Chimerix Inc (CMRX) 2013 Q2 法說會逐字稿

Welcome to Chimerix's second-quarter earnings conference call. This call is being webcast live on the investor section of Chimerix's website at IR.chimerix.com. This call is the property of Chimerix and any recording, reproduction or transmission of this call without express written consent of Chimerix is strictly prohibited. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the investor section of Chimerix's website. I would now like to introduce your host for today's conference call, Chief Financial Officer, Tim Trost. You may begin.

Thank you operator. Good morning everyone. Before we begin, I'm going to read Chimerix's Safe Harbor regarding forward-looking statements. During the course of this conference call the Company will be making certain forward-looking statements such as statements relating to our Phase 3 SUPPRESS trial of CMX001 and related matters. These statements involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties are discussed more fully in Chimerix's filings with the Securities and Exchange Commission, including without limitation, it's most recent quarterly report on Form 10-Q, it's most recently filed reports on Form 8-K and other documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements made on this call speak only as of the time they are made and Chimerix undertakes no obligation to update these statements to reflect subsequent events or circumstances. I would now like to turn the call over to Kenneth Moch, our President and CEO.

Thanks so much, Tim. Good morning everyone and welcome to the Chimerix second quarter 2013 conference call. Joining me this morning on today's call, in addition to our Chief Financial Officer, Tim Trost, is our Chief Medical Officer, Michelle Berrey.

To start this call, I would like to take a moment to highlight Chimerix's recent progress. Chimerix has made significant headway on many fronts since our initial public offering in April which generated $107.6 million in net proceeds. You will recall that the primary use of proceeds from the IPO was to progress our lead broad spectrum antiviral, CMX001, into the Phase 3 SUPPRESS trial for prevention of cytomegalovirus in CRO positive hematopoietic cell transplant recipients. We are moving forward with this study, and as we told you during our first quarter results call in May, expect that the first patient will be dosed during the third quarter, this quarter.

I'm very pleased to report that this morning we released the top line data from our Phase 2 trial evaluating CMX001 as a preemptive therapy for adenovirus infection. Simultaneously, we were equally pleased to announce that these data were accepted for a late breaker oral presentation at the upcoming ICAAC meeting in Denver on September 10. Distilling the top line top line data down to a sentence, the key takeaway is that the results from this exploratory study are consistent with our understanding of CMX001's activity, and support continued development of CMX001 as a broad-spectrum antiviral for double-stranded DNA viruses, including adenovirus and cytomegalovirus. Michelle Berrey will provide you with further insights into the overall CMX001 clinical development program, including the top line data from the adenovirus trial during her comments in just a few moments. Before she does so, let me note that in accordance with ICAAC embargo policies, we will not be providing the detailed scientific findings of the Phase 2 adenovirus trial until presentation of the data at ICAAC. Please take this into consideration when asking questions at the end of this call.

In addition to our commercially focused efforts on CMX001, we continue to work to develop CMX001 as a potential medical countermeasure against smallpox, another double-stranded DNA virus. We have now shown that CMX001 possesses statistically significant efficacy in the rabbit pox model at a dose Chimerix believes has the potential to be equivalent to the human dose being investigated in the SUPPRESS trial. We are continuing to work with BARDA on additional experiments which have the potential to lead to FDA approval of CMX001 for the smallpox indication. Along these lines, in June, we announced the extension of our contract with BARDA, for an additional 12 months. Also during the second quarter, Chimerix was notified by the Council of United States Adopted Names, or USAN, that brincidofovir has been adopted as the generic name for CMX001.

Looking forward, we continue to make progress on key milestones and expand our interactions with key stakeholders in the clinical, regulatory and investment communities. As noted, we expect to dose the first patient in SUPPRESS later this quarter. Many members of the Chimerix clinical team will be in the audience at ICAAC on September 10. We are planning and -- we are in the planning stages for a meeting with the FDA over the coming months, as we build out our development program for CMX001. Finally, we will continue our ongoing interactions with the investment community through presentations in early September at the Morgan Stanley and Stifel Healthcare Conferences in New York and Boston, respectively, and then on September 27 at the Biocentury Newsmakers Conference in New York. With that brief overview, I would now like to turn the call back over to Tim, to review the financials for the second quarter. Tim?

Thanks, Ken. Earlier today we issued a press release detailing our financial results for the second quarter of 2013. Starting first with our balance sheet, at June 30, 2013, it reflected $123 million in cash, cash equivalents and short-term investments, $12.7 million in debt, and $25.8 million outstanding shares of common stock.

Turning to the statement of operations and comprehensive loss, for the second quarter of 2013, we reported a net loss of $12.5 million, which when coupled with the $8.6 million in accretion of redeemable convertible preferred stock, resulted in a net loss of $0.91 per basic and diluted share for the quarter. For purposes of comparison for the second quarter of 2012, we had a net loss of $4.3 million, which when coupled with the $900,000 in appreciable redeemable conferred stock we resulted in a net loss of $3.44 per basic and diluted share. The year-over-year increase in quarterly net loss is primarily due to a decrease in revenue related to our contract with Biomedical Advanced Research and Development Authority, or BARDA, for the development of CMX001 as a medical countermeasure against smallpox. As a result of our completing the base segment of the BARDA contract in May 2013. In addition, the year-over-year increase in net loss was affected by an increase in the fair value adjustment of our warrant liability.

There was also an increase in net loss attributable to common shareholders, which was due to, in addition to the increased net loss, an increase in the accretion of redeemable preferred stock. Note that although our net loss attributable to common shareholders increased compared to the prior year period, the net loss per share decreased, due to the effect of the significantly higher number of weighted average shares outstanding during the second quarter of 2013, as a result of our IPO in April. Revenues for the second quarter of 2013 decreased to $808,000, compared to $6.2 million for the same period in 2012. Revenues for both quarters consisted of contract revenue for BARDA. BARDA activities in the second quarter of 2013 were minimal compared to the same period in 2012, when we were engaged in the manufacturing of drug product and the conduct of a clinical trial.

As we announced in June, the BARDA contract was extended for an additional 12 month segment, which provides up to $5 million for the continued development of CMX001, as a potential medical countermeasure against smallpox. Research and development expenses decreased to $6.3 million for the second quarter of 2013, compared to $9.1 million for the same period in 2012. Again, driven primarily by a reduction in BARDA related spend. This was partially offset by a one-time non-cash compensation charge related to restricted stock units or RSUs divested upon completion of our IPO in April.

We continue to expect R&D expenses to increase throughout the rest of 2013, as we increase activities associated with our Phase 3 SUPPRESS trial for CMX001. General and administrative expenses increased to $2.2 million for the second quarter of 2013 compared to $1.5 million for the same period in 2012. Primarily due to a one-time non-cash charge related to the vesting of RSUs as previously described. Interest expense increased to $415,000 for the second quarter of 2013, compared to $128,000 for the same period in 2012. This increase was due to the larger outstanding loan balance in the second quarter of 2013, as a result of the draw down of a $12 million second tranche of venture debt in the third quarter of 2012.

There were two increases in non-cash expenses during the quarter, which were primarily attributable to the increase in value of our common stock in connection with our IPO in April. Fair value adjustments to our warrant liability increased to $4.4 million in the second quarter of 2013, compared to an add back of $226,000 in the same period of 2012. Secondly, accretion of redeemable convertible preferred stock increased to $8.6 million in the second quarter of 2013, compared to $900,000 in the same period in 2012. Upon the completion of our IPO, the preferred stock converted to common stock. The preferred warrants converted to common stock warrants, which are not considered to be derivative instruments and will thus not be valued in the future. Neither of these non-cash expense items will recur on the statement of operations and comprehensive loss going forward.

As a reminder, the second quarter results, as well as this morning's announcement are available on the investor section of our website. I would now like to turn the call over to our Chief Medical Officer, Michelle Berrey.

Thank you, Tim. This morning we announced top line results of Study 202, the first proof of concept trial for adenovirus infection. This blinded placebo controlled trial will provide the first controlled data on use of CMX001 in the setting of preemptive therapy for adenovirus disease and stem cell transplant recipients.

Before we review the top line results, I'd like to give everyone some background on adenovirus and how Chimerix arrived at the design and patient population for our Phase 2 study. Adenoviruses, is a double-stranded DNA virus that causes upper and lower respiratory infections, including the common cold in individuals with intact immune systems. In patients with immunosuppression, adenovirus can lead to significant respiratory or GI disease, including hepatitis. Adenovirus infection is much less frequent than CMV in stem cell transplant recipients, but has a high mortality rate of up to 80% in the first 30 days after diagnosis. The frequency of adenovirus infection in even the most susceptible patients is unknown, as are the factors that influence progression to advanced disease.

Based on the in vitro activity of CMX001 against all major species of adenovirus and with limited data from emergency IND's in Study 350, in which CMX001 was administered to patients with life-threatening adenovirus infections and no alternative therapy, we designed a proof of concept study to assess CMX001 utility in the setting of asymptomatic adenovirus in the blood or viremia. The progression rate to organ involvement with adenoviruses was estimated to be 50% for subjects randomized to placebo. We evaluated 48 pediatric and adult stem cell transplant recipients in this exploratory Phase 2 study which we believe is the first interventional adenovirus study ever conducted. 735 pediatric and adult stem cell transplant recipients at 29 centers were screened weekly for adenovirus viremia. Those found to have adenovirus viremia and no symptoms of disease were randomized to receive up to 12 weeks of preemptive therapy with once weekly or twice weekly CMX001 or placebo followed by a four week post therapy follow-up period. The primary endpoint of study 202 was a composite endpoint of progression to presumed or definitive adenovirus disease or at least a tenfold increase in the level of adenovirus viremia. A key secondary endpoint for this study was mortality. Subjects who developed suspected or confirmed adenovirus disease or increasing adenovirus viremia were offered open label CMX001 twice weekly.

Now, to the results. In Study 202, CMX001, 100 milligrams twice weekly, decreased levels of adenovirus viremia and showed a numerical benefit in reducing progression to adenovirus disease and reducing all cause mortality, compared to subjects who received placebo or CMX001 dosed once weekly. While statistical significance was not demonstrated in this Phase 2 proof of concept study, results from the analyses of the intent to treat population and subsets of patients, favored the CMX001 twice weekly dosing regimen over placebo or once weekly CMX001. Subjects at higher risk of adenovirus disease progression, as well as those who were at risk for CMV reactivation, were considered in these additional analyses. These trends toward decreased all cause mortality are similar to those seen in the adenovirus data from study 350, presented earlier this year at the European BMT meeting which showed a mortality rate lower than expected, based on historical data in patients who had significant decreases in adenovirus viremia following intervention with CMX001.

A thorough review of the safety and tolerability data from Study 202 revealed no new safety concerns and a successful incorporation of the safety monitoring and management plan, or as SMMP, which had been developed initially in Study 201 our Phase 2 study in CMV prevention. No changes were necessary in our Phase 3 SUPPRESS trial, which is on track to begin dosing later this quarter. We believe these data support continued development of the twice weekly dose of CMX001, 100 milligrams, twice weekly, as prevention for double-stranded DNA viral infections, including adenovirus and CMV. We plan to discuss the results of Study 202 with the FDA later this year, to determine the appropriate next step in the development of CMX001 in pediatric and other high-risk transplant populations. As we mentioned, these data have recently been accepted for late breaker oral presentation at the upcoming 53rd annual ICAAC meeting in Denver. Dr. Michael Grimley at Cincinnati Children's Hospital will present the data on September 10. As Ken mentioned, the results from Study 202 are embargoed until the ICAAC presentation. We will be in a position to discuss the Study 202 data following that presentation.

Turning to our Phase 3 CMV program, site initiations and IRB approvals are underway, and we anticipate dosing our first patient in the SUPPRESS trial later this quarter. SUPPRESS will enroll adult stem cell transplant recipients who will be randomized two to one to receive CMX001, 100 milligrams twice weekly or placebo. We anticipate that SUPPRESS will enroll approximately 450 subjects with evidence of prior exposure to CMV or recipient sero positivity. Approximately 300 of the 450 subjects will receive CMX001 adding significantly to the large safety database for CMX001 administered at 100 milligrams twice weekly.

The final study design agreed with the FDA incorporates the same general post transplant intervention as the Phase 2 trial, but with a few key changes that we believe improve the probability of success of SUPPRESS. These are, one, dosing earlier in the post transplant period, allowing patients to get to effective steady state levels of CMX001 earlier in the period of highest risk of CMV reactivation. Two, studying only one effective dosing regimen of CMX001, 100 milligrams twice weekly. And three, dosing of CMX001 with food which should improve the GI tolerability in combination with the SMMP that was successfully incorporated into the adenovirus Phase 2 trial and in the final cohort of our Phase 2 CMV study. Dosing with CMX001 or placebo will begin shortly after subjects receive their transplant and will not require evidence of engraftment, which is evidence of production of blood cells by the new transplant. Waiting to dose until after engraftment was a safety precaution in our Phase 2 study, and in other recent studies of investigational agents for CMV prevention.

When reviewing the safety from our Phase 2 study, the majority of CMV events were concentrated in the first few weeks immediately following a subject's transplant. In SUPPRESS, we will be dosing closer to the time of the transplant, which has the potential to prevent early CMV events in the patients receiving CMX001 and to capture those early events in the placebo arm, resulting in a greater differential and prevention of CMV in CMX001 treated subjects. We believe that this is an important improvement in the design of SUPPRESS and one that increases the chances of a successful outcome from the study. Subjects in SUPPRESS will receive CMX001 or placebo from the early post-transplant period through week 14 post transplant.

The primary endpoint for SUPPRESS is prevention of CMV reactivation through week 24, post transplant, or 10 weeks after the last dose of CMX001 or placebo. The trial is powered to detect a 50% decrease in CMV reactivation in subjects receiving CMX001, versus those subjects receiving placebo. Secondary endpoints in the SUPPRESS trial include measures of CMX001 activity against other double-stranded DNA viruses, including adenovirus, BK virus, and other herpes viruses such as HSV6, which have a significant impact on morbidity and mortality in stem cell transplant recipients. Because this patient population is often infected with more than one double-stranded DNA virus, we believe that the broad spectrum activity of CMX001 may demonstrate both direct and indirect effects on mortality associated with many double-stranded DNA viruses.

We anticipate enrolling subjects in SUPPRESS at approximately 40 transplant centers over the next 18 months, which gets us to data from SUPPRESS in 2015. If the data are positive, they may support accelerated approval of CMX001 for the prevention of CMV infection, based on the demonstration of benefit on a surrogate endpoint of CMV viremia. The second confirmatory study of CMX001 in CMV prevention is under discussion with the FDA, in order to support traditional approval. The population under study must have a higher incidence of clinical events related to CMV reactivation, and could potentially include solid organ transplant recipients, or pediatric stem cell transplant recipients. This confirmatory second trial would usually be in progress at the time of NDA submission for accelerated approval. We anticipate having an updated clinical plan in the first half of 2014.

In summary, we are excited about the months ahead and anticipate additional presentations and publications on data from the expanded access study of CMX001, as well as other analyses, which support the potential of CMX001 as a broad-spectrum antiviral. I'd like to turn the call back over to the operator for any questions.

(Operator Instructions)

Katherine Xu of William Blair.

I'm just curious, for Study 202, was there any differences between adults and pediatric patients?

Good morning, Katherine. Thanks for the question.

We will be going into the subset analyses at the ICAAC presentation on September 10. We did enroll about 25% adult, 75% pediatric in the trial. So, we can, then, reveal the rest of that data at the ICAAC presentation. Unfortunately, we are limited by their embargo policy into going into much detail today.

Okay. Recently, Vical and Astellas announced their Phase III strategy for their CMV vaccine with overall survival as the endpoint. Just curious about what your thoughts are. Will that impact your thinking of the future competitive landscape and your strategy?

Thanks. I think it is a good question.

Mortality is certainly something that we've always included as a secondary endpoint. And, clearly, with CMV infection, there's a potential for both direct and indirect effects of CMV reactivation that have the potential to affect mortality. We believe that the broad-spectrum activity of CMX001 has an even broader opportunity to impact all cause mortality and, specifically, non-relapse mortality when we look at data for allogeneic transplant recipients, there's approximately a 20% non-relapse mortality in the first year with the potential of maybe a third of that being directly related to the double-stranded DNA viruses.

So, I think that, again, mortality is an interesting primary endpoint for that trial, but, I believe our success in negotiating with the FDA on the CMV viremia endpoint of our trial is -- was the best way to go for CMX001, certainly with the opportunity to demonstrate, as we did with our adenovirus trial, the potential for improved all cause mortality.

Great. Thank you.

Lastly, for Tim, just housekeeping question. How shall we recognize the $5 million from BARDA for the next year?

Well, it's going to be received over the totality of the contract period, which is roughly a year from June 1, 2013 through May 31, 2014. The way it actually happens, timing wise, is subject to precisely when the work is done and invoiced by subcontractors. So, it might be a little lumpy and is slightly unpredictable, because of that, with respect to timing. But, it's going to be received roughly over that time period.

Thank you.

You're welcome.

(Operator Instructions)

Phil Nadeau with Cowen and Company.

Good morning. Thanks for taking my questions and congratulations on the progress.

Michelle, a couple for you, to see if you would be willing to answer any of these. The reasons that statistical significance was inhibited, what is your preliminary assessment of that? Is it that the progression rate to adenovirus associated disease was lower than the 50% assumption that was made in the trial design? Or, was the reduction in the magnitude, the reduction in viremia produced by CMX001 somewhat less than you anticipated?

Thanks, Phil. It's a good question.

Again, we will go into all the specifics that the ICAAC presentation. Just to remind you a little on the background of adenovirus, as the first exploratory trial in adenovirus, we didn't have apriori any estimate for progression rates. So, we really began the trial sizing if you will by estimating a 50% progression rate. Had we achieved a 50% or greater progression rate in the placebo arm, there was potential for statistical significance. So, I think, certainly, we saw the numerical improvement in viremia and all subsequent analyses that supported the improvement post viremia and progression to disease, as well as all cause mortality, favorably for the CMX001 arm over the placebo arm, but really, for further details on that, we are going to have to wait for the ICAAC presentation.

Okay.

Can you give us your initial thoughts on how this changes, if it changes that all, your design of a pediatric Phase III or, more broadly, your plans for the confirmatory Phase III that you just discussed?

Well, I think we are waiting for our discussion with the FDA, to really discuss more specifically, what next steps would be. I think the good news, bad news, if you will for CMX001, is that as a broad-spectrum antiviral, it is becoming increasingly difficult for us to tease out a single viral endpoint. Again, looking at the all cause mortality, I think we do continue to see evidence of improved outcomes in these patients. But, as we've mentioned, these high at risk patients are often infected with more than one double-stranded DNA virus. So, I think that will be a big part of our conversation with the FDA, as we move towards continued studies of CMX001 as a prevention for multiple viral infections.

But, even within SUPPRESS, we will be looking, specifically, not just at the CMV endpoint band, but at the direct and indirect effects of avoiding CMV reactivation. But, also incidence of BK viremia and viruria, of improving renal function based on avoiding some of the side effects of BK disease on adenovirus, EBV and HSV6. We know that all of these viruses impact on mortality in the allogeneic transplant patients. How we design a confirmatory, or if we need a confirmatory study for adenovirus, is really yet to be determined until we have those conversations with the FDA.

Okay. Great.

Tim, one last question for you. I apologize -- I missed what you said on the share count as of June 30. Did you say 28.7 million shares?

25.8 million.

25.8 -- good. Thank you.

You can get the exact number off the balance sheet in the Q.

Great. Perfect. Thank you.

Sure.

Josh Schimmer with Lazard Capital Markets.

Question. I just had one on the smallpox program and wondering if you could summarize what needs to be done going forward to gain FDA approval? Will the CMV and adenoid development programs be sufficient to provide the human exposure safety data for that indication? Thanks.

I will start and then I think Michelle can jump in.

Based on a number of discussions, both privately and publicly, both with the FDA, BARDA, and then there was a public advisory committee, what would be required under what's called the animal rule are two animal models that show the potential for any virus, any drug, sorry, to treat the smallpox virus. For us, it will be mice and rabbits. We are under way with those development programs with BARDA, that's what their funding, now. They have taken responsibility for developing and refining the models. We are obviously applying our drug in those models. That is well under way.

As I mentioned, we have shown statistical significance in a rabbit pox model, which, at a dose which is at the same potential as what we are using in SUPPRESS. We believe has the potential to be the same dose as used in SUPPRESS. That's encouraging, from our perspective. Obviously, we are talking about a virus which does not exist in the human population. So, the human data that we are generating from our clinical trial efforts has relevance. In fact, as a note of history, BARDA paid for the 350 program, our compassionate use program, as a way of generating data showing the use of CMX001 in a highly diseased population. So, all of that is, basically, the gestalt of the data, if you will, that taken together will be, hopefully, the basis for an NDA application for smallpox. That's something that's a future development effort.

Michelle, do you want to comment further?

Just, again, the point of the large safety database that we are generating on CMX001. To date, we have over 900 individuals exposed to CMX001 and the SUPPRESS trial will add an additional 300 patients at the dosing duration of our first indication for CMV prevention. Again, we will have a large safety database to support that NDA for potential approval for smallpox.

I guess the one thing to add, just if it's helpful, is that the anticipated dosing period for smallpox is a matter of weeks. Obviously, the safety database that's being generated through our clinical trial work is months. So, we got very relevant data being generated in our clinical trials regarding the safety side of the equation, in particular.

Can you estimate when you will have the full data package for submission? And/or, will you need to wait for the SUPPRESS safety data set to submit? Or, will it be possible to submit ahead of that?

I'm not sure I'd speculate at this moment. But, I'm not sure I'd speculate at this moment. Michelle?

I don't think it would be tied.

Right.

To the SUPPRESS safety database. I think our existing safety database of over 900 patients is certainly more than would have been expected for a compound moving forward under the two animal rule.

Some of that really develops in the animal process and that's based on what the BARDA is doing. So, we don't control all aspects of the development program because BARDA is doing model development that is very relevant to our timelines.

Just to be clear, you have rabbit data. So, is the gating step now for a filing having the rodent data?

There is more work to be done on rabbit data, just to build it up, and there's work to be done on mice data to build that up, as well. I guess I'd say this a little bit more generically. We are not projecting timelines on the BARDA/smallpox NDA process, simply because we don't control all aspects of that timeline. There's work being done by other parties that integrates with the work we need to do and there's no way to predict that, since part of that's in the hands of BARDA in terms of their developmental efforts and their funding priorities.

Got it. Thank you.

As you'll note, during the IPO process we never projected and we hold to that. We are very encouraged by the activity of the drug. I think that's very clear. The potential activity of CMX001 against smallpox, we can't project timelines because we don't control all aspects of it. If I were relying only on Michelle, I'd be much more happy about the timelines.

Great. Thanks again.

I am not showing any further questions at this time. I would like to turn the presentation back over to Kenneth Moch for any closing remarks.

Thank all for joining us this morning. I think you have a feeling for our feelings of encouragement and what we believe from the adenovirus data and how it supports our CMX001 overall development plan. We obviously look forward to sharing the detailed results at the ICAAC meeting on September 10 in Denver. Hopefully, some of you will be there. Certainly, many of us from Chimerix will be. We are very interactive, as I think many of you know, with the financial community and we look forward to those discussions going forward. With that, I will hand it back to the operator.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Have a great day.