Immunic Inc (IMUX) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vital Therapies Second Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to turn the conference over to Al Kildani. Please go ahead.

Thank you, George. Good afternoon. My name is Al Kildani, Vice President of Investor Relations and Business Development with Vital Therapies. Thank you for joining Vital Therapies' management team on our conference call to discuss the company's operations update and results for the second quarter ended June 30, 2018.

On today's call are several members of Vital Therapies' senior management team, including Russell Cox, Chief Executive Officer; Dr. Duane Nash, President; Rob Ashley, Executive Vice President and Chief Technical Officer; Dr. Jan Stange, Chief Medical Officer; and Mike Swanson, Executive Vice President and Chief Financial 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 conduct of our clinical trials and the timing of the release of the trials' results; whether such results will be positive and adequate to support any regulatory submission or approval; our plans for and our current estimated timing of any regulatory submissions; whether such a submission will be sufficient for acceptance; the timing of any preapproval inspection by regulatory authorities; pricing of our product and the level of reimbursement it may support; our ability to attract key personnel to support our commercialization plans; and our projected cash flow needs.

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 unsuccessful or regulatory authorities require an additional clinical trial and the risks that our biologics license application or BLA takes longer to prepare than we are currently planning, is not accepted for filing or is more expensive to complete than we expect or that we may 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 filed earlier today for a 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 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 Russell Cox, Vital Therapies' Chief Executive Officer.

Thanks, Al. Good afternoon, everyone, and welcome to our second quarter 2018 update call. On today's call, I'll begin with some introductory comments on the status of our VTL-308 clinical trial, recap our recent analyst R&D day and other R&D activities, discuss some of our preparations for potential positive outcome from 308, then I'll ask Mike to review our second quarter financial results. And finally, we'll open up the call for Q&A.

As you probably know, we are very close to announcing top line results for VTL-308, our pivotal Phase III trial, evaluating ELAD in subjects with severe alcoholic hepatitis or sAH. We expect to lock the database in the next 30 days, which puts us on track to announce top line results next month in the second half of September. Top line results will be announced via a press release and will be followed by a conference call to discuss the results.

As a reminder, the primary endpoint for 308 is overall survival assessed using a Kaplan Meier analysis of the intent to treat population. I want to emphasize that we do not know the outcome of 308 and that at the request of the FDA we have steadfastly remained blinded to the data. After database lock, we will turn the database over to our outside statistical consultants. These consultants will then perform numerous analyses according to the statistical plan and quality check them. This process takes a couple of weeks, as it includes not only the top line analysis of survival data but also the multitude of predefined analyses, which are anticipated to form part of the BLA package, assuming the outcome is positive.

At the end of this analytical process, the outside statisticians will present the results to us and we will then announce these results to the public. As mentioned earlier, this announcement is currently anticipated for the second half of September. Needless to say, we are very much looking forward to this momentous event for the company.

On the R&D front, on May 24th, we held our first analyst R&D day at our headquarters in San Diego. In addition to company presentations, two external clinical experts in the field of alcoholic hepatitis presented. Dr. Stephen Atkinson, Specialist Registrar in Gastroenterology and Hepatology and an Honorary Clinical Lecturer at Imperial College London, gave a presentation on the background and pathophysiology of sAH. Also, Dr. Nick Pyrsopoulos, Chief of Gastroenterology and Hepatology at Rutgers New Jersey Medical School, discussed his clinical experience with sAH.

There were a number of key takeaways from analyst R&D day. The outside clinical experts reviewed data and made it clear just how severe a disease alcoholic hepatitis is in terms of pain, mortality, and expense. The experts also highlighted the fact that there are limited treatment options for alcoholic hepatitis and that even among existing treatments, none have demonstrated a survival benefit beyond 28 days. Members of the Vital Therapies' R&D team presented extensive in vivo and in vitro data we have generated characterizing ELAD's hypothesized mechanism of action. We are very proud of the considerable work that has been completed in this area and we look forward to reporting future findings that support our cell therapy. Our Chief Technical Officer, Rob Ashley, made a presentation on how our learnings from prior clinical trials led us to what we believe is the appropriate population to treat with ELAD and how this shaped the design of 308. Finally, we discussed some of our plans for how we will commercialize ELAD in the event of positive top line results from 308 and a successful BLA submission.

Overall, these presentations reinforced our belief that if our clinical development is successful, we have a highly attractive, commercial opportunity that we can target on our own and in the US and EU.

We'd like to thank Drs. Atkinson and Pyrsopoulos for participating in this informative event. We'd also like to thank the analysts who participated and the several who traveled to attend personally. An archive of the webcast from this event can be found in the Investor Relations section of our website along with the associated slide presentation. We highly encourage you to review these materials.

Next, a quick update on our liver perfusion program. As you may recall, we have been working with Drexel University in Philadelphia and the University of Birmingham in the UK to evaluate the potential for the mixture of substances produced by VTL C3A cells to improve the condition of marginal donor livers. We call this mixture C-GEM and we are hopeful that the use of C-GEM in combination with machines designed to maintain the livers at body temperature, prior to transplant, might increase the number of organs available for transplantation.

We are pleased to announce we have recently extended this program by entering into a research collaboration with Massachusetts General Hospital or MGH to further explore the use of C-GEM in comparison with current perfusion solutions in a more definitive ex vivo split liver perfusion model developed by MGH. We look forward to reporting more on this program in the future.

In order to capitalize on what we hope will be positive results from 308, we continue important preparations for the future. These include preparations for a BLA submission, assuming positive trial results, critical hiring, and commercialization. With regard to preparations for the BLA submission, we are accelerating our BLA activities in advance of the 308 top line results. Preparing a BLA submission is a huge undertaking for any organization. Although we will work to prepare the BLA for submissions as quickly as possible after top line results, we currently believe submitting 12 months after data is a realistic timeframe. To understand why, it is important to recall that we manufacture the ELAD C3A cell cartridges at our own facility here in San Diego. For the last 2 years, this facility has been fully occupied manufacturing product for our clinical trials. However, prior to BLA submission we need to focus in preparing the facility for commercial product manufacture, which includes generating new validation data to support commercial scale manufacturing processes and related equipment and facilities.

While the ELAD manufacturing process is modular in nature, new modules need to be installed and validated through full manufacturing runs, which is a time-consuming, but unavoidable part of a BLA development plan. Also at the risk of stating the obvious, our goal is to prepare a submission that will be accepted for filing on first submission and result in the shortest approval time and the highest likelihood of success as we can possibly achieve. We hope this sheds some light on what will be required for our BLA submission.

On the critical hiring front, we are working to identify key additions to the Vital Therapies' leadership team that will be needed as we evolve towards a commercial stage organization. We recently added Gary Neumann to the management team as Vice President, Quality. Gary has extensive experience with biotech companies such as Genentech and Novartis. Gary will play a critical role in guiding the BLA submission. Looking ahead, we are in contact with a number of promising candidates for key leadership roles that we will need to fill soon in the event of positive results.

On the commercialization front, we're pursuing a number of initiatives to lay the groundwork for a potential launch of ELAD. We're working with outside consultants and clinical experts in the field of sAH to expand our understanding of the disease as well as determine how we might best be able to reach these patients. This effort will build on prior work, including the recent publication of a burden of illness study in the peer-reviewed journal, Alcohol, that we believe validates the size of the sAH market in the US. We continue to build out the value proposition that we believe ELAD may offer to the healthcare system. In the event of positive results from 308, we believe that ELAD will demonstrate highly attractive, quality-adjusted life years or QALYs as a potentially lifesaving therapy in a relatively young population. We believe this will have positive implications for ELAD's reimbursement since the cost effectiveness ratios that payers evaluate could be quite favorable, particularly when compared to other life-extending therapies.

In addition, we have been meeting with key experts in the field to confirm our thinking around our launch strategies. It has been great to hear directly from them as we seek to optimize our approach to centers of excellence for the treatment of sAH. To date, the feedback from these experts is very encouraging due to the potentially lifesaving nature of ELAD. We will continue to raise the visibility of the company in the event of positive top line data for the 308 trial. Much of this will be focused on raising awareness around the serious nature of sAH and the appropriate characterization of this patient population.

There is already growing awareness of how prevalent alcohol-related liver disease is becoming. Just last month, an article published in the BMJ documented the sharp increase in deaths related to alcohol consumption in the United States between 1999 and 2016, particularly among those in their 20s and 30s. While that study focused on chronic liver disease, increased alcohol consumption among the young likely has implications for acute forms of liver failure as well. So it is important to educate the public about this growing problem.

This is only a snapshot of the activities we're undertaking as we prepare for moving forward in the event of positive results from our VTL-308 clinical trial. We hope to report more on these activities in the near future.

I'll now turn the call over to Mike for a discussion of our second quarter financial results.

Thank you, Russ. We ended the second quarter with cash and cash equivalents of $31.1 million. Our average monthly cash usage for operations and capital expenditures during the second quarter was approximately $4.2 million. Our use of cash is shifting from clinical development to BLA-related activities in anticipation of a future BLA for ELAD. Assuming our current level of operations and limited BLA and commercialization-related expenditures, our quarter end cash balance would fund our operations through the first quarter of 2019.

Summarizing our results for the quarter ended June 30, 2018, the company reported a net loss of $12.7 million or a $0.30 basic and diluted loss per share. This included noncash expenditures for stock-based compensation, depreciation and amortization totaling $2 million. This compared to a net loss of $12.4 million or a $0.29 basic and diluted loss per share for the second quarter of 2017, which included $1.4 million for the same noncash expenses. For more details on these financial results, please refer to our press release and our quarterly report on Form 10-Q.

With that, I turn it back over to Russ.

Thanks, Mike. We truly look forward to reporting 308 top line results in the second half of September. We are unlikely to have any significant announcements before announcing those results so this may be one of the last opportunities to address any questions you may have before then.

I'd like to open up the call to your questions. In addition to Mike, joining me for the QA 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. Operator, can you please provide instructions and open up the call for questions?

(Operator Instructions) The first question comes from the line of Laura Chico from Raymond James.

I just have a couple here. First, a clarification question, Russ if I'm reading the press release correctly and your comments, it sounded like you're not in data lock yet. Could you just confirm, have you actually crossed the event trigger? I believe it was 55 events.

Yes, so thanks for the question, Laura. So, just remember that 55's an approximate number so that's not a moment in time where we have to lock the database. And you're I think assuming correct in terms of how you're reading the timing, but I would refer to Rob and maybe he can give you a little bit more color there. Rob?

Sure, hi Laura. Yes, if you remember the way that we were dealing with the sort of number of events that we anticipated was that we made a prediction of when we anticipated we would hit the 55 events point. It's not like we're sitting there counting events as they come in or anything, we're blinded to that information. So, we'll lock the database at the point where that prediction suggested that we would have 55 events. And we don't absolutely have to have 55. There's a range around that number. But we'll lock the database when our calculations anticipated that that 55 event number would take place and that'll be soon.

Okay, that's helpful. So, and if I can just say that back, so you are blinded to the actual events, but based on your calculations that will triangulate off of and trigger the data lock. Is that what I hear you saying?

Yes, and not really our calculations. It was independent statisticians that drew that conclusion. We didn't even look at the preceding data to do that calculation. We had people independent from us do that calculation for us.

Okay, thanks, Rob. That's helpful. I guess just two quick follow ups then and I was looking back at the analyst day slides and I'm just wondering, could you remind us when you were doing the 208 analyses and you looked at a subset of patients that had elevated MELD scores. And if we look at the curves there, it looks like the ELAD group and this is just in the elevated MELD over 30, it looks like ELAD patients faired a little bit worse than control. And Rob and Duane, I know you both talked about this pretty extensively, but could you just remind us kind of the rationale or hypothesis for why that is actually occurring?

Yes, go ahead, Rob.

Sure, so as you know MELD is made up of three biomarkers, or the better word, factors. One is bilirubin and when we looked at the data and we looked at the impact of bilirubin on the data, then subjects on ELAD did just as well, irrespective of their bilirubin levels as control patients did. But when you look at the other two factors, INR which is a measure of coagulopathy and Creatinine, which is a measure of kidney failure, yes, in those patients which were already moving into kidney failure already, had evidence of severe coagulopathy, the ELAD patients didn't do as well as the control patients.

And I think there are a number of explanations for that. It's consistent with, for example, the literature on other extracorporeal therapies such as ECMO and it's probably a function, at least on the coagulopathy side of the disruptive nature of carrying out extracorporeal therapy bumping blood around tubes and so on. And then on the kidney function side, it's simply indicative of subjects or patients who are essentially moving past the point at which ELAD, which doesn't address kidney function directly, could be anticipated to help. So they sort of fell off the cliff, if you like. And really this was what directed the design of the 308 study and particularly pushed us towards the idea of getting these patients earlier in the disease process, prior to them moving into these secondary organ dysfunctions, which the literature would say is clearly, almost inevitably, fatal. We hope to be able to address that in the future, but with the ELAD system as it's set up today, those patients were excluded from the study.

Okay, thanks. And one last one, I'll hop in the queue. Russ, you mentioned the primary endpoint for this will be overall survival. I think you alluded to a couple of additional analyses that will be also performed in the top line analysis. Is there anything you can kind of share with us in terms of what to expect there?

Yes, I mean I think that the one thing that you should recognize is top line results are going to be specific to Kaplan Meier analysis. But I'll let maybe Rob and Duane and Jan talk maybe a little about some of the other things that we'll look it. As you can imagine, we are running all kinds of different analyses just to make sure that everything holds up exactly the way we want. But then there's some other secondary endpoints that we'll look at. So, Rob, why don't you go ahead?

Sure, the primary endpoint is exactly as you described, the Kaplan Meier analysis of overall survival after at least 90 days of follow up. Just like with the last study, we'll also be looking at proportions of survivors at given points in time, 28 days and 91 days, and we'll be in terms of this sort of I don't know want for a better word, exploratory, so next-level analyses we'll be carrying out very similar analyses to what you saw us present for the 208 data, plus a few others you know based on our experience since then and based on the experience from the STOPAH study, which might help illuminate the mechanism of action and might help illuminate outcomes some more and help drive the labeling for the product. But really the primary and secondary endpoints are the critical ones. And that's a Kaplan Meier analysis of overall survival at 90 days and secondary endpoints of proportions of survivors. Jan, I don't know whether you want to expand on that at all?

Yes, all I can say is that a large part of the analysis is of course to make sure that the groups are balanced in all kinds of potential covariants, their baseline liver disease, the baseline age, things like that, just to make sure that there are no other covariants that would propose the positive results if we have one. Just making sure the groups are balanced is a big part of that.

(Operator Instructions) And I show no further questions at this time. I would like to turn the call back over to Al Kildani for closing remarks.

Again, I'd like to thank everyone for joining our 2018 second quarter update call. We look forward to speaking to you again after announcing top line results for VTL-308 next month. Please have a great evening.