Immunic Inc (IMUX) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vital Therapies Third Quarter 2017 Financial Results. (Operator Instructions) I would like to introduce your host for today's conference, Al Kildani. Please proceed.

Thank you, Terrence. 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 operations update and results for the third quarter ended September 30, 2017.

On today's call are several members of Vital Therapies senior management team, including Dr. Terry Winters, Chief Executive Officer; Dr. Duane Nash, President; Mike Swanson, Executive Vice President and Chief Financial Officer; Rob Ashley, Executive Vice President and Chief Technical Officer; and Dr. Jan Stange, Chief Medical Officer.

Before we begin, we'd like to remind you that some of the statements we make today will include forward-looking statements, such as statements related to the timing, conduct, and enrollment of our clinical trials, future clinical trial results, and whether such results will support any regulatory submission or approval. The timing of certain development goals including regulatory filings, our approval strategies, our ability to scale up our process and to increase our manufacturing capacity to meet demands, our projected cash runway, potential product indications and market sizes, and plans and objectives with management for future clinical and market operations.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual events or result to different materially, including the risks that our clinical trials program is delayed or is ultimately unsuccessful, the risks that our BLA takes longer or is more expensive to complete, or that we need additional financing sooner than anticipated. Please note that these forward-looking statements reflect our management's 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 and our most recent 10-Q for a discussion of the risk factors that could cause actual events or result to differ materially.

Vital Therapies promptly makes available on its website reports that the company files with or furnishes to the SEC, corporate governance information, press releases, and other posters and presentations. A replay of this call will also be available on our website later today. We encourage investors to use our Investor Relations website as a way of easily finding information about Vital Therapies.

I would now like to introduce Dr. Terry Winters, Vital Therapies' Chief Executive Officer.

Good afternoon, everyone, and welcome to our third quarter 2017 update call. I would like to begin with our usual summary of the company for those of you who may be new to the story.

We are developing ELAD, an extracorporeal human allogeneic cellular therapy, which could improve survival in acute forms of liver failure. ELAD is at the Phase 3 clinical trial stage and has orphan drug designation in the U.S. and the EU. We are currently enrolling subjects in VTL-308, a randomized controlled clinical trial in severe alcoholic hepatitis, or sAH. Top line data are anticipated in the third quarter of 2018. Assuming successful clinical results in the future, we plan to seek regulatory approval and to commercialize ELAD directly in most major markets of the world.

Our agenda for today's call will be first to review the status of VTL-308 trial and its outlook for completion; second, to discuss the appointment of Faheem Hasnain as our Chairman; third, to provide update on our commercialization plans then to discuss our recent R&D activities, review our financial results; and finally, we will open up the call for Q&A.

So, first, we'll discuss the status of our VTL-308 Phase 3 clinical trial. As most of you know, this trial is our top priority since successful results are essential for us to move to a BLA-submission targeted to mid-2019 and subsequent commercialization. I am very happy to report that as of yesterday, the trial was 79% enrolled based on the target of 150 subjects. One-hundred eighteen subjects have been enrolled in the trial in the U.S. and EU, and we now have 45 clinical sites open for enrollment. This compares to 95 subjects and 49 sites reported at the time of our last investor call on August 3rd. As we approach conclusion of the study, we are taking a staged approach to closing some sites which accounts for the slightly lower number of clinical sites opened.

Subject enrollment for the last quarter has remained above eight per month and continues to be close to our plan. The overall rate is 0.19 subjects per open site per month, close to our planned metric of 0.20. Enrollment in Europe, which was underperforming, has increased to 0.14 and the U.S. is at 0.22. If we stay on this enrollment rate, we should enroll 150th subject by the end of February and be on track to announce top-line results in the third quarter. However, if we enroll additional subjects under the event driven design of the trial it could extend the time to results by a month or more.

As we approach enrollment of 150 subjects in the trial, we will assess the overall death rate up to that point and make a decision as to whether additional subjects should be enrolled in order to meet the minimum number of 55 deaths at time data lock called for in our statistical plan. We will provide an update on whether or not we will need to keep enrolling subjects as we near enrollment of the 150th subject.

As part of routine quality control of study conduct, we monitor the critical baseline characteristics of subjects enrolled in the VTL-308 study to see how they compare with the baseline characteristics of the VTI-208 reference population. Today, we updated previously disclosed baseline characteristics to include the first 115 subjects enrolled in VTL-308. You can find the details in today's press release, but in summary the means for the key baseline characteristics continue to track the VTI-208 reference population.

Next, we would like to formally welcome Faheem Hasnain as our new Chairman. This is our first update call since announcing that Faheem was appointed Chairman of the Board of Vital Therapies on September 6. For those of you unfamiliar with Faheem, he has experienced great success in the biopharmaceutical industry, and he currently serves on the board of one private and three public biotechnology companies.

Faheem was formerly the CEO, President, and a board member of Receptos, Inc. until the time of its acquisition by Celgene in 2015 for nearly $8 billion. Prior to that, Faheem had a long history of impressive executive leadership with companies such as Facet Biotechnology, PDL Biopharma, and Biogen Idec which was preceded by a distinguished career in senior executive roles with large pharma companies.

We are thrilled to have someone with Faheem's background and experience to guide Vital Therapies at this critical time. In particular, Faheem's strong experience with commercialization will help guide us in our efforts to commercialize ELAD in the event of positive VTL-308 trial results and FDA approval.

Aside from Faheem's strong leadership as chairman, organizationally, Vital Therapies remains much the same. Muneer Satter and I have stepped down from our co-chairman roles, but I remain as chief executive officer and will stay on the board. Muneer also remains on the board and is our largest shareholder. I look forward to working closely with Faheem and with the rest of our exceptional board members.

Next we are continuing to plan for BLA filing and commercialization. We are adding to our regulatory quality and manufacturing departments to help to meet our goal to file the BLA in nine months after successful top-line results. In product launch planning, our focus is now on manufacturing cost and capacity to meet anticipated market demand.

We would like to share with you our current thinking with the caveat that it may change as we advance our plans. Although, we plan to launch out of our San Diego facility, we are beginning the design of a larger plant and are starting the site selection process. We are leaning towards two intermediate size plants rather than one large plant with one in the U.S. and one in Europe in order to simplify logistics.

The allogeneic nature of our product greatly simplifies our production process since the cells are not patient specific and each patient is treated with cells from the same stock, in contrast to autologous cellular therapy where the patient's own cells are used for treatment and must be segregated in the production plant. As an allogeneic product, ELAD lends itself to production in a modular process which should enable us to increase capacity by simply adding bioreactors, thereby reducing process scale-up issues.

Turning now to R&D. We continue to make progress in our understanding of the mechanisms by which ELAD maybe influencing survival in subjects with sAH. The work we have reported so far has been in the laboratory looking at various proteins that VTL C3A cells release under various conditions.

Recently, we had been analyzing clinical samples from our prior VTI-208 study to see whether the findings in cell culture might translate into changes in circulating levels of these important substances in treated subjects. Our first findings from these studies were presented at a conference in Rostock, Germany in September. We showed that the levels of interleukin-1 receptor antagonist or IL-1Ra was significantly elevated during ELAD treatment compared with controls in a selected group of 25 subjects from the VTI-208 study that met the enrollment criteria for VTL-308.

IL-1Ra is an anti-inflammatory protein that has been shown to block the interaction of the pro-inflammatory cytokine, IL-1, with its receptor, thereby potentially reducing inflammation. In our study, IL-1Ra level was significantly elevated throughout ELAD treatment in comparison to baseline and were significant higher than in controls. These data were measured at three time points during ELAD treatment and suggest that the IL-1Ra was being continuously delivered during the full five days of the ELAD therapy.

In addition, we have shown in our prior work that other proteins beneficial to endothelial cells such as vascular endothelial growth factor or VEGF and hepatocytes such as amphiregulin are produced by ELAD C3A cells and prevented apoptosis in these cell types in the laboratory. The same proteins were also shown in our recent unpublished work in the same 25 subjects to be significantly elevated in the plasma of ELAD treated subjects as compared to control subjects. In contrast, markers of inflammation such as procalcitonin and ferritin was significantly reduced in the selected ELAD treated subjects versus control subjects.

While these data are preliminary, we believe they provide an encouraging insight into the potential for VTL C3A cells to have a significant impact on key pathological characteristics of sAH such as liver inflammation, impaired regeneration, and apoptosis. We also made a number of additional scientific presentations regarding our laboratory and clinical data during the third quarter of 2017 at the Liver Meeting, which is the annual meeting of the American Association for the Study of Liver Disease or AASLD; at a single topic meeting on acute-on-chronic liver failure sponsored by the AASLD; and at a joint meeting of the AASLD and the European Association for the Study of the Liver or EASL in London to discuss definitions, therapeutic advances, and clinical endpoints in alcoholic liver disease and alcoholic hepatitis. These posters and associated presentations are available on our Investor Relations website under the section titled, Clinical Publications and Presentations.

I will now turn over the call to Mike Swanson for our discussion of our third quarter financial results. Mike?

Thanks, Terry. We ended the third quarter with cash and cash equivalents of $66.4 million. Our average monthly cash usage for operations and capital expenditures during the first nine months of 2017 was approximately $3.5 million.

We continue to expect our use of cash to vary primarily on the timing of enrollment in the VTL-308 clinical trial and on the timing of expenditures on longer lead time activities in anticipation of a future BLA for ELAD. Based on our current plans, this would fund our operations through the first quarter of 2019, well past the expected announcement of VTL-308 top-line results.

Summarizing our results for the quarter ended September 30, 2017. The company reported a net loss of $12.5 million or a $0.30 basic and diluted loss per share. This included non-cash expenses for stock-based compensation, depreciation, and amortization, totaling $1.4 million. This compared to a net loss of $10.2 million or a $0.32 basic and diluted loss per share for the third quarter of 2016, which also included $1.8 million for the same non-cash expenses.

The $2.3 million increase and the net loss in 2017 primarily reflects higher costs associated with the increased enrollment and activities associated with our ongoing VTL-308 clinical trial. For more details on these financial results, please refer to our press release and our quarterly report on Form 10-Q.

Terry, I turn it back to you.

Thanks, Mike. We 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, President; Rob Ashley, Executive Vice President and Chief Technical Officer; and Dr. Jan Stange, Chief Medical Officer.

So, operator, can you please provide instructions and open up the call for questions?

(Operator Instructions) And our first question comes from Laura Chico from Raymond James.

Good afternoon. Thanks for taking my questions. I just have a couple here, I guess, related first to the 308 enrollment. Terry, you mentioned that four sites had closed between now and back in August. I believe you went from -- what you're at 47 now. I'm just wondering if you could elaborate a little further on kind of why the closure of these sites perhaps?

Well, I think it's just simply cleaning up in preparation for the finish of the study, Laura, and we were looking primarily at the sites that had not performed. It's nothing -- and it's nothing more than that. Anybody want to add to that? OK.

And then I guess if I could just have a follow-up then, Terry, you also mentioned kind of the difference between the European enrollment rates and the rates in the U.S. I think you said 0.22 for the U.S. and 0.14 in Europe. I guess could you speak to any of the dynamics that might be different or impacting enrollment in Europe versus the U.S.? And do you think you will see a reacceleration back up towards the U.S. rate that you're experiencing now?

Well, I think what we've said in past calls, Laura, is we experienced some, shall we say, a much higher bureaucracy factor in Europe that I think of itself depresses enrollment. But I've got an expert sitting on my left here in the shape of Dr. Jan Stange. And, Jan, I'm sure you have some thoughts about Europe. Jan is from Germany, of course.

Yes, I think that's exactly it is, the higher bureaucracy. And once you're over that hurdle, enrollment rate picks up. And that is what we are seeing now of the ratio of patients enrolled in Europe versus patients enrolled in the U.S. per month slowly but surely increasing. So, I don't think there's any profound medical differences or reasons.

No, I think -- and if you go back to our last call, Laura, the European rate was 0.11 and we got a lot of Europe sites. I think it's about 23. So getting it up to 0.14 I think is a very good achievement. And in fact, in our last call, we said we were going to work on that, and we did and we have certainly increased the rate.

Very helpful, OK. And I guess last question and I'll hop back in the queue, you mentioned the biomarker studies that were presented in September; just one follow-up there. And I think this is briefly discussed in the presentation. But have you been able to look at biomarker expression in subjects that were not meeting the 308 criteria? And I guess kind of what are the plans to look a little further into that? Thank you.

Rob, would you like to take that?

Sure. Laura, yes, I mean that's exactly what we need to -- we want to do next having looked at the biomarker expression in the patients that did make the 308 criteria and really finding very encouraging results. We now need to focus on those patients that didn't make the 308 criteria and see if that gives us some additional understanding in the mechanisms of action and the relationship between secondary organ dysfunction and outcome in these patients. So, yes, it's exactly what we're planning to do.

Thanks very much, guys.

Thank you, Laura.

And our next question comes from Jonathan Aschoff from National Securities.

Hi, guys, nice to see the patients is well within the criteria and the pace overall. I was wondering what is the time range in trial 308 for a period of time between conclusively diagnosing the patient and treating them with ELAD?

Jan, would you like to take that?

What I can say is the time between randomization and start treatment of ELAD is usually between two and three days, depending on the distance of the site from here because it's getting help there and the teams there. I can only refer to what we published in the 208 study data. The usual time between being hospitalized, identified and getting into the trial somewhere around nine days was in the 208 study, and it was equal between controls and ELAD.

Okay. So a substantial shortening of that, the 308 versus 208, correct?

Those are -- I'm sorry I didn't make myself clear. Those are two different times. This is the time between diagnosing and finally getting into the study. That's the nine days.

Okay.

And then once you're randomized, there's another two to three days before the ELAD therapy actually starts after randomization.

OK, thank you. And I was curious, did the statistician, [Tom Fleming], did he have a hand in designing 308? Or did Vital just design 308 with his opinion in mind?

I'm not quite understanding that question, Jonathan. Could you repeat it?

Yes, there was someone, you know, Tom Fleming is a very well-known statistician that you had worked at your earlier data. And I was just curious if he actually had a decent hand in designing 308 upon looking at the subset of 208? Or did you guys do that just kind of with his opinions in mind?

Rob, would you like to take that?

Yes, sure. So Thomas was very engaged in helping verify the calculation - the power calculation and so on that we did. And he was also very engaged in working with those -- the definition of some secondary endpoints that we might use in the study. He proved extremely useful in both respects. And as the statistical analysis plan is currently written, the sample site calculation section of that is Tom's word. So, he proved very useful in helping me verify that stuff and in the secondary endpoint stuff, too.

All right, thanks very much.

Thank you, Jonathan.

And at this time, I'm showing no further questions.

Thank you, operator. Well, it just remains for me to thank everybody for your support. It's deeply appreciated, and we'll talk to you again probably in the New Year. Thanks, everybody. Bye.

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