CymaBay Therapeutics Inc (CBAY) 2020 Q1 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the CymaBay Therapeutics First Quarter 2020 Earnings Conference Call. (Operator Instructions) The conference is being recorded. (Operator Instructions) I would now like to turn the conference over to Mr. Dan Menold, Vice President of Finance. Please go ahead, sir.

Thank you, operator. And good afternoon, everyone. I hope that you've had a chance to review the press release we issued announcing our first quarter 2020 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; Dr. Chuck McWherter, Chief Scientific Officer; Klara Dickinson, Chief Regulatory and Compliance Officer; our principal investigators in our PBC and NASH programs, Dr. Gideon Hirschfield and Dr. Stephen Harrison; and the Chair of our Expert Review panel, Dr. Paul Watkins.

Sujal and I will provide an update on the review of our seladelpar investigation and financial position before we open up 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, and in particular, for this call, regulatory approvals and anticipated time lines and data release dates and cash runway are all forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

Although the company believes that expectations reflected in such forward-looking statements are based upon 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.

Good afternoon, and thank you for joining us. During our last quarterly update call in March, we discussed our continued focus on completing the ongoing investigation of the unexpected histologic findings identified by study pathologists in our Phase IIb study of seladelpar in patients with NASH. I'm pleased today to announce that we have good news on upfront. Although it will take more time to gather and analyze all of the data that we intend to share with the FDA, we have now successfully cleared a key step in our process.

At the end of last week, a panel of 8 of the world's foremost expert liver pathologists and hepatologists, bringing together extensive knowledge in drug-induced liver injury, NASH and cholestatic liver diseases completed a 4-day independent and in-depth review that analyze the findings from our NASH Phase IIb study.

At the conclusion of the meetings, the panel unanimously agreed with the following statement, "The features noted by study pathologists at end of treatment were confirmed on this review. However, these did not differ qualitatively between baseline and end of treatment. We suspect these histologic features are underreported. However, in the experience of the pathology review subcommittee, these features may be observed in patients with NASH. The panel unanimously concluded that the data in aggregate, including the complete absence of clinical and biochemical evidence of drug-induced liver injury and the lack of significant differences in histologic features or their changes across the placebo and treatment groups do not support injury related to seladelpar. The panel also unanimously supported lifting of the clinical hold and the reinitiation of clinical development."

It was extraordinary to have assembled this distinguished group of liver experts with the depth of their experience and their outstanding reputations in clinical science and drug safety. The committee was chaired by Dr. Paul Watkins of UNC Chapel Hill, a leading hepatologist in the area of drug-induced liver injury, who was joined by 2 other leading hepatologists in liver Injury, Dr. Neil Kaplowitz of USC and Dr. Willis Maddrey of UT Southwestern. Joining the committee were 3 influential figures in liver pathology: Dr. David Kleiner, Head of the Drug Induced Liver Injury Network at the NIH; Dr. Pierre Bedossa from the University of Paris; and Dr. Zach Goodman from Inova Health Services. The committee was rounded out with prominent clinical hepatologists in NASH and PBC, Dr. Michael Charlton of the University of Chicago; and Dr. John Vierling of the Baylor College of Medicine.

Before describing the basic steps of the investigation, I want to emphasize that we have not yet discussed full results from our investigation nor any of the panel's conclusions with the FDA. Despite the favorable review by the expert panel, there is no guarantee that the FDA will agree to lift the clinical hold and allow us to continue the development of seladelpar.

We are planning to reengage with the agency as quickly as possible, but the submission of a complete response to the formal clinical hold and their review of all the data gathered will be necessary before the FDA can make a decision that will allow us to restart clinical development of seladelpar.

In order to provide context for the expert panel review, I'll first provide a thorough recap of our NASH Phase IIb study design, the study results and histologic findings identified by study pathologists last November that led to halting the development program for seladelpar.

The study was a randomized double-blind placebo-controlled dose-ranging Phase IIb study of seladelpar, which enrolled 181 patients with biopsy-confirmed NASH. The primary efficacy outcome was the change from baseline in liver fat content at 12 weeks, and a key secondary measure included evaluation of histological improvement in NASH and fibrosis as assessed by comparing the scoring of liver biopsies at 52 weeks with baseline.

In June 2019, we reported minimal reductions in liver fat but robust and clinically meaningful reductions in markers of liver inflammation and injury, including ALT, AST, gamma-GT and alkaline phosphatase at 12 weeks. The study remained blinded and was planned to continue to the 52-week endpoint to evaluate the effects of seladelpar on histological improvement of NASH and fibrosis. We remained optimistic at that time because of published studies that had correlated reductions in liver enzymes, namely ALT, with improvements in NASH histology.

In March of this year, we reported dose-ordered improvements in NASH resolution without worsening of fibrosis, and in one point or greater improvement in fibrosis stage without worsening of NASH, in seladelpar treatment groups versus placebo at week 52 or end of treatment. The percent responders with resolution of NASH and no worsening in fibrosis were 8%, 10.3%, 19% and 26.1% in the placebo 10-, 20- and 50-milligram seladelpar groups, respectively.

The corresponding responder rates for at least a one stage improvement in fibrosis with no worsening in NASH were 20%, 23.1%, 23.8% and 37%. The percentages of patients meeting both endpoints were 8%, 5.1%, 11.9% and 19.6% for the placebo 10-, 20- and 50-milligram seladelpar groups, respectively. With most of the patients having completed 52 weeks of treatment last November, the study pathologists began their blinded assessment of the 52-week liver biopsies. Our plan had been for them to conclude the biopsy review in February for the final group of patients' still active in the study as they finish their 52 weeks of treatment. As events unfolded during the review of the first batch of slides, they identified a subset of patients with what they described to be an unexpected pattern of histological findings overlaid on NASH pathology.

In order to protect the integrity of the investigation by our experts, including the blinded pathology review of all paired biopsies, we've not previously shared additional details on the original findings. Now that the review panel's work is complete, we are able to provide additional information.

Out of 181 subjects enrolled, 152 or 84% had an end-of-treatment biopsy, which is comparable in percentage to other NASH biopsy studies. The study pathologist identified 42 of the 152 end-of-treatment biopsies as having atypical histology with a total of 6 of 24 or 25% in the placebo group, 8 of 39 or 21% in the seladelpar 10-milligram group, 10 of 42 or 24% in the seladelpar 20-milligram group and 18 of 46 or 39% in the seladelpar 50-milligram group. Thus, the incidence of cases flagged appeared similar between placebo and seladelpar 10 and 20 milligrams, but was higher in the seladelpar 50-milligram group.

The study pathologists described these findings as unexpected or atypical in NASH pathology and potentially concerning for drug-induced liver injury. The findings were predominantly characterized as an interface hepatitis with or without bile duct injury or cholangitis, presence of plasma cells and eosinophils, and in some cases, vascular lesions. It's important here for me to highlight that these atypical features are not usually examined in NASH clinical studies, where the intent is to establish eligibility and evaluate endpoints by scoring for steatosis, lobular inflammation, hepatocellular ballooning and fibrosis.

Another element important to mention is that the baseline biopsies were read at least 12 months before the end-of-treatment biopsies, and like many studies, were not reread as part of the end-of-study protocol. Also, to remind you of how the situation unfolded, there was no clinical correlate with these findings. Patients with and without these findings had either improving or stable levels of biochemical markers of inflammation and liver injury throughout the 52 weeks of treatment, which included ALT, AST, gamma-GT, alkaline phosphatase, total bilirubin, direct bilirubin and high-sensitivity CRP.

In addition, there were no signals of immune or allergic reaction as reflected by changes in eosinophils or in clinical symptoms of liver injury, nor were there other changes in markers that can be associated with progressing liver disease, such as platelets or coagulation parameters. No occurrences of liver decompensation or liver-related AEs in association with peaks in liver chemistries were observed for any of the patients with a paired 52-week or end-of-treatment biopsy.

Importantly, these findings were unanticipated based on prior clinical and preclinical experience with seladelpar. After consulting with study pathologists and expert hepatologists and with patient safety at the forefront of our minds, the decision was made to halt development of seladelpar in all indications while committing to an in-depth review of these findings. The FDA agreed with this decision and formally placed a clinical hold on seladelpar development and subsequently provided input on necessary steps towards understanding the nature, significance and consequence of these findings for the patients flagged in the study.

Our commitment to completing the investigation reflects our responsibility to the patients in our NASH study as well as to those who took part in our global PBC studies. The discordant picture between the existence of unexpected liver histology in a subset of patients and the absence of any clinical or biochemical signals of liver injury and inflammation was the key unknown we set out to better understand.

Turning to the investigation. The first step was to assemble and analyze a comprehensive profile of all study data, including patient demographics, medical history, concomitant medications and to measure additional biochemical markers typically elevated in drug-induced and immune-mediated liver injury. This included immunoglobulins, autoimmune and tissue antibodies, cytokines and other inflammatory markers in search of any signal that may correlate with the unexpected findings.

The outcome of this extensive effort was that there was no pattern of medical history, concomitant medications, clinical signs or laboratory or other biomarker changes that were associated with patients having the atypical histologic findings in our study.

The second step in the investigation was a rigorous blinded independent review of baseline and end-of-treatment biopsies by the 3 expert pathologists, Drs. Kleiner, Goodman and Bedossa. This time-intensive process included 2 levels of review, a blinded review of all biopsies completely randomized from one another and a second review of the blinded paired biopsies in which the chronological order of the biopsy pair was randomly varied. Two of the pathologists performed the first review assessing each independently. This review blinded them to knowledge of baseline end of treatment and dose assignment and used the e-shock modified histologic activity index scoring system, which has been adapted to identify histologic patterns of drug-induced liver injury.

All 3 pathologists independently performed the second-blinded paired review assessing better, same or worse across multiple features of histology, including interface hepatitis, portal inflammation, parenchymal inflammation, hepatocellular ballooning, steatosis and fibrosis. In addition, the pathologist noted the presence or absence of features, including eosinophils, plasma cells, bile duct injury and vascular injury.

The only direction we provided to the pathologist was to highlight generally the types of histology that had been called out by the study pathologist. In order to make certain nothing was overlooked. By its very nature, these reviews are very different from histology reviews conducted to score NASH in Phase II paired biopsy studies.

First, the blinded reviews of baseline and end-of-treatment biopsies were all done at the same time. And second, it was more comprehensive than what is usually done for NASH clinical studies, because it included features that classically define NASH, steatosis, lobular inflammation, ballooning and fibrosis as well as the specific atypical types of pathology called out by the study pathologists. Our intention was to have an objective independent analysis of histology to identify cases that raised a suspicion for drug-induced liver injury that would then be brought to the full expert review panel to discuss.

What transpired from the independent pathology review was that all 3 pathologists were in agreement that they did not observe any histology that, on a case-by-case basis, couldn't be seen in NASH patient biopsies, and that they did not observe any features of histology that were alarming or would be red flagged for drug-induced liver injury. Although the features identified by study pathologists were certainly visible, the review panel pathologist's conclusion was that the clinical significance of these did not point to evidence of drug-induced liver injury or anything otherwise alarming for these patients in the absence of any clinical or biochemical signal for liver injury. Furthermore, these underreported features that can be seen in NASH patient biopsies were observed by the panel pathologist at baseline in our study population and deemed to be qualitatively unchanged through the end of treatment.

With this view, the review pathologist agreed that having the full expert review panel adjudicate the 42 cases identified by the study pathologists would be the best course of action to confirm their overall view that there was no evidence of drug-induced liver injury based on review of biopsies from patients in the study.

The third step in the investigation brought together all expert panel members to review the 42 cases flagged by the study pathologists to discuss the significance of any findings observed and to ultimately assess whether or not treatment with seladelpar caused drug-induced liver injury in our NASH study.

Medical history, concomitant medications, patient demographics, laboratory markers and liver histology at baseline and end of treatment were reviewed in detail for each of the 42 patients. None of the 42 patients were deemed to have any clinical or biochemical evidence of drug-induced liver injury. Furthermore, 29 of the 42 patients were deemed to have no evidence of emergent or progressive unexpected liver pathology. The remaining 13 patients were deemed to have evidence of emergent or progressive unexpected liver pathology, of which 12 were deemed to be either not study drug-related or unlikely related to study drug and were equally distributed across treatment groups, including placebo. One was deemed to be possibly related to seladelpar for a patient who also had a diagnosis of systemic lupus erythematosus.

Although no patients had elevations of ALT and bilirubin to meet Hy's Law, the panel reviewed and discussed an eDISH analysis and confirmed their conclusion that there was no clinical evidence of drug-induced liver injury.

The final day of discussion at the expert panel review centered around overall observations related to features of histology present in our baseline population, presence and progression of underreported features of NASH pathology, and the clinical significance of what was observed in patients in our study. We plan to reach out to the FDA to discuss all of the data we have collected to date and the results of the panel review meetings.

Once we gather their feedback, we plan to submit a complete response to the seladelpar clinical hold. Time lines are uncertain at this moment, but this effort remains our highest priority. Although we cannot guarantee how and when the FDA will respond, whether or not they will require us to gather additional information or if they will accept the conclusions that have been made by the panel, we are confident that we have conducted a truly rigorous independent review with the foremost leading liver experts in the world to help us definitively support the conclusion that seladelpar did not cause drug-induced liver injury in our NASH Phase II study.

We have worked closely with our Board throughout the investigation and panel review and have their support for our next steps forward.

Before we open up the call for Q&A, let me turn the call over to Dan to provide you with an overview of our financial position at the end of Q1 and our projected cash balance through midyear. Dan?

Thank you, Sujal. As a reminder, during the fourth quarter of 2019, management implemented a restructuring program following the placement of our seladelpar program on clinical hold, pending further investigation of histologic observations noted in our NASH study and pending completion of our review of strategic options. We continue to be focused on cost containment and looking at additional steps we can take into fiscal year 2020 in order to closely control the company's operating expenses and associated cash burn.

Late in the first quarter of 2020, the need for sustained cost containment emphasis was further underscored by the unexpected and rapid onset of the coronavirus pandemic and the associated travel restrictions and shelter-in-place orders that were issued by governmental authorities and jurisdictions where we, our partners, investigators and vendors conduct operations.

In response to these measures, we have taken steps such as enabling remote operations for all our employees, which have allowed us to continue our operating activities. While our 2020 results to date have not been significantly impacted, and our planned clinical and strategic objectives are not currently expected to be affected, unforeseen pandemic-related disruptions could occur in the future, making the full effects of the pandemic on our operating capabilities and our business uncertain.

Accordingly, we will continue to closely monitor pandemic developments and their associated risks to our business, and we will take actions available to us where possible to mitigate them. Additionally, everything we do will be guided by a commitment to taking all steps possible to ensure the health and safety of our employees.

I will now briefly turn to a review of key elements of our first quarter financial results, beginning with a current update on our fourth quarter 2019 restructuring plan. As part of this plan, we froze hiring, significantly scaled back future procurement plans, announced a 60% reduction in our workforce and scaled down or canceled many of our existing contracts for goods and services.

As a result of these actions, we recorded a $5.1 million restructuring charge during the fourth quarter, which was primarily comprised of employee severance costs and, to a lesser extent, costs associated with certain contract terminations. Of the total $5.1 million in restructuring charges, $3.3 million of these charges are expected to be settled in cash. We have paid out $1.6 million through the first quarter of 2020, and remaining cash payments are expected to be paid out over the course of fiscal 2020.

Moving on, I'll next provide a review of first quarter expenses. Research and development expense for the 3 months ended March 31, 2020 was $9.5 million as compared to $18.6 million for the same period in 2019. As a result of the clinical hold placed on the seladelpar development program in the fourth quarter of 2019, research and development expense in the first quarter of 2020 was significantly lower than the same period in 2019 due to declining clinical trial activities related to our PBC Phase III, NASH Phase IIb and PSC Phase II clinical trials and other studies as we continue our efforts to scale back and shut them down as planned.

General and administrative expense for the 3 months ended March 31, 2020 was $4.3 million compared to $5.7 million for the same period in 2019. General and administrative expense was lower in the first quarter of 2020, primarily as a result of lower continuing labor costs and other administrative expenses following our restructuring efforts undertaken in the fourth quarter of 2019.

Overall, our net loss for the 3 months ended March 31, 2020 was $13.1 million or $0.19 per diluted share. This compares to net loss of $23.1 million or $0.37 per diluted share for the same period in 2019. The decrease in net loss for the first quarter of 2020 compared to the prior year period was primarily due to decreases in our operating expenses, including our clinical trial and labor-related expenses, as discussed earlier.

Finally, I'd like to share with you our current cash position, the outlook for planned activities during the remainder of 2020 and the expected impact of those activities on our operating expenses and our cash burn.

At March 31, 2020, we had $176.2 million in cash, cash equivalents and short-term investments on hand compared to $190.9 million at December 31, 2019. As noted earlier, in 2020, management intends to fully conclude its investigation of the clinical observations seen in NASH patients, while completing a review of all strategic options. In addition, management will continue work to complete ongoing clinical study closeout and monitoring activities. These activities involve a number of key efforts, including conducting early termination visits with patients; recovering investigational drug product; carrying forward monitoring NASH patients with histologic observations; conducting investigator-site monitoring and closeout visits; and quality reviewing, analyzing and reporting on clinical trial data accumulated to date.

In the first quarter, we made progress on many of these activities and objectives despite the unexpected onset of the coronavirus pandemic and the travel restrictions and shelter-in-place orders that have impacted our operations. As mentioned earlier, we will continue to closely monitor pandemic developments and their associated risk to our business, and we will take further actions available to us where possible to address them.

Going forward, we estimate our overall cash burn for the first half of 2020 will be between $30 million to $35 million. Of this total, we expect between $20 million and $23 million will be used to fund the clinical study closeout, patient monitoring and seladelpar investigation activities previously mentioned.

Let me now turn the call back to Sujal for final remarks. Sujal?

Thank you, Dan. Before taking your questions, I'd like to once again remind you that we have not yet shared any of the data collected to date during our investigation nor the conclusions of the expert panel with the FDA. Thus, while we will refrain from commenting on specifics that are important primarily for our discussions with regulators, we are happy to discuss our process and conclusions from the investigation.

As Dan mentioned at the opening of our call, joining me for the Q&A are our Chief Scientific Officer, Chuck McWherter; our Chief Regulatory and Compliance Officer, Klara Dickinson; Chair of the Expert Independent Review Panel, Dr. Paul Watkins; and our lead principal investigators in PBC and NASH, Dr. Gideon Hirschfield and Dr. Stephen Harrison.

With that, I'd like to remind everyone that the purpose of today's call is to discuss our results and the update on seladelpar. We're now happy to take questions. Operator?

(Operator Instructions) The first question comes from Yasmeen Rahimi from Roth Capital Partners.

Congrats on this great progress. A couple of questions for you. The first one is directed to you, Sujal. Can you share with us what could be reasons why maybe the frequency or the initial observation of the atypical lesions was seen by the 2 pathologists made first and then later observed at a lower frequency when the 3 leading expert pathologists reviewed it?

And then the second question is directed to Dr. Watkins. In the press release, it was noted that you stated that the committee concluded that these histological features are underreported. Can you share with us how often the independent committee observes those underrated? And why those may have been missed in other studies? And then I have a follow-up.

Okay. Well thank you for the question, Yasmeen. I'll take the first question and then let Dr. Watkins address the second. First, I think it's very important for me to highlight a number of points, particularly points of differentiation between the process, the study investigators conducted as part of the study protocol versus what was done in the independent panel review by the pathologists on the subcommittee.

There was not a difference in incidence of the features identified by study pathologists. And in fact, as was determined by the panel, the findings of the study pathologists upon their review of only the end-of-treatment biopsies was, in fact, confirmed. The real key differentiation, Yasmeen, to the procedures here is that the independent pathologists, of course, conducted 2 very thorough and rigorous investigations, one that was blinded to each of the study groups as well as baseline and end of treatment and reading the biopsy specifically scoring for the modified HAI and a second in which they did a paired review, also in a blinded fashion, in changes observed between 2 biopsies from each patient.

So the real takeaway fundamentally from the study -- from the review pathologist, had more to do with existence of many of these features, in fact, at baseline and/or the clinical significance of those features themselves relative to their implication in drug-induced liver injury.

And Dr. Watkins, perhaps if you have an opportunity, if you could maybe give color from the panel itself around the idea that many of these features that our review pathologists, in fact, highlighted, could be seen on a case-by-case basis in patients with NASH, for example, interface hepatitis, bile duct injury, the conclusions around the panel relative to how these features largely may be, in fact, underreported in the setting of NASH.

Right. So yes, obviously, it's compensated from my work here, but I have no stake, financial or otherwise in the outcome of this drug. And first, just to set the background, one thing I've had a lot of experience with is assessing drug-induced liver injury and spontaneous reports and large experience in clinical trials, and this is very unusual and that what brought the issue to attention was a histologic finding. And actually, histology is not even part of the usual evaluation of somebody with potential drug-induced liver injury.

So one of the first things that I did and the other 2 experts was really look at this as we would normally look at data from a clinical trial, which is looking at the routine liver chemistries, any question of liver dysfunction. And by the usual ways that you approach assessing drug-induced liver injury, there really was no signal there. And I can come back to that if you want more information. So it really came down to the pathology. And the 3 pathologists that were selected and all on the phone and Webex together are really sort of the 3 tenors, I would say, in terms of pathology that you want, both world-renowned experts in NASH, but also very importantly, in drug-induced liver injury.

There's no 2 people in the world who have more experience with histology or drug-induced liver injury than Kleiner and Goodman.

And so what was done was to systematically go through those 42 cases where we presented the clinician, presented the clinical -- she is a 53-year old woman, presented the clinical findings, the usual way you look to assess liver injury due to drugs. And then they showed the pathology, but also on the line were the 2 original clinical trial pathologists who first raised the questions. And in some cases, they would say, well, wait, go back, look at this other part of the pie, this is what we were concerned about. So there was no potential for confusion between what they had originally been concerned about and what was specifically looked at and evaluated by these 3 pathologists. And in every case, the things that they were finding that they were concerned about, and there was a list of things, it wasn't a consistent pattern, was looked at and evaluated and then gone back for the first time for the clinical pathologists to look at the initial biopsies. And in every case, there were qualitatively the same findings and both Kleiner, Goodman and Bedossa were saying these are things that we can see in NASH. People don't talk about them much, and that was one of the things that came out of this that there should be manuscript to the world to understand things like interface hepatitis and portal inflammation can be part of NASH. You don't have to think of a separate process.

So just -- again, I think the most thorough histologic I've ever been part of and then in addition, the clinical -- traditional clinical evaluation of drug-induced liver injury, really led to a unanimous consensus that we were not seeing anything adverse that could be attributed to the study drug.

My apologies for asking one last question. Can you share with us to the extent you can, what is the path forward to get clearance from the FDA? How many patients, I guess, have completed the 52-week analysis in the PBC study? Is there a chance you could run a smaller Phase III in PBC? Whatever color or content you can help us to visualize the path forward, it would be very helpful.

Yasmeen, I'll ask Klara, our Chief Regulatory -- sorry, Dr. Kleiner.

Go ahead. No, please. I was going to just say, no, Dr. Watkins. But I don't -- I'm not an expert at that.

Okay. Sure. I will ask Klara, our Chief Regulatory and Compliance Officer, to give you some color, Yasmeen, in terms of our next steps forward with the agency.

Yes. Our first step is really going to be reaching out to the FDA to have a meeting with them to discuss the findings that are presented here today to orient them to what we've learned and our intention to submit the response to the clinical hold, to assure the most efficient way in which the FDA can review the information. So during that dialogue, it will be primarily focused on addressing their safety concerns as it pertains to liver injury. And then after the clinical hold is lifted and we're through that process, we can begin discussing with them future clinical trials as it pertains to the PBC program.

And Yasmeen, you had asked some questions about where we were in our PBC study. I'll simply highlight that we had somewhere around 100 patients, in fact, north of 6 months of dosing. We've not had a meaningful number of patients all the way through the 52-week endpoint in our ongoing Phase III study that terminated earlier this year. But we did maintain the blind in that study. That data is being -- has been locked and is being cleaned, and there will be an opportunity for us to, of course, learn a tremendous amount from what was effectively significant number of patients through at least 6 months of dosing around both primary and key secondary endpoints. And we'll take that learning into our consideration as we think about next steps forward, particularly in PBC, should we be successful at getting the clinical hold lifted.

The next question comes from Ellie Merle from Cantor Fitzgerald.

Congrats on the panel findings. It's an exciting moment for you guys. Just in terms of as you're working through the next steps as you prepare for the FDA meeting, what exactly are you doing in terms of preparations and going through the data? Are there any final analyses that you plan to do as you look through this and sort of ask for the clinical hold to be lifted?

And then just in terms of the findings themselves. I mean, in questions you anticipate from the FDA, are there any instances where, say, there is an imbalance and something that even if it wasn't a severe safety finding or was it being drug related, were there any other imbalances in the higher dose arms that were seen as part of this investigation?

Sure. Maybe what I'll do is start off with the latter part of your question and invite any of our experts to weigh in as well in order to provide you a key summary.

As I noted in my prepared remarks, in fact, around 70% of the cases flagged by study pathologists were deemed to have features of histology that were present at baseline in as much if not more than even at end of treatment. Of those remaining subjects, as we noted, in fact, where there was some either emergent or progressing unexpected features of histology, be it a level of portal inflammation or interface hepatitis, that progressed from baseline to end of treatment that were largely deemed to be not related or unlikely related to seladelpar, there, in fact, was a balance across treatment groups, including placebo 10, 20 and 50 milligrams.

Maybe -- yes, Klara, do you want to talk a little bit about the...

The information we'll share with the FDA, it will be summarizing the data that was actually reviewed by the HRC panel, expert panel and reporting out the actual results of the scoring performed by doctors Kleiner, Bedossa and Goodman for their review. It will also include the transcripts from the meeting itself, some of the dialogue that transpired and actual images, digitized histology images, and obviously, the safety data from the locked database.

Does that answer the question, Ellie? Okay.

Yes. Yes, that's helpful. And I guess as a follow-up, in terms of thinking about sort of clinician response to this, I know, obviously, these are sort of new results in terms of the panel conclusions that you have. But from your initial conversations with physicians, I mean, there's what the FDA wants, and then I guess there's also what would get a physician comfortable in terms of redosing patients, specifically in diseases where it might be chronic dosing. I mean, what are some of the reactions from the physicians that you're speaking with in terms of comfort around these findings and this investigation?

Yes. So I think we're fortunate to have both Dr. Gideon Hirschfield and Dr. Stephen Harrison on the line. Perhaps I'll let each of them provide their context. They were observers across the panel meetings that were conducted. Perhaps, Gideon, do you want to start? And then Stephen, you follow?

Yes, sure. It's a pleasure to listen. I mean, I think the messages really for me are that there's been the most rigorous analysis, I think, I've ever been involved in of a clinical trial of NASH. And the findings are incredibly reassuring for the patients that we had under investigation for a drug, which has looked very promising and very effective in PBC. So I think the sponsor can be congratulated on doing the most incredibly difficult task and looking at great detail in histology. And what we see is very reassuring. And of course, fundamentally, it fits our experience of using this drug in our patients with PBC, which we found it to be a safe drug and we saw promising effects of efficacy. So all very consistent and all very positive.

Yes. This is Stephen Harrison. I'll just flip stop what Gideon said. This was a no holds barred review. I mean, the sponsor had no hooks in this at all. I mean, Paul and his team had free rein to look at this however they wanted to look at it. It underwent a very thorough and rigorous review. From the clinical perspective, you have to remember, this took everybody by complete surprise. The normal way, as a hepatologist, I look at patients with liver disease is I look at their labs, and there was no signal that anything negative was happening in these patients. In fact, to the counter in a lot of these patients, there were very positive signals. So to find this grouping of atypical findings at baseline that led to the clinical hold was really quite a surprise. And many of our patients were upset at the fact that they had to go off this medication because of the benefit they -- that they had been receiving, not just biochemically, but also symptomatically.

So I think from my perspective, I think I speak for quite a few PIs that were involved in the trial. If a clinical hold were able to be lifted, I think there would be a groundswell of support to get our patients back on this drug in a study setting, so it can be formally -- the formal evaluation can be complete and potentially move the drug forward.

The next question comes from Steve Seedhouse from Raymond James.

My questions are for Dr. Watkins, but Sujal, we welcome, obviously, your thoughts as well.

The first one I have is, did the panel recommend a specific clinical path forward, i.e. any preclinical or Phase I clinical studies that are necessitated by this new finding or a specific or explicit rather a recommendation to restart both NASH and PBC clinical development? That's question one.

So this is Paul Watkins. I mean the unanimous conclusion was that there was no evidence to support this drug causing liver injury. We -- and therefore, there was no -- from our perspective, the concern that had been initially raised based on only looking at the 52-week biopsies no longer existed. So there wasn't any -- it was putting it to bed. And we were not asked whether the preclinical evaluation was sufficient or anything like that, our mission was just to evaluate these new concerns.

So the mandate was exclusive to DILI and not -- to DILI and not to anything else, is that essentially a fair understanding?

That's right, Steven.

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Yes. I mean, it was to evaluate the concern that had been raised. The only concern, safety concern, in terms of the liver that have been addressed. Of course, there was a thorough review of everything about the biopsies. But the focus was on those 42 patients that have been singled out by the clinical trial pathologists.

Okay. That's helpful. And then another point of clarification, Dr. Watkins, is the conclusion of the panel that the patients with atypical findings should not have been enrolled in the study in the first place, given the baseline findings? Or did the panel essentially conclude that you'd be fine enrolling these patients in either this study or future studies?

I'm not sure that, that question was ever exactly posed, but I'm pretty sure I know the answer, which is the pathologist felt they see this in NASH, and then it's the part of the disease, part of the spectrum of disease. And therefore, I don't believe they would say that these patients should not say going forward be included, but that the knowledge that they have needs to get out into the public domain.

Yes. This is Chuck. That's -- I would agree with that statement, Dr. Watkins. In fact, the baseline population, for example, for interface hepatitis had between 60% and 70% subject at interface. So it's very quite common. And I do remember, at one point in the discussion, there was a question raised from one of the participants about whether subjects should have been excluded. And I specifically remember one of the expert pathologists should they have not even been enrolled in the study with the question and they said paraphrasing, but close paraphrasing is, "my God, I hope not. We'd exclude 75% of our subjects in NASH studies if we did that". So I think my understanding from the comments made from both -- from all 3 pathologists was that they see these features. And in fact, we even had a comment from one of them who said during the review process, he was also simultaneously screening subjects for new NASH studies, and having had the conversations and being exposed to this issue, he was saying, in fact, yes, he's seeing this in subjects that are currently being screened for other studies.

So I think the message is really that it was there before, but because the field is focused on the defining characteristics of NASH, steatosis, lobular inflammation, ballooning with fibrosis, they often don't put particular attention, especially for eligibility criteria.

Okay. So I guess -- just maybe have one more question then, and it's perhaps a little bit long. I'm just having a hard time understanding. It sounds to me -- and please correct me if I'm wrong, but it sounds like there really wasn't a failure in the trial design here from the standpoint of these patients will in all likelihood, be the type of patients that will enroll in a future NASH study and really it's just a failure of the processes in place to evaluate liver histology. And I guess it's just remarkable that this hasn't happened or manifested in any other trials in the past. So maybe the question is for Dr. Harrison at least and maybe Dr. Watkins as well. Just I guess, what do you do going forward? Reassessment of completed studies, assessment of ongoing studies, changes to enrollment criteria, if I'm wrong about the first point or screening processes? Like how does this change NASH drug development for both seladelpar but for everything really? It's not clear what these learnings will do other than obviously revise seladelpar, which is remarkable.

Well this is Paul. I can -- Watkins -- so I can take that on. And I think the key here was not looking at the 52-week biopsies in isolation, but pairing them with the initial biopsy. I think had that been done by the clinical pathologists, although they weren't asked to do this, I pretty strongly believe they would have not felt that there was a liver safety concern.

Yes, this is Stephen. I completely agree with Paul's comment. I think moving forward, one bright spot, besides the fact that it's great news for seladelpar, is the NASH field, I think, is going to be a big winner here. Because again, you had 5 of the world's best pathologists look at these slides. And there's kind of been an eye-opening experience for them and then for the clinical hepatologist as well. And for me, in particular, living in the NASH world like I do, it was an eye opener for me.

So I'm not sure we change our criteria for outcome measures based on the findings here. But clearly, I can see us broadening our aperture a bit on what we call histopathology as it relates to NASH. And clearly, I think there will be a broader understanding of some of the lesions that maybe are heretofore unappreciated on a broader scale. So I think there's a learning here about what's happening relative to the underlying disease. Remember, this is a multifactorial disease, lots of different pathways to activation, all kind of spurred on by fatty acid toxicity, lipotoxicity, and there's an overlay of genetics and epigenetics on top of this.

So not every patient looks identical to the next patient. And so it's like a bell-shaped curve, I would imagine. There's very classic lesions, and then there's nonclassical but still associated lesions. And I think we're just learning about this. We're still, believe it or not, in the early days of really putting our hands around NASH, what this means clinically, and then as we develop therapies to try to swage this disease pattern and bring health back to the liver, we're learning about these things.

So I think ultimately, we're going to take away some very positive things from this that will be broadly applicable and then we'll follow the FDA guidance on what a positive endpoint will be for drug development. Does it stay NAS, driven with ballooning of 0 and inflammation of 0 or 1 with fibrosis improvement of 1 stage or more with no worsening of NASH? Or does it change? I don't know. But I think we'll learn from this. And we'll see where that goes moving forward.

Could I just add something?

Yes. Go ahead, Gideon.

So I wanted to add, I think it also challenges us about the supremacy of liver biopsy generally. It's a very, very difficult field of medicine, and it really is actually qualitative in many regards. And really, it's why the whole field of developing drugs for chronic liver disease, NASH, PBC is trying to move away from liver biopsy, precisely because, in fact, what you see is -- can be very distant depending on how people look and how people interpret. So that's the whole world is trying to move to things that are more sort of independently validated. So it's really a bronze standard when we're assessing lots of aspects of liver disease.

And maybe I'll just add a couple of points here, Steve because I think this question is a very important one. And so just to pause on it, perhaps giving you an example, might help to illustrate what each of the experts on the call just identified. So as we looked at these biopsies and, in fact, had the 3 review pathologists do an in-depth scoring of 300-plus biopsies, there was an appreciation for a feature of NASH that's quite well understood despite the fact that it's not part of the NAFLD Activity Score. So portal inflammation, for example, is a feature that, in fact, is well described. Now sitting with 20-, 30-plus year experts in liver pathology and hearing them comment that while it's not -- while we decided it's not part of the scoring for NASH, it's nevertheless very prominent and may, in fact, be underappreciated was a learning. I think certainly for us as a sponsor, but to hear that from 20-, 30-plus year veterans, talking about one specific feature of NASH, that, in fact, is well understood, but perhaps underappreciated was an interesting learning from this process. And taking portal inflammation forward, for example, some of the pathologists commented that they weren't surprised that in the setting of advanced portal inflammation that you would see interface hepatitis.

Now up until this point, at least our understanding, was interface was not necessarily typical. But even as Chuck represented, the HAI scoring in a blinded fashion revealed 60% to 70% of patients had at least some level of interface, be it largely mild, but perhaps anywhere from 20% to 25%, even having mild-to-moderate or even advanced interface. And once again, really as perhaps another complication of advanced portal inflammation was a discussion the pathologist had around bile duct injury. And the fact that at least in some cases within NASH, perhaps as a secondary consequence of advanced portal inflammation or as one pathologist put it "collateral damage" of advanced portal inflammation, you could expect to see some bile duct injury.

And so as we move from this process to first engaging with the FDA, it is certainly a key priority of ours to share as much of the learnings out of these panel review meetings, the independent pathology review to publish and to share this information with the medical community really to advance the entire field.

Yes. I just want to say kudos for the persistence and really the rigor of this analysis and to the panel and everyone involved.

Thank you, Steve.

The next question comes from Jay Olson from Oppenheimer.

Congrats on the panel findings. I was wondering if you could just look into the future. And assuming that the clinical hold on seladelpar is lifted, could you talk about how you would pick up where you left off in the clinical development in NASH? And then separately, how you could proceed in PBC and whether or not you might have a registrational data set there? Or would you need to conduct additional clinical trials in PBC? And then separately, since we just learned from Genfit that the Phase III study of elafibranor failed to meet the primary endpoint, if you could just comment on any read across to either seladelpar or the NASH space in general?

Jay, this is Chuck McWherter. I'm going to try to take on the issues that you raised there. So I think -- I'll come to NASH shortly, but I think just to remind everyone, the Phase II data that we had in our open-label study for seladelpar has really been robust, and it showed a really strong profile for reductions in cholestatic markers, alkaline phosphatase and improvements in transaminases and, of course, the effects that we saw in pruritus were really encouraging.

So we continue to believe that this profile has clearly shown its potential to offer patients a second-line treatment alternative with improved efficacy and better tolerability. So I think that interest is really reflected in -- that interest in PBC is really reflected in the fact that we had fully enrolled 265 patients into ENHANCE in about a year, in spite of the availability of an approved second-line treatment. So with that in mind, our commitment really is to first work with the FDA to lift the hold and then reinitiate clinical development, and we think that PBC is likely our most attractive and derisked first entry.

So we've always been very thoughtful about expanding beyond PBC. And we think that the effects that we saw on NASH resolution and fibrosis really deserve additional consideration. You've mentioned really what happened -- was announced with elafibranor today. That obviously has an impact on the landscape. But of course, right in front of us is obeticholic acid with REGENERATE, and they're expecting a regulatory decision soon. And that's going to have a lot of important lessons for us regarding launch, uptake, reimbursement, what's the measure of success, and how is this being accepted into the community.

So I think just kind of recap, I think PBC is really front and center right now. The NASH results are really quite interesting, and I think we did see some encouraging results on efficacy endpoints. But there's a little bit more to understand there. And of course, we don't want to get ahead of ourselves too much. We still have to be very thoughtful about our interaction with the FDA and try to address any concerns that they might have.

And I'll just add, Jay, you asked the specific question around differentiation with elafibranor, which is, in our minds, largely a PPAR alpha, although it is a mixed PPAR-alpha delta agonist. As you can see from data that we have now, both in PBC as well as in NASH, there are some differentiating features, particularly around the robustness of the anti-inflammatory benefit that we see with seladelpar, whether or not that's one of the key features leading to the efficacy we saw in our NASH study, both on NASH resolution and fibrosis, I think, needs to have some continued attention.

But we've always felt that a very potent selective delta agonist has the potential to provide a meaningful anti-inflammatory benefit and even now with some of this data in NASH, what appears to be a good antifibrotic benefit in a good portion of the patients that we had enrolled.

The next question comes from Joel Beatty from Citi.

This is Shawn Egan calling in for Joel. Congratulations on all the progress, and I appreciate you taking my questions today. I guess, first, on the panel, with the reassessment of all the data, will the panel reassess the fibrosis improvement and NASH resolution score? And if so, will that be shared in the future? And I have a follow-up question on timing as well.

Yes. So I can answer that first part of the question. The purpose of the panel, as Dr. Watkins outlined, was really to make -- take a deep understanding of whether or not seladelpar caused drug-induced liver injury in the NASH study.

We did not ask the panel to assess the effects of seladelpar on NASH resolution or fibrosis.

Okay. Great. And then any comments on the timing and your plans to share the Phase III PBC data you've gathered to date? And also, any timing on the comprehensive findings of the panel?

Yes. So I think you make a good point. As I mentioned, ENHANCE is a study that we did have to terminate early, double-blind, placebo-controlled registration study for seladelpar in PBC. Nevertheless, we maintain the blind in that study. That study remains blinded today. The data has been locked and is being cleaned by the CRO. It will offer us an opportunity to eventually evaluate and share that data publicly. And so, we look forward to doing that at the appropriate time.

The next question comes from Thomas Smith from SVB Leerink.

This is Dylan Dupuis in for Tom. So quick question. With these histology results, were they more associated with the NASH pathology or with fibrosis? And then do they anyway foreshadow a greater risk of progression to more advanced stages of fibrosis or to cirrhosis?

Yes. So I guess -- all right, go ahead.

This is Paul. You want to Sujal -- well, I think these things track more with the activity of the NASH than the fibrosis, whether or not there's any prognostic value in terms of the rate of progression or potentially response to NASH treatment, I don't know.

Yes. I think I was going to effectively share the same sentiment. I think it's not necessarily well understood how the progression of any one of these particular features on their own plays a role in progression of NASH. But I think important, at least from our assessment, to highlight a couple of things, as we mentioned, almost 70% of the 42 patients called out by study pathologists, in fact, were deemed to have either as much, if not more, of some of these features of histology at baseline than they did at end of treatment. So we didn't view the presence or absence of these features in our population baseline or end of treatment as any sort of complicating element of what we saw in terms of some very promising effects on both NASH resolution as well as fibrosis.

This is Stephen. I'll just chime in there. You bring up an excellent point, and this needs to be looked at. And in fact, we did discuss that, a future look at placebo group looking at these baseline lesions and marching out over time to see what happens, not just from the CymaBay trials, but REGENERATE, Resolve-It, all these big databases where we have a large placebo contingent, going back and looking at some of these baseline findings and see if that tracks with outcomes or progression of disease. I mean, maybe this could be a predictor of a rapid fibrosis, predictor of rapid development of disease or progression of disease, who knows. There's just a lot of data that we could mine as a result of these -- the work that's been done here.

Yes. I appreciate that. And then one other quick question kind of on, I guess, on time lines. If, let's say, a couple of months from now, we assume the FDA gives the best case where they allowed to move forward with development. Do you think you'd have to redo a Phase IIb program for NASH? Or do you think you can move straight to a Phase III?

Well, it's a good question. I don't know that we've gone as far as projecting what the agency's response will be at this stage. But the design of our Phase IIb study, and perhaps Stephen can even provide some commentary, was the design that would have, of course, allowed us to move straight into a Phase III study was a paired liver biopsy. So the agency does require a paired liver biopsy, of course, as you know, in Phase II to progress into Phase III. 152 patients that completed end-of-treatment biopsies, a vast majority of which actually made it through 52 weeks of dosing. As we mentioned, the study was actually powered on the primary endpoint, which was a 12-week change in liver fat content, not powered to the secondary endpoints on NASH resolution and effects on fibrosis.

Nevertheless, I think the data that we've gathered for the patients in this study that did have paired liver biopsies, I think, arguably can be viewed as some of the more promising Phase II data in a paired liver biopsy that's been demonstrated, at least for an oral agent in NASH.

Yes. I'll just chime in. This is Stephen again. So I mean, when you look across the broad landscape of Phase IIb trials with paired histology that have subsequently gone in to Phase III, this is within that rental. And as Sujal mentioned, the vast majority of those patients were able to get across the 52-week finish line and get a follow-up liver biopsy. So I think what we've heard today is safety, biochemically, clinically, histopathologically not a concern.

With that in hand, then it just really shifts in my opinion -- it's just my opinion, it pivots to, okay, then do we have a dose-ranging study that -- with paired histology with enough data to move in Phase III. And I think if you look at what they've published previously, the preliminary top line results, and clearly, as a dose response relationship, and as Sujal mentioned, I mean, when you're looking at seladelpar 50 and you're getting 26% resolution of NASH versus 8% for placebo, and let me just comment on placebo there, that's within what we would consider a "normal placebo" response. That's very positive. And in the fibrosis benefit on top of that, I think, puts it into a league that would be very reasonable to move into a Phase III trial. Again, that's just my opinion, but I think that's -- the data we have would warrant moving to Phase III.

This concludes the question-and-answer session. I would now like to turn the conference back over to Mr. Sujal Shah for any closing remarks.

Thank you, operator. I want to make just a few more remarks.

Since our announcements last November, every member of our remaining team at CymaBay has been tirelessly dedicated to the seladelpar investigation and our evaluation of strategic alternatives on behalf of all of our stakeholders. In the face of a suspicion for safety concerns in our NASH Phase IIb study, we took decisive action not to put patients at risk. Our commitment quickly turned towards pulling together a deep bench of liver experts to help us analyze and interpret tremendous amounts of data we have been collecting over the past 5 months.

We took no shortcuts in our investigation. NASH is a complex heterogeneous disease and one for which we have only seen a significant acceleration of clinical development with potential novel interventions over the past 10 years. I believe there will be much we can share with the field to increase our understanding of the many elements of NASH that today are largely underappreciated.

In the end, I firmly believe this effort will only contribute to the base of knowledge needed to continue making significant advances for patients with liver disease. We look forward to our continued role in this effort and to providing updates as we make progress in the weeks and months ahead.

I'd like to thank all of the experts who participated on our review panel, several of my colleagues in the industry who aided in our efforts, everyone here at CymaBay, to the patient advocacy groups who inspired us not to give up, on the effort to understand the findings from our NASH Phase II study and, of course, to the patients who have participated in our clinical studies.

Thank you all again for joining us today.

Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating. And have a pleasant day.