Neurogene Inc (NGNE) 2015 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen.

Thank you for standing by.

And welcome to the Aquinox Pharmaceuticals year-end 2015 conference call.

(Operator Instructions) As a reminder, today's conference call is being recorded.

At this point, I would like to turn the call over to Mr. Brendan Payne, Senior Manager of Investor Relations.

Good afternoon, and thank you for joining us.

On behalf of Aquinox, I would like to welcome everyone to our conference call to discuss financial and operational results for the year ended 2015.

Joining me today are Mr. David Main, Chief Executive Officer, and Mr. Kamran Alam, Chief Financial Officer.

During today's call, Mr. Mayne will begin with the business update based on events from 2015 and, looking forward, a description of opportunity we see for AQX-1125 in interstitial cystitis bladder pain syndrome from our successful LEADERSHIP trial that is driving our advancement towards phase 3 trials in 2016.

Mr. Alam will then discuss our year-end 2015 financial results.

And we will conclude the call with a Q&A session.

Today's conference call will include forward-looking statements under the Private Securities Litigation Reform Act of 1995, including statements regarding our research and development plans and financial outlook.

Actual results may differ from those indicated by these forward-looking statements due to numerous factors, including those discussed in the risk factors section of our most recent 10-K and other SEC filings.

Our expectations and assumptions could change.

While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change.

And with that, I will now turn the call over to David.

Thank you, Brendan, and good afternoon, everyone.

And thanks for joining us.

As described in our press release earlier today, 2015 was a defining year for Aquinox.

We completed three phase 2 clinical trials with AQX-1125, with one of those, our successful LEADERSHIP trial in this interstitial cystitis bladder pain syndrome, paving a path forward towards phase 3 trials and ultimately our plan for independent commercialization in the United States.

Our phase 2 results in interstitial cystitis bladder pain syndrome, or what I will call IC/BPS for short from now on, demonstrated consistent therapeutic benefit with AQX-1125 across a broad range of endpoints that included both pain and urinary symptoms, the two greatest complaints of IC/BPS sufferers.

Our market research indicates that this is a compelling and potentially a multibillion-dollar opportunity for the Company.

We believe AQX-1125 has the potential to become front-line therapy for this debilitating, largely underrecognized disease affecting both men and women.

In the interest of time for those of you new to Aquinox, I would encourage you to view our website for a comprehensive review of the data generated from the LEADERSHIP trial as well as supporting information discussed at our research day held last October in New York.

Both are accessible through the investor relations and events page of our website at aqxpharma.com, where you can also find additional information on IC/BPS and a detailed history of our lead program with AQX-1125.

But very quickly, though, just a recap, IC/BPS is a chronic inflammatory disease of the bladder characterized by pelvic pain and increased urinary urgency and/or frequency.

While the underlying cause is unknown, the disease is a result of degradation of the inner protective lining of the bladder that then allows contents of the urine to irritate the underlying muscle layer, causing inflammation and pain.

Epidemiology studies suggest that IC/BPS is a disease that afflicts both men and women almost equally, but in clinical practice it is diagnosed much more frequently in women.

Although recorded diagnosis rates are low, the prevalence of IC/BPS is estimated to be between 5 million people and 12 million people in the United States alone.

In other developed countries, it is expected to be of similar incidence, but comprehensive epidemiology studies have not yet been undertaken.

There is no known cure for IC/BPS, and there's been no new oral treatment approved by the FDA in the last 20 years.

Many drugs that have analgesic effects are prescribed off-label, but none have been shown to be consistently effective.

The only approved oral drug for IC/BPS goes by the name Elmiron and is thought to work by helping to restore the bladder lining.

It requires 3 to 4 capsules throughout the day.

And for anyone reporting benefit, it typically takes three to six months for onset of action.

However, several recent clinical trials have demonstrated Elmiron to be similar to placebo.

In addition to oral treatments, some patients resort to the invasive procedure of direct installation of drugs via catheter into the bladder to achieve temporary benefit.

We believe AQX-1125 has the potential to address the significant unmet medical need for a novel oral therapeutic that not only reduces symptoms by treating the underlying chronic inflammation, but also may modify the underlying disease process.

Our clinical trials to date have demonstrated AQX-1125 to be a well-tolerated therapy that is easy and convenient for patients to take with a high degree of compliance.

With an effective oral once-daily therapy, our market research supports IC/BPS diagnosis and treatment rates could escalate, translating into a product opportunity that could exceed $1 billion in the US alone.

AQX-1125 is the first of a new class of small-molecule compounds targeting inflammation through a mechanism of action by activating an enzyme called SHIP1.

Predominantly expressed in immune cells, SHIP1 is nature's regulator of immune cell activation and migration to sites of inflammation.

Our aim with 1125 is to enhance the natural role of SHIP1 to slow immune cell activation and migration and thereby accelerating the resolution of inflammation.

Preclinical studies with 1125 have demonstrated it to be well-distributed to tissues to the plasma, but also excreted in the urine and feces as intact, unmetabolized active drug.

Indeed, the 200-milligram once-daily dose studied in the phase 2 LEADERSHIP trial, we achieved high urine concentration of the active drug that we believe may significantly contribute to the improvements in localized pain and urinary symptom control observed.

Clearly, our strategy of targeting an inflammatory condition of the bladder is well-matched to both the mechanism and biodistribution profiles for the drug.

The primary endpoint results from the phase 2 LEADERSHIP trial with 1125 were released in June of 2015, demonstrating a reduction in average daily pain at six weeks for patients on 1125 versus placebo.

This result narrowly missed statistical significance with the P value of 0.06.

And, later, we released analyses of all secondary endpoints, demonstrating statistically significant reductions in maximum daily pain measurements and also in urinary frequency for patients treated with 1125 compared to placebo.

Combined pain and urinary symptom scores captured by questionnaires on e-diaries were also statistically significant in favor of 1125.

We believe that this totality of data is a strong body of evidence that 1125 and IC/BPS has provided the justification and necessary data to decide and begin a phase 3 program in 2016, initiation of which is expected in the next several months.

To support this next stage of development, our investors supported us in raising net proceeds of $91.8 million in September of 2015 through an oversold public offering.

The public offering saw strong participation from existing investors as well as several new institutional investors.

In the months since the completion of the LEADERSHIP trial, we've been fully engaged in preparing and adding the resources necessary to undertake all the enabling work to advance into phase 3 trials as quickly as possible.

We met with the FDA in December of last year to discuss our development program and have incorporated feedback of that meeting into our trial design.

We are now anticipating FDA submission of our phase 3 trial protocol in this next quarter and initiating patient enrollment in the third quarter.

This is the same timeline that we have released and discussed during our financing.

The proposed trial design for the first pivotal trial is a three-arm, randomized, double-blind, placebo-controlled trial to assess the efficacy and safety of 1125 in IC/BPS patients at one of two potential doses once daily over 12 weeks of treatment.

Following the treatment period, patients will then be offered to continue in a 40-week or a 14-week open-label extension during which we will continue to collect long-term safety data.

The open-label extension is beneficial for both making the trial more appealing to volunteers so that they know if they were randomized to the placebo arm.

During the open label extension, they will get active drug, as well as it allows us to collect more safety data to meet our requirements under international standards for drug development.

Upon completion of the first phase 3 study, and assuming a favorable outcome, we will select the dose we believe most beneficial for the patients, considering both safety and efficacy, and initiate a second confirmatory two-arm, randomized, double-blind, placebo-controlled phase 3 trial.

At that point, the goal will be to have top-line data from our first phase 3 study by the end of 2017 so we can make that dose decision to start the second phase 3 trial in 2018.

This, of course, will be affected by the actual enrollment rate that can only be determined once the trial has been initiated.

We will provide more accurate estimates for top-line data once the trial has been enrolling for a period of time.

The second phase 3 trial was planned to be initiated within a few months after top-line data from the first.

The second trial was presently designed to be a two-arm trial and therefore will require fewer patients.

We also plan for it to only have a 14-week open-label extension.

And, therefore, between potential for a faster enrollment period and the 14-week open-label extension, we would anticipate that the second phase 3 trial would complete not long after the first.

Now, among other initiatives we've been undertaking to strengthen the commercial attractiveness at 1125 is a recently completed bioequivalence study demonstrating that tablets are a suitable product format.

To assist in all our required development and product planning, we are also expanding our operational infrastructure.

We've been adding personnel in our corporate head office in Vancouver, and we've recently opened an office in San Bruno, California, near the San Francisco airport.

We are currently at approximately 30 employees and we expect to be approaching 50 by year-end.

As part of our expansion, we recently announced the hiring of Ms. Shelley McCloskey as Vice President of Human Resources and Administration.

And today I'm also pleased to announce the appointment of Dr. David Green as Vice President, Clinical Operations.

Dr. Green has joined us in our San Bruno office and will guide the strategic direction and oversight of Aquinox's clinical operations and our interactions with clinical research partners.

Dr. Green has over 21 years of clinical trial operations experience in academic, biopharmaceutical and CRO settings.

He brings a depth of experience in the development, implementation, execution and management of phase 3 clinical trials and ultimately their inclusion in successful new drug applications.

He has held numerous leadership positions of an increasing scope and responsibility within the biopharmaceutical industry.

He has a diverse set of global clinical operations experience across multiple therapeutic areas.

Most recently, Dr. Green was executive director at United Therapeutics, leading global clinical operations for developmental drug candidates targeting orphan disease.

And prior to that, he was vice president of global clinical operations and biometrics at ReSearch Pharmaceutical Services.

And before that, he was executive director of clinical operations at Amgen and clinical program manager at Abbott Laboratories.

So altogether, Dr. Green brings a tremendous amount of experience to our clinical team.

Of course, it merits in reviewing 2015 that we also announce the top-line results from our FLAGSHIP and KINSHIP trials with 1125 in COPD and ectopic dermatitis respectively.

Unfortunately, neither trial demonstrated a therapeutic benefit with AQX-1125, and we have since ceased further development in those disease areas.

However, these trials provide important information on overall tolerability of the drug.

We now have a combined database of more than 380 patients exposed to 1125 demonstrating, as with LEADERSHIP, 1125 to be well-tolerated, with adverse events comparable to placebo.

This tolerability data will also contribute significantly to the overall safety database for 1125 required for potential registration and commercial approval by the FDA and other regulatory agencies.

Based on the biodistribution and efficacy data from the LEADERSHIP trial, we will continue to explore potential additional therapeutic areas where 1125 could prove beneficial.

Prominent disease candidates include other urinary and GI diseases where pain and inflammation are known to be key contributing factors.

And some examples that we are currently evaluating but are not limited to are diseases such as prostatitis and ulcerative colitis.

In summary, we are continuing to add the necessary resources to capitalize upon the positive results from the LEADERSHIP trial and to initiate a comprehensive development program towards commercialization of AQX-1125 in IC/BPS.

With that, I will turn the call over to Kam Alam, our Chief Financial Officer, to discuss our year-end financial results.

Kam?

Thanks, David.

As we reported in our press release, cash, cash equivalents, short-term and long-term investments totaled $112.9 million as of December 31, 2015, compared to $41.1 million as of December 31, 2014.

This increase was primarily driven by the completion in September 2015 of our public offering's net proceeds of $91.8 million.

Aquinox expected cash, cash equivalents, short-term and long-term investments to be sufficient to complete the first of two planned phase 3 clinical trials in IC/BPS with AQX-1125 as well as supportive activities related to manufacturing, toxicology and additional clinical development.

Research and development expenses were $15.8 million for 2015, compared to $18.1 million for 2014.

This decrease was primarily due to the reduction in expenditures as we completed final activities related to the leadership and flagship clinical trials.

General and administrative expenses for 2015 increased to $5.5 million, compared to $4.3 million for 2014.

This increase was primarily due to higher personnel-related costs, legal and consulting expenses.

In 2015, Aquinox had a net loss of $21.9 million, compared to a net loss of $24 million for 2014.

The decrease in net loss was primarily due to the reduction in research and development expenditures for the second half of 2015.

And with that, I will turn the call back over to David.

Thanks, Kam.

So in closing, everyone, we remain committed to delivering on our upcoming milestones through 2016 and into 2017, all the while adding value for our investors.

We viewed 2015 as a successful year in the clinical development of the 1125, and we are pleased to now have a focused effort towards phase 3 trials in IC/BPS.

Thank you all again for joining us today.

I want to conclude by in particular extending my appreciation to our employees, which is a relatively small team, who have worked exceptionally hard to bring Aquinox to where it is today, embarking on its first phase 3 trial that could be a truly transformational event for Aquinox.

This would also not be possible without the continued support of our investors and other partners.

We of course look forward to updating our progress in the months ahead.

And, operator, we can now open the call up for questions.

(Operator Instructions) Alan Carr, Needham.

Earlier this year, you had mentioned after discussions with the FDA that maximum daily pain might be a suitable endpoint, but the FDA wanted to consult with -- or the division you were talking to wanted to consult with another division.

I was wondering if you could comment if there's any changes to that.

And then also, any other -- I guess can you go over any other support of preclinical or clinical work that you will need to do with 1125 for this indication?

Thanks.

Great.

Well, thanks for being on the call today, Alan.

As I think we announced when we had our post-FDA meeting, the FDA said that they will consult the division of anesthesia, analgesia and addiction products once we submit our protocol for the phase 3 trial.

So I think we will get that feedback in the next couple of months as we submit that protocol.

So there hasn't been any further discussion with them on that.

They are really waiting for us to submit the protocol.

And in terms of additional preclinical work, there is additional work that we will be doing to complete the carcinogenicity study that is probably the largest thing that is still outstanding.

And we will be doing that, just like most companies do, in parallel to phase 3. So we expect it to be completed well in advance before we file an NDA.

As well as from other clinical work that we will undertake, there is no other additional clinical work beyond the phase 2 -- the phase 3 studies that I've outlined that we absolutely must conclude for this indication specifically.

But, again, as we outlined after our FDA meeting, that we know that we must meet all of the requirements from a safety database perspective.

And a reminder for everybody, that means that total of 1,500 patients -- total exposures of which between 300 and 600 must be for six months and at least 100 for one year.

We will be certainly achieving all of the requirements for the one year and the six months.

We will likely need to undertake some additional phase 2 work to get up to the total 1,500-patient exposures.

Of course, it also depends upon how many men are enrolled in our phase 3 studies.

I think our last estimation, we are sitting at around 1,200 to 1,300 total exposures with the planned studies, so we would undertake some additional phase 2 work in parallel to get those extra safety numbers.

That does not have to be an IC/BPS.

And I suppose that is for the other indications that you are considering might come in?

Yes, though there are some additional IC/BPS studies that we would be interested in pursuing, even just from a pure publication strategy.

So all -- any patients enrolled in any phase 2 study would count towards that total exposure number.

Okay, great.

Thanks very much.

Paul Matteis, Leerink.

This is Jeff on for Paul.

Thanks for taking my questions; I have two.

The first one, could you give us a little bit more color around the phase 3 studies such as what are the rate-limiting steps, and what are the assumptions that you made to design a trial?

When you say rate-limiting steps -- rate-limiting steps to start the study?

Yes.

To start and, like, enroll the study.

Sure.

The rate-limiting steps are, again, nothing unique to us.

They are what every company faces.

We had to write up all of our completed clinical studies that have a consolidated safety database that has to be included in the investigators' brochure.

We had to sign up a CRO, which we have now done.

We had to write the protocol, which is nearing completion.

We needed to complete some additional toxicology work, namely reproductive toxicology.

That's now being completed and being written up.

And we also needed to manufacture drug to be used in the clinical study, which we started at the beginning of the year once we knew we had bioequivalence with tablets.

And that's also nearing completion.

So, most of the things that are necessary for us to submit our protocol, we are barreling down on completing.

Beyond that, of course, there was regulatory considerations.

Once we submit our protocol model into the FDA -- but to other jurisdictions where we want to run the study.

We not only have to wait for any comments on the protocol and informed consent and other documentation required, we also typically will need to submit to ethics committees to cover off the sites that we have selected to participate.

So those are all very standard and typical things that we will be undertaking to move us toward patient enrollment.

And about the assumptions made into designing a trial such as -- what is the enrollment rate?

How would you compare it relative to the phase 2 trial?

The phase 2 study was not really a great example because we started with a very, very few centers in that trial.

We started with only 5 centers in Canada and slowly added them.

So in this case, we have kind of looked at what was our peak enrollment in that trial.

We've also looked at some historical trials.

And we have estimated approximately 100 sites will be required for the entire study.

And as I mentioned in my remarks, right now the goal is that we are hoping that the enrollment rate with those 100 sites should put us on track to have data from the treatment period.

Not from the open-label extension, but from the treatment period right towards the end of 2017.

But to know if that is achievable, we will have to wait until we see a few months of enrollment and if our early assumptions are correct.

Okay.

And my last question is for -- I know you mentioned that you are also looking into other indications.

How much of these other indications are a priority, and what steps would you take to explore these new indications?

Any additional clinical indications we would explore at this point would all be phase 2 studies, so we can go into them very quickly once we have the resources.

So right now the rate-limiting step to pursuing additional indication is really all hands are on deck to get the first phase 3 study up and running.

Once that is well underway and we feel the critical activities there are now well into the hands of our CRO, we will then look to see about planning some additional phase 2 work.

All right.

Excellent.

Thank you for answering my questions.

Biren Amin, Jefferies.

Just wanted to ask on the scientific advice, have you guys met with the Europeans and received feedback on the phase 3 trial design?

Our team is meeting with them this week.

But then, the process there is very different; there is no official minutes.

So we will just take their advice and take into consideration.

I think as we've guided before, we want to hear what they have to say to know whether or not our studies would be equally as applicable in the US as they would be in other jurisdictions.

But our number one priority is making sure that they are suitable for the FDA.

So depending upon what advice we give, we may or may not make changes to the program, but we are getting that this week.

Got it.

And then on the phase 3 trial design, how are you handling patients on background therapy; for example, Elmiron?

Are those patients allowed to remain on Elmiron?

Are they discontinued or washed out or they will allow rescue therapy?

It will be exactly the same as what was in the leadership studies.

So, we -- anybody who was on stable doses of background meds can continue to be on those meds; so Elmiron, amitriptyline.

Again, but they have to be on stable meds -- a stable background dose, as they can't change the dose coming into the study or while on the study.

But, importantly, if they are on those medications, they still have to have the minimum of 5 out of 10 on the average daily pain score to be eligible.

And they have to hit certain numbers on the screening questionnaires, [olirisantin], [DPICSS].

So basically, our assumption is regardless of what background meds they are on, they are not adequately addressing their symptoms.

Now, one exclusion, though, is we do not allow patients on study that are on chronic opiate use.

Got it.

Okay, all right.

Thanks.

(Operator Instructions) Bill Tanner, Guggenheim Securities.

David, just -- I know you guys have certainly got your hands full with 1125 for BPS/IC.

But just curious if the Company -- what the Company's thoughts are on any kind of BD activity, anything you're seeing out there that might be complementary to the compound for that indication.

Yes, it's something that is certainly on our mind.

We are looking, but there's been certainly nothing at this point that we would talk about.

But if there were products -- our programs that are complementary, it's certainly something that we would be interested in.

Okay, great.

Thanks.

And I am showing no further questions at this time.

I would like to turn the call over to Mr. Brendan Payne for closing remarks.

Just in closing, I want to thank everyone for taking the time to be with us today.

We look forward to an exciting year ahead and to our continued investor support.

Thank you.

Ladies and gentlemen, thank you for participation in today's conference.

This concludes the program.

You may all disconnect.

Everyone have a great day.