PDS Biotechnology Corp (PDSB) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Edge Therapeutics Fourth Quarter Financial Results Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to turn the conference over to Allison Wey, Head of Investor Relations. Ma'am you may begin.

Thank you, Shannon. Good morning everyone and welcome to Edge Therapeutics Fourth Quarter and Full Year 2015 Financial Results Conference Call. A copy of the press release we issued this morning is available on our Web site. In addition, we are conducting a live webcast of this call, also available on the site.

We are joined this morning by Brian Leuthner, President and CEO; Andrew Einhorn, our Chief Financial Officer; Dr. R. Loch Macdonald, Chief Scientific Officer and Dr. Herbert Faleck, Chief Medical Officer. Brian will provide opening remarks to share highlights of 2015 and recent events. Andy will then provide detailed financial results and we will open up the call for questions.

Please note that today's conference call webcast may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that any statements made on this call contain information that is not historical, these statements are essentially forward-looking and are not guarantees of future performance and involve risks and uncertainties including those noted in this morning's press release and Edge's filings with the SEC.

Investors, potential investors and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Edge specifically disclaims any intent or obligation to update these forward-looking statements except as required by law.

I would now turn the call over to Brian Leuthner.

Thanks, Allison. First, I like to welcome everyone this morning to our first call as a public company. 2015 was a big year for Edge Therapeutics. We made significant progress from a clinical, regulatory, manufacturing and also corporate perspective. And I'm very excited to share with you all that we've accomplished to date and what we look forward to in 2016.

So, since this is our first conference call and before I get to those accomplishments, I'd like to familiar you with our mission, what drives us as a company and some background on our initial therapeutic area, aneurysmal subarachnoid hemorrhage, also known as a ruptured brain aneurysm.

So first our mission, we're committed to developing life-saving medicines for patients throughout the world by focusing on discovery, development and commercialization of hospital-based product. So that means these are products that are administered to patients in the hospital setting.

And what's clear, what's driving us today is that we're focus on preventing permanent brain damage and a lifelong disability for patients that suffer an acute brain hemorrhage and we'll talk more about that in a little bit. Today, over 600,000 people worldwide suffer a ruptured a brain aneurysm in each year. In the U.S., over 35,000 arrived alive at hospital annually.

Now ruptured brain aneurysm strikes relatively young patient population in the prime of their life. The average is 52 years old, so many of these victims are in their 30s and 40s and it strikes typically with no symptoms, a few warning signs.

Now in the last 25 years, the only drug approved to improve functional outcome in these patients is the calcium channel blocker, nimodipine. Even with this current standard of care, it's given to almost all patients around the world. Seventy-five percent of the people suffering a ruptured brain aneurysm will be permanently brain damaged or worse.

To put another way, these young people only have about a 25% chance of going back to work or taking care of their families ever again. So when Dr. Macdonald and I started Edge, we hypothesized that if you took nimodipine which worked, has limitations and we developed a way to deliver high-concentrations of nimodipine right through the injury site in the brain. Essentially what we're doing is bathing the brain in nimodipine and then if we can make it easier to administer via a single administration, it would improve the clinical outcome and reduce the nursing and patient administration burden associated with oral nimodipine. We wanted to do that without sacrificing safety. Well, that medicine is now called EG-1962, we're developing that right now.

So last year, we completed the NEWTON study. The NEWTON study was a randomized, controlled, Phase 1, Phase 2, Phase 1/2 dose escalating study that compared EG-1962 directly with the current standard of care, oral nimodipine. So, this wasn't an add-on study, this was a direct head-to-head comparison.

And overall, we met all of the study endpoints including determining the dose for our Phase 3 study and most importantly all of the endpoints including safety and the 90-day functional outcome of the patient favored EG-1962 treatment. Additionally, we looked at some other endpoints that we felt would be supportive of efficacy and all of those endpoints favored the EG-1962 treatment.

So, let's talk a little bit more specifically about some of those results. So in terms of safety, there was no toxicity that limited dose escalation to the highest prespecified dose nor were there any safety signal is identified that precluded us from going into our pivotal Phase 3 study. Now importantly, there was no EG-1962 related hypotension reported.

So, this is in contrast to 17% of the patients that received oral nimodipine had drug-related hypotension. Hypotension can have serious consequences for the brain injured patient because it diverts blood and oxygen away from the injured brain.

So, that was the safety, so what about the efficacy? Well, with the efficacy, we saw unprecedented clinical outcomes in the NEWTON study. The results show that for patients treated with EG-1962, 60% had a favorable outcome and it was measured by a scale called the Glasgow Outcome Score or Outcome Scale Extended, this is a well-known scale that's used throughout the world, so versus only 28% of the patients in the standard of care oral nimodipine group.

So again, if you were treated with EG-1962, 60% favorable outcome. If you receive the current standard of care, only 28%. So in short, we doubled the chances that a patient would have a favorable outcome. That means that they can go back to work or take care of themselves for at least eight hours a day if they receive the EG-1962.

The most remarkable efficacy finding was that 27% of patients treated with EG-1962 were found to have the best clinical outcome possible. That was a GOS score of 8 compared to only 6% in the control arm. Now historically, very few patients come back at their 90-day assessment stating that they can do all the things that they were doing prior to the ruptured brain aneurysm.

So as I mentioned earlier, we also prospectively evaluated other exploratory endpoints in the NEWTON study, which would be supportive of this very promising efficacy data. So in fact, just a couple of weeks ago at the International Stroke Conference we presented this additional data.

So for example, EG-1962 reduced angiographic vasospasm, delayed cerebral ischemia and delayed cerebral infarction by almost half compared to oral nimodipine. And EG-1962 also reduced the need for rescue therapy by more than half compared to oral nimodipine. So again, these exploratory endpoints we thought would be supportive of the efficacy that we [saw].

So finally if patients were doing better, we would expect that their ICU and hospital length of stay would be reduced. And indeed, we showed that EG-1962 substantially reduced the median ICU length of stay by 3.5 days and the total hospital length of stay by 2.5 days.

Now when we look at this data, in addition to being supportive of efficacy, reducing the need for rescue therapy and shortening the ICU and hospital length of stay would have a major pharmacoeconomics impact.

So given these promising results, we're moving forward with a single pivotal Phase 3 study to be conducted in North America, Europe and Australasia, and right now, we're on target to begin in mid-2016.

So based on the end of Phase 2 feedback that we received from the FDA and also the European Regulatory Authorities, we determined the overall design and the key elements of our Phase 3 study. Now when looking at the Phase 3, we feel that by keeping the main pieces of the Phase 3 study the same as our Phase 2 NEWTON study, we hope to see similar efficacy and safety results.

In fact, the major differences between the Phase 3 study which we're now calling NEWTON 2 and the NEWTON study are that the NEWTON 2 is a one to one randomization and it would be double-blind, double-dummy design versus the NEWTON study was a three to one randomization and that was an open label design. Otherwise, it sustained patient population, same competitor of standard of care oral nimodipine and the same outcome score that's the GOS of 6 to 8 as a favorable outcome.

Now we anticipate it will take about 24 months to enroll and evaluate up to 375 patients. Now with that said, we also have built in an interim analysis at 210 patients. So, that's pretty much a review of where we are today in regards to NEWTON and the NEWTON 2.

Now also in 2016, we'll be starting a study looking at EG-1962 and delivering that via cisternal administration. Now with this administration, this could expand the patient population in the market share if EG-1962 is approved. So, we anticipate data from that study to be available in 2017.

So finally, let me touch briefly on the early stage program of EG-1964 and as you may recall EG-1964 is in development to prevent recurrent of another type of brain hemorrhage called chronic subdural hematoma. For the chronic subdural hematoma, there's no medicine that's ever been approved for this condition, and has a bigger patient market than aneurysmal subarachnoid hemorrhage.

So from a commercial perspective, that's a really good thing but it's proving to be more challenging from a formulation development perspective. So, we now hope to file the IND with 64 in 2017.

So with that, I'll turn the call over to Andy and he'll go through our financial details and some corporate highlights. Andy?

Thank you, Brian. I'm pleased to report that Edge is in a strong financial position. Earlier today we issued a press release detailing our financial results for the fourth quarter and full year 2015.

Before I go to details though, let me remind everyone that on October 6, 2015, we completed our initial public offering raising net proceeds of approximately 83 million which substantially added to our cash position ahead of our upcoming Phase 3 clinical trial for EG-1962.

Cash and cash equivalents at December 31, 2015 totaled a $130.2 million. Research and development expenses for the fourth quarter were $5.3 million inclusive of $400,000 of noncash stock compensation expenses.

For the full year 2015, R&D expenses were $17.8 million including $1.1 million of noncash stock compensation expense. The increase during 2015 was driven by higher spending on clinical activities including expenses related to our planned Phase 3 trial for EG-1962 and related manufacturing scale of cost and clinical supplies.

General and administrative expenses were $3.6 million for the fourth quarter including $900,000 of noncash stock compensation expense and $8.7 million for 2015 including $1.8 million of noncash stock compensation expense. During the year, we continued to increase head count and build our infrastructure to support clinical activities and our growth as a public company.

We reported a net loss of $8 million in the fourth quarter and $28.1 million for the full year 2015. As of February 29, 2016, we had $28.8 million shares outstanding.

As we look ahead, we expect operating expenses to increase significantly as we commence our NEWTON 2, Phase 3 study of EG-1962, as we continue to advance our other development program and continue to build our infrastructure. Based on our current plans, we expect our cash and cash equivalents to be sufficient to fund our operations at least through full data readout from our NEWTON 2 study.

And now, we'll turn it back over to Brian.

Thanks. As you heard, we've accomplished a lot in 2015 and we're continuing to execute in 2016 to drive Edge's value for the future. So, the funds that we raised in the private and public offerings allow us to advance our development programs and with EG-1962, the possibility of changing the standards of care in aneurysmal subarachnoid hemorrhage for the first time in decades.

So, we'll open up the line now for questions, so operator?

Thank you. (Operator Instructions)

Our first question is from Louise Chen with Guggenheim. You may begin.

Hi congratulations on a productive 2015 and thanks for taking the questions. This is Zenah Hasan on for Louise. I have two quick questions. The first on 1962, in light of the differences between Phase 2 and Phase 3 trial design, what gives you confidence that the Phase 2 data will support a positive outcome for Phase 3? And then second question on 1962 as well how should we think about the potentially broader use of that product that could extend to patients outside of intraventricular delivery method meaning intracisternal and lumbar administration route?

Sure, hey, Louise, thanks for the question. All right, so for the first one what gives us confidence going from Phase 2 to Phase 3, so as we -- as I spoke about earlier, the best way that we feel to duplicate a result we saw on Phase 2 to Phase 3 pretty much change nothing as far as the clinical design.

And as you heard, the only changes that we have going in from Phase 2 to Phase 3, is first it will be a one-to-one randomization versus three-to-one; and second, it will be a double-blind double-dummy study versus an open label. All the other things are the same. Patient population is the same -- the comparator, the standard of care oral nimodipine is the same, the Glasgow Outcome Score Extended, (sic - Extended Glasgow Outcome Scale), the favorable outcome 6 through 8 is the same, so from a confidence standpoint, that gives us great confidence. We're really pretty much not changing anything.

But from a clinical perspective, if you'll look at it, we have this, I would say extraordinary difference in clinical outcomes this 60% for the -- versus the 28% but then if you look at the exploratory endpoints that we saw, reduction in vasospasm, reduction in DCI, reduction in infarction by almost half and then reduction rescue therapy by more than half, to us, everything is lining up to predict what we'd expect for Phase 3 but really what I'd like to do is get Loch's opinion on this because he's been working on this for 25 years.

Thanks, Brian, so, you're right. So, the remarkable thing is that in 25 years or so of running clinical trials and studies in subarachnoid hemorrhage, I haven't seen data like this where everything aligns in favor of the treatment where we've improved outcome as well as reducing the expected sort of mechanism of action endpoints like vasospasm, rescue therapy and things like that and plus the difference between the groups as Brian said a doubling of difference between standard of care and enteral -- or between enteral nimodipine and EG-1962 is remarkable. So, we're as confident as we can be that we're going to have favorable results in NEWTON 2.

And then also we've -- I know you asked regarding market expansion, so as you know, we'll give that 50% of the patients that have the EVD place the standard of care. We're looking at cisternal because clearly there are patients that will not get an EVD that will have their aneurysm microsurgically clipped, so we have direct access into underneath the brain where we can place EG-1962. So, that's the study that we're going to start this year and we'll have the data next year.

The other thing, we spent a lot of time talking to the customers out there. And we found that though there is some interest in lumbar, there is very little -- there is a smaller interest, what we've heard from neurosurgeons are that there is difference between EG-1962 and oral nimodipine remains dramatic that they would consider putting them in external ventricular drainage just to administer this drug.

Yes, as you know, this is -- an external ventricular drainage is placed many times by the first year of resident -- first year of neurosurgical resident, so again, I believe that we can capture much of that other 50% by this other ways of delivering EG-1962.

Thank you.

Thank you.

Thank you. Our next question is from Jason Butler with JMP Securities. You may begin.

Hi, this is [Harry] on for Jason. I just have three questions on the NEWTON 2 trial. So first if you can -- if you can provide the dose that (inaudible) to go ahead with; second around the statistical design of the trial or namely the assumed treatment effect size and variance for the power of the [interim] in the final analysis and if the statistical method to be used in the Phase 3 trial will be similar or the same as the NEWTON trial; and finally, on the double-dummy control, do you think there will be a greater placebo effect on the Glasgow measure or is there evidence maybe in the literature showing that there is little effect on this endpoint?

Yes, I'm going to start with that last question as far as what we expect. If you look in the literature, which we have done, you saw on the NEWTON 2 or NEWTON study the oral compare -- or oral nimodipine at 28% favorable outcome, there's also an article published when they look at propensity matching some similar typed patients from earlier studies in subarachnoid hemorrhage and that number was around 17%, and if you look in the package insert and you look at the sticker patients that are broken out in the package insert for oral nimodipine that difference was around 25%, so we believe what we saw at NEWTON was very predictive of what we would expect to see from the oral comparator in the Phase 3 study.

Then going back to what dose we've decided to take forward to 600 mg dose. So when we look at all of the data, this dose offered the best benefit risk profile as we try to balance the volume of the injection looking at safety and looking at efficacy. So, really at 600 mg dose had the fewest AEs and this was in spite of the 600 mg dose being the dose that was used in the sickest patient cohort, the patients did well.

And then I believe your middle question was, [Harry], how about some of the statistics looking at the NEWTON 2, I'm going to turn that over to Herb and Herb can talk you through the statistics that we'll be looking at in the Phase 3 NEWTON 2 study.

Good morning, everybody, and thanks, Brian. So, the statistical design as you can imagine is something that we spent a great deal of time classing and working through with regulatory agencies both here and in the EU and we actually feel very confident that we have an appropriate design. It is different than NEWTON because as Brian said, it's a one to one randomization not three to one and it's a double-blind double-dummy study will be blinded internally, of course, to any of the data.

So, what we've done is we've created a design where as Brian mentioned, we'll have an interim analysis at the 210 patient point after they've achieved -- at the last -- after the 210 patients have achieved the 90-day outcome and that will be a formal statistical analysis. And from there the ultimate sample size will be determined up to 375 subjects in total.

And why we feel confident in that because as Brian and Loch have already mentioned, we saw a remarkable difference in treatment outcome in the NEWTON 2 study. We've sample sized this. In the NEWTON 1 -- in the original NEWTON study, we've sample sized the NEWTON 2 study conservatively.

What doctors have told us along the way and what we've worked with number of statistic groups to design is a conservative estimate. Doctors have said if we see a 10% to 15% difference in treatment effect, we would consider that remarkably significant from a clinical perspective and that's our assumption in sample sizing the study.

All right, thank you.

So, right now -- yes, so at the end, the 375, we're looking at a 15% difference between the treatment group and EG-1962 and obviously we saw 32% difference in the -- in the NEWTON. I believe also you asked about the 210 interim look and what we would there is we would expect, originally somewhere north of 20% would be enough to look at that difference. So, again either way, we are confident because we've gone and we've sized this conservatively given the results that we saw in the NEWTON -- in the first NEWTON study.

Okay, thanks.

You're welcome, [Harry].

Thank you. Our last question is from Joseph Schwartz with Leerink. You may begin.

Hi guys, this is [Daygon] dialing in for Joe, a couple of questions for Brian and then one I guess for Andy later on. Thanks for taking my questions.

First of all, could you remind us on sort of the more granularity on the EG-1962 intracisternal program, I know you said data readout in 2017, but perhaps what are you interested in terms of sample size as well as enrollment and kind of what we should expect. Is it more on the first half or the second half of 1962, and then I'll ask subsequent questions afterwards.

Yes. So, what we're doing, we're still designing the actual study protocol, but what we're looking at is more of an exploratory type study looking probably around 12 patients or so just to get a look at how that -- what kind of results looking at safety. So I'd say similar to what we did in the NEWTON study from a cohort standpoint, so that's what we'll be doing. It will be -- we're thinking about it as an open-label study, but like I said we're still designing -- in the designing stage and look to begin this towards the end of 2016.

Okay, great. And in terms of the Phase 3 NEWTON 2, you mentioned first patient or initiation of the program on mid-2016, but I guess given the 1962 intracisternal program, do you foresee any challenges in the enrollment or I guess perturbations with regards to that?

No, we don't and the reason is because when we look at cisternal, these will be patients that do not have an external ventricular drain as part of their standard of care. That these were the patients we would be considering in that other 50% as we look to expand the marketplace.

Okay, and could you remind us when you talked about the 600 mg dose that you would be using for the Phase 3, what cumulative volume is that infused in?

Sure. So going back, again as you probably imagine the cisternal, we see tremendous synergies with the NEWTON 2 study because this will be the same site that we're doing and again instead of not having access for patients that maybe benefitted, we'll be able to take these people -- these patients that don't have an EVD and be able to provide EG-1962 to this patient and then I'm sorry, so what volume. So, right now, the volume is 100 mg per mL, so if you look at the 600 mg, it will be a little bit more than 6 cc of volume.

Okay, great, thank you.

And essentially, yes, it's not an infusion, it's a single injection that we would administer over a very short period -- relatively short period of time.

Okay, perfect. So, the data you presented at the [ICS], length of stay presents what we believe to be a compelling argument for the pharmacoeconomics, how are you guys kind of using this, I know we kind of talked about this at our healthcare conference, but in terms of pricing going forward, I know you would need the compelling evidence to kind of project the overall pricing of the drug and perhaps it's a little too early or maybe you've already had this internally discussed with your team. Yes, so how exactly should we think about it in terms of pricing going forward with this data presented?

Yes. So regarding pricing, we will continue to kind of chew on that until we get the data. We're doing more research, but I'd say a couple of things because like Loch from a commercial perspective, I've been working in this field for 25 years and when we look at cost, one, you've got a compelling efficacy data of taking people who are young people and getting them back to work or taking care of their family, so clearly that's a benefit to society and health economics.

But we also cut in half actually by more than half the use of rescue therapy. And then if you look at ICU and hospital length of stay, the 3.5 days, I can tell you in all of my years, I mean I haven't seen things cutting off 3.5 days in the ICU or 2.5 days in the hospital. So I think at the end of the day, no matter what point you take things at, I believe, the health economic argument is going to be very strong and very compelling for a premium price.

So again, we're doing more research on it, but again when you look at all the different points, the outcome data, the length of stay in the ICU, the hospital and the reduction of rescue therapy, I mean clearly as you said, it's a compelling argument for a premium priced product.

Great. And I guess last question for Andy, looking at the OpEx you said obviously the trajectory will grow significantly as you start adding more programs and expand on it, so how should we use the 4Q numbers as a projector for or if any going forward?

Yes. I think the -- looking at the OpEx, they will continue to grow again as the NEWTON 2 study comes fully on screen, as we begin to get our other programs where I mentioned the cisternal and the 64 up and running, I can tell you that the run rate for the fourth quarter is probably -- will probably -- it will probably be a higher run rate than what we saw in the fourth quarter.

All right. Well great, thank you for taking my questions today.

Absolutely, thank you, [Dan].

All right, so to kind of wrap things up, first, I wanted to express my gratitude to everyone along the way that shares the same vision and passion that we get here at Edge and what we're doing, and again as we look to really bring this potentially lifesaving medicines to patients in need of them, it's very important. I truly appreciate everyone's support out there. It is also the support of the patients, the families, the healthcare professionals and the investors that we're able to be where we are today and then hopefully to drive in the future really focused and change the outcome for patient in this really devastating condition. So, again, thank you very much for joining us this morning and have a great day.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation. Have a wonderful day.