Obseva SA (OBSV) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the ObsEva Second Quarter 2017 Earnings conference call. (Operator Instructions)

I would like to welcome and the call to your host, Mario Corso, Senior Director of Investor Relations.

Thank you, operator. Good afternoon, everyone and welcome to today's call, to review ObsEva's Second Quarter 2017 Results and business update. On this call, I'm joined by Ernest Loumaye, our Cofounder and Chief Executive Officer, and Tim Adams, our Chief Financial Officer.

During the call today we will make forward-looking statements, and we remind you of our Safe Harbor language. We will make forward-looking statements including but not limited to statements later to financial results and trends, the process and timing of the anticipated future development of ObsEva's product candidates; our gonadotropin-releasing hormone or GnRH receptor antagonist, OBE2109; our oxytocin receptor antagonist, nolasiban; and our PGF2a receptor antagonist, OBE022, including clinical trial results, and potential regulatory pathways towards gaining approval of our product candidates in the U.S., Europe and Asian countries as well as the therapeutic and commercial potential of ObsEva's product candidates.

These forward-looking statements are based on ObsEva's current expectations and inherently involve significant risks and uncertainties. ObsEva's actual results and timing of events could differ materially from those anticipated in such forward-looking statements and as a result of these risks and uncertainties, which include without limitation, risks related to ObsEva's development programs; clinical trial time lines and results; the uncertain clinical development process, including adverse events; the success cost and timing of all development activities and clinical trials; the market potential for ObsEva's product candidates; the accuracy of ObsEva's estimates regarding expenses; capital requirements; and the need for financing and other risks detailed in the Risk Factors and elsewhere in ObsEva's U.S. Securities and Exchange Commission filings and reports, including its 20-F report filed with the SEC on April 21, 2017, and F1 form filed with the SEC, on December 30, 2016.

ObsEva undertakes no duty or obligation to update any forward-looking statements contained in this presentation, as a result of new information, future events or changes in its expectations.

I will now turn the call over to Ernest Loumaye, our Chief Executive Officer.

Thank you, Mario. On today's call, we'll provide the business update and our accomplishments in the second quarter. This includes update on our 3 advancing pipeline programs, OBE2109, nolasiban, and OBE022, who are aiming to address significant unmet medical needs in women's health, focusing on the area of endometriosis, uterine fibroids, assisted reproduction and preterm labor. We will also review our second quarter financial results.

In terms of our pipeline progress at high level, our most important second quarter milestone was the start of our Phase III clinical trials, PRIMROSE 1 and 2 for OBE2109 for the treatment of uterine fibroids. Together, with our Phase III clinical trials of nolasiban IMPLANT 2 study, in Assisted Reproductive Technology or ART, which began in March, our pipeline now includes 2 Phase III programs: one Phase 2b trial of OBE2109 for the treatment endometriosis and a Phase 2a trial to begin in the fourth quarter of 2017, is OBE022 for preterm labor.

Needless to say that we are very enthusiastic about the depth and breadth of our pipeline that we assembled, driven by the goal of improving the lives of women, who face highly symptomatic disease that hinder their day-to-day quality of life and functioning as well as those that face challenges in fertility, pregnancy and childbirth.

I would like now to take a few minutes to discuss the specific progress for each of our assets in our R&D pipeline.

Starting with our lead asset, OBE2109, an oral generation antagonist for the treatment endometriosis and fibroids. As previously mentioned, we have begun our Phase III clinical programs comprised of PRIMROSE 1 and PRIMROSE 2, for uterine fibroids treatment. These studies are double-blind, placebo control, Phase III international clinical trials in women with heavy menstrual bleeding or HMB associated with uterine fibroids.

The study revealed on a whole approximately 1,000 patients in total with primary endpoint of reduction in heavy menstrual bleeding, as measured by the alkaline imitate metal.

PRIMROSE 1 will be conducted exclusively in the United States, and PRIMROSE 2 will be conducted in the U.S. and Europe. In addition, we continued to enroll patients into our Phase IIb EDELWEISS clinical study of OBE2109, for the treatment of endometriosis-related pain, for which we continued to target enrollment completion late 2017 or early 2018, and subsequently, generating data around midyear 2018.

More specifically, we have completed the enrollment of patients in the European territories, meaning we are now solely focusing on the completion of U.S. enrollment.

We view the GnRH antagonist class to have very distinct potential advantages over currently used oral contraceptives and GnRH agonist injections in terms of safety, tolerability, chronic treatment compliance as well as symptomatic relief.

In addition to our ongoing belief that patient population in United States alone of approximately 2.5 million women for endometriosis and 4 million women for uterine fibroids can support multiple treatment alternatives, we believe, that the profile of our OBE2109 may be best in class. Our potentially best-in-class profile should appeal to both physician and patient with a once-a-day dosing administration without regard to mealtime and a PK/PD profile that translates into optimal absorption and minimal variability in direct exposure.

Overall we expect to be the first company that would be able to offer physician and patient for both indications a once-daily treatment with 2 different doses, 1 with and 1 without add-back therapy, allowing for maximum flexibility of dosing strategies.

We would also like to take this of opportunity to highlight important data that we have released in June on the PK/PD profile of OBE2109, and add-back hormone replacement therapy. We conducted a trial in healthy women volunteers, testing OBE2109 at 100 milligram and 200 milligram dose alone as well as combined with 2 different doses of commonly used add-back therapies, E2/NETA at 0.5 milligram, 0.1 milligram respectively or 1 milligram and 0.5 milligram respectively.

This study not only supports our OBE2109 and add-back therapy doses being studied in PRIMROSE 1 and PRIMROSE 2, but we also observed 2 important takeaways that we believe support our development strategy. One, approximately 50% of patients at our lower 100-milligram dose of OBE2109, fell in the estradiol range of 20 picogram to 60 picogram per mL, does not requiring add-back therapy. And second, although add-back therapy serves an important purpose to protect bones as measured by bone mineral density protection, we also observed some drawbacks to a frequency and tolerability as measured by bleeding control or rate of amenorrhea and/or spotting.

We now turn to our second late-stage program, the oral oxytocin receptor antagonist, nolasiban, for Assisted Reproductive Technology during ESHRE procedures. We announced in March, the commencement of our Phase III clinical study in Plan 2, in 50 fertility centers across Europe, with the aim of enrolling 760 women undergoing IVF to allow fertility.

Following ovarian stimulation [echo] retrieval fertilization patients were randomized to receive either a single dose of 900-milligram nolasiban or placebo, about 4 hours prior to embryo transfer on day 3 or day 5 after oral (inaudible).

Following pregnancy test and uterus on confirmation, the primary endpoint of the study is ongoing pregnancy at 10 weeks post embryo transfer. Follow-up will take place up to live births of babies then for 1 to 6 months post birth.

We are very pleased to report today that the interest among center and patients to enroll in IMPLANT 2, has been beyond our expectations with both initial patient screening and enrollment tracking ahead of our plan. Therefore, we believe our initial goals of enrollment completion by the end of 2017, is readily achievable, yielding topline data in the first half of 2018.

Our regulatory strategy for nolasiban has remain unchanged. In the event of positive data, we intend to proceed with registration submission in Europe, and also to reengage safety on additional end-of-trial requirements.

In our view, the record screening and enrollment of IMPLANT 2 is an indicator of the need for new technologies that can increase pregnancies and live-birth rates for this large population. Indeed, infertility impacts about 10% of reproductive-age couples and result in approximately 1.6 million ART treatment each year worldwide and has been influenced by many factors, including the trend for pregnancy desire beyond 30 years of age, as opposed to prior generation in the low to mid-20s.

Ramping up with our third pipeline program, our potential first-in-class oral and selective [post-anglinase] to alpha receptor antagonist OBE22, designed to control preterm labor.

In the first half of 2017, we completed our extensive preclinical Phase I clinical program for OBE22, in which we observed, first, appropriate PK properties; second, no drug-drug interaction with standard off-case therapies used to improve neonatal outcomes, such as protection of brain damage and acceleration of lung maturation; third, potential synergistic effect on contraction inhibition with standard of care to corrective treatments and fourth, in addition, we saw good tolerability and absence of laboratory and ECG, QTc abnormalities in humans.

Next, we are currently designing a Phase IIa clinical trial for OBE022, to be known as the PROLONG study that we are planning to begin in the fourth quarter of 2017. This trial will assess PK, safety, contraction inhibition and time to delivery in women, who are in spontaneous preterm labor between 24 and 34 weeks of pregnancy. The study would be conducted in Europe with OBE022 added onto the standard of care, atosiban. We expect that the study could yield data in second half of '18, and would inform additional future development plan.

In summary, we continue to make significant progress on the clinical development front, delivering according to plan now with 2 Phase III programs active and the third advancing through Phase IIb.

I will now turn the call over to our CFO, Tim Adams for brief financial overview.

Good afternoon, everyone and thank you for joining us on the call today. I will provide a brief recap of our current financial position and our results for the second quarter of 2017. Our cash balance at June 30, 2017 was $82.1 million, reflecting a $22 million use of cash in the quarter.

Based upon our current plans and expectations, this cash position allows us to find our operations into early 2019. Our cash used in operations during Q2 2017, was $17.5 million. This $6.9 million increase from our Q1 2017 cash used in operations of $10.6 million, was in line with our expectations, and we do not believe represents a run rate for future quarters due to a few factors.

Our spending in the second quarter was largely a result of continued development of our 3 pipeline assets, which importantly included startup costs for Phase III PRIMROSE 1 and PRIMROSE clinical trials in the treatment of uterine fibroids as well as the Phase III IMPLANT clinical trial of nolasiban in Europe. Given the upfront nature of costs for large clinical trials as well as the timing of cash payments for clinical trial services, we anticipate some future moderation from the Q2 levels, and consider the first half 2017 cash used from operations of $28 million to be more representative of our current run rate going forward.

Also note, in the quarter, we made a $5 million milestone payment to our partner, Kissei Pharmaceuticals, related to the initiation of the Phase III study for OBE2109 in uterine fibroids. This item was included in the investing section of the cash flow statement. The next such milestone payment due to Kissei will be made at the initiation of the Phase III trial for endometriosis.

Now turning to the income statement. Our net loss for the second quarter of 2017 was $17.3 million or $0.61 per diluted share, which compares to a net loss of $6.4 million or $0.30 per diluted share for the quarter ended June 30, 2016. This increase in the net loss was, primarily, driven by our investments in research and development programs.

Our research and development expenses were $14 million for the second quarter of 2017, compared to $5.7 million in the second quarter of 2016. This increase in investment is attributed to our continued work in progress for all 3 of our assets, which includes 3 ongoing Phase III studies.

Our G&A expense for Q2 2017, was $3.9 million compared to $700,000 in Q2 of 2016. This increased investment includes the cost of becoming a public company and additions to our staff. The largest contributor to the year-over-year change was stock-based compensation. We have had a very busy and productive second quarter of 2017. We are investing appropriately in important programs while efficiently utilizing our cash.

We will now turn the call back to the operator for questions.

(Operator Instructions) And our first question is from the line of Alethia Young with Crédit Suisse.

This is actually [Derek Yuen] on for Alethia. 2 quick ones for me. First one is, can you talk more about the current enrollment status for PRIMROSE 1 and PRIMROSE 2? And any dynamics in terms of U.S. versus EU status enrollment? And my second question is from the 2109 PK/PD study, what are the key learnings that you guys have, which will affect add-back dose selection for the Phase III trial?

It's early stage for the PRIMROSE 1 and PRIMROSE 2, but it is starting a very well both in the U.S. and in Europe. So I think we would be able to give maybe more precise information on next coming quarters. But both U.S. and Europe are recruiting very well. For your second question about the selection of add-back therapy dose based on the PK/PD study that we released June, so it confirms that we will -- we are using the standard add-back therapy for both doses, 100-milligram doses and the 200-milligram doses. You will remember that we have 4 arms in this clinical study, 100 without add-back, 100 with add-back, 200 without add-back, 200 with add-back, and the add-back therapy is the same for both groups.

And our next question is from the line of Paul Matteis with Leerink Partners.

My first one is on the EDELWEISS study. Can you talk about the statistical powering of that trial? Is that trial well powered enough to show a statistic benefit on pain measures, which can be kind of tricky and variable? And there's 5 dose arms, so can you talk about how you're thinking about the primary efficacy endpoint with respect to which dose or which pooled doses are core to the analysis?

Yes. So the study has been powered based on the data we have from the Phase IIa in Japan performed by Kissei. The primary endpoint is Phase IIb if the pain reduction in terms of menstrual and non-menstrual pain combined. We are very well aware and we will be able to analyze [both pains] directly, and we expect in Phase III to have both pains being fully [powered].

Okay. And how does it work with respect to which doses are the most relevant to the primary endpoint?

As you know, and we have said many times we are identifying 2 doses, 1 which would not require add-back and 1 which will require add-back. We are testing different doses in the EDELWEISS study, our assumption is that we may be either on 75-milligram or the 100-milligram dose for the no add-back group and to go for 200 milligram for the add-back group. So data will help us to decide what would be the dose to move forward in Phase III.

Okay. That's helpful. And then in terms of picking a dose that doesn't need a add-back, can you talk a little bit about what kind of mean bone mineral density change you would see as acceptable for that does that doesn't require add-back? And I guess how important are outliers versus the mean change in estradiol or median estradiol levels and mean change in bone mineral density with respect to how you're thinking about this decision and ultimate FDA labeling.

Sure. Well, we'll definitively have end of Phase II meeting with the FDA regarding the design and the assumption for the Phase III. We anticipate that in the no-add-back group, the lower confidence interval of bone mineral density reduction should not exceed, if I remember well, 1.6%. So, which is correlated to the accuracy of the DEXA methods for measuring that bone mineral density.

Okay. And then just one P&L question if you don't mind. Can you confirm the basic and fully-diluted share count outstanding right now?

Yes, Paul, it's Tim. It's approximately 30 million shares, I'll dig up an exact number for you.

We will also see more detail on that in the 6k when that's filed with the SEC, you should be seeing that shortly as well.

Our next question is from the line of Ram Selvaraju with H.C. Wainwright.

Pretty quick ones here. Firstly, can you remind us of the salient parameters of the design of the PROLONG Phase IIa trial? And can you confirm that dose ranging for 022 would be completed once this trial is done or if you anticipate doing more dose ranging studies with 022 after the PROLONG trial? Secondly, can you confirm to us what the size of the milestone is that would be (inaudible) say, upon initiation of the Phase III program on endometriosis with 2109? And then with respect to the centers that are involved in PRIMROSE 1 and PRIMROSE 2, specifically the ones in the United States since both of these studies are enrolling patients the U.S. Can you confirm whether there's any overlap in centers between these 2 trials? And if there is, what's the degree of overlap, if any?

Thank you, Ram. PROLONG, so spontaneous labor, premature labor 24 to 34 weeks of gestation, patient for which the physician will decide to give atosiban, the oxytocin antagonist IV route, which is standard of care in Europe, and on top of atosiban, where it will be randomized to either placebo or the highest possible dose of OBE022, highest possible dose being defined on the toxicology data that we have. So this atosiban duration of administration is limited to 48 hours. They would start OBE022 during that period, and OBE022 would be continued for 7 days, both administrations twice a day. So in terms of -- does that answer your question on PROLONG?

What is a number of patients -- the projected number of patients?

Yes. It will be 3 steps. First, 8 patients, which is open design for initial safety. Then there would be a first set of 60 patients that we expect to complete by end of '18, and then an extension of 60 additional patients. This is not dose finding, it's a proof of concept, generating data on efficacy and safety, and therefore, it will be followed by dose finding study Phase II.

In a similar type of population, right?

Yes, yes, yes, definitely. Now what is not yet decided is whether in the Phase IIb, we would have arm of OBE022 stand-alone so step-by-step. I think it's a difficult indication, extremely difficult to give placebo nothing else to patient with preterm labor, and therefore, we are going stepwise by taking the existing standard of care, for which we have good safety in terms of drug-drug interaction and for which we have seen some synergistic affect in preclinical (inaudible), and then we would decide based on that Phase IIb. In terms of PRIMROSE centers, I don't know the figure by heart, there are a few centers who are indeed running EDELWEISS and PRIMROSE, but I believe that majority are different centers. As I mentioned, the initial recruitment rate, it's very satisfactory.

It was a clarification. Can you confirm whether there is any overlap in trial size in the United States for PRIMROSE 1 and PRIMROSE 2? Are any trial sites enrolling patients...

All right, all right, all right. No, no, no, I did not understand. No, no, absolutely not, absolutely not. A center, which is participating to PRIMROSE 1 cannot participate to PRIMROSE 2, that's for sure. Because as you suggest in your questions, you may have some bias going to one or the other study. No, no, no, no overlaps.

And the size of the milestone?

The size of the milestone for the endometriosis fits $3 million to (inaudible) say...

It would be approximate $5 million.

(Operator Instructions) And we do have a question from the line of Biren Amin with Jefferies.

On the Phase III endometriosis program, will you be designing that based on the 12-week portion or on the 24-week portion of EDELWEISS?

It will be based on the 24 weeks -- 24 weeks data, which provide BMD data, however, we will be able to report on pain control at 12 weeks when that part is completed. And we will initiate then end of Phase II meeting with the FDA in order not to lose time in design of the Phase III, but we will have 24 weeks' BMD data to make final decisions on the protocol for the Phase III.

So then the start of the Phase III would likely be towards end of 2018 or early 2019?

Correct. Yes. Correct.

And I'm not showing any further questions in the queue. I will like to turn the call back to Ernest Loumaye for his final remarks.

Operator, it's Tim. Let me go back to Paul's question on the weighted average share count for the quarter for Q2 is 28.5 million shares weighted average. Back to Ernest.

So we would like to thank everyone for taking the time to join us on ObsEva's Second Quarter 2017 update call. We are pleased with our progress to date, and are focused on providing potential best-in-class in a particular alternative across of range woman's health disease and infertility condition. We really appreciate your support and look forward to updating you on our progress again next quarter. Please reach out to Tim Adams or Mario Corso for any follow-up questions. And this concludes our call. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program, and you may all disconnect. Have a wonderful day.