Immunic Inc (IMUX) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vital Therapies, Inc. First Quarter 2015 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would like to introduce your host for today's conference Mr. Al Kildani. Sir, you may begin.

Thank you, Vince. Good afternoon. My name is Al Kildani, Vice President of Investor Relations and Business Development. Thank you for joining Vital Therapies' management team on our conference call to discuss the company's financial results for the first quarter ended March 31, 2015. On today's call are several members of Vital Therapies Senior Management, including Dr. Terry Winters, Co-Chairman and Chief Executive Officer; Mike Swanson, Chief Financial Officer; Dr. Duane Nash, Executive Vice President and Chief Business Officer; Rob Ashley, Executive Vice President and Chief Technical Officer; and Dr. Jan Stange, Chief Medical Officer.

Before we begin, we would like to remind you that some of the statements that we make today will include forward-looking statements such as statements related to the timing and conduct of our clinical trial programs and the expected results release of top line results, the timing of certain development goals including regulatory filings, our projected cash runway, and plans and objectives of management for future operations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual events or results to differ materially, including the risk that our clinical trials program is delayed or is ultimately unsuccessful. Please note that these forward-looking statements reflect our managements views only as of today's date, and we disclaim any obligation to update any forward-looking statements except as required by law. Please refer to our SEC filings for more detailed discussion of the risk factors that could cause actual events or results to differ materially.

Vital Therapies promptly makes available on its website reports that the company files or furnishes with the SEC, corporate governance information, press releases, and other posters and presentations. A replay of this call will also be available on our Investor Relations website later today.

I would now like to introduce Dr. Terry Winters, Vital Therapies' Co-Chairman and CEO.

Good afternoon, everyone, and welcome to our first quarter 2015 earnings call. We have now been a public company for just over one year, and we would like to thank all our investors for their support. I'd like to begin today's call with a brief summary of a company for those of you who may be new to our story.

We are developing ELAD, an extracorporeal human allogeneic cellular therapy which could improve survival in liver failure. We have two Phase 3 trials underway. ELAD has orphan drug designation in the U.S. and the EU. And assuming successful clinical results, we plan to commercialize ELAD directly in most major markets of the world.

The agenda for today's call will be to review key recent developments including: number one, the status of our clinical programs; two, our recent attendance of the annual meeting of the European Association for the Study of the Liver or EASL, where we had two poster presentations; three, progress on our R&D program to elucidate ELAD's mechanisms of action; four, an update on the regulatory front; and five, of course, a review of our financials. After which, we will open the call for Q&A.

First, a brief update on the status of our first Phase 3 trial, VTI-208, which is a randomized controlled open-label trial evaluating the ELAD system in subjects with alcohol-induced liver decompensation with a primary end point of survival through at least 91 days, assessed using the Kaplan-Meier statistical method. Enrollment was completed in January with 203 subjects, and we remain on track for database lock and announcement of top line results in the third quarter of this year. We are maintaining an effective blind in the study at the direction of the FDA, and the data will be analyzed by an independent statistician. Outside of our prepared remarks today, we will not be providing any additional information about VTI-208 until the top line results are announced.

Our second Phase 3 trial VTI-210 is a randomized, controlled, open-label trial evaluating the ELAD system in subjects with severe acute alcoholic hepatitis; also with the Kaplan-Meier survival end point through at least 91 days. As of yesterday, there were nine subjects enrolled and 24 sites opened for enrollment in the U.S., the U.K., and Spain. Site opening, and therefore enrollment in VTI-210, has not been as fast as we expected due to our prioritization of VTI-208 data finalization at many sites. However, as soon as VTI data are finalized we anticipate that the high enrolling sites will be able to focus on VTI-210. We continue to expect top line results from VTI-210 in early 2017.

Our third clinical trial, VTI-212, is a Phase 2, single-arm survival trial in subjects with fulminant hepatic failure or surgery-induced liver failure. As of yesterday, there were six subjects enrolled and 11 sites opened for enrollment in the United States, which is the only targeted country. We continue to expect top line results from VTI-212 in 2016.

In April, we attended the International Liver Congress, which is the annual meeting of EASL in Vienna, where we made two poster presentations. Our first poster summarized the demographics of baseline laboratory values of subjects enrolled in VTI-208. Mean age was in the mid 40s, and the mean baseline MELD, or Model of End-stage Liver Disease, score was 27.2 with a tight distribution.

The MELD score was developed by the Mayo Clinic to assess the risk of mortality in subjects with end stage liver disease. Values can range from 6 to 40 with higher numbers indicative of greater risk of death. The subjects enrolled in VTI-208 met tightly defined inclusion criteria, representing a very sick population with baseline characteristics that closely matched those observed in subjects enrolled in VTI-206, our Phase 2b trial in Alcohol Induced Liver Decompensation.

Our second poster presentation was the first of a series about our research into ELAD's possible mechanisms of action. The work is being performed with the input of our scientific advisory board, which consists of well recognized experts in many aspects of liver function. This poster described the gene expression levels of liver-specific cytochrome P450 isoenzymes and oxygenases in ELAD C3A cells both during cartridge production and after use in clinical treatment. The result shows that the C3A cells express the diverse assortment of critical liver enzymes, including those which are collectively responsible for metabolizing nearly 90% of all drugs as well as many toxins. Obviously, we're really excited about these data. Both of these posters are available on our website.

Our activities at EASL were helpful in raising awareness of the ELAD system amongst clinicians to encourage their participation in our clinical trials. We also saw no sign of any competitive activity that had reached a clinical trial stage. In addition to the material presented EASL, we are also expanding our internal and external research efforts to help us better understand ELAD's mechanisms of action. Based on preliminary results of this research, we believe that ELAD may exhibit multiple mechanisms of action.

Our efforts have focused on four main areas of investigation, and I would like to summarize the status of each. First, immune modulation. Activation of the immune system leading to liver inflammation is believed to be important in the evolution of liver failure in subjects with Alcohol Induced Liver Decompensation. We have shown that our C3A cells produce a number of acute-phase proteins including those that are known to have anti-inflammatory properties such as interleukin-1 receptor antagonist and alpha-1-antitrypsin. These substances may help modulate liver inflammation which may in turn lead to improved liver function. New data in this field will be the subject of a poster at the International Liver Transplantation Society or ILTS meeting in Chicago in July. We plan to extend this work through analysis of samples from our clinical studies to help understand the clinical implications of these laboratory findings.

The second area of investigation is detoxification of the blood, which is an important function of the normal liver that is compromised in patients with liver failure. A specific class of enzymes mainly produced in the liver called the cytochrome P450 system is responsible for many of the pathways of detoxification. The ELAD C3A cells have been shown to express messenger RNA for most of the enzymes in the ELAD cell cartridge. And the types and amounts of enzymes expressed seemed to change during exposure to the plasma ultra filtrate from different subjects. This exciting finding may suggest that the ELAD system can respond in different ways to a particular patient's condition. We are also studying the production of second phase detoxifying enzymes particularly in the context of reducing bilirubin levels during ELAD treatment.

The third area is regeneration and restoration of liver function for it's the liver has a remarkable capacity after it has been damaged. Many growth factors have been shown to be produced by C3A cells and may contribute to liver regeneration in these subjects. We are exploring what substances are produced and whether the amounts produced are sufficient to solicit a physiological response.

And fourth, coagulopathy or disorders of blood clotting. We are investigating the different types of blood coagulation factors that are produced by our C3A cells.

While currently in its early stages, we plan to build on this work over time and to present new data at key medical conferences. The EASL and ILTS presentations are examples of this program. We look forward to reporting further on these data after they have been presented.

On the regulatory front, we recently approval of our Clinical Trial Authorization, or CTA, in Ireland for VTI-210, where we plan to open several sites. We also submitted the CTA for VTI-210 in Austria. The addition of these countries to the U.S., U.K., Spain, and Germany should accelerate enrollment in VTI-210. In addition on the regulatory front, we are continuing preparations to file a Biologics License Application, or BLA, including validation of our commercial production procedures. In the event of positive results from VTI-208, our plan remains to submit a BLA in the first half of 2016.

Before turning over the call to Mike for discussion of our first quarter financial results, I would like to note that because we have passed the one-year anniversary of our IPO, we are now eligible to file a registration statement on Form S3. In order to broaden our future financing options as part of good corporate housekeeping, we are filing an S3 today. However, I want to assure investors that we will not raise funds prior to release of top line results from VTI-208. As a reminder, our board, including our largest shareholder and their management team, have agreed not to sell any shares until after the release of VTI-208 data.

I will now turn the call over to Mike Swanson, our CFO for a review of first quarter financials. Mike?

Thanks, Terry, and good afternoon, everyone. We ended March 31, 2015, with cash and cash equivalent of $88.3 million. Our monthly cash burn rate for the first quarter was approximately $4.7 million. Based on current business plan, our existing cash would fund our operations into third quarter of 2016. However, as we stated on our last quarterly call, our project burn rate and therefore our cash runway is highly dependent on the top line results of the VTI-208 clinical trial.

Summarizing our results for the quarter ended March 31, 2015, the company reported a net loss of $14.8 million, including non cash expenses of $1.1 million for stock-based compensation, depreciation, and amortization. This compared to a net loss of $10.7 million for the corresponding period in 2014 including non-cash expenses of $732,000 for stock-based compensation, depreciation, and amortization. The increase in the net loss in 2015 as compared to 2014 primarily reflects an increase in Phase 3 clinical trial-related activities. As we indicated on our last call, we expect the costs to continue to increase in 2015 as we prepare and analyze the data from our VTI-208 clinical trial as participation and enrollment in our VTI-210 clinical trial and our VTI-212 clinical trials increased, and as we incur costs in preparation for a potential BLA filing. For more details on these financial results, please refer to our press release issued earlier today and our quarterly report on Form 10-Q for the first quarter.

With that, I'd like to turn it back over to Terry.

Thank you, Mike. Before we take your questions, I'd like to summarize our key upcoming milestones. In July, we will present a poster at the International Liver Transplant meeting in Chicago that describes ELAD systems potential mechanism of action in immunomodulation. In the third quarter, we expect to announce top line results for VTI-208, and if the results are favorable, to file a BLA in the first half of 2016. We expect to announce top line results for VTI-212 in 2016 and top line results for VTI-210 in early 2017.

I would now like to open up the call to your questions. In addition to Mike joining me for the Q&A portion of our call are Dr. Duane Nash, Executive Vice President and Chief Business Officer; Rob Ashley, Executive Vice President and Chief Technical Officer; and Dr. Jan Stange, Chief Medical Officer.

Operator, can you please provide instructions and open up the call for questions.

(Operator Instructions) Our first question comes from Salveen Richter of SunTrust. Your line is open.

Thanks for taking my questions. Just given that we're coming up on the Phase 3 data, maybe you can just comment on the similarities and differences between patient baseline characteristics from the 206 Phase 2 study and the 208 Phase 3 study. And then just a second question, in terms of the breakdown of aged and non-aged patients in 208, is the purely aged patient subset large enough to allow you to detect the activity signal? Thank you.

Let's take those one by one, Salveen. It is good to hear from you. Rob, could you comment on 206 and 208?

Sure. Hi, Salveen. So the study populations were really pretty similar in terms of the characteristics, which determine mortality rates, which is I suppose the thing that really matters. The age in the VTI-208 population was 45.6 on average, and population in VTI-206, which was the one that we analyzed for efficacy, the population was just a tad older, maybe an average of above 47.

The most important thing though is the MELD scores were pretty much in line with each other. The MELD scores on average in the VTI-206 were around 28 to 29, and the MELD scores in VTI-208 study on average for the whole population. Obviously, we don't know what it was for treatments and control was 27.2. So that reflects a very similar anticipated mortality certainly within, staying within the error limits that the Mayo group would predict. I don't think there are any other aspects of the population which are really totally important. Those two are the ones which seem to predict mortality in our prior studies.

Okay. And could you repeat the second question please, Salveen?

Sure, Terry. Just for the breakdown of aged and non-aged patients in 208, is the subset large enough here for aged patients to detect activity signals?

I don't think we really answer that. Can we ...

Yes, we haven't ...

We don't have that information.

Yes. We haven't commented on the split between the two populations. The only thing I would comment on as we have noted is that the study is extremely well powered with the 203 patients with at least 95% likelihood of predicting the outcome. So I think the study was extremely well powered. But we haven't commented on the distribution between the two arms of the study.

Great. Thank you, guys.

Wait a minute, Salveen. Duane would like to comment.

Hi, Salveen, it's Duane. So, one last comment on your first question for what it's worth is if you look at the confidence intervals for the various parameters like MELD score, it looks like we got a fairly tight distribution, much tighter than we saw on 206. So, based on that analysis, it would suggest that we're getting a fairly homogenous population in 208.

Yes, good point.

Yes.

Thank you.

Thank you, Salveen.

Thank you. Our next question comes from Katherine Xu of William Blair. Your line is open.

Yes, hi, good afternoon. I'm just wondering to the extent that you can say, can you just talk about the sort of the detailed procedures that you'll go through from now through data release. I understand the last patient was in January and you are probably by now done with the last patient (inaudible) for 90 days and from now on until there is -- just procedural-wise and protocol-wise, just some details would be very helpful.

Well, I'd love to be able to give you more details, Katherine, but we can't comment in great detail. You're quite correct that the last, the 91 days was around about May 6, I think. And then obviously what we are doing is we are proceeding to database lock, and the activity is primarily around cleaning a data to get to database lock. That's essentially it.

And, Katherine, the other thing that we are doing is all of the statistical programming associated with the various analyses that we will be doing on the data that they defined in the statistical analysis plan.

Okay, thanks. And just as you're playing devil's advocate, what if VTI-208 does not succeed, what is your backup plan there?

Well, it is pretty difficult because it depends upon what comes out. But obviously we would probably take a look at the data, decide whether to file a BLA and if not we would put everything into VTI -210. And we would probably make sure we had more than adequate capital to make that happen.

Thank you.

Thank you. Our next question comes from John Newman of Canaccord. Your line is open.

Hi, guys, thanks for taking my question and congrats on all the progress. I just had a couple of questions. The first one is, Terry, can you comment on the filing strategy for VTI-210 and VTI-212 assuming that the 208 study is positive. Would you file on that data after approval for 208?

And I'm also curious, I don't know if you can comment on this or not, but in the past, you had said that the enrollment of the study for 208 was going well when it was still open and that you really weren't seeing any issues with the control patients leaving the study. I don't know if you can comment on that or not but I just thought I would ask, so.

Hey, well, I will take your first question first about the filing strategy for 210 and 212. Well, obviously 210 is going to report out results quite a long time after 208. And remember that it is primarily a study for Europe and that the Europeans have said that, that study alone will be good enough for approval in Europe. And so, it would be quite a way after filing for approval of 208 assuming that 208 results are good enough to file.

With 212, recall this is a Phase 2 study. It is an uncontrolled study. And we are going to be doing some comparisons with the historical controls, and it would be nice to use that for label expansion. But Rob, did I get it right.

Yes.

Good. Okay, the second one. I would like to know myself about the controls. We don't -- we are maintaining an effective blind here in 208. So, we simply are not in a position to make a comment on that because we simply don't know.

One comment that's worth making though, John, is that our primary analysis is Kaplan-Meier analysis. So if the patients are lost to follow-up, the sense is obviously at the time that they lost, but they're not lost from the analysis completely. So - but to the value of doing Kaplan-Meier sort of tied to event analysis is that you don't pay anything like a bigger penalty for those patients that are lost to follow up.

Would you like us to comment on the latest DSMB meeting? Jan, would you like to say something on that?

Yes. But also on the DSMB meetings, we have not become aware that patients leaving the study has become an issue.

Yes.

Okay, great. And just one last question. Assuming that the 208 result is positive and you file a BLA in early 2016, what would be the potential time line in terms of manufacturing the product? Thanks.

So it's obviously what we have been thinking about. And if you look at when you might expect to gain approval and therefore market introduction, I mean you're looking probably, oh goodness, I would say, early 2017, and we are preparing commercialization. We've said before that we've developed a commercial process to produce the cartridges in relatively high volume. We are going through the procedure right now of validating that process. That will be part of the BLA. And we already have the capacity or the potential capacity in place for the commercialization that would probably last us for the first two years. So the short answer to your question is I would expect commercialization and production volumes to start in about the middle of 2017. Are you agreeing with that, Duane?

Yes.

Yes, good.

Okay, great. Thank you very much.

(Operator Instructions) At this time, there are no other questions in queue. I'll turn it back to management for any closing remarks.

Okay. Well, thank you, everyone. We appreciate your interest and your support. I'd like to thank everyone for joining us on the quarterly conference call. And please do call if you have any further questions. We'd appreciate if you would reach out directly to Al Kildani, who is our VP of Investor Relations. I believe that completes the call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program. You may now disconnect.