Chimerix Inc (CMRX) 2014 Q2 法說會逐字稿

Ladies and gentlemen, please stand by. Your Chimerix Second Quarter 2014 Earnings Conference Call will begin momentarily. Once again, thank you for your patience and please remain on the line. Your Chimerix Second Quarter 2014 Earnings Conference Call will begin momentarily.

Thank you.

Good morning and welcome to the Chimerix Second Quarter 2014 Financial Results Conference Call. Today's call is being recorded. All lines have been placed on mute.

(Operator Instructions)

At this time, I would like to turn the conference call over to the Company's executive director of investor relations and corporate communications, Joe Schepers. Please go ahead, sir.

Thank you and welcome to Chimerix's Second Quarter Financial Results Conference Call.

On the call today are Michelle Berrey, president, CEO and CMO; Tim Trost, CFO; and Linda Richardson, chief commercial officer. Before we begin, allow me 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 certain R&D programs, including our phase 3 SUPPRESS trial or future clinical trials of brincidofovir, also known as CMX001, and related matters.

These statements involve risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements.

These risks and uncertainties are discussed more fully in Chimerix's filings with Securities and Exchange Commission, including, without limitation, its most recent quarterly report on Form 10-Q, its 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 also want to point out that the Company issued a press release this morning, containing financial results for the second quarter 2014. The press release is available on the Company's website at www.chimerix.com.

At this time, I would like to turn the call over to Michelle Berrey.

Thank you, Joe. And thank you all for joining us this morning.

Today I will provide an overview of the first half of 2014 for Chimerix and Tim Trost will discuss our second quarter financial results. Following our formal presentation, Tim and I will be joined by Linda Richardson for the question and answer session.

The first half of 2014 has been an exciting and very busy time for all of us at Chimerix. We successfully completed our common stock offering in May, with gross proceeds of just over 119 million. These proceeds are targeted primarily for funding the Company's research and development programs and preparing for the planned launch of brincidofovir. With this financing, we have a solid financial position into 2016, which will follow the date of read-out for the phase 3 SUPPRESS trial.

I want to extend a personal note of appreciation to our three outgoing board members, whose terms with Chimerix ended in June; Farah Champsi, Wende Hutton and Art Pappas provided important guidance to Chimerix over the last several years, during a significant period of growth and transition to a publicly traded company. Thank you.

At our annual meeting in June, we added four new independent directors to our board; Jim Daly, Cathy Gilliss, John Leonard and Patrick Machado were each named as directors. These individuals bring important expertise to our organization, in the areas of research and development, commercial operations and global marketing, and organizational growth.

The primary focus for all of us at Chimerix for the remainder of 2014 and 2015 continues to be the brincidofovir pivotal development programs in CMV and adenovirus. We are preparing for regulatory submissions and approvals and beginning commercialization activities.

In support of this, we continue to build our corporate infrastructure, by adding key employees with strong experience in the areas of commercial, clinical, regulatory and medical affairs.

I will begin with some updates on the brincidofovir phase 3 SUPPRESS trial in CMV prevention. We recently conducted our third quarterly review by the independent data, safety and monitoring board.

Following their [ongoing bid] review of all safety data, with a specific focus on renal and hematologic safety parameters and G.I. tolerability; once again, there were no recommended changes for the clinical conduct of the SUPPRESS trial.

We expect to enroll the final patient into SUPPRESS by yearend or early in 2015, with study data to be reported in the second half of 2015. This revision regarding the potential timing of our last patient enrolled is predominantly driven by the significant variability and time required for IRB review and approval processes at some transplant centers, which have been longer than initially expected.

We recently initiated several high-volume centers and are now seeing enrollment at these sites, including sites in Europe and Canada. We expect to see a more consistent enrollment pattern, going forward.

Earlier this year, we initiated discussions with European regulators, regarding the brincidofovir development program, culminating in formal scientific advice in early May. The EMA Scientific Advice Working Party indicated that CMV viremia, leading to initiation of preemptive therapy, would be considered a clinical endpoint and, thus, could lead to a full approval with success completion of the SUPPRESS trial alone.

This approach differs from the currently agreed accelerated approval path in the US, which requires a second confirmatory study. The correlation of CMV viremia with CMV disease from a prevention study in renal transplant recipients could be one of several mechanisms for obtaining traditional approval for CMV prevention for brincidofovir in the US.

CMV remains a significant risk in immunosuppressed populations, including adult, and especially pediatric, solid organ transplant recipients. The impact of viral infection on pediatric and adolescent kidney transplants was highlighted in a review article, published in this morning's New England Journal of Medicine.

Over the last 25 years, increasing rates of CMV, EBV and BKV were noted in this population, likely related to the increasing use of [certain] immunosuppressants, which result in post-implant complications, graft loss and death.

To address this unmet medical need, we have been progressing discussions with US and European regulators, regarding a prevention trial in renal transplant recipients. During the recent World Transplant Congress in San Francisco, we convened a panel of experts to obtain additional feedback on our trial design, which we plan to finalize by the end of 2014 and initiate in 2015.

Because multiple viruses contribute to infectious complications and graft loss in kidney transplant recipients, we are evaluating ways to include overall graft function as a potential way to demonstrate the broad antiviral benefits of brincidofovir.

From a safety perspective, it was important for us to demonstrate the lack of hematologic toxicity with brincidofovir, before dosing stem cell transplant patients, prior to engraftment, in the SUPPRESS trial. For the stem cell transplant patient, the most important goal is to protect the graft; the new bone marrow.

The hematologic safety data for brinci over - with over 1,000 individuals, allowed us to begin dosing in SUPPRESS soon after the transplant, independent of engraftment. For kidney transplant recipients, graft survival has improved with the availability of [potent] immunosuppressants, but 10-year graft survival is still less than 50%. The lack of nephrotoxicity for brinci was demonstrated in the phase 2 study, published last year, in the New England Journal.

At World Transplant Congress last week, we presented new data in patients from the expanded access trial that switched to brincidofovir from the nephrotoxic antivirals, cidofovir and foscarnet. More than 80% of these patients showed improvement in renal function during the first weeks of brincidofovir treatment; even those who had had severe renal impairment or who were on dialysis when they began brinci.

Demonstration of the safety and broad spectrum efficacy in the renal transplant population would provide us with an important opportunity to address the need for a broad spectrum antiviral in patients whose graft survival is limited by risk of multiple viral infections.

At World Transplant Congress, we also presented data showing that brincidofovir demonstrated antiviral activity against clinically or virologically-resistant CMV in renal transplant patients, who had failed all other antivirals.

These data in kidney transplant recipients are representative of the more than 100 patients who've received brinci for a resistant or refractory CMV infection, many of whom had more than one active viral infections; supporting a potency of brinci against multiple DNA viruses.

In addition, at World Transplant Congress, we presented clinical data from the brincidofovir expanded access trial, showing that brinci has significant and clinically relevant activity against adenovirus and CMV, in pediatric and adolescent liver transplant recipients.

Importantly, clinical activity was demonstrated in these patients against other viral infections as well, including Epstein-Barr virus, B.K. virus and varicella-zoster virus. These in vivo data supplement the antiviral activity that has been demonstrated in vitro.

In March of this year, we began a pilot study of brinci for the treatment of life-threatening adenovirus infection and have already exceeded the initial target enrollment of 20 patients.

As of today, we have treated 36 patients at 24 sites and are continuing to enroll patients in the pilot portion of the pivotal phase 3 study, which will be known as AdVise. Patients are receiving open-label brincidofovir at the same dose that is being studied in the SUPPRESS trial; 100 milligrams, twice weekly.

Just this week, we learned that data from the pilot trial in adenovirus have been accepted as an oral late-breaker presentation at IDWeek in October. We look forward to the opportunity to present the virologic and important clinical outcomes data at this conference.

Data from the pilot portion of the AdVise trial will be submitted to the FDA, along with our final study design, which is planned to evaluate two different durations of brinci for the treatment of adenovirus infections. We remain in discussion with the FDA, regarding the size of the study and the timing of the endpoints, but anticipate finalizing and initiating the pivotal AdVise trial by the end of 2014.

During the second half of 2014, we plan to continue to present and publish data on brinci's favorable safety and tolerability profile and broad spectrum of antiviral activity, as well as brinci's potential applications in diverse patient populations.

Two abstracts describing brinci's high barrier to viral resistance have been accepted for oral presentations at [AGEK] in September, as an additional abstract has been accepted for presentation at the Liver Meeting in November.

With regard to our important development program for the treatment of smallpox, we're currently in formal discussions with BARDA, regarding option [segment 2], which would fund continued development of brincidofovir under the Animal Rule for the treatment of smallpox.

In the event that we receive positive news from BARDA, our smallpox countermeasure development program would enter the equivalent of phase 3 testing later in 2014, in support of an NDA submission.

We look forward to keeping you apprised of our progress with brinci and other R&D initiatives, including our active discovery program, focused on viral diseases, including norovirus, influenza and other infections that impact global health.

A key objective in 2015 will be to progress additional compounds into preclinical assessments and to potentially advance a second compound into clinical testing. By capitalizing on our lipid technology platform and our chemical library, we have been able to progress compounds which have unique profiles and different spectrums of potent antiviral activity.

I will now hand the call over to our CFO, Tim Trost, for a review of the financial results for the second quarter 2014.

Thank you, Michelle, and good morning, everyone.

As Joe mentioned in his introductory remarks, earlier today, we issued a press release, containing our financial results for the second quarter 2014.

Beginning with our balance sheet, Chimerix had 200.6 million in cash and cash equivalents, 7.1 million in debt, and approximately 35.4 million outstanding shares of common stock at June 30th, 2014.

Turning to our statement of operations, Chimerix reported a net loss of 11.7 million, or 39 cents per basic and diluted share for the second quarter of 2014. During the same period in 2013, Chimerix reported a net loss of 12.5 million, or 91 cents per basic and diluted share.

Revenues for the second quarter of 2014 increased to 919,000, compared to 808,000 for the same period in 2013, due to an increase in the second quarter of 2014 in reimbursable expenses associated with Chimerix's ongoing contract with BARDA.

Research and development expenses were 8.1 million for the second quarter of 2014, compared to 6.3 million for the same period in 2013. This increase is primarily due to the effect of increased costs related to the ongoing enrollment of the phase 3 SUPPRESS trial, the pilot portion of the phase 3 to treat adenovirus infection, and growth of the Company's clinical, regulatory and development groups.

We continue to expect a significant increase in R&D expenses for the full-year 2014, compared to full-year 2013, due to these same cost drivers. R&D expenses may be uneven from quarter to quarter.

General and administrative expenses increased to 4.4 million for the second quarter of 2014, compared to 2.2 million for the same period in 2013. The increase is primarily due to growth of the Company's corporate infrastructure, operating as a publicly-traded company, and a one-time severance-related compensation expense of 1.6 million.

For the full-year 2014, we continue to expect an increase in G&A expenses, compared to the full-year 2013.

Loss from operations was 11.6 million for the second quarter of 2014, compared to a loss from operations of 7.7 million for the same period in 2013. The variance is due primarily to the increase in costs related to ongoing phase 3 trials and, as previously discussed, a one-time severance-related compensation expense.

Net interest expense was 138,000 in the second quarter of 2014, compared to 415,000 in the same period in 2013. The decrease is primarily based upon a declining outstanding loan principal balance, as the Company continued to pay down debt.

For the second quarter of 2014, there were no fair-value-of-warrant charges, as all of the outstanding preferred warrants converted to common stock warrants upon the completion of the IPO in April 2013. For the second quarter of 2013, the Company recorded a $4.4 million expense, due to the change in Company valuation during that period.

Again, as a reminder, the second quarter 2014 financial results, as well as this morning's announcement, are available on the investor section of the website.

I will now turn the call back to Michelle.

Thank you, Tim.

Before we take questions, I want to emphasize some important points. During the second quarter of 2014, we significantly strengthened our financial position, we added several new independent directors to our Board, and we continued to add key employees to critical areas of the company.

Since March, we've enrolled nearly twice the anticipated number of patients in the pilot portion of the phase 3 AdVise study for adenovirus infections.

Assuming the BARDA contract is awarded, our smallpox countermeasure development program is expected to enter the equivalent of phase 3 testing in 2014.

Looking forward to 2015, we intend to progress a second compound in the clinical testing and to continue preclinical assessments on additional internal assets in areas of unmet medical need, such as influenza and norovirus.

Most importantly, we remain confident that the successful completion of the phase 3 SUPPRESS trial will lead to brinci's approval as the first compound for the prevention of CMV in HCT patients.

We are also optimistic about the opportunities for brinci to demonstrate broad spectrum antiviral activity, improvement in non-relapse mortality, and a benefit in healthcare utilization in the SUPPRESS secondary endpoints.

I will now turn the call to the operator for questions.

(Operator Instructions)

Katherine Xu, William Blair.

I'm just wondering on the slight delay on SUPPRESS; Michelle, you said, is because certain centers were enrolling slower. Could you just provide us with some more details why that was and is it unexpected from your side?

Good morning, Katherine.

So, just to clarify, we wanted to be very transparent about the enrollment for SUPPRESS and some of the lack of easy predictability on our enrollment patterns.

We found, over the last six months in particular, that there were some transplant centers that had a more cumbersome review and approval process, were a little slower in getting up to full enrollment than other centers.

We are now seeing, with the initiation and enrollment from some of the larger centers, a more consistent screening and enrollment pattern. It is still quite possible that we will complete enrollment by the end of 2014, but we wanted to be transparent that we may see the final patient of the SUPPRESS trial enrolled in the first few weeks of 2015.

And what data is really driving the final design of AdVise at this moment? Do you need some data from a pilot trial or do you not or it's pretty much set by now?

We do have general agreement with the FDA on the design of the AdVise trial, which will look at two different durations of therapy in patients with disseminated adenovirus. We are planning to look at both 6 and 12 weeks of brinci.

One of the interesting things we've seen so far in the pilot data, and again, you'll see much more granularity on this in October, is the different type of relative immunosuppression that we've seen. We are, again, going through this population to make sure that we are being inclusive in patients who are at risk of rapid progression to what is often a fatal disseminated adenovirus infection.

One of the things that we're also looking to the pilot data to confirm is, for those patients who relapse after stopping brinci; how quickly do we see that adenovirus relapse? And that will really play a larger part in determining where the primary endpoint is assessed.

Is it two weeks after discontinuation of brinci, is it four, is it six? And that's really one of the final things we're looking to confirm with the pilot data. As I reviewed, quite a number of patients and I think a surprising number of patients have sort of come out of the woodwork.

I think there was a lack of testing for adenovirus in many cases, because there was no therapy available, frankly. So I think that's also one of the last things that we're looking to confirm, prior to finalizing the endpoint and, obviously, the implications that that has for statistical analysis for the study.

But we do anticipate having that finalized by the end of 2014 and converting the sites that are actively enrolling into the pilot portion, into the formal phase 3 AdVise study.

And lastly, on the European side, are you still talking to them about the first indication you're pursuing? What is the plan there? I mean, do you plan to go through the regulatory processes in parallel on both continents or European is kind of lagging at this moment?

I would say we're certainly progressing both in parallel. Because we had the advantage of a longstanding relationship with the FDA, that certainly made initiation of our regulatory strategy and our sites in the US that much more rapid. But we are certainly progressing, both at the EMA level, as well as individual country health authorities.

Including, we're getting interest from several European countries in potential participation in the AdVise trial. So that's a newer component that, really. We had not anticipated discussions with when we submitted our regulatory package for discussion with EMA, for formal scientific advice, we had not initiated the adenovirus trial, so it was something to add to our agenda for discussion there.

We are continuing to progress with individual countries, throughout the summer and fall, and anticipate submission of our SUPPRESS data for review and approval in Europe, as well as in the US.

From a commercialization perspective, we're in the midst of a review of potential commercialization strategies in Europe and should have more information by the end of the year about our strategies there.

Thank you.

Thank you very much, Katherine.

(Operator Instructions)

Phil Nadeau, Cowen and Company.

First, I guess on the adenovirus trial, Michelle, is it your understanding that, given the design that you've come up with, that this is likely to be sufficient to be the confirmatory study and convert the approval; assuming you get an approval on the SUPPRESS trial, to a full approval?

Yes, hi; good morning, Phil. Thanks for the question.

So, for the adenovirus trial; the AdVise pivotal trial, it is planned to be a single study for full approval of brinci for the treatment of disseminated adenovirus infection and would, because of the clinical endpoint, be a single study that would get us approval for that indication.

For the CMV prevention indication, again, currently our plans and discussions with the FDA would result in an accelerated approval for CMV. As I mentioned earlier, there are several different potential routes for us to achieve traditional approval for that CMV prevention indication; one of which would be meeting some of the significant secondary endpoints in SUPPRESS, including non-relapse mortality or graft survival.

The other options there are if we can come to an agreement of the scientific community, along the lines of what we've discussed with the European authorities; namely that CMV viremia that results in initiation of preemptive therapy is in fact the clinical endpoint and, thus, should be the appropriate endpoint for a full traditional approval in the US as well.

So I think we're progressing on all fronts, but our current understanding is for an accelerated approval for the CMV prevention indication.

And if you're understanding there doesn't change, so if some of the secondary endpoints either don't come through or you don't reach an agreement with the FDA on [CME] viremia leading to therapy, would you then anticipate having to do a second study?

Well, our plan is to conduct a second confirmatory study in solid organ transplant recipients, so independent or whether or not we received an accelerated approval or a full approval on the SUPPRESS trial, either way, we want to have data in the solid organ transplant recipients.

Our first population would be the kidney transplant recipients, because of the opportunity for us to demonstrate the potential activity of brinci against B.K. virus and EBV, especially in those younger kidney transplant patients.

So, independent of whether we need that trial for a full approval, it is a trial that we intend to finalize by the end of this year and initiate in 2015. Again, that would be before we have the data for SUPPRESS, so, as I mentioned, that's our plan and we are actively pursuing finalization of that study design, with ongoing conversations, both with regulators and our advisors in that area.

And in the solid organ transplant trial, if you were going to look at an endpoint of kidney transplant graft survival, based on the early data that you've seen, do you have a sense for how large of a study that would need to be and how long of an endpoint you'd need to examine?

No. Most of the data for survival of the graft or for GFR that is, for example, less than 45; something that demonstrates less than optimal results, for those patients are usually at one year. We are looking at the literature and available single-center databases to see if we can get a good point estimate for a six-month post-transplant. So those are two potential timings for that measure.

Obviously, we will be collecting data, specific for CMV infection in these patients, but wanted to make sure that we can really shed light on the importance of these other viral infections and the need for a broad spectrum antiviral, as was highlighted in today's article; particularly in younger transplant recipients, where viral infections are increasing and having a significant impact on graft survival.

Great. Thanks for taking my questions.

Thanks, Phil.

Operator: Thank you. And at this time, I'm not showing any further questions. I would now like to turn the call back over to Michelle Berrey for any closing remarks.

Thank you, Charlotte.

We thank you all for your participation in today's call and we look forward to updating you again very soon. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect.

Have a great day.