Larimar Therapeutics Inc (LRMR) 2018 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Zafgen's Third Quarter 2018 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I'll now like to introduce your host for today's conference, Mr. John Woolford from Westwicke Partners. Mr. Woolford, you may begin.

Welcome, and thank you for joining us for Zafgen's Third Quarter 2018 Operating Highlights and Financial Results Conference Call.

Joining us on the call today are Jeff Hatfield, Chief Executive Officer; and Patty Allen, Chief Financial Officer. Dennis Kim, Chief Medical Officer; and Brian McVeigh, Chief Business Officer are available for the question-and-answer portion of the call. After management's prepared comments, we will open up the call for questions.

Before we begin our prepared remarks, I need to remind you that estimates and other forward-looking statements included in this call represent the company's views as of today, November 7, 2018.

Zafgen disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's press release, as well as Zafgen's filings with the SEC for information concerning risk factors that could cause actual results to differ materially from those expressed or implied by such statements. Please also note that this call is being simultaneously webcast online.

I'll now turn the call over to Jeff to begin today's call. Jeff?

Thank you, John, and thank you, everyone for joining us today to discuss our third quarter 2018 operating highlights and financial results. Since we detailed data for our 2 leading programs in our last few quarterly calls, we'll keep this call fairly brief. I'll provide updates on recent clinical and pipeline developments for our 3 development stage candidates ZGN-1061, ZGN-1258 and our newly added early development candidate ZGN-1345. I'll then turn the call over to Patty to review third quarter financial results. Finally, I'll come back on and highlight our upcoming near-term milestones before opening the call up for questions.

As a quick reminder, for those who may be new to this Zafgen story, we are developing a second generation novel investigational MetAP2 platform with advanced chemistry and a unique mechanism of action for the treatment of rare and more prevalent complex metabolic diseases.

Before we get into details, I'll quickly summarize some recent key highlights. For ZGN-1061, we've continued to progress our ongoing Phase II proof-of-concept trial and are pleased to report that the 1.8-milligram extension cohort is now fully enrolled.

For ZGN-1258, we had a significant presence at the Foundation for Prader-Willi Research, or FPWR, annual conference last month. Our activities there included giving multiple poster presentations that highlight our broad array of nonclinical data for 1258; kicking off enrollment for our natural history study we're conducting in collaboration with FPWR, called PATH for PWS; and perhaps most impactful for us, spending quality time actively engaging with the PWS community. This really is the heartfelt mission, shared by all of us here at Zafgen, helping the families affected by this devastating disease. And to complete these introductory comments, we are also pleased to announce this quarter that we have formally advanced ZGN-1345, a novel oral MetAP2 inhibitor, to development candidate status, a differentiated third asset within our pipeline.

Now moving on to some additional detail. As I mentioned earlier regarding ZGN-1061, the company has continued to make progress in our 12-week Phase II proof-of-concept clinical trial for type 2 diabetes, following the addition of a second dose cohort of patients, which includes up to a 1.8-milligram dose. Enrollment for this trial is now complete, and we are in fact slightly over enrolled, as we had a high level of interest to participate in the trial. As a quick reminder, we announced positive results for the trial's first cohort, which included doses up to 0.9-milligram at the American Diabetes Association or ADA meeting in June. In that initial cohort of low- to mid-level targeting engagement, 1061 met all primary endpoints, demonstrating proof of concept efficacy with robust A1C lowering effects, and a favorable safety and tolerability profile generally comparable to placebo with no treatment-related serious adverse events and no CV safety signals observed.

Based on the successful safety and tolerability results of the initial data, we added the currently running cohort to explore the mid to top end of the likely therapeutic dose range of 1061. Based on nonclinical studies, we expect the 1.8-milligram dose to approximate full target engagement. We continue to expect the results from this 1.8-milligram dose cohort in early 2019. As a reminder, we expect an IND allowance this quarter.

Moving on to 1258, our investigational MetAP2 inhibitor for rare metabolic disorders, which we are developing for PWS as an initial indication. As a reminder, PWS is a complex condition that is characterized by unrelenting pathologic hunger, called hyperphagia, and a high risk of obesity. The hyperphagia can be extremely debilitating, causing individuals to struggle with concentration, social interaction, school and work, and the overwhelming desire for food can also result in dangerous behaviors.

The highlight of the quarter for ZGN-1258 was having 3 different presentations on nonclinical efficacy and safety data at the FPWR Annual Conference in October. I'll quickly summarize the key findings for 1258. The first presentation highlighted the core efficacy of 1258 in multiple nonclinical models of hyperphagia and obesity. In all of these studies, 1258 consistently demonstrated robust efficacy, with a magnitude of efficacy that clearly replicates the results seen in similar studies with the company's prior PWS compound. The second presentation explored the potential effects 1258 might have on certain behavioral aspects of PWS.

People with PWS frequently experience high levels of anxiety and obsessive or compulsive behaviors based on their condition. Based on anecdotal and observational benefits on behavior reported in the clinic with our previous PWS compound, we evaluated 1258 in multiple nonclinical genetic models that share behavioral aspects seen in PWS. In these exploratory studies, 1258 consistently demonstrated positive, statistically significant effects on measures of anxiety and obsessive compulsive behavior. These effects may translate to additional aspects of efficacy in the clinic with 1258.

The third presentation directly contrasted the CV safety profile of 1258 with that of the previous PWS compound. Measuring a number of factors, 1258 demonstrated a highly differentiated profile, which ultimately delivers a projected, greater than 100 full margin to this aspect of CV safety. We're excited by all of these encouraging data sets and are very hopeful that the continued strong, nonclinical efficacy and safety data for 1258 may provide an indication of its potential value for people living with PWS.

Regarding our work to advance 1258 into clinical development, I'd like to provide a quick update on our ongoing IND enabling activities. As we stated in our previous calls, the Zafgen team has been working very hard towards an IND allowance for 1258 in this fourth quarter. At this time, Zafgen has successfully completed all of the IND enabling studies for submission of an IND to the FDA with the exception of 1, in which the contract research organization improperly conducted the study. We're currently in the process of completing this last requirement necessary to file the IND, and are now doing so with a new CRO partner. We are working diligently to complete this study and expect the FDA IND allowance and a Phase I clinical trial start in the first quarter of 2019.

To wrap up our update on 1258, our natural history study collaboration with FPWR, called PATH for PWS, opened for enrollment at the FPWR conference last month. The study is designed as a 4-year, 500-participant study, and is expected to provide a number of benefits to the PWS community and companies working to develop potential therapeutics in the field, including Zafgen. The reaction from the PWS community has been very favorable. I'm excited to report that in just our first month, 188 of the target 500 participants have enrolled. It's a clear demonstration of high interest and engagement the community has around this shared initiative.

And finally, in this portfolio update, we're pleased to announce an early-stage addition to the pipeline ZGN-1345, an orally dosed MetAP2 inhibitor that achieves high concentrations in the liver with minimal-to-no deductible exposures systematically. It's been previously established in work outside of Zafgen that high MetAP2 levels are strongly correlated with the most severe outcomes for advanced liver disease, like hepatocellular carcinoma. The profile we are seeing, including positive early data in multiple nonclinical models, supports daily oral dosing for liver diseases with high unmet medical need. We look forward to updating you on the progress of 1345 as it advances. Additional guidance on the timing of future milestones for 1345 will be provided during the first quarter of 2019.

Before I turn the call over to Patty, I want to highlight that we've added to our team this quarter with 2 key hires that bring significant expertise in areas that align with and support our expectations for growth. Lisa Percival, our new Vice President of Regulatory, brings nearly 20 years of global regulatory leadership experience in fast-moving specialty therapeutic areas while previously at Bristol-Myers Squibb. Importantly, she also colead BMS's Global Pediatric Center of Excellence, which has strong implications for her potential ability to impact 1258 in our PWS development program. We're also delighted to welcome Erin Brubaker, our new Vice President of Commercial Strategy and Business Development, who brings 25 years of leadership experience while previously at GlaxoSmithKline, including global roles in new product planning, portfolio strategy, alliance management and commercialization. Erin's contributions will be particularly important as we begin to integrate commercial strategy into the clinical development and indication expansion plans for our growing, maturing pipeline.

I'd now like to turn the call over to Patty to present a financial overview of the quarter. Patty?

Thank you, Jeff, and good afternoon, everyone. I'll now provide a brief summary of our financial results for the third quarter of 2018.

Zafgen reported a net loss for the third quarter of 2018 of $15.1 million or $0.41 per share compared to a net loss of $12.6 million or $0.46 per share for the third quarter of 2017. We issued 9.2 million shares of common stock in our offering that was closed in early July, and now have a weighted average number of common shares outstanding of 36.6 million for the third quarter versus 27.5 million shares in the same quarter of 2017.

Research and development expenses for the third quarter of 2018 were $11.8 million compared to $9.7 million for the third quarter of 2017.

The increase in R&D expenses compared to the prior-year period was primarily due to increased costs related to the 1258 program, as the IND enabling studies progressed during the quarter as the program advances toward the filing of an IND. The increase in R&D expenses was also the result of increased cost associated with the ongoing Phase II clinical trial for 1061.

There were also increases in personnel related costs and noncash stock-based compensation expense in the third quarter of 2018 as compared to the third quarter of 2017. These increases in R&D costs were partially offset by a decrease in nonclinical and manufacturing costs for 1061 that were completed as the program advanced in its clinical development.

General and administrative expenses for the third quarter of 2018 were $3.3 million compared to $3.1 million for the third quarter of 2017. The slight increase in G&A expenses as compared to the prior-year period was primarily due to an increase in personnel related costs, partially offset by a decrease in professional fees and noncash stock-based compensation expense. As of September 30, 2018, Zafgen had cash, cash equivalents and marketable securities totaling $127.8 million. As I previously mentioned, in early July, we completed an underwritten public offering of 9.2 million shares of our common stock at a price to the public of $7.50 per share, including 1.2 million shares pursuant to the underwriters exercise in full of their option to purchase additional common shares, which resulted in net proceeds of approximately $64.6 million. These funds are now reflected on our balance sheet in the third quarter. Given the completion of this offering, we expect that our cash, cash equivalents, and marketable securities balance will be greater than $100 million as of December 31, 2018, and that our cash runway will last through the first half of calendar year 2020.

And with that, I'll turn the call back over to Jeff for closing remarks. Jeff?

Thank you, Patty. To conclude our prepared remarks, I'd like to briefly recap our important near-term milestones for Zafgen. For our 1061 program targeting complex difficult-to-control type 2 diabetes, we anticipate an IND allowance in the fourth quarter of this year, and we remain on track to report top line results for the 1.8-milligram, second dose cohort of our Phase II clinical proof of concept trial in early 2019. For our 1258 program being developed for rare metabolic conditions starting with PWS, we expect an IND allowance and Phase I start in the first quarter of 2019. This year continues to be a period of significant growth and progress for Zafgen. We're excited by the scientific accomplishments in the pipeline, and the renewed interest received from the scientific industry and patient communities regarding our work. We look forward to updating you as we continue to execute against our operating plans and strategic objectives and to updating you on new value inflection point milestones expected across the portfolio as we move into 2019.

And with that, I'd like to now open the line to questions. Operator, can you open the line please.

(Operator Instructions) Our first question comes from Ted Tenthoff from Piper Jaffray.

I was shocked to hear 188 people registered, that's amazing, demonstrating the need in Prader-Willi, so good for you guys. I wanted to get a little bit of sense if I may, about how the -- about how 1258 will be developed? So would the first Phase I be in healthy volunteers, would you go directly to Prader-Willi syndrome patients? How exactly should we expect that progress?

Yes, thanks for the question Ted. And before I answer, I just want to echo what you said. In a rare disease area like PWS, we've just been so gratified to see the engagement of the community and to see such a fast start with this very important natural history study that I think creates an enormous value, not only in the community and with all the effort that's on-going to do something about this devastating disease, so we are right there with you. As it relates to clinical development, what I can tell you right now is that the initial part of the Phase I will be a typical Phase I program, meaning that first stop is -- our first initiative is a single ascending dose Phase I trial that would be conducted in normal healthy volunteers. Beyond that, I think we want to continue to move forward and get that up and going and we'll give I think greater detail on that as we move forward.

Got you. And just to be sure that I get the -- that's very helpful. Is the goal still -- I realize that one study is sort of holding you up here, is the goal still to file that IND by year-end, but maybe late this year and then have it clear early next year? Is that the way to think of this?

Ted, it's a great question. But it is our practice that we don't comment on filing dates for these things. But I would just reinforced that we are -- we feel very good about an expectation that we would have the IND allowance in first quarter.

Our next question comes from Jason Butler from JMP Securities.

Roy in for Jason. Can you just give us a sense of the extent of the preclinical data that you have for ZGN-1258 in terms of the duration of treatment? And then can you give us any additional details about this IND enabling study that was done incorrectly? What kind of study it was? And what exactly was done incorrectly?

Sure, so the broad nonclinical package for 1258 has been, I would say, one of the most extensive and complete packages that I've seen in my career, which is now multiple decades. Exploring all aspects, including efficacy, core efficacy, as I already highlighted, behavioral aspects of -- that we're able to hopefully replicate in animal models, and extensive work in safety. And we feel very good about what that data had told us and the confidence we have around the characteristics of 1258. Regarding the study, I won't get into the specifically which of the requisite studies for filing the IND, but to answer what I can about your question, the CRO did not follow the dosing protocol that was clear. And therefore, the data -- we're not able to use them in that regard. So we're completing that requirement with a different CRO and working diligently at getting that completed so that we can move forward as we want to so urgently.

Okay, great. You guys have anything planned for AASLD? And then when do you think we'll get the next data for 1258? Are you going to release this latest study before the IND in 1Q? Or you think after that?

Yes, so we do have a poster being presented at AASLD as well as we have a poster at TOS at the same time, which TOS is the acronym for The Obesity Society, I wanted to make sure I said it right. So both of those are being presented within the next week, I believe. Beyond that, I can't give you any further guidance in terms of new data coming, but certainly there's a lot of it.

(Operator Instructions) Our next question comes from Joseph Schwartz from Leerink Partners.

This is Dae Gon dialing in for Joe. So I just wanted to delve into your next newly christened candidate ZGN-1345, just wanted to get your take on what the considerations were in selecting this third asset? And can you perhaps help us understand the timing around this candidate selection, given that you already have a fairly late stage asset in 1061 and an earlier asset in 1258? And going forward, I'm just looking at 1345 as potentially a pipeline within this single drug, so can you help us understand what priorities or what considerations you have in terms of identifying your indication to pursue with this select candidate?

Thanks, that's a very comprehensive list of good questions around 1345; I'll do my best and if I miss anything, please bring me back to it. So I'll start with what I think was your first question, in terms of what were we looking for when we were identifying 1345 to be a new asset within the pipeline. So that's clear, it's the profile that I just described. We were looking to discover, identify an oral MetAP2 inhibitor that had a very specific target of the liver. There are multiple metabolically driven liver diseases that have significant underserved -- or unmet medical needs, and we particularly thought that we will be able to identify a -- an oral compound that could be dosed once daily. That's the profile, in addition to all of the traditional things that we look for including safe, et cetera, with the compound. 1345 emerged from a number of potential candidates through the course of studies, looking at safety, pharmacokinetics, tissue distribution, systemic exposure, early signals of efficacy, et cetera, through the course of our typical rigorous screening process, and we've reached the point now where it's very clear that that is the significantly best compound amongst the number of potential alternatives. And hence the nomination. We do think -- and so that's the key aspect of what we're looking for. There are a number of different liver diseases that may have potential for treatment with 1345. I'll stress, this is an early compound that has the profile that I've described, but in terms of reaching a clear decision on which indication to pursue, we're just -- we're not there yet. There is early positive data on indications that are in the rare disease space, there are early data in other spaces beyond rare, but again, this is -- it's speculation to see where this is going to lead to. The science as always will drive our decision.

Thank you, I show no further questions in the queue. At this time, I'd like to turn the call back over to Jeff Hatfield for closing remarks. Please go ahead.

Thank you, operator. So I'd like to thank everyone for joining the call today and for your interest in Zafgen. Have a good evening.

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.