Chimerix Inc (CMRX) 2018 Q2 法說會逐字稿

Good morning. Welcome to the Chimerix conference call discussing the financial results of the second quarter 2018. Please be advised that today's call is being recorded at Chimerix's request.

I would now like to turn the call over to Michelle LaSpaluto from Chimerix.

Thank you, and welcome to the Chimerix second quarter 2018 financial results conference call. This morning at 7:30 am, Eastern Time, we issued a press release containing the financial results and other updates for the second quarter 2018.

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 Michelle Berrey, President and CEO; Tim Trost, Chief Financial Officer. Other members of the Chimerix medical team including CMO, Garrett Nichols; and Kevin Reeves, VP of marketing will be joining us for questions.

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 our current or future clinical trials of brincidofovir that may not be successful that the FDA and other regulatory authorities may not approve brincidofovir or other 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 in the forward-looking statements. You are cautioned not to rely on these forward-looking statements. These statements are -- and uncertainties are described in detail in Chimerix's filings with the Securities and Exchange Commission, including in the Form 10-Q filed earlier today.

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

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

Good morning, everyone, and thank you for joining us today. The first 6 months of this year have been particularly productive for Chimerix. We've had significant progress across multiple programs, and are positioned to achieve key clinical milestones in the second half of 2018 and into 2019.

Brincidofovir is our broad-spectrum antiviral and the lead candidate for Chimerix. We believe in its potential to transform how we prevent and treat many serious viral infections for which there are currently no therapies.

We remain committed to advancing brinci through the clinic incorporating lessons learned from the nearly 2,500 patients who've received brincidofovir for life threatening viral infections.

We'll kick off our update today with the AdAPT. Our late stage trial of short course oral brinci for the treatment of adenovirus in pediatric stem cell transplant recipients. We're delighted to report that over half of our clinical sites are now initiated. We expect to have nearly all of the remaining targeted sites enrolling by the end of September. Importantly, we continue to expect full enrollment during 2019.

I want to spend a few minutes recapping why we are so confident in our trial design for short course oral brinci for adenovirus. First, oral brinci efficiently delivers the active antiviral to the gut. In pediatric patients, we know that about 1/3 of stem cell transplant recipients carry adenovirus into their transplant and reactivate the virus from the gut tissue, where it replicates to high levels during the first few weeks while their immune system is at its weakest point.

Based on demonstration of antiviral effect in over 1,500 patients who've received brinci for adenovirus, we expect a majority of subjects to clear adenovirus within 4 weeks. This shorter duration of therapy with a treat to clear approach has been well tolerated, especially in pediatric patients.

Second with data from advice -- from AdVance and from the U.K. consortium, we know that brinci has superior antiviral efficacy compared to standard-of-care to clear the adenovirus from the bloodstream especially in T-cell depleted transplant recipients, which we're targeting in AdAPT, whose immune system is crippled for a longer period of time.

And third, advanced data demonstrated a strong correlation between adenovirus viral burden and mortality, meaning that a more rapid reduction of adenovirus should translate to a survival benefit.

Data from our landmark study AdVance and from multiple independent sources are moving towards publication later this year. These external datasets also confirmed the strong correlation of adenovirus viral burden, the adenovirus average area under the curve over 16 weeks or adeno AUC with mortality risk.

Confirming this association in multiple independent settings can facilitate FDA's consideration of this virologic endpoint for an accelerated approval.

You will recall that AdAPT was designed together with European regulators who have historically accepted virologic endpoints ahead of the FDA. Our expectation is that demonstration of superiority of brinci in the AdAPT trial will be sufficient for marketing approval in Europe.

With data in hand, we will then make our case to the FDA for an accelerated approval. This small 141 patient study is expected to complete enrollment in 2019 and have top line data and regulatory filings shortly thereafter.

Our regulatory strategy is to advance short course oral brinci as we believe it can give us an early commercial foothold while building a platform on which to advance multiple development opportunities for IV brinci, the land and expand strategy.

We're pleased to have our Vice President of Marketing Kevin Reeves with us today for the Q&A portion of the call this morning. Kevin joined our commercial team 4 years ago, and prior to that was at GSK for over 25 years in various commercial capacities.

Turning to IV brinci, we're pleased to announce that our open label Phase II studies in adult adenovirus infected patients are opening for enrollment at sites in the U.S., U.K. and in Europe. We look forward to sharing both PK and virologic data from these trials later this year.

In June, at the American Transplant Congress in Seattle, we had a very productive meeting with kidney transplant specialists and stem cell transplant physicians to discuss potential study designs for a dose ranging study of IV brinci and BK virus, which we plan to share soon.

We continue to see great potential for IV brinci in viral diseases of the central nervous system such as HHV-6 and herpes encephalitis, given the higher drug concentrations we've seen in animal studies of IV brinci.

Just this week a review of viral encephalitis in The New England Journal reiterated the importance of developing new drugs to treat the 6,000 hospitalizations per year in the U.S. for encephalitis, which results in a total cost of between $350 million and $540 million per year.

With more immuno-oncology therapies in the pipeline, these often devastating viral infections are likely to become more frequent as we look to 2019 and to dose ranging studies for IV brinci viral infections of the CNS will certainly be one consideration.

We've completed the 13 week toxicology studies for IV brinci and continue to see improved tolerability in animal studies that have served as good models for our clinical studies. These data support our belief that IV brinci can successfully provide the longer duration of dosing needed to prevent multi viral infections in high-risk stem cell transplant recipients.

Turning now to our smallpox program, I was honored to be invited to deliver remarks before the House Committee on Energy and Commerce Subcommittee on Health, in support of reauthorization of the Pandemic and All-Hazards Preparedness Act or PAHPA. The purpose of the hearing was to reauthorize certain programs under PAHPA which originally passed in 2006.

PAHPA reauthorization would improve the U.S. medical preparedness and response capabilities for emergencies whether deliberate, accidental or natural. The draft reauthorization would authorize funding for BARDA and for the project BioShield Special Reserve Fund, a secure funding source for the purchase and stockpile of critical medical countermeasures such as vaccines, therapeutics and diagnostics.

We know that there have been substantial advances in the ability of would-be terrorists to weaponize smallpox, a threat that's resulted in recent preparedness exercises at Johns Hopkins and the Shattuck lecture from Bill Gates earlier this spring.

Our private-public partnerships over the last 15 years and particular with BARDA have been critical to the survival and progression of our smallpox program with brinci. Companies like ours rely on the existence of a government market for medical countermeasures to sustain the long-term investment of researching and developing these therapies for bio defense indications, which provide a critical bulwark against biological threats.

Recently we're delighted to see FDA's first approval of a smallpox countermeasure as it underscores the government's medical and economic commitment to protecting the public. Importantly, it confirms a path forward for brinci, as it has been stated by [CMC] that 2 antivirals with different mechanisms of action are needed for the stockpile to protect the public from the smallpox outbreak.

The revised FDA draft guidance issued last month recommends that efficacy be demonstrated based on 2 studies in 2 different animal models infected with related viruses. We expect to begin conducting a rabbitpox adjunct study shortly and the efficacy study in mice toward the end of 2018. We expect to have final data on each of these studies early next year and to submit marketing applications shortly thereafter.

Last month, we received Orphan Drug Designation for brinci to treat smallpox. And we look forward to working with the FDA in advancing this critical program.

Moving now to our norovirus program, we were excited to present both oral and poster presentations at the 31st international conference on antiviral research. These presentations highlighted results from preclinical studies of CMX521, the first direct-acting antiviral specifically for the treatment and prevention of norovirus, to reach the clinic.

The data demonstrated that CMX521 targets a region of virus common to all strains and showed activity in vitro against all strains of norovirus tested. This suggests broad efficacy against human noroviruses and supports our ongoing Phase I program. Specifically the presentations showcased CMX521's promising safety profile with no genotoxicity or mitochondrial toxicity observed. Moreover, oral administration of CMX521 delivered drug directly to target cells in the gut and showed dose dependent inhibition of norovirus replication in mouse GI tissues and feces. We'll be presenting the clinical safety and tolerability data from the single dose administration of CMX521 in September at the European Society for Clinical Virology in Athens, Greece.

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

Thanks 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 second quarter 2018. Starting with our balance sheet at the end of second quarter 2018, we remain well capitalized with approximately $196 million in capital to fund operations, no debt, and approximately $47.9 million outstanding shares of common stock.

Turning to our statement of operations, the company reported a net loss of $18.6 million or $0.39 per basic and diluted share for the second quarter of 2018 compared with a net loss of $16.7 million or $0.36 per basic and diluted share in the second quarter of 2017. (inaudible) contract revenue for the quarter was approximately $1.2 million as compared with $0.7 million for the same period in 2017.

Research and development expenses increased to $13.7 million for the second quarter of 2018 compared with $11.6 million for the same period in 2017. Primarily due to increased expenses associated with the oral BCV clinical program, manufacturing expenses, and our smallpox program.

General and administrative expenses increased to $6.7 million for the second quarter of 2018 compared to $6.3 million for the same period in 2017.

Loss from operations was $19.2 million for the second quarter of 2018 compared to a loss from operations of $17.2 million for the same period in 2017, due primarily to the increased R&D expenses as previously mentioned.

Before turning the call back over to Michelle, I'd like to again emphasize the $196 million in cash on our balance sheet. And although we continue to expect R&D expenses for the full year 2018 to trend upward from 2017, we remain committed to a focus on cost control.

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

Thank you, Tim. In closing, we have a number of upcoming clinical milestones including for enrollment of the European Registrational Trial AdAPT in 2019 with data readout and regulatory submission shortly thereafter, adenovirus decay curves from the open label Phase II studies of IV brinci and adult stem cell transplant recipients with adenovirus later in 2018. Data from our smallpox animal efficacy studies in rabbit and mouse models. And in September a presentation of safety and tolerability data from our single dose administration of CMX521, the first clinical stage targeted antiviral for norovirus and initiation of our multiple ascending dose study later this year. We have the resources to support achieving our objectives for 2018, 2019 and into 2020 and a team focused on achieving our key milestones, which we believe will enhance shareholder value.

Finally, we look forward to hosting you to be at our annual R&D update in New York on October 17. Just after market close, we will provide additional details on our antiviral pipeline. We hope to see you all there, so please save the date.

With that operator, we'll now open the line for any questions.

(Operator Instructions) Our first question or comment comes from the line of Jessica Fye of JPMorgan.

This is [Hugo] on the call for Jessica, thank you for taking our questions. With AdAPT open for enrollment can you elaborate on how many U.S. sites are currently open for enrolling patients and then how many in the U.K.? And then would you like to comment on the regional mix of targeted sites to be open?

Yes. This is Garrett Nichols so we do have the majority of our sites open however there are still a couple of key countries that are still undergoing regulatory and ethics review. We have the majority of the sites in the U.S. open. We have a couple of targeted sites that are still in the process of opening. And again, we have a few key countries that we're in the process of initiating. And once we have all the sites open, have a good understanding of the enrollment curves, we'll give an enrollment projection update. But just to clarify as far as the targets are concerned, we have a targeted number of sites about 30 to 40 sites total with 1/3 coming from the U.S., 1/3 coming from the U.K., and 1/3 coming from Europe.

Our next question is from David Lebowitz of Morgan Stanley.

I was curious when the upcoming in term data release for the Phase II IV trial, what type of data should be expect to see from that study?

That study is a Phase II open label study of IV brinci versus standard of care for the treatment of adults with adenoviremia. This will be providing important data with regards to pharmacokinetics, with regard to safety and tolerability of the IV formulation. In which we expect to see improved safety and tolerability versus previous studies and comparable to the good tolerability that we saw in healthy volunteers. But importantly, this is also a study in which we will be able to generate data with regards to pharmacodynamic effects. So we'll be able to see the effect of IV brincidofovir on adenoviral levels in stem cell transfer patients with adenoviremia.

And jumping over to CMX521 understanding that the study thus far is on healthy volunteers, is there anything from the upcoming data from that study that might be able to hint at potential efficacy?

Well, it's healthy volunteer data I think that for the time being we are looking at safety tolerability and pharmacokinetics. So this is the data that we will have thus far, I think that the efficacy data that we've presented at ICAR in the animal models really speaks to the potential that this drug has with regards to prevention of adenovirus infection.

Our next question or comment comes from the line of Katherine Xu from William Blair.

I was wondering intrigued by your comment on the CMX infection. You, kind of, alluded to oncology treatment side effects. Can you just elaborate a little bit on that? And what's your thinking in potentially positioning brinci towards that direction?

I just as we've been watching that space I think we've seen some reports of side effects from the increasing immune suppression that have been associated with these different types of therapies and some anecdotal reports about viral infections that typically haven't caused severe -- outcomes or death including BK and so that has really gotten our attention. We've had a couple of points of outreach just to see if brinci would be available for those kinds of infections. So it’s something we're keeping an eye on, and certainly that's a hot area and it's great to see this pipeline making its way through that and can provide some additional improved outcomes and -- in oncology and in some of the genetic diseases where we haven't had that in the past. But with something that not surprisingly is resulting in some additional immunologic suppression. So it's part of that, that growing population and diverse population of relative immuno compromised and in some cases severe immune compromised that can make these viral diseases even tougher to deal with.

So I guess so you're starting a IV brinci study in BK virus.

So right now the Phase IIs are in adenovirus but yes we are anticipating starting a dose ranging study in 2019 in BK that’s something that we’ve just had a advisory board about and are still working through some of the details on what that study design should look like. We hope to share that with you in the coming weeks. But something that we look forward to getting back to. We do have data showing the effect of brinci in vitro against the polyomaviruses, so and to be able to provide a therapy for the polyomaviruses and specifically for BK is something that we’ve long held as an objective. IV really gives us that opportunity to do more dose ranging than we were able to do with oral. Also a round for a better CNS penetration, we see in the animal models up to 10x higher concentration in the CNS in animals than we can achieve with oral. So it’s a real opportunity to be able to treat some of these viral CNS infections that have some pretty substantial impact on the long-term survival and in functionality.

So previously I mean over the years there were a lot of evidence looking at double sided DNA viruses in viral oncology, viral neurology such as [GBM] Alzheimer's, neuro schizophrenia, so can you just give us an update on the, I guess, the size/medicine in those departments? And then do you have any intentions down the road going towards those indications?

Yes, I think all we can say at this point is there is some active conversations and certainly an area of the literature that we are keeping a close eye on and having some active conservations with groups that have interest in this area. And I think long term for us sticking with our -- what we know best to leave the transplant recipients we are having increasing requests for IV brinci that’s something that we’re focusing on our AdAPT study right now and IV getting the data from the Phase II studies. But I think as we look towards 2019 and the different opportunities for IV brinci and that’s something that we have to be able to share more specific plans on in the coming months.

And then lastly, can you remind us the rabbit adjunct study design?

Yes so the rabbit study you recall from our prior 041 study, where we had different times post infection and after a clinical trigger, which in the rabbit is very much like the humans has fever and then shortly after a rash, that was a pretty complex study and provided some great information. We were also able with that study to show a 100% survival in the rabbits after they had a confirmed viral infection, first triggered by fever but also with rash around the same time. And then they were randomized at that time of clinical trigger to either immediate or delayed therapy. And the current study does not rely on a clinical trigger again that virus an added complexity for that study, and this next study it has assigned timing. So after a rabbit has a confirmed infection, they'll begin therapy on a certain day, post inoculation, where we've shown very high rates of infection, but not based on a clinical trigger. It's a little easier to predict staffing needs, things like that, and these are large efficacy studies that can get complex pretty quickly. So we felt this would give us a better opportunity to have a successful study that finalizes the smallpox efficacy program.

Our next question or comment comes from the line of Yigal Nochomovitz from Citigroup.

So on the strategy for the FDA accelerated approval for the oral brinci, based on the data from the virologic endpoint from AdAPT as well as the supportive data on advanced correlation with reduced mortality. I am wondering, is there any precedent that you're aware of, where the FDA has provided an accelerated approval for a viral drug based on a biologic endpoint and then with some other data sets that’s supportive on mortality in the transplant setting -- or maybe not in transplant setting. I am just wondering if there is some precedent there.

I think that the FDA typically has EMAs as far a specific biologic endpoints. Certainly as we were negotiating the suppressed study, the EMA recognized as a clinically significant CMV viremia as a relevant primary endpoint for full approval, whereas the FDA was considering that as an endpoint only for accelerated approval by the time of the suppressed study and now the [full term] of your study have completed the FDA have now moved towards acceptance of clinically significant viremia as an endpoint for full approval. So certainly movement ended up occurring in the CMV space, in the transplant patient. The FDA has also issued its guidance with regard to CMV agents to include CMV clearance of CMV viremia in the case of maribavir as a primary endpoint for preemptive studies. And I've said in essence what we are doing with adenovirus we are using preemptive brincidofovir versus a preemptive standard of care predominantly IV off label cidofovir as our [granularization arms] and we are looking for clearance of a virus. We have a number of endpoints, we’ve described to you all the area and the curve is the most precise way of describing the effective in antiviral but essentially the FDA is accepting of clearance of CMV viremia for a primary endpoint of the maribavir study. So we think that there is recently established precedents in the transplant space and obviously there is a lot of historic precedence as viremia was accepted for endpoints in the HIV space and the Hepatitis B space and Hepatitis C space as well.

And just to clarify Garrett, on AdAPT so it's open for enrolment as talked about but just so I am clear, have you enrolled patients yet, or that’s something that has not happened yet?

We are in the process of rolling patients. We -- as we have just stated we are in the process, it’s still opening up pharma sites in the U.S. and we have a couple of other countries that are under review. And once we end up getting a couple of months of full recruitment under our belts, we will provide you guys with updates in terms of our projected completed enrolment. With that we remain on target to complete enrolment in 2019.

And on 521 with the norovirus program, are you aware of any other competitors that may have a drug with a substantially similar profile for what you have seen so far in the pre-clinical work.

No, there is a number of vaccines that are in development but no directly targeted antiviral (inaudible) awareness. There is -- there are other drugs with other mechanisms, vaccines but not targeting norovirus DNA -- or RNA [primary] specifically.

Our next question or comment comes from the line of Phil Nadeau from Cowen & Company.

The first question is on the AdAPT study. Your guidance on today's call is to complete enrollment in 2019. In the past I think your guidance was for data from the study in 2019, so it seems like there's a small change there. Is it possible now that data could fall in 2020 or am I parsing your words too closely?

No, our guidance really hasn't changed as far as where -- what we're goals -- what our goals are, we're looking to complete the enrollment in 2019. We have 16 week primary endpoint, so the data from the patients who are enrolled and file for 16 weeks will be available about 4 months after enrollment is complete. And we look to you to have regulatory filings shortly thereafter.

Then second is on the smallpox studies. I believe in the past you've shown efficacy in 2 different animal models. So can you maybe give us some idea of what is different between a guidance document and the studies you conducted to necessitate new animal studies or basically why weren't those support a filing?

Yes. So the new guidance I think just clarified the view point there's nothing substantially different from with the animal rule. There are some differences for smallpox than for other threats. Specifically, smallpox only infects humans, primates and so therefore you have to use different viruses in different animal species. So that's something that's a little different than say plague or a radiation threat where that's the same regardless of which animal you're using. But there's really nothing that's substantially different in the guidance. We are -- this will be our sixth rabbit pox study. So we're pretty confident in the model and the data that we've generated where we -- in which we've shown, as I've said before, 100% survival in those animals that receive treatments immediately upon confirmation of their infection. Then we had 93% survival at 24 and 48 hours so a step wise reduction if you continue to wait. The rabbit pox model is one that replicates a lot of what we see in humans, so it's a very nice model. But it does require an inoculation. The mouse model has the advantages of being aerosolized or respiratory infection. So that replicates a different part of the human smallpox model. So they both are -- they are complementary but the rabbit pox is a more robust model. So that's what we anticipate will be our last study in rabbit pox that should be starting shortly and then the mouse final efficacy study towards the end of this calendar year.

Our next question or comment comes from the line of Ed White from H.C. Wainwright.

So I just want to circle back to the AdAPT study in -- I heard you correctly from the other question I think you had said you're enrolling. Has the first patient been treated yet?

Yes, he has. We do have our first subject in.

And then just as far as the 521 while you're going to have the data on the healthy patients, how should we be thinking about the timing of the first challenge study beginning?

Yes, so that's something we have probably we enter 2019 before we can give any guidance on timing around that. Our -- with our main programs with brinci moving forward we need to get -- keep those moving forward. And then for 521 once we get our multiple dose data. So that's something that will be coming toward the end of 2018. So, I expect it'll be in early 2019 before we can give more guidance on when we can do a challenge study. You'll remember we've talked about those doing our prevention and the treatment in parallel. So meaning more data to come on that. We've not had any regulatory discussions on that yet to get a feel for how large a safety database would need to be et cetera. That's something that we had to share in the coming months.

And then just my typical BARDA question and smallpox question but from the -- your most recent presentation you were expecting data from the mouse and the new rabbit studies in. It looks like early 2019 and I just want to clarify that because you just said earlier around 2019 so that is earlier or first half of '19 or could it be later than that. And then also on the EU or U.S. which is you think is do you think is going to come first? I think in your most recent presentation it looks like you're expecting to have sales in the EU first in 2019 followed by potential stockpiling in the U.S. in 2020.

Yes, I think so just to clarify them so. For adenovirus we feel we have a little more clarity on the path to an approval there because the AdAPT study was designed together with the European regulators and they have given us their assurances of their acceptance of a viralogic endpoint. So we feel there's a little straighter path. Once we get the AdAPT data in hand, we hope to achieve the same approval here in the U.S. for adenovirus. For smallpox in the U.S. we have the animal rule, so we have a well laid path with I think 34 medical countermeasures that have already proceeded through the animal rule. There is no animal rule equivalent in Europe but they generally follow on FDA approvals on the basis of the animal rule. So where in the smallpox case we've got there a little more clarity on approvals and stockpiling, which could be independent out of an FDA approval. In Europe, they generally follow on the FDA's lead following the animal rule and stockpiling. It's the other way around for adenovirus. I hope that's helpful and clarifying.

Thank you. I am showing no additional questions or comments in the queue at this time. I would now like to turn the conference back over to Ms. Michelle Berrey for any closing remarks.

Thank you very much. Appreciate you all joining us this morning and we look forward to seeing you all in October. Thank you and good bye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.