Chimerix Inc (CMRX) 2020 Q2 法說會逐字稿

Good morning, ladies and gentlemen. And welcome to the Chimerix Second Quarter 2020 Earnings Conference Call. I would now like to introduce your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

Thank you. Good morning, everyone, and welcome to the Chimerix Second Quarter 2020 Financial and Operating Results Conference Call. This morning, we issued a press release, which outlines the topics we will plan to discuss today. You can access the press release in our Investors section of the website.

With me on today's call are President and Chief Executive Officer, Mike Sherman; Chief Financial and Business Officer, Mike Andriole; Chief Medical Officer, Allen Melemed; and Randall Lanier, our Chief Science Officer.

Before we begin, I would 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 and uncertainties and other factors.

These risks and uncertainties and other factors could cause actual results to differ materially for those that refer to -- for those referred to in the forward-looking statements. Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties.

And at this time, I would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Good morning, everyone. Thanks for joining us. While this has been a challenging -- a year that's been challenging one for just about everyone, the team at Chimerix has maintained a high level of productivity, quickly adjusting to a virtual business world. I have to say the physicians we're working with at investigational sites and regulators at the FDA have also risen to that challenge.

During the second quarter, we've made progress on 3 important fronts. First, following go-ahead from the FDA to proceed with a Phase II/III trial of DSTAT in COVID-19, we began treating patients. Second, we've resumed start-up activities related to the DSTAT trial in acute myeloid leukemia, with the expectation to have patients enrolling by early next year. This follows a brief pause on that program as we allowed sites to focus on their COVID readiness, and we focused on launching our COVID trial. And finally, we've been submitting packages to the FDA as part of our rolling submission of brincidofovir as a smallpox countermeasure, with plans to complete that this quarter.

In addition to the clinical progress we've made, we've also strengthened our leadership team with the addition of Dr. Allen Melemed as Chief Medical Officer; and Caryn Barnett as Vice President of Clinical Operations. Allen has over 20 oncology approvals under his belt and a wide range of indications. He also brings a unique balance of medical practice and regulatory experience, along with his success in drug development.

Caryn has similar success in oncology operations. She most recently drove Endocyte's Phase III prostate cancer trial to full enrollment ahead of schedule. Following a similar track record, leading multiple simultaneous clinical programs to successful conclusions. I'm really thrilled to have both join our team as each is already making meaningful contributions.

Let me spend a few minutes making more detailed comments about our top 3 priorities. As it relates to the DSTAT trial in COVID, we've been very pleased by several peer-reviewed publications released in the last month, which independently reinforced the relevance of DSTAT's mechanisms in this disease. I'll let Allen expand on that a little bit more. These mechanisms by the way, likely apply to acute lung injury or acute respiratory distress syndrome from other causes. As a result, the rationale for this investment goes well beyond the commercial potential in COVID.

You may have seen a number of articles about the challenges of roll -- enrolling COVID trials. After a good start, we've experienced some of these challenges as standards of care have evolved quickly. That said, we've been able to respond quickly and effectively. In our case, we have good flexibility as DSTAT will combine well with most of the treatments being used. Recall our Phase II portion of the trial has 3 cohorts: 2 cohorts at different doses, and then a third expansion cohort at a selected dose.

We recently added some flexibility to our protocol to allow the potential unblinding of data after cohort 2. This doesn't impact the statistical design materially, and it potentially accelerates our insight into the data. We're particularly interested to evaluate the multiple biomarkers we're tracking. With that, it gives us more certainty to have data to assess and report before year-end. As we expect to complete enrollment of the third cohort in the fourth quarter, allowing that data to mature to the 28th-day primary endpoint means final Phase II data readout is more likely early next year.

With regard to our program in AML. You can imagine, as we brought Dr. Melemed onboard, his enthusiasm helped drive us to move ahead quickly with that Phase III trial. Moving forward now, we can position ourselves well relative to some other trial initiations currently on pause.

For brincidofovir, we plan to deliver our last element of the rolling submission this quarter, so we expect to receive its 2021 PDUFA action date in the fourth quarter of this year. We plan to communicate via press release as we receive that date from the FDA. COVID-19 pandemic has highlighted the importance of preparedness to treat future viral outbreaks, especially those as deadly as smallpox. And we look forward to a potential brincidofovir regulatory approval and a procurement contract for the U.S. Strategic National Stockpile, or SNS.

Among the final analyses coming together for the submission, we've been particularly pleased to see the resistance data from our primary animal model. As expected, we're not seeing resistance materialize. This is a key aspect to the nature of brincidofovir treatment and the driving reason BARDA has supported this program throughout its development.

Before passing the call over to Allen for a review of our DSTAT programs, and for those of you who have not met Allen yet, let me give a few more details on his background. Dr. Melemed joins Chimerix from Eli Lilly, where he spent more than 20 years dedicated to the clinical development and approval of oncology medicines across a broad range of tumor types, including VERZENIO, CYRAMZA, LARTRUVO, ALIMTA and RETEVMO, among others. Most recently served as a distinguished medical fellow and Senior Director of Regulatory Affairs, Oncology, North America. As you can see, Allen is uniquely qualified to build and expand our clinical programs, and we're delighted to have him on our team.

With that, let me turn the call over to Allen.

Thank you, Mike, for that fine introduction. I'm thrilled to be joining Chimerix at such a pivotal time in its evolution into a leading therapeutics company.

In addition to its potential oncology, DSTAT's mechanistic rationale was flagged for having the potential to treat COVID-19 patients. The mechanistic rationale supporting DSTAT's potential in acute lung injury patients with COVID-19 is twofold. First, DSTAT offers the potential to decrease inflammation, immune cell infiltration in COVID-19 patients.

Studies have shown that primary anti-inflammatory effect of DSTAT is mediated by inhibition of HMGB1 activity. This is important as HMGB1 induces downstream pro-inflammatory cytokines, included, but not limited to, IL-6, TNF-alpha, monocyte chemoattractant protein-1, or MCP-1, and macrophage inflammatory protein-1 alpha, all which have been shown to be elevated in COVID-19 patients.

Infiltration of monocytes and other immune cells into inflamed lung tissue is a key pathologic driver of ALI. DSTAT is expected to reduce lung infiltration by immune cells in ALI, likely by inhibition of both HMGB1 binding to range and leukocyte lung infiltration via decreases in MCP-1 expression and blocking of the cell and adhesion molecule P-selectin.

Second, DSTAT offers the potential to alleviate the underlying causal of coagulation disorders. Two recent studies have identified a high neutrophil lymphocyte ratio and low platelet counts as clinically relevant indicators of disease severity and mortality in COVID-19. Neutrophils are early responders to infections, capable of extruding granular and nuclear content to produce neutrophil extracellular traps or nets.

While nets may be beneficial in trapping and eliminating pathogens, but it also promote clotting and are related to intubation and death in COVID-19. HMGB1 and PFF4 (sic) [PF4] are 2 key proteins involved in net formation and stability. DSTAT combines and inhibit both HMGB1 and PF4, which may reduce the formation of nets and promote their clearance. In doing this, DSTAT may prevent and treat coagulation disorders observed in COVID-19.

We are currently enrolling a randomized, double-blind, placebo-controlled Phase II/III study, which is designed to determine the safety as well as efficacy of DSTAT in adults with severe COVID-19 who are high-risk and respiratory failure. Eligible subjects are those with confirmed COVID-19 who require hospitalization and supplemental oxygen. The primary endpoint of the study is the proportion of patients who survive and do not require mechanical ventilation through Day 28.

Additional endpoints include improvement as assessed by the National Institute of Allergy and Infectious Disease ordinal scale, time to hospital discharge, time to resolution of fever, number of ventilator-free days and all-cause mortality. We are also evaluating changes in key biomarkers, including interleukin-6, tumor necrosis factor alpha, HMGB1, C-reactive protein and D-dimer.

The ongoing Phase II portion of the study will enroll 24 subjects to confirm the maximum safe dose, and then it will expand by an additional 50 patients at the selective dose. As Mike mentioned, a formal analysis of all endpoints, including supportive biomarkers, is planned to be formed at the conclusion of the dose escalation portion of the trial and then again at the completion of Phase II. Contingent upon positive results, the Phase III portion of the study will enroll approximately 450 patients.

In addition to this work we are doing with DSTAT in COVID-19, we have also resumed work in our DSTAT program for the treatment of acute myeloid leukemia, or AML, and now expect site activation for the Phase III study to begin early 2021. We are very encouraged by the potential for DSTAT in AML as this promising product candidate has shown compelling activity across multiple endpoints in first-line AML patients. Furthermore, the standard chemotherapy regimen of 7+3, utilizing this study, has been recently endorsed in the 2020 American Society of Hematology, or ASH Guidelines, for the diagnosis of elderly patients with AML, the newly diagnosed elderly patients with AML. We look forward to updating you on our continued clinical progress with DSTAT in both COVID-19 and AML indications.

With that, I'll now turn the call over to Mike Andriole for an operational update and review of the financials. Mike?

Thanks, Allen, and good morning, everyone. Before I review the financials for the quarter, I would like to quickly comment on the commercial potential for each of our development programs.

For DSTAT in COVID '19, we believe data generated from the current Phase II study has the potential to support advancing this program to a pivotal study in COVID-19. Beyond COVID-19, data from this study has the potential to support a pivotal study in all-cause ARDS, a condition for which there are very few therapeutic options and approximately 125,000 patients diagnosed in the top 7 markets annually. This translates to well over a potential $1 billion a year revenue opportunity.

Additionally, in first-line de novo AML, there are over 40,000 patients diagnosed annually in the top 7 markets, which we also believe translates to a potential $1 billion per year revenue opportunity when combining DSTAT with 7+3 chemotherapy. As Allen noted, the recent ASH guidelines supporting the use of 7+3 induction chemotherapy for fit patients further supports the strategy. And finally, we expect a potential procurement contract for brincidofovir in the United States to generate meaningful cash flow over the next 5 to 7 years, and potentially an additional 5 to 7 years should a second contract be subsequently awarded.

International stockpiling of brincidofovir, while expected to be modest compared to the United States, is also expected to grow as the recognition of pandemic preparedness becomes a higher priority globally in the years to come. The opportunity for Chimerix to supply the U.S. and international markets with brincidofovir stockpiling further supports our innovation strategy with potentially substantial recurring non-dilutive capital for years to come. As Michelle mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the second quarter of 2020.

Starting with our balance sheet. At the end of the second quarter of 2020, we remain well capitalized with approximately $96 million in capital to fund operations and no debt. We reaffirm our previous guidance to end the year 2020 with approximately $70 million in cash.

Now turning to the statement of operations. The company reported a much narrower net loss of $10 million or $0.16 per basic and diluted share for the second quarter of 2020 compared with a net loss of $17.7 million or $0.35 per basic and diluted share in the second quarter of 2019. Revenues for the second quarter of 2020 were $1.4 million, equal to the same period of 2019. Research and development expenses decreased to $8.6 million for the second quarter of 2020 and compared to $13.8 million for the same period in 2019. General and administrative expenses decreased over 50% to $3.1 million for the second quarter of 2020 compared to $6.3 million for the same period in 2019. And loss from operations was $10.3 million for the second quarter of 2020 compared to a loss of operations of $18.7 million for the same period in 2019.

With that overview, I'll now turn the call back to Mike for closing remarks. Mike?

Thanks, Mike. As we look to the balance of the year, Chimerix is well positioned to achieve a number of value-creating milestones as we advance our brincidofovir program as a medical countermeasure for the treatment of smallpox, we complete enrollment and report preliminary results from the Phase II portion of our DSTAT clinical study in COVID-19 patients and we ready our Phase III clinical program for DSTAT to treat AML. I'd like to take this opportunity to thank the entire Chimerix team for their dedication and commitment throughout these past several months and to our shareholders for your continued support and encouragement.

With that, operator, maybe let's open it up for questions.

(Operator Instructions) Your first question is from the line of Phil Nadeau with Cowen and Company.

Congrats on the progress. I guess, first question is for the COVID Phase II. What's your disclosure strategy? Will you put out a top line press release as soon as you have the data early next year, or would you wait for a medical meeting or publication in order to release the data?

Yes, our strategy, and as I mentioned in our comments here, we had the opportunity to look at data both after the dose escalation portion, the cohort 2, and then again at the end of the Phase II trial. So it sets us up for the likelihood that we would release top line results this year on those first 2 portions, not wait for a medical conference. I think you've seen most of our peers are doing the same and then do the same update top line with the final analysis early next year. I do think there's a trade-off here. There are a number of -- there's multiple communications around data from a number of trials. And I think those coming out ahead of peer-reviewed publications make sense in this context. I do think, however, that reporting randomized data is a discipline that we have adhered to. So you really can get a better understanding of what's going on with these patients and the effect of your drug given that their patients are receiving multiple therapies. So we're balancing the discipline of reporting randomized data with the notion that we'll probably report it earlier than waiting for a conference.

That's very helpful. And then second, on the entry criteria, clinicaltrials.gov says it to score 3 or 4 in NIID ordinal scale. You mentioned the need for supplemental oxygen. Can you remind us, does the entry criteria include patients already on mechanical ventilation? Or is it just those patients on supplemental oxygen who seem high-risk to go into mechanical ventilation?

It's the latter. It excludes -- it specifically excludes patients who are already on the ventilator. The idea is to treat those patients and potentially prevent them from progressing to that stage.

That's helpful. And then last question for me is it seems like one challenge in running clinical trials for COVID is that the pandemics moving around. So in some places, it's hot and then it cools off and moves on to others. It looks like according to clinicaltrials.gov, you have trial sites in Florida, Louisiana, Michigan and Virginia. Do you think that's sufficient to fully enroll the trial, or would you look for -- look to add even more sites in other geographies?

Yes. We're continuing to add sites. And to your point, you need to have broad coverage because this is going to pop up and be intense in areas and then wane. I think one of the things we're seeing is areas that we're intense initially, New Orleans being a good example. The -- I think, the hospitalizations went down pretty significantly after the initial spike, but those have been coming back up again. So it will continue to ebb and flow. We've got perhaps another 6 sites or so that would add to our coverage, and we think that will be helpful.

Congrats on your progress.

Thank you.

Our final question comes from the line of Soumit Roy with JonesTrading.

A question I was thinking like if you can provide a little bit color on the biomarker approach. Are you looking into predictive biomarker side if there is like a retrospective look into the patients who progressed into ALI? If you can address those patients ahead of time kind of a prophylactic setup rather than treatment, might that would help faster enrollment in the future? Or just any color on the biomarker approach.

Yes. Let me -- I'll start with that and then maybe I'll let Randall and then Allen ship in if they want to add to it. I think it's a great comment because one of the challenges in this disease is it shows up so differently in -- from patient to patient. And so far, we've seen no silver bullet in terms of the therapeutic options. However, these drugs are seeming to be effective in some -- in one individual versus another. So identifying in advance, which may benefit the most is important. And we will get that kind of helpful information from these biomarkers from the data that we gather, such that we can identify upfront if there's a population based on their initial biomarkers that seem to benefit better than others. And of course, we could incorporate that and adapt our Phase III trial accordingly. But it's -- yes, that will play out as we see the data. I don't know, Randall, and Allen, anything you'd like to add to that?

I can add just a little bit of color here. This is Randall. We're looking at over 30 different biomarkers of -- inflammatory biomarkers and coagulation biomarkers and cell-migration related biomarkers. So we're going to look at a wide array of factors that we know [are vertically] involved in COVID-19, and we'll look at those early on. So in the first 2 cohorts that Mike mentioned, and then we'll focus down on those for the later trial part for -- and for especially for Phase III.

And Allen?

Yes. The other thing I've got to agree with what both have said, this is really going to be a treasure trove of data that we have that people did not have this kind of data that we're going to look at both to see can our drug modify these biomarkers. And if so, what are the benefits of the patients. And if we see ones that are very prognostic can help, then look to see if they can be predictive. So it's kind of twofold, but a lot will depend on how much biomarkers we can actually get and how much effect we see from that. But I do think that we have the potential to do both from this kind of a study. Thank you for the question.

Great. My last question is on the enrollment pace of the Phase III trial -- COVID trial, if 35-plus-something patients taking some time, and you are in the hot spots of current players in the U.S., to be able to enroll the entire Phase III portion in a timely fashion, I don't know how you're thinking through it. What's the time line on that? Or would you expand into sepsis patient or flu patient a separate cohort because 30% of the ICU patients are undergoing sepsis, and they have a high chance of COVID? So if there is any indication of expanding beyond just a COVID we are looking into the relevance of the drug in 2022, 2023.

Mike, you're mic on mute.

I remind everybody to -- thanks sure you're off mute when you're speaking. Here you go. It's also a good question on enrollment. I -- the experience we've had initially, we had really good engagement and enthusiasm around the enrollment. So off to a good start where we had challenges like others related to the standard of care evolving and we needed to quickly assess those changes so that we could adapt our study to confirm that we were okay with those other standards in combination with DSTAT. And we were able to do that quickly. And as we have feedback from sites, they're very supportive, and they remain confident in their ability to enroll quickly. So I think it was just as those challenges had come up early on dealing with them quickly.

So that having been said, I think your point about this therapy going forward, if in fact we are seeing activity in COVID, it causes us to look pretty aggressively at other opportunities that we might explore even in parallel. As Mike Andriole mentioned in his comments, it sets us up not only for a potential Phase III trial in COVID patients, but in other causes of acute respiratory distress syndrome where you could expand or create parallel cohorts and/or separate trials to pursue those. So I think it's -- all of those are options on the table, and we'll make those decisions as we see with the -- both the data and the enrollment pace looks like.

And I'm showing no further questions at this time. I would now like to turn the conference back to Mike Sherman.

Great. Thank you, everyone, for your time this morning, and look forward to providing updates in the coming months.

Thank you for joining today's conference call. You may now disconnect.