Obseva SA (OBSV) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 ObsEva SA Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to turn the call over to Mario Corso, Senior Director, Investor Relations. Sir, you may begin.

Thank you, operator. Good morning or afternoon, everyone, and welcome to today's call to review ObsEva's first quarter 2018 results and business update.

On this call, I'm joined by Ernest Loumaye, our Co-Founder and Chief Executive Officer; Jean-Pierre Gotteland, our Chief Scientific 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 related to financial results and trends; the process and timing of anticipated future development of ObsEva's product candidates; our gonadotropin-releasing hormone, or GnRH receptor antagonist, OBE2109; our oxytocin receptor antagonist, nolasiban; and our PGF2alpha receptor antagonist, OBE022; including clinical trial results and potential regulatory pathways toward 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 timelines 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 on March 9, 2018, and F1 form filed 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. Good morning, good afternoon, everybody.

On today's call, we will provide a business update, including clinical trial progress, first quarter 2018 financial results and our outlook for achieving key future clinical milestones.

The first quarter of 2018 was another step forward in ObsEva evolution as we announced the result of our first Phase III clinical trials of nolasiban in IVF, the IMPLANT2 trial. We will provide more details on that later. We also completed patient randomization in our Phase IIb EDELWEISS clinical trial for our oral generation antagonist, OBE2109, in endometriosis. Top line result are expect by the end of the second quarter of this year.

This event and other make 2018 a year of important data readouts following on all the artwork that took place in 2017 to design and initiate our 5 ongoing Phase II and Phase III clinical trials in total for our 3 compounds which are at clinical development stage.

I would now like to take a few minutes to provide an update on all 3 of our compounds. I will start by reviewing our announcement that took place in February. Positive top line result of our double-blind, placebo-controlled Phase III IMPLANT2 clinical trial of nolasiban for improving the outcome of assisted reproduction or IVF procedures.

IMPLANT2 included 778 women across more than 40 fertility centers in Europe. Either a onetime 900-milligram dose of nolasiban or placebo was administered orally 4 hours prior to embryo transfer, which could occur either 3 days or 5 days after ovum pick-up. The primary endpoint of this clinical trial was ongoing pregnancy 10 weeks post embryo transfer. The primary endpoint of IMPLANT2 was successfully achieved with 10 weeks ongoing pregnancy rate of 35.6% for patients who received placebo as compared to a rate of -- sorry, patients receiving nolasiban as compared to a rate of 28.5% for patients who received placebo. This represent a 25% relative increase with a p-value of 0.031. Of notable importance among the 50% of patient who underwent the 5 embryo transfer, nolasiban treatment resulted in 10 weeks ongoing pregnancy rate of 45.9% versus 34.7% for placebo, a 32% relative improvement with a p-value of 0.034.

A few points of context to provide on these results, key opinion leaders and prospective U.S. clinical trial center that we have spoken to have expressed enthusiasm about the result and in particular, the day 5 result, considering the 11% absolute and 32% relative improvement. This result really represent an impressive achievement with the potential to have a dramatic impact on clinical practice if replicated in future U.S. clinical trial and ultimately, commercially available. The importance of the IMPLANT2 clinical trial's result within the setting of single embryo transfer should be fully appreciate by those who are not familiar with the current state of the art for IVF treatment. We believe that nolasiban has the potential to have a major impact on the field as it will not only increase the efficacy of the IVF procedure, but would also help to generalize the practice of single embryo transfer.

Indeed, up to date, double embryo transfer is still too often used to increase the pregnancy rate by an absolute 8% to 10%. This practice has some dramatic adverse consequence, which are to increase rate of multiple births associated with double embryo transfer over single embryo transfer. I.e., about 40% versus 2% according to CDC data. Two, the risk to both mother and infant for multiple pregnancies in associate premature birth such as preeclampsia, birth defect and mortality. And third, the significant financial cost of twins, triplets birth that are estimate to run from USD 100,000 to USD 400,000 or 5x to 20x that of a single time delivery. Thus, nolasiban has the potential of delivering a now growing pregnancy rate similar to the one resulting from double embryo transfer, but with a single embryo transfer and thus largely avoiding the multiple pregnancies and their serious consequences.

Now we look forward to receiving live birth rate data from this trial in the fourth quarter of 2018 as well as the 28 date neonatal follow-up later in that same quarter. Given that approximately 90% pregnancy at week 10 are expect to result in live birth, we expect to see a level of improvement with nolasiban as compared to placebo that is similar to the 7% to 11% absolute benefits seen in the ongoing 10 weeks pregnancy rate from IMPLANT2.

In summary, we are obviously very pleased with the IMPLANT2 result and enthusiastic about its global commercial potential, given the relatively small required commercial infrastructure to address the concentrated clinics in major geographies such as U.S. and Europe. We are presently seeking feedback from regulatory authorities in U.S. and in Europe on any additional clinical trial requirement beyond IMPLANT1 and 2. We are proposing to conduct a U.S. clinical trial to be known as IMPLANT 3 that we are planning to begin in Q4 '18, and which could potentially satisfy all or part of additional requirement in both the U.S. and Europe. We expect to be able to speak to more definitive plans with regulatory feedback in hand during Q3 '18.

Now turning to OBE2109, our oral generation antagonist for the treatment of endometriosis and uterine fibroids. Patient randomization of approximately 330 patients in the U.S. and Europe into our Phase IIb EDELWEISS clinical trial for the treatment of endometriosis is now complete. Top line results following 3 months of treatment remain on track for mid-2018. And today, we are able to narrow that to the end of the second quarter of 2018. We are often asked what we believe will constitute success in this trial, so we believe this is worthy of a few minutes of discussion.

Broadly speaking, we are seeking to identify 2 therapeutic dosing option to serve the need of this large and diverse endometriosis patient population. One, 1 dosage with the potential for alleviating patient symptoms with moderate estrogen suppression that will not meaningfully decrease bone mineral density, thereby not necessitating hormonal add-back therapy; and two, another dosage that fully or nearly fully suppress estrogen which would require adding back estrogen to counteract bone loss. More specifically, the trial's power to show a 77% response rate for each individual active treatment arm as compared to placebo response of 45%. The purpose of this trial, a responder is defined as a 30% reduction in pain score on a 0 to 3 verbal rating scale, which combines both menstrual and non-menstrual pain measurement over the final 28 days of the treatment period. At the Phase IIb dose ranging trial, we are interested in seeing the dose response from 50 to 200 milligram and would be very pleased if one of the lower dose, 50 or 75, were to show the ability to alleviate symptoms in the majority of patient at an estrogen level around 20 to 60 picogram target range that is believed to balance symptoms relief with bone mineral density safety. It is important to note that final dose selection of OBE2109 for the Phase III program will be made after bone mineral density data at the standard 6 months' time point. This would be available by the fourth quarter of 2018.

On our 2 ongoing Phase III clinical trial for uterine fibroid treatment, PRIMROSE 1 and PRIMROSE 2, please recall that these studies are 2 double-blind, placebo-controlled Phase III international clinical trial in women with heavy menstrual bleeding associated with uterine fibroids. Planned enrollment is approximately 1,000 patient in total. The primary endpoint of reduction in heavy menstrual bleeding as measured by the standard alkaline hematin method.

Since beginning PRIMROSE 1 and 2 in April 2017, we have been targeting completion of patient enrollment in both studies by the end of 2018. The PRIMROSE 2 clinical trial remain on track to achieve our enrollment goal, noting that approximately 70% of sites are in Europe. However, our U.S. study, PRIMROSE 1, is expect to reach completion of enrollment in the first quarter of 2019. This change is largely influenced by highest (inaudible) that was initially anticipate in the U.S. We believe this (inaudible) is at least partially consequence of current entry corrective regarding myoma size. We are taking measure to improve the recruitment rate such as enhanced site management and revisiting the myoma size entry criteria and expect to see a positive impact over the coming months.

Wrapping up now on OBE2109, we remain focused on providing a potential best-in-class therapy into large and diverse patient population of women who we believe are likely to best served by multiple treatment option with multiple dosing strategy, including both with and without hormonal add-back therapy.

Finally, on to our third pipeline program, the potential first-in-class oral and selective prostaglandin F2 alpha receptor antagonist, OBE022, being developed to treat preterm labor. In late 2017, we began a Phase IIa proof-of-concept trial known as PROLONG. This trial will measure PK safety and contraction inhibition, targeting delay of delivery by 2 to 7 days in women who are in acute preterm labor between 24 and 34 weeks of gestation. PROLONG is being conducted in several countries outside of United States with OBE022 added into the standard of care, atosiban. This clinical trial is being conducted in 2 part with an open-label Part A measuring PK and safety, followed by a placebo-controlled, double-blind Part B, subsequently enrolling up to 120 patient with follow-up extending for 14 days post-treatment to neonatal delivery and infant follow-up.

We are very pleased to report that there have been babies delivered close to term in the open-label portion of the study with nothing noteworthy to report on tolerability and safety. We expect interim efficacy result from this trial in an initial growth of patient in the fourth quarter of 2018.

Summing up, the first quarter of 2018 started the year strong with positive IMPLANT2 results, and we look forward to achieving additional clinical and regulatory milestone over the course of 2018.

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

Thank you, Ernest. Good morning or good afternoon, everyone, and thank you for joining us on the call today. I will provide a brief update of our results for the first quarter of 2018 and our current financial position.

Starting with our income statement. Net loss for the first quarter of 2018 was $19.8 million or $0.54 per diluted share, which compares to a net loss of $15.5 million or $0.58 per diluted share in the first quarter of 2017. This increase in the net loss during the quarter was primarily driven by our investment in our research and development programs. Research and development expenses were $16.3 million for the first quarter of 2018 compared to $13.1 million in the prior year quarter. This increase in investment is attributed to the clinical trial progress outlined by Ernest for all 3 of our development compounds.

G&A expense in the first quarter was $3.6 million compared to $2.7 million in the prior year quarter. This increased expense level includes additions to our staff and the noncash item of equity-based compensation of approximately $2.4 million for the first quarter of 2018.

Our cash balance at March 31, 2018, was $95.4 million reflecting a $14.8 million use of cash in the first quarter, which was similar to the run rate at which we exited fiscal 2017. This cash investment reflects spending in support of our 3 pipeline assets, continued enrollment of our Phase IIb EDELWEISS study in endometriosis, ongoing Phase III enrollment of the PRIMROSE 1 and 2 clinical trials in the treatment of uterine fibroids, the data readout of our Phase III clinical trial of nolasiban and continued progress in the PROLONG study of OBE022 in preterm labor. We continue to believe that our existing cash is sufficient to fund our operations into the second half of 2019, noting that our 2018 cash usage from operations is expected to be meaningfully higher than the $56 million investment from the full year of 2017.

In summary, we continue to invest prudently in the development of our 3 new chemical entities as we endeavor to complete 3 ongoing Phase III clinical trials and 2 ongoing Phase II clinical trials.

And with that, operator, we open the call for questions.

(Operator Instructions) And our first question comes from Kennen McKay with RBC Capital Markets.

This is Slanix on for Kennen. As we look towards the endometriosis update, just wanted to get a sense from you on what level of data you'd be looking for in terms of being competitive versus some of the other agents in the class, specifically elagolix or relugolix. Just wanted to get your thoughts on that.

Yes. Ernest speaking. So you remember that we are going to report on the 12 weeks data. And the total duration of administration is 6 months, so 24 weeks in this trial. So that's a primary endpoint at 12 weeks in term of pain reduction. And pain reduction is going to be translate into a responder rate, responder being defined as a reduction of 30% from baseline for each individual. We are going to have a responder rate, therefore, on the different dose of the compound. And we will have a dose for which we would consider that is viable to have no add-back therapy, and that responder rate could be compared to some extent to the elagolix 150-milligram dose per day, which is not requiring add-back therapy. For the higher dose, we will have also an opportunity to see and report the responder rate. Keep in mind, however, that the final decision on what dose will be -- move forward into the Phase III, we'll need to review the bone mineral density, which will be available in Q4 to finalize the decision on those and consult the FDA in an end of Phase II meeting. So we are intending also to report by end of this quarter not only the pain reduction in the combined menstrual and non-menstrual pain but also in individual non-menstrual pain and menstrual pain, which are, in our protocol, secondary endpoints. Does that answer your question, Kennen?

Great. That's perfect. And if I can just ask a follow-up question. Given the delay that we saw announced by the FDA for elagolix's current NDA potentially relating to some liver issues, I was wondering if you could just speak to any read-throughs just out of class and the level of comfort you have with 2109's profile based on all the diligence you have done from inlicensing the compound.

Sure, sure, sure. As you know, adverse effect, adverse event can be either on-target effect or an off-target effect. If you have on-target effect, that mean it's related to the mechanism of action of the drug. You may have a class effect. If it's off-target effect, it's really peculiar and specific to a specific chemical structure of a given compound. It's obvious for us that this is not a class effect. On top of that, we -- just through the mechanism of action, it's a peptide; it's not metabolized by the liver. I'll say it's a small molecule, and we don't see that the mechanism of action would target the liver. Now in terms of current safety database we have for 2109, we have more than 1,400 subject exposed in Japanese and now Caucasian subject. And we have obviously a very close monitoring, very close monitoring of all-safety parameter, including liver enzyme with alert process in case of any abnormal move. And we can tell you now that we have no concern or no identified safety signal regarding lever -- liver toxicity on our 1,400 patient exposed to the drug.

(Operator Instructions) And our next question comes from Biren Amin with Jefferies.

This is David Hoang on for Biren. I guess, two on nolasiban. The first is, and thinking in about kind of the registration requirements, have you zoned in on a day 3 versus day 5 requirement for the embryo transfer protocol? Are you thinking both or maybe just one of those protocols would be in the label? And additionally, in terms of commercialization, are you thinking that you would pursue commercialization solely with just your organization in the U.S. and EU? Or would you be looking for a partner in either?

Yes. Based on IMPLANT2 data, based on literature with atosiban, based on current practice or leading current practice in United States for the initial and first registration, we are going to focus on day 5 single embryo transfer. Further development on day 3 embryo transfer, it's still in discussion, especially because this day 3 seems to be more used currently in Asia, China, for example, than in Europe and the U.S. So that could make additional development. But the current focus, we have engaged both with the FDA and national authorities in Europe, and we intend to report in Q3 about that feedback. And the aim is to register day 5 single embryo transfer. Regarding commercialization, I will ask Tim maybe to comment on that given that he looks very accessible for a company like us both in Europe and U.S.

Yes. David, good morning. Thank you for the question. The commercial opportunity for nolasiban is actually very exciting. When you think of the number of IVF cycles across the globe, it's approximately 2 million cycles per year. In the U.S. market, we see that number of 230,000 plus; Europe is a very exciting market, it's over 600,000; Japan, over 400,000; and China, just a huge market opportunity. So when you think of the U.S. market for a second, this is an -- even Europe, this is an opportunity for our company that we could go to market and commercialize directly ourselves because you don't need a huge sales force because you're calling on the number of IVF centers in these different geographies. So in the U.S. market, we could ramp up our sales force, let's call it, 20 to 25 reps that would go in and call on the IVF centers. And based on the recruitment level, the time of recruitment and readout for nolasiban for a Phase III was within a 12-month period. We know there's a lot of excitement and a lot of demand for something like nolasiban in the market. So we don't think you need a large sales force to cover the geographies. Europe, maybe the sales force would be a little bit bigger because you're dealing with different countries and different languages but, call it, 25 to 40 reps over in Europe. And again, we just think the patient and the physician excitement in a product like nolasiban would allow a company like ObsEva to take this market -- drug to the market once approved and commercialized ourselves.

Our next question comes from Ram Selvaraju with H.C. Wainwright.

This is Julian on for Ram. First off, assuming positive data from the PROLONG trial later this year, what will be the development path moving forward for 022?

Yes. I'll remind you that what we have said that we will have some initial interim data on the PROLONG by the end of the year. That mean that the PROLONG will not be complete obviously in the NDA, but it will take more time to complete it. Now having a positive final data on the PROLONG, the question will be where to develop and how to develop it. We have different options. Currently, you would remember that in PROLONG, we -- in Europe, we are recruiting patient who have premature labor, and for which they start to receive atosiban, the registered product in Europe for preterm labor, which is an oxytocin antagonist administered IV, and we top the atosiban treatment with our drug. Why did we do that? It's because to have a pure placebo-controlled trial, in other words, to say to a patient at 7 months with premature contraction, you're going to have either a new drug which has never been administered to a woman, pregnant woman or a placebo, that's impossible. So we can say now, the physician can say you have the standard of care and on top of that, we are giving you an additional chance or placebo to keep your baby in utero and prolong your pregnancy. And we see already that this is helping. And the attraction of the protocol for the center is clearly higher than it would have pure placebo trial. Now atosiban can be the way to develop it in Europe by tapping indeed the standard registered care, but that would not be applicable for the U.S. It will be applicable for Europe and for Asia. So a decision will have to be made where we focus initially the development. Based on positive data, we can also consider doing some trial in the United States, but the definition of the trial needs to be discussed with the authority. We believe that the pure placebo trial is going to be very difficult, maybe not impossible, but very difficult. So to summarize my answer, I would say that we have a clear path forward in Europe and Asia pending the results. And we need to further assess whether how we can develop it outside of an addition to atosiban for Europe and for the rest of the world, including United States.

Great. Just one last quick question. Regarding the Phase IIb EDELWEISS study, when you report top line results later this quarter, do you plan on hosting a conference call?

Tim? I guess so. Tim?

Yes. Yes, we will. We will be excited to share the news with the marketplace.

And I'm showing no further questions at this time. I would now like to turn the call back to Ernest Loumaye, Chief Executive Officer, for closing remarks.

So clearly, I want to thank everyone for taking the time to join us on the ObsEva first quarter 2018 update call. As always, we appreciate your support, and we look forward to updating you on our progress again next quarter, which obviously the next time point will be read out of the EDELWEISS study.

As always, don't hesitate to reach out to Tim Adams or Mario Corso for any follow-up question.

And this concludes our call. Thank you, everybody.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.