Matinas BioPharma Holdings Inc (MTNB) 2019 Q3 法說會逐字稿

Greetings and welcome to the Matinas BioPharma Third Quarter 2019 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Peter Vozzo, Investor Relations representative for Matinas BioPharma. Please go ahead, sir.

Thank you, Kevin. Good morning, everyone, and thank you for joining the Matinas BioPharma Third Quarter 2019 Results Conference Call.

Earlier this morning, we issued a press release with our third quarter 2019 financial results along with business updates. The release is available on the Matinas BioPharma website under the Investors section.

Speaking on today's call will be Jerry Jabbour, Chief Executive Officer, who will discuss the company's corporate progress and key milestones; Keith Kucinski, Chief Financial Officer, will then review third quarter financial results. We also have Dr. Terry Ferguson, Chief Medical Officer; and Dr. Terri Matkovits, Chief Development Officer, who will be available to answer questions during Q&A.

At this time, I would like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs expectations or projections for the future. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of federal securities laws. These forward-looking statements are based on Matinas BioPharma's current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Matinas BioPharma files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the SEC's website. We encourage everyone to review these documents carefully.

An archive of this call will be posted to the company's website also in the Investor Relations section. Following the company's prepared remarks, we will open up the call for a question-and-answer session.

I will now turn the call over to Jerry.

Thank you, Peter. Good morning and welcome, everyone, and thanks for taking the time to join us today as we provide a business update and discuss our 2019 third quarter results.

I think to kick things off, I'd like to say that I believe there has never been a more exciting time for Matinas and its stockholders. The progress we have made as a company these past few months coupled with the growing momentum and enthusiasm within the prescription omega-3 market has really set the table for a strong close to 2019 and a milestone-driven 2020.

The third quarter of 2019 was filled with significant operational progress across our company as we advanced our key clinical stage assets and positioned each of these important products to initiate clinical studies which we believe will continue to provide the data necessary for each of these products to become the best in their respective classes.

For MAT9001, our potential best-in-class prescription-only omega-3 drug candidate, we began prescreening patients in September for our ENHANCE-IT trial, our second head-to-head study versus the current leading prescription-only omega-3 therapy, Vascepa. I will speak more about this study and its growing importance giving recent positive developments in this therapeutic category later in the call.

We also commenced dosing of MAT2203, our oral formulation of the highly efficacious but currently poorly tolerated and highly toxic antifungal drug, amphotericin B, in Part 1 of our EnACT study in early October. MAT2203 is our lead product based upon our proprietary and potentially disruptive lipid nano-crystal drug delivery platform. The EnACT study represents a big step forward in further demonstrating the significant potential for this platform which is designed to solve some of the more complex challenges faced today in the delivery of life-changing medicines. Having personally been involved with the formation of the prescription omega-3 market all the way back in 2005, it has been particularly gratifying to witness all of the recent traction, scientific and medical adoption and overall excitement associated with this emerging class of drugs.

Over the past 12 months, this class has begun to redefine itself. And we can now easily see a future where prescription omega-3 therapies are set to become the next-important solution for both treatment and prevention of cardiovascular disease. Momentum and excitement around the prescription omega-3 class continues to build as we enter a new era in the treatment of patients with elevated triglycerides. The recent scientific advisory document from the American Heart Association, which mentions MAT9001 favorably; the new European Society of Cardiology and European Atherosclerosis Society lipid guidelines and a new National Lipid Association position statement all recommend omega-3 therapy for treating high-risk patients with elevated triglycerides, not just those with severe hypertriglyceridemia, which is defined as patients with triglyceride levels greater than 500 milligram per deciliter.

This growing enthusiasm and respect for the benefits of prescription omega-3 therapies comes at the perfect time for our lead asset, MAT9001. In addition to checking the boxes associated with some of our necessary early-stage development activities, we have made great strides in manufacturing and in further establishing the supply chain necessary to support our clinical programs.

Further, and as I mentioned previously, we have commenced the prescreening of patients for our ENHANCE-IT head-to-head study against Vascepa and remain on track to begin dosing patients in the first quarter of 2020. We believe that this second head-to-head study, which builds upon the impressive data demonstrating statistical superiority to Vascepa across a number of important lipid markers, will go a long way to enhancing the profile of MAT9001 and confirming its potential as the best-in-class prescription omega-3 therapy.

We have slightly revised the protocol for this study to increase the number of patients enrolled from 70 to 100. Patients will be enrolled in a crossover design, and each patient must have elevated triglycerides between 150 milligrams and 499 milligrams per deciliter, similar to those patients included in REDUCE-IT. Each patient will be randomized to either MAT9001 or Vascepa for a treatment period of 28 days, which will be followed by a 4-week washout period. Then each patient will go on the other therapy for another 28-day period. Each product will be dosed at 2 grams twice daily with food. The study is powered to show at least a 10% delta across markers with 90% confidence.

In addition to triglycerides, we will also look to confirm prior impressive superiority on the reduction of total cholesterol, VLDL-C, non-HDL-C, ApoC3 and PCSK9 while showing no significant increase in LDL cholesterol.

I believe it is also important to highlight that MAT9001, which was designed to be significantly more bioavailable to Vascepa and other ethyl ester formulations of omega-3 fatty acids, has more total omega-3 fatty acids than any other prescription omega-3 drug, either approved or in development. We believe that the concept of total omega-3 exposure combined with the potential to achieve significantly higher blood levels of critical omega-3 fatty acids may prove to be extremely important as this class and the real science of true omega-3 prescription products continues to evolve over the coming years. We anticipate top line data from this study will be available in the fourth quarter of 2020, which is relatively fast and potentially ideal timing considering some of the other category-defining catalysts expected within the omega-3 class during 2020.

It's no secret to anyone following the prescription omega-3 class that this week represents a very important and critical piece to the expansion of the addressable patient population for prescription omega-3 therapy. The FDA has convened an Advisory Committee to evaluate the potential label expansion for Vascepa based upon the robust and impressive data generated in the Amarin's REDUCE-IT study. A positive vote from the Advisory Committee and subsequent approval of the supplemental new drug application submitted by Amarin could potentially increase the addressable patient population by as much as 20x or from roughly 4 million patients to potentially as many as 80 million patients in the United States alone. We view this meeting and label expansion as an important catalyst for MAT9001 and Matinas as it would be the critical first step in omega-3 therapy becoming a valuable and significant cardiovascular class in terms of market size, a multibillion-dollar opportunity.

Although the public has only had access to the briefing documents for about 24 hours, we believe the expressed views of FDA and the question posed to the committee provide good reason for optimism in the expected approval of Vascepa's sNDA. We look forward to attending this meeting tomorrow and continuing to benefit from FDA and expert guidance as we chart the ultimate development course for MAT9001.

While we are a beneficiary of developments from the AdCom and other FDA regulatory involvement in the prescription omega-3 class, we are intently focused on executing on those things within our control, including our comparative PK bridging study to LOVAZA, which will commence in the next few weeks, and an additional supportive 90-day comparative toxicology study. We expect to have an end-of-Phase II meeting in the middle of 2020 to discuss our Phase III program and position MAT9001 to enter a registration trial as quickly as possible thereafter. 2020 is definitely going to be an exciting year for MAT9001 and the entire omega-3 class.

Turning now to MAT2203, our lead candidate based upon our lipid nano-crystal, or LNC, delivery platform. In October, we initiated the Phase II EnACT study of MAT2203 for the treatment of HIV-infected patients with cryptococcal meningitis. This open-label sequential cohort study, which is financially supported by the NIH, will utilize the company's LNC drug delivery technology to orally deliver the traditionally IV-only and historically toxic fungicidal drug, amphotericin B.

Cryptococcal meningitis is a severe life-threatening fungal infection of the central nervous system and is currently an area of high unmet medical need with poor treatment alternatives. Our Phase II study is designed to explore the use of MAT2203 for both induction and maintenance therapy in these very sick patients. Current standard of care involves the limited treatment course with IV amphotericin due to its renal toxicity, followed by an extended maintenance period of fluconazole treatment. Within this patient population, more than 40% of treated patients typically die, underscoring the ineffectiveness of the current treatment options.

Part 1 of our trial, which began in October, is designed to determine the maximum tolerated dose among people living with HIV but who have not yet developed a fungal infection. Part 2 of the trial is a prospective randomized trial evaluating the safety, tolerability and efficacy of MAT2203 and HIV-infected patients with cryptococcal meningitis compared to the treatment with standard IV-administered amphotericin B as induction therapy.

We have made good progress already through the first cohort of patients in Part 1 and have almost completed cohort 2. We expect to be in position to transition from Part 1 to the efficacy portion during the first quarter of 2020, which is right on schedule and very encouraging. As we have previously guided, we believe that progression from cohort-to-cohort in this study during 2020 may be viewed positively and as a sign that MAT2203 is having the desired impact, both from a safety and an efficacy point of view. We will provide updates and additional commentary on EnACT as appropriate during future quarterly update calls.

Supporting our regulatory pathway, the FDA recently granted MAT2203 orphan drug designation for the treatment of cryptococcosis in October this year. As previously reported, the FDA has designated MAT2203 as a qualified infectious disease product with Fast Track status for 4 indications, including cryptococcal meningitis. The combination of orphan and QIDP designations positions MAT2203 for up to 12 years of exclusivity if approved. This exclusivity, we believe, is a very important value driver for this asset.

I would now like to turn the call over to Keith Kucinski, our CFO, who will discuss our financial results for the quarter.

Thanks, Jerry, and hello, everyone.

This morning, we reported a net loss attributable to common shareholders of $4.6 million or $0.03 per basic and diluted share compared to a net loss attributable to the common shareholders of $3.3 million or $0.03 per basic and diluted share for the same quarter last year.

Research and development expenses were $2.7 million compared to $1.4 million in the same quarter of 2018. The increase in R&D was due primarily to higher manufacturing process development, clinical development and overhead costs, specifically around the development of MAT9001.

General and administrative expenses were $1.9 million compared to last year's third quarter G&A expenses of $1.6 million. The increase in G&A was due primarily to increased employee compensation expense.

We ended the third quarter with $32.7 million of cash and cash equivalents compared to $12.4 million at year-end 2018. This increase includes net proceeds of approximately $30.1 million from the company's public offering completed in March of this year. Based on our current projections, we continue to believe that cash on hand is sufficient to fund operations into the first quarter of 2021.

I'll now turn the call back over to Jerry.

Thanks, Keith.

We are well positioned to begin a period of compelling news flow and value-driving catalysts with multiple studies underway across our 2 clinical programs. We also believe that we will benefit from increasing activity in our space, specifically with the continued emergence of this new class of omega-3 drugs, which could potentially benefit tens of millions of patients without some of the side effects that have traditionally plagued cardiovascular medicines and, importantly, at an affordable cost.

To briefly summarize our upcoming catalysts. One, a potential positive vote from the Vascepa Advisory Committee meeting, which occurs tomorrow; two, potential approval of an Amarin sNDA on or about December 28; three, transition from Part 1 of the EnACT trial to Part 2 efficacy portion of that trial in early 2020 and cohort progression throughout 2020; four, commencement of dosing in the ENHANCE-IT head-to-head study of MAT9001 versus Vascepa in Q1 2020; five, a potential end-of-Phase II meeting with FDA in mid-2020 for MAT9001; six, a potential readout from the STRENGTH trial of AstraZeneca's omega-3 EPANOVA in the second half of 2020, which potentially provides another large positive study demonstrating that high-dose, high-purity omega-3 fatty acids can reduce cardiovascular outcomes; and seven, top line data from our head-to-head ENHANCE-IT trial versus Vascepa in Q4 of 2020.

As I stated when we started the call, we are embarking on what we believe could be the most exciting 12 months in our company's history and with sufficient cash resources to take us past all of these milestones and into 2021. We thank our valued shareholders for following along with us, and we look forward to continuing to update you on our progress.

With that, I will turn it back over to the operator so we can begin our question-and-answer session.

(Operator Instructions) Our first question today is coming from Jason McCarthy from Maxim Group.

So obviously, there's a lot of anticipation and excitement around the AdCom tomorrow. Could you opine a little bit on how you would view the potential outcomes? Because this is the emergence or potential emergence of a cardiovascular class of drug that could be enormous like the statin. So how do you view a unanimous decision or maybe there's a mix decision or outcome on the AdCom or even a negative decision? And how does that impact your thinking around the potential for the space?

Sure, Jason. Thanks for the question. And obviously, some of the pressure comes off a little bit as you get to see the briefing documents, which were released by FDA yesterday. And they took really a good amount of time to deal with some of the, what I would call, fashionable kind of issues that have been bandied about by interested investors in the REDUCE-IT study and Vascepa. And they really put to rest, I think, some of these long-standing questions around things like mineral oil and things like that.

So some of the controversies that may have been expected tomorrow we don't think is there. And it's really going to focus on what we think are the 2 most important questions when you look at this current prescription omega-3 market. It's the who and the why. And there's really nobody better to kind of talk about what we expect tomorrow, what we've seen in the documents and how important it is to Matinas than Terry Ferguson. So Terry, why don't you take it from there?

Yes. I think that the most important thing, at least to my eye and looking through the extensive briefing document, is actually the single question that is posed by the FDA. And throughout even the FDA's portion of the briefing document, there's lots of discussion and -- of the robust benefit that was demonstrated in the clinical trial. And the simple question that's posed by the FDA is, is there sufficient evidence of efficacy and safety to support approval of Vascepa for an indication to reduce CV events? That's the question. Is there enough evidence in REDUCE-IT to support that? And throughout their own document, they provide evidence on the robust benefit that is there.

And then there's sort of a second question posed in. And if yes, then what exactly should the population be? And I think that this is all boiling down to the who question, not if, but who. And there's lots of discussion in the very different -- amongst the -- even the FDA document around the subgroups that are involved. There's broad benefit across pretty much all of the major subgroups represented there. So I think that at least my expectation is should it be approved, I would expect a strong affirmative vote, but we'll see what happens tomorrow.

And then the question will ultimately revolve around what does that population look like and how broad does it extend and are there triglyceride ranges and are there other things that are involved? So I'm -- my expectation around just how they have phrased the question is that my expectation is that it's positive. I think there'll be a lot of discussion of the population, but I think that the population represented in REDUCE-IT is still a substantial extension of the existing population.

And then just to add to that, Jason, how it translates into something that's meaningful for Matinas. Look, there's been a lot of debate about the patients that were studied in REDUCE-IT. And the reality is that they all have elevated triglycerides. And it's -- that is becoming an important marker for physicians. Whether it's as clear as LDL is in terms of lowering to a specific goal, it really doesn't matter. And as far as how that translates to Matinas, we like the fact that triglycerides will be involved, but we also recognize that there are other benefits of omega-3, which may be the reason why you saw the robustness here. And whether that's related to total omega-3 exposure, whether that's related to EPA alone, our MAT9001 is well positioned to take advantage of any of these variables. One, because we are going to be the most -- we believe the most robust reducer of triglycerides, but it's more beyond that. It's the unique impact on PCSK9 which positions MAT9001 to potentially play best with the statin. It's the unique bioavailability profile of MAT9001, which we believe and what we've seen in the head-to-head data so far yields significantly higher blood levels of EPA, for example, than a "pure EPA product like Vascepa."

So the profile of drug is set up to kind of be able to go in any direction that we see from FDA and the experts about how they characterize the benefit. And so, for us, this is a critical first step in market expansion. And then the input and the reasoning behind the who and the why, we're set to take advantage of as we continue to develop the drug in our Phase III programs.

So how do you think guys about what we've seen with Vascepa? Because LOVAZA was the market leader. They went generic. And even though there's generics out there and LOVAZA is a good omega-3, Vascepa's better, and we're seeing erosion of LOVAZA despite generics in the market. So it appears to us that like statins, doctors may use the next best drug. So how do you view that when you're thinking of 9001 as a potential best in class? Could it potentially surpass and be the next omega-3 beyond Vascepa?

Yes, Jason, thanks for the question. I mean there's no question that this is designed to be a next-generation omega-3. And when you think about the profile of LOVAZA, and listen, I was closer to that than anyone given my time at Reliant, I'm not surprised that the market has switched since 2015 and the brand prescriptions have increased toward Vascepa. It's because Vascepa demonstrated that not all omega-3s are the same. And we think that, that continued evolution of the science behind omega-3s and understand the different profile of the unique omega-3s, which comprise our MAT9001, will again yield a profile of drug which will provide that differentiation and a reason for physicians to reach for that next-best-profile drug. It's not -- your analogy to the statins, we think is right on because they were all -- the statin drugs all had different profiles, had some unique impacts, some more robust than the reduction of LDL than others, some had better side effect profiles. And we think that MAT9001 is set up to kind of take advantage of the advancement of omega-3 science the same way that those later-approved statins were.

So we expect Vascepa to be the omega-3 -- and it already is, to a large degree, the omega-3 that changed the game for LOVAZA. We look forward to see how EPANOVA may further change the game and highlight the importance of bioavailability, and then we sit there just behind those 2 big drugs with a better potency profile and just as bioavailable a profile as you'll see with STRENGTH. So our expectation is that the market expansion will happen now based upon the robustness of the REDUCE-IT data. It will be, first, further strengthened, no pun intended, hopefully with the EPANOVA data later this year. And then our profile of drug's going to benefit because whether it's potency in reducing triglycerides, whether it's higher amounts of EPA in the blood, whether it's unique impacts on PCSK9 and whether it is a continued demonstrated safety profile of omega-3s and an affordable medicine, which makes this something that can be widely prescribed and covered by payers, I think we check all the boxes.

Okay. And last question. So worst -- devil's advocate, worst case, this doesn't go well for Vascepa tomorrow or on the PDUFA, the market expansion is just not there, at least yet, how important is it to Matinas to let investors know that just in the severe hypertriglyceridemia, this could still emerge as a best-in-class drug and that's still a very, very large opportunity?

Jason, thanks for that question. I mean yes, what you're highlighting there is essentially the severe hypertriglyceridemia opportunity. Outside of the potential for Amarin's approval of its sNDA, it's still the only indication that's ever been given to an omega-3. And it's all about reduction of triglycerides because it's about reducing a significant risk factor for pancreatitis. That's not to say that those patients don't have enhanced cardiovascular risk, but it's about lower trigs matter most. You've got to do it.

And so if you can own that and you have to assume for purposes of that, that pricing will be relatively equal, we do think dosing will be important. We will -- we expect to put ourselves in a position to potentially have a 2-gram dose approved for severe hypertriglyceridemia. Vascepa only has a 4 gram, so that we think that there's an opportunity there. But it's all about reduction of trigs. So if you can own that 500 or above as a baseline, that's still a big market. It's a $1 billion market in and of itself. And if the goal is get trigs as low as you can, all things being equal, you're going to reach for the product that lowers trigs the best, and that's the profile of MAT9001. So from a worst case base case, that's still a great opportunity considering where the company is today and the unique profile of our drug.

Our next question is coming from Gregg Gilbert from SunTrust.

Jerry, do you think the company will need to do an outcome study to get to market for a broad label for it to get to market period? And if not, what is your market research and your personal experience in the space suggests about the doc's ability to prescribe a drug without an outcome study and for payers to pay for it, i.e., no outcome study but good data otherwise?

Yes. And I think that's a question that we get a lot, Gregg, because we have designed a development program, which essentially, there's a little bit from a -- to use a hockey analogy, it's a little bit of like skating to where the puck is going to be. That's a favorite of Dr. Ferguson. We continue to believe that there is an ultimate indication here, which gets you to a large, large patient population without having to do an outcome study. The reality is you will not get outcomes data in your label if you don't do the study, but this is about access to patients. So I'll take you back to kind of where the FDA was as they were evaluating the anchor sNDA and the potential to grant Amarin an indication where as an adjunct to diet to essentially reduce triglycerides as a key marker of cardiovascular risk in patients with triglyceride levels 200 to 499. And we all saw how that AdCom went the last time. And it really was because, to that point, no other medicine focused on triglycerides showed an outcome benefit. And so they wanted to wait for REDUCE-IT. Well, we see now with REDUCE-IT that, that box has been checked. And we think that STRENGTH further lends credibility to that pathway that there is an indication here to reduce triglycerides in a patient population. Whether it's 200 to 499 or 150 to 499, that is real and viable because of the benefit we're starting to see in REDUCE-IT. And certainly, we anticipate that STRENGTH will also be positive.

So that's the strategy. Until we have our end-of-Phase II meeting with FDA, we won't get their -- the benefit of their current insight on that. The last time we had an FDA interaction was quite a few years ago, but nothing but positive things have happened since then. So that's the advice we're getting from our regulatory experts. That's the path that we're on, and it's really about getting an indication to treat 50-plus million patients.

As far as payer access, my experience there historically is so much of it is price-dependent and all things being equal, that you will get covered for those large patient populations if the price is right essentially. And we expect that pricing will be consistent across all of the products here. There may be an advantage to doing an outcome study later, and it doesn't necessarily have to be focused on the same patient population that was present in REDUCE-IT or even the ENHANCE risk population that you see in STRENGTH. There are certainly other outcome targets like chronic kidney disease, for example, that you could target. But that decision will be made. I think the best position is for commercialization after we see what happens with REDUCE-IT this month and then STRENGTH next year. But Dr. Ferguson, you want to add anything to that?

No. I think that Jerry hit all of the big points. And I think that the issue is, is this -- what is going to be in the label and what is the addressable population? And as we look and see where the guidelines have been going, the guidelines have been at least recommending omega-3 therapy in patients with triglycerides in the 200 to 500 range. And the puck that we are trying to skate towards is to understand what that is going to look like. And while it may not have CV outcomes in the label, is it still going to be important to reduce triglycerides in that population? And that seems to be where things are heading, but again, this will require much further discussion with the FDA.

And then, Gregg, the other thing, and you've seen this in I think other categories once you have established outcomes with a particular class of drugs. And in this case, we would hope and expect that there would be 2 large outcome studies which were positive. It kind of becomes pretty hard to do a placebo-controlled third outcomes trial here. And I think FDA recognizes that, and that certainly will be part of the discussion. And so we think that the opportunity to get that broad label certainly is increased if STRENGTH is positive. If STRENGTH is -- it's powered for a 15% kind of improvement, we would expect it to be north of that. But let's say it disappoints a little bit and this kind of points back towards an EPA story, you would expect that that's where the importance of our not 1 but 2 head-to-head studies against Vascepa come into play. And we think that will be very persuasive to both payers and physicians along with us having a potential 2-gram approval, which could provide some unique pricing for prescription. So -- but that's how we would answer that as of what we know today.

And if I could ask one quick follow-up to Dr. Ferguson since you're willing to talk about the AdCom and the materials. Do you think the committee and ultimately, the FDA will eventually label or suggest labeling what specific cut points on triglyceride levels or take more of a sort of PCSK9 approach where that's more open-ended?

At this point, I just don't know. The label that Amarin has requested is for triglycerides that are greater than 135 milligrams per deciliter. As you look at the public commentary, there actually have been a number of public comments that suggest that there really shouldn't be a lower threshold and it should be like, for instance, the statins or the PCSK9s. I don't know where that is going to be going. As a first step personally, they may put a threshold number in there to start. This is the first one in the class coming forward, but I think it will probably be in the 135 to 150 range since that what was the -- is what was done in the trial. And very frequently, labels reflect what was done in the trial. And given the identification of elevated triglycerides as a risk factor, I wouldn't at all be surprised if there is a threshold. Does that help?

Yes.

Our next question today is coming from Bert Hazlett from BTIG.

Could you discuss why you've increased the size of ENHANCE-IT, please?

Sure. It's a function of 2 things. One, you'll see that, Bert, we wanted to give ourselves the opportunity to get more patients in. We just thought that there was a benefit from increasing that both just from a total number, but also saw an opportunity to increase the power of the study we wanted to take advantage of. In order to keep ourselves on track from a timing perspective, we are going to do a modified PK as part of this and really focus on the pharmacodynamic end points. We think those are the end points that physicians and the market will care about the most relative to Vascepa. I think it's already been pretty well established the enhanced bioavailability of a free fatty acid versus an ethyl ester. So in reality, we actually saved quite a bit of money from modifying the PK portion of that, and then decided that it would be best to utilize those increased funds to increase the number of patients, give ourselves a more meaningful number and then get to that 90% confidence interval.

And you talked about manufacturing and you're making great strides. Could you give a little more clarity on that with regard to 9001 as well?

Sure. I mean it's really -- these are not the easiest products to make. And I think you saw that with some of the challenges AstraZeneca had with manufacturing. And so part of what we've been really focused on is optimizing both our unique and proprietary capsule formulation, but really ensuring that we have adequate supply of all the intermediates for our drug. And so what we've been able to do over the past few months is something we haven't done in a number of years, and that's make GMP batches of these products and position ourselves to get drug back into patients. That's not insignificant. And the number of technical batches that we did really show us that we're developing a very, very robust kind of supply chain here, which will give us assurance that we'll continue to be able to not only support our clinical programs, but put ourselves in position to meet early commercial demand. We would expect over the course of our development program to continue to expand our supply chain and add additional suppliers. But over the past few months, we have ensured that we have adequate supply for all of our Phase III, and we've made great capsules. And that, in and of itself, is a great result and positions us to kind of stay on track.

Okay. One more from me. Regarding 2203, is there anything you can do to enhance the speed with which you're performing in EnACT? I think that's important not only for 2203, but for the entire LNC platform and that's the reason why I asked the question.

Yes. It's a good question. We're throwing around the word enhance a lot today. We use it all across the board. But we really think taking a prudent approach with that drug in that trial makes the most sense, Bert, because what you're doing is setting yourself up for success. So a deliberate progression in Phase I and ensuring that you are identifying the best dose to take into the efficacy portion makes a lot of sense. So the reality is, you're going to know pretty quickly that the delivery technology is working the way we've seen it work in more than a dozen preclinical studies and even in the 2 earlier conducted Phase II studies. If in cohort 1, you're seeing that continued kind of knockdown of fungal count as early as cohort 1, that's going to be a great signal for us. And so it's not going to be just waiting until the full data set from that 4- or 5-cohort approach is there to kind of validate the platform.

And so I think you're going to be able to see pretty quickly if we can demonstrate that we're crossing the blood-brain barrier work, and the platform's being validated the whole time. And then you combine that with the fact that we do continue to explore collaborations with the platform. We may have not -- chosen not to comment as much on these as we focus on our clinical stage assets, but the reality is also through 2020, we would expect to have earlier-stage data in other therapeutic categories like antivirals, for example, with our ViiV collaboration and some other things that we're working on where we think platform validation can happen pretty quickly in 2020. So we like the speed with which EnACT is going. We think because of the tough patient population you're in, you've got to give yourself the best chance to succeed from an efficacy standpoint. And we really want to make sure that we're doing the right thing by patients from a safety perspective, but we'll know probably by the second quarter and feel good about how that drug is working.

Our next question is coming from Chad Messer from Needham & Company.

Thanks, Jerry and Terry, for sharing your thoughts on the briefing documents. Obviously, something that is front of mind with the big day coming tomorrow. You talked about the who and the why being important questions that will be discussed. Just wondering how important you think the how is in that. Specifically, I'm talking about the dissociation between triglyceride lowering and the apparent benefits. Obviously, we know this class of drugs has a lot of other good things that it's doing, but none that you can really -- none that we yet have established is sort of driving the effect. How much do you think that will be discussed? How important is that to the class? And how important is that to MAT9001?

There's a lot of nuances around the mechanistic drivers of benefit in the -- with the omega-3s and in the REDUCE-IT trial. And initially, there was a lot of skepticism that while this might not have any relations with triglycerides, and people seem to have backed off of that, both the FDA and the Amarin portions of the briefing document at least admit that they're not sure what the true mechanistic driver is right now. And I expect that there's going to be a fair amount of discussion as to what is driving it. And triglycerides are not the only driver in that process, and we have a lot more to learn in that regard. I think that there's also been a lot of additional data that has come forward in the literature establishing that there is a relationship between how much you lower triglycerides and how much benefit is achieved. And there is even a dose response in the dose of omega-3s that is administered for the ultimate cardiovascular benefits. So that it's a complicated question. I don't think triglycerides -- I kind of reject the idea that there is a dissociation. It's just we don't know what all of the contributors are to the different things. And if it is EPA, then we are well positioned relating to EPA. If it is total omega-3, we're well positioned with total omega-3. And there is a lot more that we need to learn. But as you put together large groups of patients, multiple med analyses seem to be identifying that while at least in REDUCE-IT, triglyceride lowering was not probably the only contributor, triglyceride lowering does make a difference. And that's coming forward in the literature.

All right. Great. Terry, I appreciate your thoughts as always and excited for the discussion tomorrow. I think like many, I'm optimistic. Maybe just a quick follow-up on your pending head-to-head study. You said that you began prescreening. Just wondering what that means in that context. Or is this patients actually coming in and getting tested and made sure that they're -- that they meet enrollment criteria so that when you put off the starting gun and you're ready to go, they're ready to be enrolled? Or what does prescreening mean in this context?

Yes. It's exactly that. I mean you're coming in and you're making sure that these patients meet your inclusion criteria, that they have the elevated triglycerides that you want to see, that they are practicing potentially a TLC diet so that they can go right into the study and there doesn't have to be additional time for them to get on the right diet. When you're thinking about how aggressive our time line was, Chad, in trying to dose this study in the first quarter and have data by the fourth quarter, we wanted to do everything possible to set ourselves up for success.

So the study is being run by Kevin Maki, well-known in this area. It'll be at 5 or 6 sites, including Harold Bays' site. He ran the MARINE trial for Amarin. And we wanted to get a head start on that so that once with the calendar turn to 2020, we know who the patients are. We can get them lined up, and we're not sitting there in the middle of 2020 going, well, we don't have enough patients to enroll here. It also helps us even though the patients in this trial will have triglyceride levels 150 to 499, you don't want to enroll all of the patients with triglyceride levels 150 to 200 even though that would allow you to enroll the study really fast. So prescreening also allows you to create the balance that you want.

And I think people also need to understand that as they're going to look at the 2 head-to-head studies side-by-side. And the reality is that the first study was done in patients with trig levels 200 to 499 on a lower-fat diet. This is going to lower the entrance criteria to 150. So you're likely to see a little bit of a change in the robustness on some of the -- certainly on the triglycerides based upon what we know and understand the relative reduction increases as your trig levels are elevated. But we think because of the crossover design, it'll still be a really, really useful tool for physicians and certainly payers and investors to evaluate both drugs. But the prescreening just -- it takes away a lot of the risk with enrollment.

Our next question is coming from Jerry Isaacson from Roth Capital.

So looking forward to everything that's going on right now with Amarin. And one question I'd like to maybe have you guys help me square here is that if you listen to what they say, nobody can follow on their data. They own their data. They've built a beautiful wall around everything that they've done. Oh, and by the way, nobody else can ever do an outcome study because it's unethical. So you can never prove that your drug is in any way equal. And I'm sure you've taken these thoughts into consideration. I'm just wondering if you could help me put together where you -- how you bridge that gap between where you stand and kind of their rhetoric.

Sure. Well, first of all, we're flattered that they're worried about us because I think if I was sitting in their shoes, I'd have a lot to worry about. I think it's a recognition of the reality of the competitive dynamic that a profile of drug like MAT9001 presents. Our reality is we're not entitled to the REDUCE-IT data, but you definitely can look at on an apples-to-apples basis what one omega-3 does in a patient population versus what another omega-3 does in a patient population. And this is not the first time certainly in the cardiovascular world where the first-to-come companies had outcomes data and other companies whose drug had a better profile still ate their lunch. Our reality is we're not going to be in a position to have to compete commercially with Vascepa for a number of years. But we like that. We want them to kind of create that market.

As far as for -- that they built this unique wall, that's a sturdy a wall as convincing yourself there's some magical properties of EPA, for example. So there's no such thing as these mystical properties. So they've convinced themselves of a lot, and I probably would be competitively sensitive if I were them, too. But they should be thinking about AstraZeneca and STRENGTH showing a relative risk reduction, which is going to be in the ballpark.

For us, it's about how can we go down the same path that these other omega-3s have placed in the same study designs with the same sorts of patients and show what our optimized next-generation omega-3 can do, and then let FDA evaluate the safety of all of these drugs, the robustness of the efficacy data that we generate and think about what -- how do you get access to patients. We're not getting an outcomes indication without doing an outcomes study. But as Dr. Ferguson outlined earlier, the importance of getting access to 40 million or 50 million patients with elevated triglycerides and the reality that these studies are showing that the higher your triglyceride levels are, once you get above 150, it increases your risk of cardiovascular disease significantly.

So the data and the science on triglycerides is going to continue to emerge. Our understanding of the unique properties of omega-3 is going to continue to emerge. And we think the importance -- we will -- we believe we'll be the only omega-3 to do a head-to-head study against Vascepa. Nobody else is going to throw their hat in that ring because they're not sure of what the results are going to be. So we're going to benefit from not only doing it once, but hopefully putting ourselves in a position to demonstrate very similar data the next time. And that's going to be we believe instructive on FDA and physicians as they evaluate what's the best therapy for their patients. And when you throw in some of the unique things like our ENHANCE-IT bioavailability versus Vascepa where we're getting more EPA in the blood than they are and impact on things like PCSK9, which they could only dream about, I think the profile's going to stand up, and we'll just let the passage of time dictate it.

Yes. I mean, I hope when the time comes that it's a tasty lunch.

Yes. I mean if you're -- right now, Jerry, don't confuse. We're big Amarin fans. Like they are doing exactly what I would -- they may not be doing it the same way I would do it, but they are doing exactly what we think is necessary to help expand this class and increase the awareness of the power of omega-3 in impacting cardiovascular disease. So we're big Amarin fans even if they don't like us.

Yes. No, I think we're on the same page there, for sure. Absolutely. I mean, I think that that's hopefully their rising tide floats all boats. The other thing that I want to ask you quickly about is just there's obviously going to be a lot of increase in clinical activity coming in the first quarter or first half of next year. And I wonder if you could just briefly talk about the increasing burn that you might expect or just -- I know you're not giving guidance, but just some thoughts about how that's going to look.

Yes. I mean, I think it's actually, we've been pretty consistent with saying that we have cash into 2021, which is about 2 quarters past where we think a lot of these meaningful catalysts are going to occur, and that breaks down to roughly about $1.5 million a month over the next 18 months or so. We've been very judicious with our cash. Although we have added to our headcount, our SG&A number has not gone up by a huge amount. We are being thoughtful with how we design these studies. And the reality is that data that we're going to generate next year is not a hugely expensive study, but it's going to be hugely impactful to the bottom line. So with roughly $32 million in cash as of the quarter-end, that comfortably gets us into 2021 and gives us the opportunity to take advantage of some of these milestones we think we're going to hit along the way.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Jabbour for any further or closing comments.

Great. Thank you.

We appreciate everyone attending this morning's call. Obviously, it's a very exciting time for the company. We will continue to kind of highlight these upcoming milestone and catalysts. We're going to close -- we believe 2019 is going to close very strong and the table is set for 2020. We appreciate the continued support, and we look forward to keeping everyone updated on our progress and wish everyone happy holidays. Take care.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.