Chimerix Inc (CMRX) 2017 Q3 法說會逐字稿

Good morning, and welcome to the Chimerix conference call discussing the financial results of the third quarter 2017. Please be advised that today's call is being recorded at Chimerix' request.

I would now like to turn the call over to Ms. Michelle LaSpaluto from Chimerix. You may begin.

Thank you, and welcome to the Chimerix Third Quarter 2017 Financial Results Conference Call. Earlier today, we issued a press release containing the financial results and other updates for the third quarter 2017.

The press release is available on the company's website at www.chimerix.com. You may also access today's call via webcast on the Investors section of the Chimerix website. An archive of the webcast will be available approximately 2 hours after the conclusion of the event.

With me on today's call are President and CEO, Michelle Berrey; and Chief Financial Officer, Tim Trost. Both Garrett Nichols, Chief Medical Officer; and Linda Richardson, Chief Strategy and Commercial Officer, will be available for the Q&A session following prepared remarks.

Before we begin, I'd like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties and other factors, including the possibility that there may not be a viable continued development path for brincidofovir, that the FDA and other regulatory authorities may not approve brincidofovir or brincidofovir-based regimens and that marketing approval, if granted, may have significant limitations on their use. As a result, brincidofovir may never be successfully commercialized. In addition, Chimerix may be unable to file for regulatory approval of brincidofovir with other regulatory authorities.

These risks, uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. You are cautioned not to rely on these forward-looking statements. These risks and uncertainties are described in detail in Chimerix' filings with the Securities and Exchange Commission, including the Form 10-Q filed earlier today, its most recently filed reports on Form 8-K and other documents subsequently filed with the Securities and Exchange Commission.

All forward-looking statements are based on information currently available to Chimerix, and Chimerix assumes no obligation to update such forward-looking statements.

At this time, I would like to turn the call over to our President and CEO, Michelle Berrey.

Good morning, everyone, and thank you for joining us today. Through the third quarter of 2017, we continued to lay the groundwork for a data-rich 2018. At this critical time in our interactions with regulators, we were pleased to further strengthen our executive team with the addition of Dr. Heather Knight-Trent as our Vice President of Regulatory Affairs. Heather brings more than 15 years of drug development and regulatory experience, most notably gaining approval for the first immuno-oncology therapeutic in the U.S. and in Europe. Heather has already made a significant contribution to the company in the short time she's been with us.

Now let's begin with an update on our clinical development programs. This morning, we will provide brief updates on our 4 clinical programs: One, oral brinci for adenovirus; two, oral brinci for smallpox; three, IV brinci; and four, CMX521 for norovirus.

We'll begin with our most advanced program, oral brinci, for the treatment of adenovirus. As we've discussed, the AdAPT trial was developed based on the rapid antiviral effect seen after oral brinci administration in patients with adenovirus detected in the blood. In both our Phase II trial and in AdVise, we saw the majority of patients with adenoviral loads of 10,000 copies or lower were able to clear adeno from the blood or reach undetectable in 4 weeks or less.

In AdVise, we continued treatment for brinci for up to 12 weeks, administering drug in patients who had already cleared viremia. This led us to the understanding that a shorter course of oral brinci could be successful in clearing adenovirus from the blood while minimizing the potential for diarrhea and other side effects that may occur with longer courses of oral dosing. Positive data from the upcoming AdaPt trial should support a conditional or full approval in Europe. And as we've discussed, once we have data from AdaPt in hand, we plan to discuss the data with the FDA upon conclusion of the study. The final protocol has been submitted for ethics and IRB review, and we expect dosing in AdAPT to begin by the end of 2017.

Our AdVance study of adenovirus screening patterns and current treatment options in Europe is reporting data as research has wrapped up for each of the 7 countries involved. We're focusing on 40 medical centers that perform stem cell and solid organ transplantation across these 7 European countries. AdVance will provide detailed information regarding the clinical progression and outcome of adenovirus infections in adult and pediatric stem cell transplant patients with the current standard of care, which is predominantly reduction of immuno-suppressive drugs and/or off-label use of IV cidofovir. We're also collecting data on the incidence of adeno infections and co-infections with other DNA viruses. We look forward to sharing these results with you in early 2018.

Now to our second program, oral brinci for smallpox. Our smallpox program with oral brinci continues to move forward with our partners at BARDA. In 2016, we completed the pivotal rabbitpox efficacy study and submitted the final study report, the first of our 2 animal efficacy models as agreed with the FDA. We anticipate discussions with the FDA by the end of the year to determine if that program is complete or if any additional studies may be required. In the spring of 2017, we published a summary of clinical safety of 3 weeks of oral brinci, the treatment course we anticipate for stockpiling. We plan to conduct the pivotal efficacy study in our second animal model, the mouse, during 2018. Following a review of these data with regulators, we could file our first applications for oral brinci for the treatment of smallpox as early as 2019. We await final approval of fiscal year 2018 federal budget, which could provide funding for medical countermeasures, including brinci for the Strategic National Stockpile. Two weeks ago, the WHO held the annual varicella conference in Geneva, and it is clear that the threat of a weaponized smallpox remains at the forefront.

Turning now to our third program, IV brinci. Our multiple ascending dose study of IV brinci in healthy subjects is progressing as expected. The study is evaluating the safety, tolerability and (inaudible) associated with multiple doses of IV brincidofovir. Healthy adult subjects are receiving IV brinci at 10 or 20 milligrams once or twice weekly for a total of 4 doses each. As we have shared, we remain hopeful that IV brinci will decrease the risks of GI side effects with longer-term dosing as it's clearly going to be required for the prevention of multiple viral infections in high-risk stem cell transplant recipients. We now know that 75% of transplant recipients who reactivate CMV also have at least one other active DNA viral infection. IV brinci also provides an opportunity for treating viral infections of the brain, including herpes encephalitis, HHV-6 and potentially PML. Data from the healthy subject study, including safety and tolerability, will also be shared in early 2018.

We're pleased to announce a new study in virally infected adult transplant recipients planned to initiate in early 2018 in Europe. These data are intended to inform the next studies in IV brinci development, including a study in prevention of CMV, adeno and other DNA viruses in pediatric stem cell transplant recipients.

And now to our fourth program, CMX521 for norovirus. Our first in human study of CMX521 for the treatment of norovirus is on track to initiate by the end of this year. As we've shared previously, 521 is a Nucleoside Analogue identified from our chemical library, which targets the norovirus polymerase, a part of the virus common to all strains and which is essential for viral replication. CMX521 has demonstrated consistent in vitro activity against multiple norovirus strains and is expected to be active against genetically diverse noro strains that are associated without outbreaks. We continue to be excited about the opportunity for 521 in this indication as there are no approved drugs or vaccines for the treatment or prevention of norovirus, which accounts for over $60 billion each year in health care utilization and lost productivity. There's clearly an enormous unmet medical need, and we're eager to bring this program into the clinic later this year.

With that overview, I'll turn the call over to Tim for a review of our financials.

Thank you, Michelle, and good morning, everyone. As Michelle LaSpaluto mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the third quarter 2017.

Starting with our balance sheet at the end of the third quarter 2017, we remain well capitalized with approximately $241 million in capital to fund operations. We also had approximately 47.1 million outstanding shares of common stock.

Turning to our statement of operations, the company reported a net loss of $17.3 million or $0.37 per basic and diluted share for the third quarter of 2017 compared with a net loss of $17 million or $0.37 per basic and diluted share in the third quarter of 2016.

Contract revenue for the quarter was approximately $0.9 million as compared with $0.7 million for the same period in 2016 due to an increase in the third quarter of 2017 in reimbursable expenses associated with the company's ongoing development contract with BARDA.

Research and development expenses were $12.2 million for the 3-month period ended September 30, 2017, and were also $12.2 million for the same period in 2016. This is due to a decrease in the oral BCV program offset by increases in CMX521 and brincidofovir IV costs.

General and administrative expenses increased to $6.7 million for the third quarter of 2017 compared to $5.8 million for the same period in 2016. The change is a result from an increase in compensation expense and commercial preparation.

Loss from operations was $17.9 million for the third quarter of 2017 compared to a loss from operations of $17.4 million for the same period in 2016, due primarily to the increase in general and administrative expenses as previously discussed.

Looking forward to 4Q 2017, we continue to expect R&D expenses for the full year of 2017 to remain relatively consistent with full year 2016, although there may be unevenness from quarter-to-quarter. Key drivers of the 2017 R&D expense remain, gearing up for the AdAPT trial, our ongoing work on IV brinci, our CMX521 program for norovirus and our smallpox development program.

I would like to close by, again, highlighting our strong balance sheet, which at the end of the third quarter 2017 reflected $241 million in available capital. We also continue to maintain our rigorous emphasis on cost control as we continue forward with these programs.

With that, I'd like to now turn the call back to Michelle for final remarks.

Thank you, Tim. Before we open up the call to your questions, I want to briefly recap the key milestones to expect through the end of the year and into 2018. In the coming months, we expect the initiation of our first in human study of CMX521 for norovirus, our newest clinical candidate; data from our multiple ascending dose study of IV brinci and initiation of the first patient study with IV brinci; data from the AdVance natural history study in Europe; and importantly, initiation of dosing in AdAPT, the trial of oral brinci for the treatment of adenovirus infection in the U.S. and Europe.

As we look to the last weeks of 2017 with our team and corporate strategy aligned, we're eager for 2018 to deliver positive data for multiple clinical trials. Our mission remains to deliver solutions to patients undergoing transplant and with other immunodeficiencies to protect them from viral disease and provide hope for successful outcomes.

Operator, we'll now open the line for any questions.

(Operator Instructions) Our first question comes from the line of Marc Frahm of Cowen and Company.

I guess, one question just on the IV formulation with this MAD trial. I guess, earlier in the year, you'd talked about possibly adding a small cohort of transplant patients to the MAD trial. Has this now been converted to just a formal Phase II? Or is that -- or did that still happen? And if it has, should we expect that data alongside the healthy volunteers in early 2018?

This is Garrett Nichols. The MAD study is a multi ascending dose study in healthy subjects. It is a study of healthy subjects who are administered 4 doses of IV brinci either once or twice weekly. What Michelle just announced was our plans to start a Phase II study in adult transplant recipients with the IV formulation, and that study is slated to start in early 2018. So those are 2 separate studies. We look forward to sharing the data from the MAD study in the healthy subjects receiving 4 doses of IV brinci in the early part of 2018.

Okay. And then do we -- the other trial that had been talked about at one point is the MVP-peds trial with this formulation, are we going to need this Phase II adult transplant trial to completely finish? Or do you -- or is that kind of -- can you stage that where you just test a few patients for safety side before you get the efficacy in adults before you could start the MVP-peds?

I think it's going to depend on the results that we end up getting from that study. We'll enroll the first cohort of patients and see what the data looks like in the adult transplant patients. That study is a study looking at safety, tolerability and some pharmacodynamic results. In other words, looking at the effects of IV brinci on the viruses in these adult transplant patients. It's a very, very useful study for us to develop as we end up looking forward to the MVP-peds study.

Okay. And then...

One thing that -- for this first patient in patients -- excuse me, first study in patients, that is confirming the dose that we need to really get us the same effect that we saw in adults in earlier studies with adenovirus. We'll still need to do some dose -- early-dose ranging work. So we anticipate that once we get into the MVP study, there will need to be this early-gating stage for us to confirm the doses in different aged children. But that should be a relatively short confirmatory phase. But as Garrett said, depending on the consistency of the data we see in this first study in adult patients, that may help us progress more rapidly.

Okay, that all makes sense. And then one relatively quick one for Tim. So it sounds like you're projecting quite a step-up in Q4 in R&D spend. When we look forward into 2018, should it -- do you think it'll continue to ramp? Or is that kind of the steady state and that should be a much slower increase from there?

Well, first of all, Marc, what we said about 2017 is we expect the expenses for the full year to remain -- to be relatively level with 2016. So that really does not imply a significant increase in 4Q. With respect to 2018, we haven't given guidance on that yet. But as we've talked about here, the key incremental things happening are going to be the AdAPT trial and this Phase II trial on IV that we were just speaking about, neither of which I anticipate to be huge cost increase drivers.

Our next question is from the line of Jessica Fye of JPMorgan.

Sorry, this is Ryan for -- on for Jess. Can you help us think about what you're specifically looking for from the IV MAD cohort in order to select the dose and schedule to move forward there?

So that study is really designed to look at safety, tolerability and pharmacokinetics and it's to look at the pharmacokinetics not only of brinci in the blood, in the plasma, but also the active antiviral, which is cidofovir diphosphate in peripheral blood mononuclear cells, and we're using that as a surrogate for tissue concentrations of the active antiviral. So it's important for us to look at -- within that study, obviously, the safety and tolerability with also the pharmacokinetics that we can relate to the efficacy that we observe with oral brinci in previous trials of oral brinci. So it's a bridging strategy. It will allow us to determine whether twice-weekly dosing, as we have pursued before, will be needed or whether once-weekly dosing could be pursued for some of the indications.

Okay. And Tim, just to kind of follow up on, I think, the prior question. I mean, when you said you're not expecting a significant increase, but just to kind of think about the math going up there, I mean is there sort of a way you could kind of talk about how much that step-up could -- how to think about that step-up for 4Q a little bit more?

Well, we have not heretofore, Ryan, provided sort of intra-year guidance. I mean to get to a number that is essentially level with 2016 would imply some increase in 4Q versus what it has been year-to-date in 2017. Whether that materializes or not, remains to be seen. But again, it's not going to be anything significant.

And just to recap, the AdAPT trial is not a large trial. It's 140 subjects, and it's pretty focused in enrollment to those centers who are transplanting pediatric patients with T-cell depletion. So we don't expect that, that would require a large number of sites. So probably not as large a step-up as we would see in a large Phase III trial.

Our next question is from the line of Roland Smith of William Blair.

This is Katherine Xu with William Blair. I was just wondering, sorry I came on a little late, with regards to the Phase II study in the adults, the Phase II study for IV, what do you learn in addition to the MAD part? It looks like you can look at the PK-PD, or early PK there and then try to model to bridge? And I'm just wondering what exactly the incremental you learned from that Phase II study?

Yes, that's exactly right. That's -- getting that information with regards to not just the pharmacokinetics in infected subjects in our transplant patients, that's one critical piece because sometimes you see different exposures in patients versus healthy subjects. But the real critical piece is for us to be able to see when you end up getting the exposures that you are targeting, what is the effect on the viruses. And that's the pharmacodynamic part that really will give us a lot of confidence going into subsequent Phase III trials.

And then using that data, so basically model each of the peds and going into MVP-peds.

Right. So that's what you're doing is establishing the levels in the blood that are associated with your desired pharmacodynamic effects. And that way when you go into the pediatric patients, you then bridge, you target those same levels in the blood of pediatric patients, confirm that you're achieving that and then, therefore, you're going to have the efficacy that you expect as you go forward.

And so for MVP-peds study, so I wonder whether the study could show a statistical significant in CMV prevention, one of the secondary endpoints. I'm curious about the powering. So if you're screening the patient with the presence of AdV in the stool, what are the assumptions that you think the co-infection of CMV would be? And do you think that the study is powered for -- to show a statistical significance in CMV prevention?

It's a good question. It's something that's very important for us to take a look at. And as we end up designing that study, one of the considerations would be whether to ensure that the patients who go into that study are CMV seropositive such that we would have the power to demonstrate those types of differences.

What we do see, Katherine, in pediatric patients at least in the U.S. and Europe is that the proportion of those patients that are CMV seropositive in the pediatric population is really equivalent to what we see in adults. So about 2/3 to 3/4 are CMV seropositive. That's one of those viruses that we get exposed to pretty early in life generally in the first 2 years.

And lastly, on AdAPT. The regulatory talks in the U.S. hasn't changed, right? So they still would not accept the sort of the surrogate endpoint. I just want to [establish] (inaudible)

Yes, so we've received feedback now from both the EMA and FDA. As far as the EMA is concerned, we've spent a lot of time with them in designing the study to fulfill requirements for a potential accelerated approval in Europe. As far as the FDA is concerned, once we get the data from the study, we'll go back to the FDA to discuss the implications on the program and whether that study is able to fulfill the requirements for accelerated approval here in the U.S. It is notable that the FDA has recently accepted CMV viremia in the CMV prevention studies as an acceptable primary endpoint for full approval.

Our next question is from the line of David Lebowitz of Morgan Stanley.

My first question is on the status of the BARDA agreement. Could you just quickly run through where things stand? Which animal studies are in place, which might be required to be done again -- or be done in the future? And what needs to be done to get things to move forward?

Yes. Good question. So 2 different approaches. One is for approval of brinci for the treatment of smallpox, and that is being conducted under the animal rule. Our first -- so our agreement with the FDA is that our 2 animal species for efficacy are rabbitpox and mouse. So -- and the rabbit studies, as you recall, we have completed with -- and showed 100% survival benefit in those rabbits. We submitted that in 2016, and that's going through what is a pretty typical process with audits, et cetera, and full review. We have not yet had that discussion with the FDA on the rabbitpox program to get confirmation from them that, that program is complete and would not require an additional supportive study. We hope to have that conversation with them soon and wrap that up. The second animal model, of course, is the mouse. We have completed all of the work up until a natural history study, which is [ongoing] now and which should allow us to run a single pivotal efficacy study in the mouse model in 2018. So regardless of our conversations on the rabbitpox, if we do need an additional study, that could be conducted during the same time frame that we've laid out for conduct of the mousepox pivotal study. So we think we can wrap up one or both of those programs in 2018. The procurement is a separate discussion. As you know, BARDA does not require that we have previously achieved approval prior to a procurement discussion. We had previously been in a procurement discussion, so we have a pretty good idea what the intent is with -- from that 2015 sole-source agreement that was underway. Unfortunately, we weren't able to get to a final agreement on that because of a shortfall in funding. We are hopeful that with the 2018 fiscal year budget, if we get to a full fiscal year budget and not another CR, that there will be more clarity and BARDA will be able to move forward on that. We're at a little bit of a disadvantage because we do need to wait to see what that fiscal year '18 budget looks like, but we do understand from BARDA that it is one of their top priorities to obtain brinci for the Strategic National Stockpile. We know that smallpox and in particular, synthetic, the capabilities to manufacture synthetic smallpox is really quite easy, unfortunately, and I think that's been recognized both recently at the WHO meeting and in some of our discussions on Capitol Hill. So we do believe that that's possible, we'll know more after we see where we get with the fiscal year budget.

And can you quickly run through the upcoming norovirus trial, how that trial -- what that protocol will look like and what we could expect to see from data?

So as far as the CMX521 asset for norovirus, it's going into the first time in human study. We'll be kicking that off before end of the year. That's a single ascending dose study. It's really -- it's a very interesting study because it not only is looking at concentrations of CMX521 in the plasma really because the -- where the drug needs to get to is just to the gut tissue because that's where norovirus replicates. It will also be associated with -- the study includes some GI biopsies for us to look at concentrations of 521 in gut tissue. So a really good study that's going to help to link to a lot of the in-vitro work that we've done and a lot of the work that we've done in tissue culture models. We're really looking forward to discussing a lot more about 521 as 2018 comes forward.

Your next question is from the line of Stephen Willey of Stifel, New York.

This is Philomena Kamya in for Stephen Willey. Just by way of elaborating how the data generated in this novel Phase II trial of IV brincidofovir in adult transplant patients will inform the MVP-peds trial. I recall you mentioning that there's going to be a bit of a gating stage for confirming dosing in children. Are you able to elaborate a little bit further with respect to what those -- what that would look like?

So we've always discussed the MVP-peds study as a Phase II, III type of a design, a seamless design. What we're talking about doing is taking the data from the adult IV patient study, looking at the concentrations that are achieved in that study that are able to have significant efficacy against adenovirus and then translate those into pediatric exposure. So we can model what the doses should be. The Phase II part of that study would simply be to treat a handful of pediatric patients at each age group going from 2 months of age, all the way up to adolescence to confirm that the dosing strategy that we're using, weight-based dosing strategy, would be able to achieve the same efficacious plasma concentrations as were achieved in the adults.

Okay, understood. And just by way of timing, you'll get a little bit of data, snapshot of the data from the Phase II adult cohort and then translate this into the MVP-peds, correct? So...

Correct.

Thank you. And that does conclude our Q&A session today. I'd like to turn our conference back over to Michelle Berry for closing remarks.

Thank you, everyone, for your time this morning, and we look forward to updating you again soon. Have a good day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.