Chimerix Inc (CMRX) 2014 Q3 法說會逐字稿

Good morning, and welcome to the Chimerix Third 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 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 third quarter financial results conference call. On the call today are Michelle Berrey, President and CEO; Tim Trost, CFO; Garrett Nichols, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Mike Rogers, Chief Development 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 III SUPPRESS trial or future clinical trials of brincidofovir, also known as CMX001 and related matters. These statements involve risk 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 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 at 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 third quarter of 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 on the call this morning. 2014 continues to be an exciting year for Chimerix. As we discussed at our R&D update in October, we are expanding our product pipeline with a new clinical candidate, 669, and are enthusisastic about our increasingly robust clinical programs and the potential of brincidofovir to prevent and treat multiple life-threatening viral infections.

Our clinical development program includes the Phase III SUPPRESS Trial for the prevention of cytomegalovirus in HCT, the AdVise Trial for the treatment of adenovirus infection, brincidofovir for smallpox, and most recently, the start of a Phase II study of brincidofovir in patients with Ebola Virus disease in the United States and Europe.

With the completion of our follow-on offering on November 5, with gross proceeds of approximately $121.7 million, we further strengthened our financial position, enabling us to advance our clinical program, which includes initiating clinical trials of our novel clinical candidate, CMX669, in 2015.

Garrett Nichols, our new Chief Medical Officer joined the Company in September, and is on our call for the first time today. Garrett will review progress on the SUPPRESS Trial, the AdVise Trial, our play into the Solid Organ Transplant Trial, brincidofovir for Ebola and for smallpox. Linda Richardson will provide an update on our prelaunch activities. Tim Trost will discuss our third quarter financial results and I will conclude the call with an update on 669 and the upcoming milestones for the Company. Garrett?

Thank you, Michelle. So let me begin with SUPPRESS. Enrollment for our Phase III SUPPRESS Trial is ongoing, including at recently initiated sites in Canada and in Belgium. We anticipate that enrollment will be completed at the beginning of next year with data expected in the second half of 2015. The Data Safety and Monitoring Board for SUPPRESS met for the fourth time and once again there were no recommendations for any changes to the study conduct. We remain confident that the successful completion of the Phase III SUPPRESS Trial will lead to brincidofovir's approval as the first compound for the prevention of CMV in stem cell transplantations. We are also optimistic about the opportunities for brincidofovir to demonstrate broad spectrum antiviral activity, the potential for improvement in overall mortality in these patients and a benefit in healthcare utilization in the SUPPRESS secondary end points.

Next, I'd like to turn to AdVise, our trial of brincidofovir for the treatment of adenovirus infection. In October, at the Infectious Disease Society of America Conference, called IDWeek, we presented positive brincidofovir data from the open label pilot portion of the AdVise study, which showed a potential survival benefit for patients with adenovirus infection. The preliminary survival analysis data, based on 48 patients from the ongoing AdVice Trial showed a mortality rate of 35% compared with historic mortality of up to 80% in these patients. A majority of subjects also had suppression or clearance of adenovirus in the blood. There is currently no approved treatment for adenovirus, and this is an infection that obviously can progress quickly in patients with a weakened immune system due to disease or due to medications.

As most of you already know, in March of 2014, we initiated the pilot portion of AdVise, which allows patients with adenovirus infection to be treated with brincidofovir. The first subject was enrolled in this study in March and we now have 25 participating sites and more than 80 patients enrolled. This rapid enrollment underscores the high unmet medical need for adenovirus infection, but also may indicate that this infection may be more common than was previously recognized and may be causing significant disease in more diverse patient populations than was initially appreciated.

We hope to finalize the AdVise pivotal study design with the FDA by the end of 2014 and we expect to quickly begin enrollment into this trial by utilizing the sites that are already participating in the pilot study. And we're also opening AdVise outside of the United States, because of strong interest from physicians and regulators in Europe and Canada.

Now for an update on our planned Solid Organ Transplant Study. We've been in discussions with external advisors and with the FDA for the last several months and are preparing to submit our study design to the FDA by the end of the year. We plan to study brincidofovir head-to-head against Valcyte in kidney transplant recipients who are at increased risk for CMV infection. The study would include dosing for 14 weeks plus a period of follow-up. Our goal is to show comparable efficacy for brinci when compared to Valcyte for the prevention of CMV. This trial also provides us with an opportunity to demonstrate brinci's activity against BK virus, a DNA virus that is a common cause of dysfunction and failure in the new kidney. The combined benefits of brinci's activity against CMV and BK virus may provide improved renal function at six months and 12 months after transplant. This would be a true game changer in the kidney transplantation field. We plan to begin our Solid Organ Transplant Trial in the first half of 2015 after we reach FDA agreement on our final study design.

Turning next to brincidofovir for Ebola. We all see the news reports everyday on Ebola and we understand that there is great interest to know what Chimerix is doing to combat Ebola Virus disease with brincidofovir. We have worked closely with the FDA and other government agencies since receiving data a few weeks ago, demonstrating brincidofovir's potent in vitro activity against the Ebola virus. Several patients with Ebola virus disease have been treated with brincidofovir in the United States and Europe under emergency INDs, as a protocol was being drafted. Data from these experiences are being written up by the treating physicians and are likely to be submitted to peer-reviewed publications soon.

As many of you know, we reached an agreement with the FDA on a Phase II protocol for brincidofovir to treat patients with Ebola virus in the US and Europe. Under this protocol, patients will receive five doses of brincidofovir, beginning with a loading dose of 200 milligrams, followed by four 100 milligram doses given twice-weekly. No agent has been proven effective for this disease; brincidofovir does have advantages over other potential Ebola investigational agents, including its oral, twice-weekly dosing, a large and relevant safety database and an adequate supply of tablets that are available for immediate use. We're also in advanced discussions with government agencies and international organizations that are planning to conduct studies of brincidofovir for Ebola virus disease in West Africa.

Finally, an update on smallpox. In August, the Company was awarded a $17 million award through the extension of its contract with BARDA for their development of brincidofovir as a medical countermeasure to treat smallpox. We expect to begin our pivotal Phase III [Rabotox] study in the next few months.

Now I'd like to turn the call over to Linda Richardson.

Thank you, Garrett. I'd like to take a moment to update you on activities we've undertaken during the third quarter in preparation for the launch of brincidofovir. In September, we added Essy Mozaffari as our Vice President of Access and Reimbursement. Essy is leading our efforts on global payer reimbursement strategies. When the Phase III data report out from SUPPRESS and AdVise, we'll be finalizing the brinci value proposition, with a particular emphasis on the health outcomes data, in addition to fine-tuning our efficacy and safety profile. In the meantime, we've been busy engaging an array of healthcare providers in the US and EU to gain insights into their needs and to assess reactions to the potential availability of a new broad spectrum antiviral.

To-date, we have completed market research with close to 400 healthcare professionals across a range of specialties and countries. And there are three preliminary key takeaways at this time that I'd like to share. Response to a blinded brincidofovir target profile is very positive. The product profile was based on data that we have to-date on brinci from clinical trials and what our base case expectation is for SUPPRESS and AdVise data. Physicians further indicated that based on the target product profile, brincidofovir may change their clinical practice from preemption of a single virus to protection from a number of DNA viruses. And thirdly, there is increasing awareness of the overlap of multiple viral infections in transplant and immunocompromised patients, highlighting the need for a broad spectrum antiviral.

Following up on this last point, as we mentioned during the Chimerix R&D Day last month, we are going to initiate a study to examine the prevalence of multi-viral infections, in particular adenovirus in transplant populations. As Garrett mentioned, we are becoming increasingly aware of the high prevalence of life-threatening adenovirus infections across stem cell and solid organ transplant patients, but also seeing increased adenovirus virus infection in patient populations we have not anticipated, an important area of focus for us in the coming months, as we prepare for the launch of brinci.

That's just a brief update on some of our commercial learnings to-date. Now I'd like to turn it over to Tim Trost.

Thank you, Linda and good morning everyone. As Joe mentioned in his introductory remarks, earlier today we issued a press release containing our financial results for the third quarter of 2014.

Beginning with our balance sheet, Chimerix had $188.4 million in cash and cash equivalents and short-term investments, $5.7 million in debt and approximately 36.4 million outstanding shares of common stock at September 30, 2014. As Michelle mentioned, we are in a solid financial position. We completed our follow-on offering earlier this week with net proceeds to the Company of approximately $114 million.

Turning to our statement of operations, Chimerix reported a net loss of $17 million or $0.47 per basic and diluted share for the third quarter of 2014. During the same period in 2013, Chimerix reported a net loss of $6.7 million or $0.26 per basic and diluted share. Revenues for the third quarter of 2014 increased to $1.2 million compared to $0.9 million for the same period in 2013, due to an increase in the third quarter of 2014 in reimbursable expenses associated with Chimerix's ongoing contract with BARDA.

Research and development expenses were $13.3 million for the third quarter of 2014, compared to $5.3 million for the same period in 2013. This increase is primarily due to the effect of increased costs related to the going enrollment of the Phase III SUPPRESS trial, enrollment in AdVise, 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. We also expect R&D expense for 2015 to increase substantially relative to current levels, based on the robust clinical programs we've reviewed earlier in the call.

General and administrative expenses increased to $4.7 million for the third quarter of 2014 compared to $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 preparations for the commercial launch of brincidofovir. Continue to expect a significant increase in G&A expenses for the full year 2014 compared to full year 2013, due to these same cost drivers.

Loss from operations was $16.9 million for the third quarter of 2014 compared to a loss from operations of $6.4 million for the same period in 2013. The increase is due primarily to an increase in costs related to ongoing Phase III trials, as well as the increase in G&A expenses. As a reminder, the third quarter 2014 financial results, as well as this morning's announcement are available on the Investors section of the website.

I will now turn the call back to Michelle.

Thank you, Tim. At our R&D meeting in October, we took the opportunity to introduce you to a few of our many outstanding scientists here at Chimerix and to highlight the progress of our research efforts. We unveiled some of our exciting discovery initiatives. Our research team has selected a novel clinical candidate, CMX669, which has demonstrated potent in vitro activity against CMV and BKV with a promising safety profile in vitro and in pilot toxicity studies in animals. Pending outcomes of the IND enabling tox studies, we plan to initiate clinical trials for 669 in 2015.

I also want to point out that in the past few months, we've continued to build our corporate infrastructure and strengthen our team in critical areas of the Company. In addition to Garrett Nichols and others who recently joined the Company, earlier this week we announced the appointment of Peter Payne, Senior VP of Business Development and Corporate Strategy and Roberto Guzman as Head of Compliance. They bring extensive expertise in the areas of business development, operations, regulatory affairs and quality that are essential to our continued success as we're advancing our clinical trials and preparing for the commercial launch of brincidofovir. With every update through 2014, we've provided significant news on our progress.

As we look forward to 2015, we expect to provide pivotal read-outs on our Phase III trials in CMV prevention and treatment of adenovirus in smallpox. As our team is busy preparing for an NDA submission, we also plan to initiate a third pivotal trial in the solid organ transplant population, another group of patients who are at risk of multiple viral infections and they need the protection of a broad spectrum antiviral, brincidofovir.

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

(Operator Instructions) Katherine Xu, William Blair.

I have a couple of questions. First, can you remind us what is going on with the European discussions on the SUPPRESS study and design indication? And the second one is, do you have any update on the Ebola animal studies at the [CBCs]?

With regard to the European agencies, we are in ongoing discussions, some about SUPPRESS, but really in discussions about the potential for adenovirus, the AdVise Trial, to be opening in, in several European countries. Although at the beginning of this year, clearly Ebola was not at the top of our list of priorities, it has given us an opportunity to engage many of the European governments and health authorities in discussions about brincidofovir and its potential, which has really opened the door for us to have discussions about opening AdVise in many of these European countries.

With regard to Ebola and animal studies, those are ongoing, but not critical path. Again, we do have some data from the emergency INDs and now have open Study 205 in the US and in Europe for patients who are diagnosed with Ebola virus disease, returning from West Africa predominantly, and have ongoing conversations with several different agencies, both federal and not-for-profit groups regarding larger trials to be conducted in the near future in West Africa.

Brian Klein, Stifel.

So, first question, just wondering if you had any thoughts about the recent approval of a generic Valcyte this week and how that might potentially impact the enrollment and/or future commercial opportunity?

So, Valcyte, as you are aware and whether that's branded or generic is CMV specific and it is also not approved for the use of prevention, as a prevention in stem cell transplant patients, because of the toxicity against the new bone marrow. So that's why brincidofovir really offers two unique opportunities, one in the hematopoietic stem cell patients who are in that very susceptible period. It's early, very early after the transplant, where we know we are seeing CMV reactivation and there's not been available antivirals that were safe enough to be used to prevent those early CMV reactivations. So, that's really not going to change, whether that's a branded or generic drug that's available. And second, of course, is the broad spectrum brincidofovir provides with activity against the other DNA viruses. It is increasingly clear that these patients are at increased risk of other viruses, besides just CMV, BK virus, adenovirus, HHV-6 et cetera and we continue to see the increasing recognition of those multiple viral infections, again, that wouldn't be provided by Valcyte or a generic.

And then just a last question. Any update on a potential trial looking at brincidofovir in PML patients?

We are continuing, in some early discussions there, but no announcements at that point about initiation of that trial. It is an area of great interest for us however. Thanks for that question.

Phil Nadeau, Cowen and Company.

I guess, first, is on adenovirus infections. I know you said in your prepared remarks you're just beginning to try to figure out the incidence and prevalence using or doing your own research, but could you maybe give us some idea of what's in the medical literature or what prevalence estimates are out there today for the number of life threatening adenovirus infections that happened in the US each year?

(inaudible) Garrett Nichols to respond.

I think that within the stem cell transplant population, literature describes a fairly wide range of incidence of infections, anywhere from the 5% to the 70% range. And so, really it comes down to what are the individual risks. The higher incidence tends to be in pediatric stem cell transplant recipients, because these are kids that are either carrying active adenovirus infections or are being exposed from other children to adenovirus infections. And so that's one of the risk factors. The other one is the type of the transplant that they receive with T-cell depleted transplants being the highest incidence. And so, for those kids that receive cord blood transplants or T-cell depleted transplants, that's where you end up getting those numbers in the 50% to 70% range of incidents. And then the lowest risk patients would be Matched Allogeneic transplants in adults.

So it gives you kind of sense as to what the range is and it just depends on what the individual risks are. What we're seeing in the current AdVise Study though is that, is that there is a wide variety of patient populations outside of the allogeneic stem cell transplant recipients, who are also presenting for treatment with brincidofovir. These include a variety of solid organ transplant recipients and routine recipients of chemotherapy, which is a large population of patients. We also are aware that with the approval of a new adenovirus diagnostic test, it is possible that other patient populations who present with pneumonia -- community-acquired pneumonia will be diagnosed with adenovirus infections going forward. Large patient populations that are immunosuppressed for other reasons, such as the reciept of biologics for inflammatory diseases such as rheumatoid arthritis are also at risk for infections such as these. So it's really a population of patients that we're learning a lot more about. But it potentially is a large unmet medical need and an opportunity for brincidofovir to provide life saving therapy.

And while we are on adenovirus, Michelle on your prepared remarks at the end, you said that the adenovirus treatment trial is actually also going to -- it's going to start and finish in 2015. Just want to assess your confidence in that. That's seems like a very quick timeline. Is that aspirational or based on your preliminary discussions with the FDA in the preliminary design that you think is likely, are you fairly confident that that trial start to finish will be less than 12 months?

Yeah, that's a good pickup. We are planning to have formal discussions with the FDA in December. So, we'll have much more confidence around those timelines once we get an agreed number of patients that would be required for that trial. So it's certainly aspirational at this time, but with nearly 200 patients treated to-date between emergency IND, the 350 Study and the ongoing pilot portion of AdVise, we are having increasing confidence in the duration of therapy that's currently being administered in the pilot portion of the trial, including all these other populations that Garrett mentioned. So, certainly aspirational; we'll give you more guidance after that FDA meeting towards the end of the year.

One last question on Ebola. I'm curious in these compassionate use cases that have gotten brincidofovir so far, or thus far. Have you been able to assay viral levels -- viral kinetics after brincidofovir is dosed? So is there enough information to know whether the declines in viral load are caused by brincidofovir or whether they're simply correlated and other things like [plasma infusions] may also play a role?

Yeah, it's a great question. And I think what we're seeing and we are gathering pretty intensive viral levels to look at exactly that question about dynamics. But again, these are individual patients and don't provide us with the kind of rigorous analysis that a controlled clinical trial would provide. So we have increasing confidence that we are seeing antiviral effect, but without a control group and without -- again through an emergency IND, we have less control over what additional interventions where patients have been administered, including convalescent plasma, and sometimes additional investigational agents on top of that. So, we are looking toward 205, which will give us more robust data, but really the importance of a controlled clinical trial, as you are seeing discussed pretty openly, both in the scientific literature and in the late press and the importance of getting that controlled data to really know what effect we are seeing fully attributable to brincidofovir.

Josh Schimmer, Piper Jaffray.

Couple of quick questions. First, do you have any greater visibility into the mechanism of action of brincidofovir in the non double-stranded DNA viruses, some of the RNA viruses, including Ebola, do you expect it may have activity against Enterovirus D68?

And that's a great question. And it is something that we are continuing to pursue. Obviously, passage work is pretty difficult for Ebola, but we are pursuing a couple of other lines of questions that might give us more visibility into the mechanism of action. Again, Ebola does have an RdRp, so it is possible that that polymerase inhibitor and the ability of the cytarabine to terminate an elongating virus, whether that's RNA or DNA, is possible. But we don't have much more information at this point. And we are also pursuing the potential to see if it is active against adenovirus. So that'll be another few weeks before we get a definitive answer there, but certainly with the number of reports, it's something that we wanted to pursue and get an answer on as quickly as possible.

And then given brincidofovir's activity against both smallpox and Ebola, which are theoretical stockpiling targets, is there a mechanism or an opportunity to kind of leverage its multi-viral activity to work with BARDA and the government to procure a contract that would cover more than one infectious agent?

Again, without ever want to get the words in the mouth of our federal agencies, it certainly makes sense that if one could stockpile an agent that has several different opportunities for utility and I guess the unlikely event that we would have two epidemics, one of smallpox and one with Ebola going on simultaneously, it makes sense that a broad spectrum antiviral would be a natural stockpiled antiviral. But stay tuned, I guess, is my best answer on that one. But, yes, I certainly agree, it's an opportunity for a broad spectrum antiviral.

Thank you. I'm showing no more questions in the queue at this time. I'd like to turn the call over to Ms. Michelle Berrey for closing remarks.

Thank you very much. Thank you all for your participation in today's call and we look forward to updating you again soon. Bye-bye.

Ladies and gentlemen that concludes the presentation. Thank you for your participation. You may now disconnect.