PDS Biotechnology Corp (PDSB) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Edge Therapeutics First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Ms. Allison Wey. Ma'am, you may begin.

Thank you. Good morning, everyone, and welcome to Edge Therapeutics First Quarter 2016 Financial Results Conference Call. A copy of the press release we issued this morning is available on our website. 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, Chief Financial Officer; and Dr. Herbert Faleck, Chief Medical Officer. Brian will provide opening remarks to share highlights of the quarter. Andy will then provide detailed financial results, and we'll open up the call for questions.

Please note that today's conference call and 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 financial 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 will now turn the call over to Brian Leuthner.

Thank you, Allison. Good morning and thanks for joining us today. So first quarter of 2016 was marked by the additional NEWTON data that we presented at the International Stroke Conference, that continues to support the unprecedented efficacy for EG-1962, which you may recall, more than doubled the chances of a patient returning back to work after a ruptured brain aneurysm versus the current standard of care, oral nimodipine.

Also during this quarter, for the first time, we introduced some of the pharmacoeconomic story that's developing with EG-1962. As you may remember at the Stroke Conference, we reported substantial reduction in ICU and hospital length of stay for patients treated with EG-1962 in the NEWTON study compared to that of the current standard of care, oral nimodipine. We believe that this data, if replicated in our Phase III clinical study, would predict a major economic, pharmacoeconomic impact should EG-1962 get approved and become the standard of care.

Now going forward, we have now begun to further characterize the current burden of illness of aneurysmal subarachnoid hemorrhage from both an inpatient perspective as well as an outpatient perspective since we believe that there may be an underappreciated awareness of the true severity and impact of this illness for these patients and their families.

Now from an inpatient perspective, our own data from the NEWTON study showed that those patients that received the current standard of care, oral nimodipine, spent a median of 17 days in the intensive care unit. And this is an area where significant hospital resources are necessary to manage these critically ill patients. And overall, patients receiving oral nimodipine spent a median of 25 days in the hospital.

So as the story developed and we better identify the burden of illness of these patients, we'll be providing further updates on inpatient burden of illness as we get more clarity on the type and intensity of medical care required and the procedures needed for these patients during those 17 days in the intensive care unit, and the 25 days that are required in the hospital.

Now if that's not enough, these patients' journey, however, don't end at their hospital discharge. Right now, even after 25 days in the hospital, less than half of the patients go home after their discharge. In fact, nearly 2/3 are discharged to a rehab center, a long-term care facility or a nursing home. So considering that the majority of ruptured brain aneurysm patients are in their 30s, 40s, and 50s, you can imagine that this condition is not only devastating to the patient, but also has a ripple effect on everyone around them, including the children, families, and employers. Now if you remember, with the current standard of care, oral nimodipine, approximately 75% of patients are unable to return to work or take care of themselves or their families without help.

So as is evident from this data, with the current standard of care right now, aneurysmal subarachnoid hemorrhage patients and their families confront a long and difficult journey ahead. So based on our preliminary findings, these patients have a very high burden of illness, much larger than most acute hospital illnesses, and that burden continues long after their discharge.

So what we're doing now is we're working on, first, to better understand and quantify the significant financial and social impact on these seriously ill patients have and how they -- their impact that they have on the health care system and society as a whole with the current standard of care. And then we'll compare what benefits EG-1962 may provide to reduce that burden, like returning patients back to work or the reduction of ICU and hospital length of stay that we've already seen in the NEWTON study.

So, with that, now on to the clinical efforts going on here at Edge. So behind the scenes, we're very busy preparing for the initiation of the NEWTON-2 study. That's our pivotal Phase III study, which is on track to enroll its first patient this summer. Also on track is commencement of our company-sponsored study of EG-1962 for cisternal administration.

So should -- so if that data is favorable, we believe it would expand our market opportunity beyond the 50% that we have for those patients that have an EVD placed as standard of care, and we'll expand that market by capturing some of these patients that don't have an external ventricular drain already placed. So we anticipate initiating that study later this year and expect to have data from the study in 2017.

We also continue to have an overwhelming interest and support from the scientific community regarding the NEWTON study and some of the other additional development programs that we're doing here. So, in fact, just a couple of hours from now, our own Chief Scientific Officer and my co-founder, Dr. R. Loch Macdonald, will be presenting the NEWTON data at one of only three plenary sessions here at the American Association of Neurological Surgeons up in Chicago.

Now also, in addition to that, a little over a week ago, Dr. Daniel Hanggi, the worldwide principal investigator for our Phase II NEWTON study, presented the NEWTON data at the 32nd Annual Spasm Meeting, which was being held in conjunction with the Japanese Stroke Association Meeting in Sapporo, Japan.

Now coinciding with that meeting, we conducted an advisory board with eight Japanese neurosurgeons who are experts in subarachnoid hemorrhage. In that meeting, these experts from Japan reinforced the unmet medical need for the treatment of aneurysmal subarachnoid hemorrhage and their interest in studying EG-1962 in Japan.

And now, what I'll do is I'll turn it over to Andy for the financial review.

Thank you, Brian. I'm pleased to report that Edge continues to be in a strong financial position. Earlier today, we issued a press release detailing our financial results for the first quarter of 2016.

Edge's cash and cash equivalents at March 31 totaled approximately $120 million. Research and development expenses for the first quarter were $5.3 million, inclusive of approximately $500,000 of non-cash stock compensation expenses. R&D spending was essentially the same as in the fourth quarter of 2015.

General and administrative expenses were $3.7 million for the first quarter, including approximately $900,000 of non-cash stock compensation expense. Again, G&A spending was about flat versus the fourth quarter of 2015. We reported a net loss of $9.2 million for the first quarter as compared to a net loss of $8 million for the fourth quarter of 2015. The increased net loss in the first quarter reflects the absence of approximately $1.1 million in tax benefits associated with the sale of our New Jersey state NOLs, which was received and recognized during the fourth quarter of 2015. As of April 30, we had 28.8 million shares outstanding.

As we look ahead into 2016, we expect operating expenses to increase significantly as we commence our NEWTON-2 Phase II study of EG-1962 and as we continue to advance our other development programs 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 the full data read out from our NEWTON-2 study.

Operator, I think we're ready to take questions now.

(Operator Instructions) And our first question comes from the line of Louise Chen from Guggenheim. Your line is now open.

Hi, this is Zenah on for Louise. Thanks for taking the questions. Just wondering if you still think you could receive approval for EG-1962 before the orphan exclusivity for Nymalize expires? And if not, in the worst case scenario, how much does this really delay your launch? And then secondly, you talked a little bit about the pharmacoeconomic benefit of EG-1962. Can you talk a little bit more about pricing and how you're thinking about that?

Sure. Thanks for the question. So, first, let's talk about Nymalize. As you know, we're pleased that we've been granted orphan designation both in the U.S. and Europe for the treatment of subarachnoid hemorrhage. So, obviously, this designation acknowledges that there'll be potentially significant benefit over current therapies. So we do recognize that right now Nymalize does have the exclusivity in the U.S. though we're going to explore all the options. And if EG-1962 is approved, we'll do everything possible to get this treatment to the patients as soon as possible. Worst case scenario, as you had mentioned, the exclusivity in the U.S. of Nymalize does go out until May 13 of 2020.

Also, I believe your other question was regarding pricing. Andy, do you want to handle that?

Sure, Brian, thanks. Yes, so we -- pricing is a subject we will continue to debate as we get more information from our pharmacoeconomic research and as we continue along here. What we do know is that this is a significant cost to the hospital. We also understand that the neuro ICU is one of the most expensive places in the hospital. So if we're able to continue to show a significant difference between the rate of favorable outcome with EG-1962 and the current standard of care, oral nimodipine, we would expect that our pricing for EG-1962 should be at a premium, and we're working to quantify exactly what the cost of this condition is in the hospital. And we'll make some judgments on what fair and reasonable pricing is within those economics.

Yes. And I think the other thing to go along with that, as we showed, at least in the NEWTON study was that if you look at the intensive care unit, which is the second most expensive ICU in the whole hospital, we were able to reduce ICU length of stay by about 3.5 days and overall hospital length of stay by 2.5 days. And if you look at -- again, these patients on oral nimodipine were in the unit for 19 days. So that's a huge burden that it places on the -- one of the most expensive places to be in the hospital. So again, if we reproduce those results in the Phase III, we clearly believe that we'll be getting premium pricing.

Thank you.

And our next question comes from the line of Joseph Schwartz from Leerink Partners.

Hi, guys. This is Dae Gon dialing in for Joe. Joe sends his regards. Thanks for taking my questions. Just a couple on the upcoming NEWTON-2 study. Can you maybe provide a little more color on the IRB process? Is that moving smoothly? Any updates on site activation and enrollment?

And also, looking forward, since there is the interim analysis before the final, since NEWTON-1 study was extremely successful but now NEWTON-2 has a placebo arm, do you guys have any comment or concerns with regards to that? I'd assume not, but just like to take your, get your take on that.

And lastly, perhaps this is for Andy, but Brian, you can chime in as well, in terms of the portion you talked about Japanese neurosurgeons being very upbeat about EG-1962, that's great. So if we look forward, maybe looking at the commercial strategy, are you guys looking to go at it alone or look for a partnership? I would like to get your take on that.

Sure. Thank you, Dae Gon. So I'll go in order here. Regarding getting sites up ready to screen, we've had tremendous interest from that. I'm actually up at the AANS meeting right now. Doctors are very interested, mainly because of the NEWTON results that they've seen. And so we continue to work through the institutions to get IRBs approved. So we are on target. We're also scaling up our Phase III supply. So again, as I mentioned during the call, we're on track to begin the study here in the summer.

Second thing is regarding the double-blind, double-dummy design. No, we're going forward with that. We've had very favorable responses, both from FDA and from internally. So, again, going straightforward, feeling very confident about that for the future. And then lastly, if Andy wants to touch base on our activities with regards to other regions outside North America; Andy, you want to touch base on that?

Yes. I think what I can tell you is we -- our commercialization plans include -- we're very interested in commercializing, fielding our own field force for North America. Europe is also an area of interest for us. In Japan and elsewhere in the world, but your question was on Japan, we're -- we found that the KOLs there are quite interested in EG-1962. We're also working with the -- we've met with Japanese regulators to discuss regulatory strategy there because nimodipine is not approved in Japan, so that's a bit of a different regulatory track than certain other regions in the world. But as regards Europe and Japan, we're still evaluating, but we would be open to either partnerships or looking at strategies where we might commercialize it ourselves.

Thank you.

(Operator Instructions) And our next question comes from the line of Vamil Divan from Credit Suisse. Your line is now open.

Hi, great. Thanks so much for the call and for taking my question. So, again, on NEWTON-2, I just had another question on there regarding the interim analysis. And if you could just maybe provide a little more detail on exactly what you'll be looking for at that analysis, and will it be efficacy and safety in terms of what they'll be analyzing? And then if you could also maybe just update us on cash burn? It seems like things kind of came in pretty much in line with what we're expecting for this quarter, but just as we think forward given your cash position, where that stands for future quarters.

Sure. Thanks, Vamil. So with the interim analysis, what we're looking at in the NEWTON-2 study is at around 210 patients, we have a drug monitoring committee and they'll be analyzing the results. And if we see a difference or if they see a difference of greater than 20%, then we can look at it from an efficacy standpoint. And the logistics behind that is that they would make the recommendation for us to stop the study, and then obviously, we would go to the FDA and bring that forward. If we don't see that at that time, we'll also have set in there what would be a sample size re-estimation. So we could either go to 300 subjects or all the way to [375]. So from a standpoint of what we're looking at with the interim analysis, that would be from an effectiveness standpoint. Also, they would be looking at safety as their role also. So hopefully, that answers your question. And then from the terms of cash, Andy?

Yes. Hi, Vamil. Yes, we don't specifically give cash burn guidance, but what I can tell you is that our spending was essentially, for R&D and G&A was essentially flat in the first quarter versus the fourth quarter of 2015.

Looking forward, we'll expect that our burn will go up as we get the NEWTON-2 study really underway, as we commence the study of EG-1962 in cisternal administration. The one thing we do say about our cash burn is that we anticipate our cash will be sufficient to fund our operations through full data readout, which we anticipate if enrollment matches our models, it will happen sometime in the third quarter of 2018.

Okay, all right. Thank you.

And I'm not showing any further questions at this time. I would like to turn the call back to Mr. Brian Leuthner for any further remarks.

Thank you, and thanks for those questions. Going forward, we're going to continue to push forward and execute our plan in 2016 to enroll that first patient in the NEWTON study and also begin our cisternal study in order to really drive the value for Edge going forward. So, as Andy said, we're in a strong financial position to fund EG-1962 through Phase III completion as well as move forward the cisternal development for EG-1962 and our other products. So thank you very much for joining us this morning, and we look forward to seeing you soon. Thanks, again.

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