and better lives.

With that, I will turn the call over to Chuck.

Thank you, Sujal. Drug development journey, as we all know, is a marathon littered with many hurdles, but there is no better feeling than entering that final mile with the finish line in sight to deliver on the promise to improve patient care. That's the feeling we had with the positive Phase III results from the RESPONSE study and the evidence is provided on the potential of seladelpar to benefit patients. (inaudible) sentiments, we are now energized more than ever, and our team is dedicated to submitting a high-quality application for regulatory review as soon as possible.

This quarter has seen many significant achievements on the clinical development and regulatory fronts. 2 weeks ago, we announced the FDA granted a revised breakthrough therapy designation for seladelpar. The revised designation specified seladelpar as a potential breakthrough therapy for the treatment of primary biliary cholangitis, including pruritus in patients without cirrhosis or with compensated cirrhosis Child Pugh A, who are inadequate responders to or intolerant to UDCA. The breakthrough designation is for serious and life-threatening diseases for which the FDA recognizes there is a high unmet need. We are extremely gratified with this revision as it emphasizes the significant unmet need for patients dealing with the impact of pruritus in their day-to-day functioning and underscores the unfulfilled needs of patients across a range of disease severity to include those with compensated cirrhosis.

Among the benefits of a breakthrough therapy designation is the opportunity to submit the NDA on a rolling basis and to request a priority review, both of which we intend to do. Our team is moving as quickly as we can to complete and submit a high-quality regulatory applications to FDA, MHRA and EMA for the review. We look forward to working closely with these agencies during the review process to potentially bring seladelpar to patients with PBC as quickly as possible.

Let me now provide highlights of results from our pivotal Phase III study response and remind you that additional details will be shared at an oral late-breaking presentation at The Liver Meeting in Boston next Monday, November 13. We will present both the time course of the effect seen across multiple endpoints, important supporting results and additional safety reporting. To remind you, seladelpar met all the key prespecified trial endpoints in response with high statistical significance. The primary composite endpoint, ALP normalization and ALP reductions from baseline [on 12] were all meaningful and highly significant. 62% of patients on seladelpar achieved the primary composite endpoint and 25% of patients receiving seladelpar had normal levels of alkaline phosphatase after 12 months of treatment.

In patients with clinically significant baseline itch, seladelpar had meaningful and highly significant reduction in patient reported pruritus intensity measured with an electronic diary, the mean reduction of 3.2 points using the pruritus numerical rating scale. Overall, safety was comparable between placebo and seladelpar groups and was consistent with previous studies. Treatment-emergent adverse events, serious adverse events and patient discontinuations were generally balanced across the treatment and placebo arms. There were no treatment-related serious advent versus events in the study. The RESPONSE study also included voluntary paired liver biopsy for a subset of enrolled patients. An expert panel of pathologists with significant experience in cholestatic liver disease, including PBC, have completed a blinded review for these subjects.

While we are continuing to analyze these data for intended regulatory submissions and publication, we can now report that the panel concluded there were no findings requiring safety adjudication in any of the biopsies collected. We look forward to sharing more data from response during our oral late-breaking presentation to be delivered by Dr. Gideon Hirschfield, a world-renowned cholestatic disease expert at The Liver Meeting in Boston next Monday.

There's more depth from the seladelpar program to share beyond RESPONSE. Last week, we announced the publication in Alimentary Pharmacology & Therapeutics, with the results from our first long-term safety study with 2-year open-label follow-up. Treatment of more than 50 patients for 2 years showed strong improvements in ALP and ALT with more than 40% of patients normalizing ALP. You should expect more to come as our second long-term safety study, ASSURE, currently has more than 300 patients taking daily seladelpar 10 milligrams. We expect ASSURE to contribute a rich source of important information in the years to come on the long-term impact of seladelpar treatment on disease and symptoms.

Now turning to the IDEAL program that we initiated in August. We are making good progress with site activation and initial streaming of patients. As a reminder, IDEAL is a Phase III randomized, placebo-controlled study for patients with the diagnosis of PBC, taking a stable dose of UDCA unless intolerant with ALP levels between 1 and 1.67x the upper limit of normal. In effect, this study targets patients who are partial responders to treatment after being treated with first-line and are not currently receiving additional treatment from which they may benefit. These patients would typically be managed by treatment of UDCA in a wait to fail paradigm in spite of the evidence for the risk of progression. We believe IDEAL has the potential to lead the way to gather critical evidence for this overlooked but sizable part of the PBC population.

Let me close out the update on the seladelpar program today with AFFIRM, a randomized, placebo-controlled confirmatory study to evaluate the effect of seladelpar on clinical outcomes in patients with compensated cirrhosis due to primary biliary cholangitis. The AFFIRM study was initiated to characterize the efficacy and safety of seladelpar in a PBC population with advanced disease. It is designed to fulfill post-marketing requirements for seladelpar to confirm its benefit on clinical outcomes.

The AFFIRM study is planned to enroll approximately 192 patients who have compensated cirrhosis, Child Pugh A or Child Pugh B based on prespecified clinical criteria. Patients will be randomized using a 2:1 ratio to oral once daily seladelpar or placebo for a fixed duration of 3 years. Primary outcome measure is the time from start of treatment to the first occurrence of predefined clinical events, including all-cause death, liver transplant, hospitalization for other serious liver-related events and progressing to Child Pugh C decompensated cirrhosis. Additional key outcomes include overall survival, liver transplant-free survival and time hospitalization for serious liver-related events.

Over the past few years, we had significant interactions with regulators to develop a study in the backdrop of many known operational and ethical challenges in conducting a placebo-controlled long-term outcome study. Our efficacy and safety data among cirrhotic patients and seladelpar across Phase II and Phase III ENHANCE studies have enabled us to select this population and design it to establish the effect of seladelpar in outcomes within a reasonable time frame. We remain fully committed to meeting our scientific and regulatory commitments while prioritizing the health of people living with PBC.

Now let me shift gears and provide an update on MBX-2982. The Phase IIa proof of pharmacology study to assess whether MBX-2982 can enhance glucagon secretion during insulin-induced hypoglycemia in subjects with type 1 diabetes has been completed. This was a placebo-controlled double-blind 2-period crossover study. Subjects with type 1 diabetes were randomly aside in period 1 to treatment with daily blinded placebo or MBX-2982 for 14 days, followed by 14 days of washout before starting period 2, which consisted of 14 days of daily dosing with the opposite treatment of either MBX-2982 or placebo. Each of these 2 periods ended with hyperinsulinemic hypoglycemic clamp, which were conducted on day 14 and 42. Primary objective was to compare relative to placebo treatment, the effect of MBX-2982, on glucagon counterregulatory responses to insulin-induced hypoglycemia in subjects with type 1 diabetes.

The study found that there was no change in glucagon secretion during clamps in subjects with type 1 diabetes dosed with MBX-2982 versus placebo. In contrast, healthy volunteers studied on a single occasion for comparative purposes showed a glucose-dependent increase in the glucagon release during hypoglycemia. Further, target engagement by MBX-2982 was demonstrated by increases in GLP-1 levels in subjects with type 1 diabetes. While disappointing, the results demonstrate a well-designed and executed study that demonstrated pharmacodynamic action of MBX-2982, but without demonstrating the pharmacology needed to benefit the type 1 diabetes population. The scientific questions were answered, and CymaBay is not planning any further studies with MBX-2982.

We would like to thank Dr. Richard Pratley and his team at AdventHealth Research Institute in Orinda, Florida as well as ProSciento Inc. California, for conducting a well-designed and executed study and Leona M. and Harry B. Helmsley Charitable Trust, for their support of the study through a grant to Advent Health. We are also grateful to the patients with type 1 diabetes and healthy volunteers for their participation in the study.

Before I turn the call to Lewis, I think it is an opportune moment to mention the deployment of our field medical team and their early impact on KOL engagement, data dissemination and expanded participation in the regional PBC-related medical conferences. We have gathered a stellar medical affairs team with expertise in PBC and other rare diseases who will be the core interface facilitating scientific exchange and addressing questions regarding the further understanding of our data. This team will also play a key role in raising awareness of PBC and the key unmet needs that remain for patients today as we interact with the medical community and patient advocates at the liver meeting in Boston next week and where we look forward to CymaBay and seladelpar being featured prominently.

With that, I'll hand the call over to Lewis.

Thank you, Chuck. Throughout the quarter and leading up to response to top line results, we have been focused on the expansion of our commercial leadership team. We recently added senior commercial leaders in marketing, commercial operations and market access, all while realizing progress on commercial infrastructure projects that are in alignment with our launch readiness schedule. Our leadership team comes to CymaBay with an average of over 20 years' experience, beginning in large pharma with more recent successes in emerging biopharma, where they each played in a central role in building the commercial capabilities for lead product launches.

The arrival of our commercial leaders has been followed by the hiring of key commercial staff positions, including the deployment of our field-based market access team. We're excited to begin scheduling introductory meetings with payers in parallel with the build-out of our specialty pharmacy network and other key patient support deliverables. In addition, our medical affairs team will play in a central role supporting market access in educating payers on the emerging PBC landscape and new goals for treatment. Our commercial operations team has initiated the work of standing up data and analytics platforms to support sales planning, such as sales force size and structure as well as the integration of market intelligence, performance monitoring and other essential launch readiness components. We are very encouraged by the early impressions from both key opinion leaders and patient advocates, both of whom expressed confidence and positivity regarding the response data set and its potential impact on seladelpar's target product profile.

Many thought leaders expressed excitement of the seladelpar, offering both biochemical improvements and symptomatic relief. The rate of ALP normalization was particularly highlighted as a key differentiator, alongside the statistically significant pruritus reduction. Patient advocates also welcomed the benefit on itch as a key milestone for those living with PBC, given the inability of approved PBC treatments to improve symptoms that they believe play a key role in their quality of life.

Given the unique properties of the delpar class, seladelpar has consistently demonstrated broad clinical utility across the spectrum of PBC and may prove to be the first and only treatment that both normalizes liver biochemistries and reduces the symptom burden of pruritus. This would be a major advance for patients and their caregivers and lead to a profile that has the potential to position seladelpar as the second-line agent of choice for PDC. Overall, we are pleased with the progress we've made so far in our pre-commercial planning efforts, which has only accelerated since the reporting of positive top line pivotal response study results. With that, I will hand it over to Harish.

Thank you, Lewis, and good afternoon, everyone. As stated earlier, the third quarter was a very successful one for CymaBay and seladelpar as we achieved significant milestones by delivering strong top line results from our Phase III RESPONSE trial initiating 2 new clinical trials, IDEAL and AFFIRM and executing an upsized capital raise to strengthen our balance sheet.

Operationally, all activities related to NDA preparation as well as pre-commercial planning continue to move forward at a brisk space. In terms of financials, we finished the quarter with a strong balance sheet with cash, cash equivalents and investments totaling $438.8 million as of September 30, 2023, aided by our upsized public equity offering in September. The net proceeds from the offering were $242.8 million after deducting the underwriting discount and other offering expenses. Following the cash inflow from this offering, we believe that cash and investments on hand are sufficient to fund CymaBay's operating expenses into the first half of 2026. The Research and development expense for the quarters ended September 30, 2023 and 2022 was $20 million and $15.5 million, respectively. The increase was primarily driven by higher employee count and clinical activities related to initiation of our IDEAL and AFFIRM studies. As we continue to progress in the late-stage development of seladelpar in PBC, we expect our overall research and development expenses to increase in the future.

Turning briefly now to a review of general and administrative expenses. These costs for the quarters ended September 30, 2023 and 2022 were $12.2 million and $5.9 million, respectively. The increase in general and administrative expenses were primarily driven by commercial and medical affairs organization build and related spend in preparation for potential commercialization of seladelpar in PBC. We expect these efforts to accelerate further in the fourth quarter as we ramp up further our precommercial planning efforts. Overall, our net loss for each of the quarters ended September 30, 2023 and 2022 was $33.9 million and $24.5 million or $0.32 and $0.28 per share respectively.

Net loss for the quarter ended September 30, 2023, was higher than the corresponding period in 2022, due primarily to an increase in operating expenses. Overall, we expect operating expenses to increase in the future as we continue to execute our development and potential commercialization plans for seladelpar in PBC.

With that, let me hand the call back to Sujal.

Thank you, Harish. Let me close out this portion of the call by relaying some of the enthusiasm of both the team here in the room and colleagues throughout CymaBay. We are eager to continue the positive momentum and are working diligently on our near-term milestones for seladelpar and our primary goal of improving the lives of people with PBC. We are happy to now take questions. Operator?

(Operator Instructions) Our first question comes from Yasmeen Rahimi with Piper Sandler.

This is [Jungu] speaking for Yas. We have 2. First, how soon could you get your NDA submitted? And could you provide any thoughts on receiving priority review versus standard review?

Yes, happy to take that question. So I think, as we mentioned, this is, of course, our key and sole focus inside the company with Phase III response pivotal data now behind us. It wouldn't be unreasonable as an expectation to assume 4 to 6 months roughly to file for regulatory submission. So certainly by the early part of next year gives you some indication of what might be a standard time line. Our focus, of course, is to drive as quickly as we can towards filing. And so internally, processes, resources are all geared towards now concluding with our pre-submission meetings with regulators and then getting the filing -- a quality filing at that submitted as quickly as possible.

Obviously, the breakthrough therapy designation and in particular the revised breakthrough therapy designation now really reflecting some of the added benefits we believe we've seen with the data in hand to date, not just in the ability to treat in a second-line setting for patients that are inadequate responders to UDCA or intolerant but also being able to deliver improvements, reductions in pruritus and seeing these effects in a broader patient population, both non-cirrhotics as well as compensated cirrhotics. This revised breakthrough therapy designation affords us the opportunity to seek an indication, a label that really fully reflects the differentiation of seladelpar relative to existing treatments and potentially other treatments in development. So as Chuck mentioned, we will, of course, look to have a rolling NDA submission as well as request priority review. That of course is still up to the agency. But again, the revised breakthrough therapy designation encourages us around these paths forward.

And then for our second question, what are some key data points you hope to share at The Liver Meeting to establish seladelpar's best-in-class second-line product profile?

Yes. Perhaps I'll ask Chuck to give you some overview of additional information that we think could be helpful as we look towards the end of this week and the presentation Monday.

Yes. Well, thank you for that question. I think we're quite excited to be able to finally unveil and share with the delegates to the committee to the meeting of what we found so far. Of course, we've already described the demographics of the baseline population quite balanced, really a very good and well-conducted study in our view. We will be sharing, of course, our primary and key secondary endpoints. So that's the composite response previously used to register Ocaliva as well as the normalization. And then, of course, in patients with clinically significant itch to change in itch at month 6.

I think the way we think about it is I think folks will be quite interested to see the consistency in those endpoints across study visits, so right through month 12, I think that's something that we would look to share. Additional information on the magnitude of the effects on the composites, the components of the composites, looking at other markers of liver chemistry, things like transaminases and the like. And then importantly, I think a whole broad array of measures of improvements in symptoms. And I think that's really something that we are quite excited to look for. And of course, as we think about the magnitude of effect on disease activity markers and normalizations and symptoms, we're also keenly aware of the interest in safety, having drugs that can be used safely in a population to reduce risk is vital. It's not just enough to focus on efficacy. So additional safety reporting is something that we look forward to sharing both at meeting and eventually in a publication. I think that's quite important for all the stakeholders in development.

Our next question comes from Steven Seedhouse of Raymond James.

I just had 2 lines of questioning. First, on Europe versus U.S. Curious if you have any sense of whether those regulators are diverging in terms of their expectations for outcomes data and just the quality of data they're looking for? Or is it your sense that they're basically aligned still? And then separately, the breakthrough designation language seems to portend a differentiated label in the U.S. I'm curious if it's your expectation that you would get a similar differentiated label in Europe that would include pruritus in cirrhotics specifically.

Great question, Steve, and then I appreciate that. I think first, it's important to recognize that alkaline phosphatase and bilirubin in the composite endpoint has been used as a regulatory bar for approving obviously the only existing second-line treatment in the U.S. and in Europe today. And I think regulators of course are aligned in terms of the need to demonstrate that those surrogates actually correlate to improving outcomes.

So I don't think there's any misalignment between U.S. regulators and European regulators in the fact that we, as sponsors need to make an attempt to demonstrate that these surrogates are of course correlated to outcomes. And I think certainly, there can be different views around study design, data sets, 1-year, 2-year data, for example. But I think in the end, from our perspective, these agencies are of course aligned and the need for us to demonstrate some sort of outcome benefit.

I think both regulators here in the U.S. and in Europe also recognize some of the inherent challenges in generating long-term outcomes data in PBC. And so I think both have been open to dialogue around generating the right real-world data and real-world evidence to be alongside these efforts to generate outcomes data.

There are challenges with those paths as well. But I think folks should understand that we at CymaBay are effectively executing on both. Executing on the AFFIRM study that we think is a novel design, certainly relative to others that have been conducted in the past and others that are being conducted today. And we are also looking very closely at generating the right sets of real-world data and evidence alongside in parallel with these activities. In terms of your second question with respect to the Breakthrough Therapy Designation, obviously, BTD is a U.S. FDA-specific designation. We have prime designation with the EMA. But I think as to whether or not the regulators outside the U.S. will look at the data sets that we will look to provide. It will certainly be our intention to have an indication in label in the U.S. that mirrors what we would expect to have outside the U.S. as well. But I think it's a little bit early for us to really come to some conclusion around how regulators outside the U.S. will view these things specific that's in the BTD.

Okay. Very helpful. And I also wanted to just ask separately on AFFIRM. First, if you will, just comment on the powering of that primary endpoint and your comfort there? And then also since the study is enrolling cirrhotics, which of course will let you complete it in an adequate period of time and hopefully ensure success of completing that study, I just wanted to confirm that FDA is comfortable in inferring an outcomes benefit in non-cirrhotics if AFFIRM is successful.

Yes. Great questions. And perhaps I'll ask Chuck to talk a little bit about the data sets that we've really interrogated to come up with the assumptions around a 3-year fixed duration study, the populations of patients between compensated cirrhotics, Child Pugh A and Child Pugh B and event rates. I think again we probably wouldn't go in too far into the detail of the powering per se. But maybe, Chuck, you can talk a little bit about how we approached the study design.

Yes. Of course, we had a very rich source of discussions with the FDA. We had multiple face-to-face meetings going back for several years to discuss various approaches that one could consider to confirm the outcomes. And we did settle on this design with their input in the preplanning phase. And then, of course, after the protocol was drafted, it was shared more than once, and we got their alignment and input before we started to move forward. In terms of the design element, Steve, we were fortunate in this particular rare disease that there's been an international collaboration between investigators called the Global PBC Study Group which has collected data on several thousands of patients both in Europe and in North America, including characterization of patients with different severity of disease, including Child Pugh A and Child Pugh B.

The level of effort to create the quality of data needed in the database to address not only death in liver transplant, but also liver-related events has really matured over the years. So we were able to collaborate with that group to develop an understanding of event rates, incidence prevalence and to come up with a design that allowed us to estimate as you allude to, the power of what we would expect to see in a patient population based on not only their natural history and rate of events but also taking into consideration some thoughts around what we expect to be the risk reduction that we have seen in prior studies with CymaBay based upon the surrogate. So you know the surrogates have effects on the composite, for example, and we could factor that in.

So we think that we've -- I guess we could use the phrase, thread the needle, a balance between the practical aspects of asking patients to participate in a longer-term placebo-controlled study, but for which they might have benefited. In this particular advanced population they're really, in many cases, don't have other treatment options, especially Child Pugh B. There's nothing on label. Child Pugh A there's a limitation and agents that are approved that might be used in that population are not available in every country in every situation.

So I think it's a nice balance to really try to take into account the developing a scientific evidence, placebo-controlled is the gold standard, but also keeping the patient in mind. Having an opportunity, it's a 2:1 ratio active to placebo. There's an opportunity to get a benefit. They really, in many cases, have no other way to go. And then -- and it's a fixed duration. It's not a -- some of these event-driven trials typically would enroll a patient, they go on placebo and they just go and tell you collect a total number of events, which could be many, many years, many more than 3 years in duration.

And Steven, just to end it out. I know you asked about cirrhotics and noncirrhotics. We do believe that regulators have at least confirmed that chilling outcome in the cirrhotic population will pertain to the broader population.

Our next question comes from Kristen Kluska with Cantor.

Given the unique observations that you've shown with itch, are you planning to do more work around IL-31 in the RESPONSE study? And if so, when can we see that data? And then second, now that you have a larger N and number of patients you could follow, are there any other analysis you're trying to conduct to further understand what's driving your differentiated benefits?

Yes, I appreciate the questions, Kristen. Perhaps I can talk -- I can ask Chuck to talk a little bit more about itch and IL-31, and I can answer the second question with respect to additional data sets coming out of ASSURE.

Yes. Thank you for that question, Kristen. Of course, we're quite interested in delving into understanding the improvements in symptoms, in particular itch that we've seen. And I think you're probably alluding to a poster that we had in Vienna at the EASL meeting, which correlated baseline itch with bile acid levels and IL-31 levels where we saw the PBC patients have up to 30-fold higher levels of IL-31 and known protogenic molecule, at least in dermatological diseases. And we do of course have an interest and you can expect us to follow up on understanding that mechanism, including in response. And as always, our commitment will be to share it at a medical meeting as well as in publications. And we're really trying to understand at the molecular and cellular level, meaning which cells in the liver or elsewhere. What's the driver of IL-31 and can we develop convincing evidence that has -- that we've seen so -- to confirm what we've seen so far as to why seladelpar might be impacting itch in terms of a molecular explanation. So stay tuned. You can be assured that we have a continued interest in this area.

And then, Kristen, you asked some great -- sorry, I just going to say you asked some great questions about number of patients today that are taking seladelpar, north of 300 in ASSURE. Of course we're also enrolling patients in the IDEAL study. And I'll just very quickly tell you that our commitment to PBC patients of course doesn't end with response or this Phase III data set or even our post-marketing commitment in AFFIRM. It is absolutely our intention to continue to generate data that helps us better understand the advantage of treating patients earlier, treating patients to normal and better understanding the impacts on symptoms and how they translate to quality of life. And so both IDEAL and ASSURE, we expect to be very rich data sets to serve for news flow and milestone generation for years to come. Even as we hope to be successful at gaining approval for and launching seladelpar, we'll continue to generate data sets that support the potential for this to be a very differentiated option and a meaningful option for patients.

Our next question comes from Cory Jubinville with LifeSci Capital.

A couple from us. We touched upon this a little bit earlier in regard to the availability of existing therapies. But in a firm, how do you plan on tackling some of the feasibility challenges that might emerge, specifically keeping placebo patients on study assuming seladelpar may likely be approved within that time frame.

That is a great question. Maybe I will make a few comments and then invite Chuck to share anything in addition. Clearly, there's no question that long-term outcome studies, as we mentioned, are challenging in this setting. I think part of what is unique around a firm is a target to have a 3-year fixed duration study. That's really fed by assumptions with respect to event rates in compensated cirrhotics, again, specifically Child Pugh A and Child Pugh B. We hope that, that will be one factor, Cory, ultimately, that drives to greater feasibility in getting patients to participate. Chuck mentioned the 2:1 randomization, so more likelihood of patients being on treatment. Of course, you asked specifically about placebo. Of course, this is a challenge. We'll look to execute this study certainly in areas where they may be more limited options for patients. There are already, I'd say, more limited available treatment alternatives for this patient population to begin with. And I think those are the things that we ultimately anchor on with respect to what is a commitment of ours with regulators.

Got it. And in regard to the breakthrough designation expansion for seladelpar, it'd be great to hear more about the data package that was submitted to the FDA to attain that expansion. Was this primarily driven by symptom improvement in response? And obviously you've done quite a bit of work on IL-31 as a biomarker for pruritus in previous studies. Would love to hear more about what really moved the needle in terms of the FDA's thoughts there?

Yes. I think I can comment. Our initial breakthrough therapy designation in fact came before we really generated the substantial Phase II data set 1 year as well as a 2-year extension data that was recently published, in fact, and certainly before the subset of data from ENHANCE. And so I think much of the anchoring around the revised breakthrough therapy designation came from the additional data sets looking at effects of seladelpar on pruritus in both our prior Phase II long-term extension as well as our prior ENHANCE study. All of these studies in fact also included compensated cirrhotics. So we think that the revision largely came from data sets that continue to mature. And therefore, again, although never guaranteed, we're encouraged by the revised breakthrough therapy designation as it pertains to the indication, the label, given the additional data sets only continue to reinforce these potential benefits.

Excellent. And last one from us. Can you speak a bit more to the ongoing pre-commercialization efforts for seladelpar? Last year you presented some really great market opportunity data. I would love to hear more about how or if your commercialization assumptions or strategy has changed post response? And I guess also on that note thinking about a potential range for the number of sales reps you're targeting, do you have a range that you're thinking about?

Yes. Thanks for the question. I think from a precommercial perspective, I would start really with our medical affairs deployment. I think we're right on schedule with where we hoped we would be at this stage in time coming out of top line readout and being able to engage KOLs and some of the critical accounts here in the U.S. And so I think things are progressing very nicely there. I think we begin now to deploy our market access team and begin to really engage payers.

We hope to begin that process here in this quarter and moving into early next year, really based on [Fedemal 114] guidance and being able to really update payers on really the treatment goals for PBC and helping them really understand the opportunity as it relates to supporting these patients. Our sales force process, we've started a lot of the initial analysis here over the last couple of months or so. I would tell you that, generally speaking, a sales force somewhere between 50 and 60 representatives is kind of where we would typically see deployment. And I think that generally speaking, this is going to allow us to reach somewhere between 5,000 to 7,000 of the gastroenterology and hepatology target audience folks. This is going to get us somewhere around 80% to 85% of the opportunity. So very early on right now in terms of some of that analysis, but that's kind of how we would see some of that at this point.

Our next question comes from Eli Merle with UBS.

It is Sam on for Eli. Earlier, you mentioned that the ex U.S. filing preparations are kind of in progress. What is your latest thinking around your strategy with ex U.S. commercialization and whether or not you'd seek a partner?

I think we're still in the same place, Sam, as we've been for some period of time. We've always had confidence that RESPONSE as a pivotal Phase III study would allow us to register seladelpar both in the U.S. as well as potentially in Europe. And so we're continuing to move forward with a strategy to complete and submit filings ourselves, working these in parallel, in fact, so that we can do so as quickly as possible, closest proximity to one another. We're going to continue at the same time in parallel to evaluate potential interest from licensors that already have infrastructure and capabilities in Europe. I think today the good news for us is with the balance sheet we have, we can keep open broader strategic alternatives for the company and not make that decision too quickly. But I think you'll see us continue to evaluate each of these opportunities in parallel, inclusive of the potential for us to think about a staged commercial launch on our own. So I think we're fortunate to be in a position where each of these are alternatives we can continue to evaluate in the near term.

Our next question comes from Jay Olson with Oppenheimer & Co.

Congrats on the progress and thanks for providing this update. As we look ahead to the liver meeting, can you just talk about how you'd like investors to compare the results to the RESPONSE study to the elated results for elafibranor and maybe compare and contrast those 2 drugs? And where do you think that will fit into the treatment landscape, assuming they both become approved?

That's a really good question, Jay. It's a little bit challenging for us to really comment because we've seen so little of the top line results for elafibranor out of ELATIVE. I think when we look an anchor around the data that we've shared to date from RESPONSE and obviously an expanded data set we'll look to share a week from today, a week from yesterday in fact. I think we are really quite anchored around the fact that seladelpar already appears to be distinguished with respect to normalization rates, which is really where physicians are driving the need to normalize biochemistries in PBC patients and therefore treat a much broader set of PBC patients today that remain at risk of progression.

We're also anchored on the fact that now response was our second global placebo-controlled study in which we hit statistical significance on reducing itch in patients with PBC. This is not an insignificant milestone. It's something that's been proved to be challenging for other agents and other settings. Clearly, something that PBC patients have not yet had an opportunity to potentially experience with treatment alternatives. This is something that we think is already differentiated from at least the top line data results we heard from the elafibranor ELATIVE study where they did not hit statistical significance on reductions in itch. I think we'll look more broadly to compare and look at the safety profiles of these 2 agents as well. There are mechanistic differences between elafibranor and seladelpar. We continue to think that seladelpar is well-positioned to be both anticholestatic and anti-inflammatory.

Remember, while ALT and transaminases are not part of the primary endpoint for approval, this is a chronic inflammatory fibrosing liver disease. And the impacts we see with seladelpar on ALT and on inflammation, we think are also differentiating with existing data sets to date, and we'll continue to look towards the liver meeting at seeing this differentiation as well. So again, anti-cholestatic, anti-inflammatory and now antipruritic with a safety profile that we believe also well-positions seladelpar.

Our next question comes from Andy Hsieh with William Blair.

I have 2. One has to do with DILI. I'm curious if you can share the approach that you're taking as a sponsor to derisk this potential regulatory risk? And perhaps in-house emulates kind of the deep investigation that the FDA will likely undertake just to prevent any sort of surprises that we have seen in the field.

Happy to answer the question, Andy. Maybe, Chuck, if you'd like to give some color here.

Yes. Of course, it's always important for any drug in development, the FDA plays the close scrutiny to the risk for liver toxicity. There's a tried and true algorithm that's employed. I believe every sponsor today would be employing that there's an adjustment to that algorithm that's implemented in the setting of liver disease. And of course, we follow it, there's a published consensus paper and there's a very specific guidance about how one evaluates the risk for drug-induced severe hepatic toxicity.

And we follow that pattern as well. I think it's really encouraging for me to say that across our program where we studied 10 milligrams or lower as we've reported previously, we've had a really solid experience. We feel that in the setting of liver disease, that seladelpar really has a really good profile. So there's not any level of concern that we have at this point. But of course, we do use a protocol-specified methodology, an accepted way to analyze and report any changes, for example, in liver enzymes. And that's all part of the regulatory package that we -- that we're putting together and submitting to FDA as well as other regulators.

Got it. And as you think about commercialization, and speaking with some key opinion leaders, there appears to be some stickiness in patients, obviously, as you kind of think about Wave 1, Wave 2 in terms of perhaps OCA-treated and discontinued patients being the easiest to penetrate. As you kind of think about expansion into potentially currently on OCA, but having either high frequencies of pruritus, what's the strategy here to overcome that inertia and really communicate with health care providers convincing them that there is a better option out there.

Andy, I think it's a good question, first of all. And I'd say in a setting where you only have one approved second-line treatment, the concept of stickiness may be very different when you have various alternatives. I think the first most important thing for me to call out, as you described, is there are many patients that have been on second line and have already discontinued. In fact, we think that number is greater than even those that have remained on obeticholic acid is the only second line approved here in the U.S. And so I think there's clearly an opportunity to serve those patients. Overall, there are many more patients that have still not yet been on second-line treatment as well.

And so I think the opportunity is very significant before you even contemplate any patients that may switch over from current second-line treatment. We do expect some of that to occur. Certainly, patients that have ultimately tolerability issues may in fact seek other alternatives. Those that do not and are actually having an adequate response, we agree with you. We should remain on the treatment they're being given. But again, I think seladelpar really has the opportunity to completely change the treatment paradigm in the setting of PBC. And so ultimately, we're excited about what we've seen with respect to the efficacy profile. Pruritus is something that to date has always been talked about as a tolerability issue.

And for us, with seladelpar, the effects on pruritus are actually an efficacy parameter, the ability to actually reduce pruritus is significant in improving the quality of lives for patients. We know with existing second-line treatment, for example, that most patients don't actually up-titrate from 5 to 10 milligrams. So again, I think you're going to see a very different view and approach to giving patients the most optimal treatment. And so right now, our focus is to really get through the regulatory process because we do believe seladelpar may offer significant advantages to patients if we're successful.

Our next question comes from Ed Arce with H.C. Wainwright.

It is Thomas Yip asking questions for Ed. Really appreciate taking our questions. So just wondering what would be the ballpark figure of incremental U.S. spend in preparation launch in the next 12 months. And then the second question is, I believe EU launch is on the table, as you mentioned. Does that factor in the first half 2020 fixed cash runway and if not, what are some major assumptions behind the cash run rate estimate.

Yes. Can you repeat the first question again? I know you asked something related to launch. Were you asking about costs or time line estimates?

Cost estimate, perhaps incremental spend in the next 12 months related to our U.S. launch.

Yes. I'll ask Harish to answer both of the questions related to the balance sheet and costs.

Yes. The way I would answer that question, our cash runway takes into account the investments that were -- we'll see accelerate. Actually, now that we're on the other side of data in all our commercialization efforts, actually, that Lewis alluded to, that we have the medical affairs team on board, and we're actually building on a commercial organization. The sales piece, rep probably will come in more closer to the launch time line once we have a sense of what our PDUFA date looks like. So it's not uncommon, probably by 1, 2 months before.

So that's kind of how I would -- so that is baked into our assumption in our cash runway. And so you would assume it will build now between now and as we get to commercialization and all the premarket planning efforts and then you would get -- end up having a more of a higher run rate now that we have the post launch when we have the full team on board. And to your second part of the question, we -- our full-scale EU commercialization is not included in our cash runway. We are still -- again, we're making progress with respect to regulatory filings and some early commercial understanding efforts, but I wouldn't say a full base commercialization is not in that estimate.

Our next question comes from Mayank Mamtani with B. Riley Securities.

This is actually William on for Mayank. So just a couple of follow-ups here. We were curious if there was any indication that the Ocaliva Article 20 investigation has anything to read into for your review in the EU?

No, there's nothing that we're aware of, frankly. We know little outside of what everyone knows from the public domain with respect to the Article 20 review for Ocaliva. To date, we don't believe that this is anything that would affect our discussions and process forward with seladelpar.

Okay. Appreciate that. And then one quick follow-up. What do you think we should focus on when your full safety adverse event table info is disclosed since that wasn't really part of the top line release. Should you be needing to show improvement on pruritus? I'm sure this is a differentiating attribute that is also included or will be included on the label? Just any extra color.

Yes. I think the statements we made at top line were that the safety we observed in response in the treatment arm with seladelpar 10 milligrams was comparable to what was observed in placebo. We also made a statement that the safety was in fact consistent with what we've seen in previous studies. I think for seladelpar, that's a fairly significant data set, the Phase II north of 100 patients out to a year, 50 plus of which went out to 2 years and then the ENHANCE study that it actually randomized 265 patients, all of which are in the published domain.

And so I think there's a very rich safety data set to interrogate in the published domain for seladelpar already. And so what we'd observed in response is very consistent with the safety profile that we've now published on in multiple studies. And so I think that should garner some level of confidence, and we'll look towards next week, again, to share more of that data out of response. You asked specifically about AEs with respect to pruritus. Again, remember, perhaps up to 70% of patients with PBC can experience pruritus in the course of their disease. So not uncommon in the setting of clinical studies to observe AEs of pruritus. The more important tool to assess whether or not you actually have an impact on reducing itch, of course, are the NRS tool that we've incorporated in response as well as our prior ENHANCE study, other PROs, including 5D itch as well as PBC-40 pruritis domains. I think interrogating these tools really gives you the best sense of whether or not you have an impact on reducing itch. So I think all of these collectively are insightful, and we look forward to sharing more of this data next week.

Our next question comes from Thomas Smith with Leerink Partners.

Just wanted to clarify, now that you have the revised breakthrough therapy designation in the U.S., their plans to engage the EMA and a similar conversation around the scope of the prime designation. And is that something you think could be valuable to either your regulatory path in Europe or perhaps securing more favorable reimbursement or access there?

Chuck, would you like to make some opening comments?

Yes. So thank you, Thomas. A very logical question. I think our focus now is on submitting our application and then having the kinds of presubmission meetings that you have rather than opening up once again at the regulatory path for Prime. Prime is -- seladelpar's position with respect to Prime is very unique. Most of the prime-designated products in Europe are -- in the EU are actually oncology products or other more -- not more but different types of serious diseases.

So we think with the benefits that come to us from the prime designation, it provides us with close access and interactions with rapporteur, we're able to have a frequency and a quality of regulatory interactions. So I think I would not be guiding you towards thinking that we're going to just repeat the same process that we did in the U.S. even though I think it's logical that people kind of think that breakthrough designation and prime are the same thing. They do have some semblance, but they're not exactly the same thing. So we think the most important thing for us to do is share the data sets to move forward towards submission and get into regulatory review as soon as we can. As Sujal mentioned earlier, I think it's the -- one of the strengths of our program is that we've had more than 500 patients with PBC dosed with seladelpar.

We have more than 300 ongoing as we speak. Now the size of the data sets and the consistency around the features that came with the revision, namely pruritus and 2 placebo-controlled studies, also pruritus effects in the open-label study and then the totality of patients that we've treated that have cirrhosis is something that is -- it's an opportunity. We have more than just response. We've got the other studies to supplement those experiences in the subpopulations.

Got it. That's helpful. And if I could just sneak in a quick follow-up here. I know you collected some paired liver biopsy data in the response study based on guidance from the FDA. I was just wondering if there's any requirement or if you were conducting any optional collection of paired liver biopsies in the AFFIRM trial with the compensated cirrhotic patient population.

Chuck?

Yes. So we've collected -- we just -- once we started response, we -- for most studies, not all of them, we've continued on that commitment, we think, to be able to characterize histology with disease status is a unique and differentiating feature of the seladelpar program. So we've actually collect paired liver biopsies in ASSURE. And we will be collecting biopsies also in AFFIRM. Now they're optional. So it's not a requirement because it's not part of standard care in PBC. But for those patients who are interested and willing to understand the status of their histology for their liver and to help us gain an understanding of what might happen in treatment responses, we think that's an important effort to be making.

There are no further questions at this time. So that concludes our Q&A session. I would like to turn the floor back over to the company management for closing comments.

Thank you, operator. As we've discussed to date with positive pivotal Phase III data now in hand, our team is accelerating each of the activities necessary to get seladelpar to patients as quickly as possible. Just a few weeks ago, we were fortunate to have several people living with PBC share their stories with all of us here at the company. They remind us of the need they and others have for us to advance the potential treatment alternative that has the potential to treat earlier to treat to normalization and to treat to reduce symptoms and improve quality of life. Their daily struggle continues to inspire us to be focused, to be driven and sincere in the work that we do here every day.

We could not be more excited as we've mentioned again today about the liver meeting in Boston starting later this week. Again, as Chuck mentioned in his remarks, fortunate to have Dr. Gideon Hirschfield on behalf of all of the study investigators present a more detailed summary of the RESPONSE Phase III results in a late-breaker presentation on Monday, November 13. This will be our most significant presence at the liver meeting since we began development of seladelpar in PBC in 2015.

And we expect CymaBay and seladelpar to be featured prominently at the Congress as we meet with health care professionals as well as patient advocates, many of which have been our valued partners for many years. And again, as we discussed in today's Q&A session, our commitment to people with PBC continues beyond RESPONSE, with our ongoing studies, ASSURE, IDEAL and AFFIRM, and we expect to share much more of our progress with you in the months and years ahead. Thank you again for joining.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.