PDS Biotechnology Corp (PDSB) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Edge Therapeutics Third Quarter 2016 Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now introduce your host for today's conference, Greg Gin, Investor Relations for Edge Therapeutics. Please go ahead.

Thank you, Takea. Good morning everyone and thank you for joining us today. During this call, we will report on Edge Therapeutics' results for the third quarter of 2016.

Joining me this morning are members of the management team including Brian Leuthner, President and Chief Executive Officer; Andy Einhorn, Chief Financial Officer; and Dan Brennan, our newly appointed Chief Operating Officer. Brian, Dan and Andy will make brief prepared remarks and then we'll open up the call for Q&A.

Before we begin, note that the press release we issued this morning is available on our website at www.edgetherapeutics.com. In addition, the live webcast of this call is also available on our website. To access the website, click the Investor's link on the top navigation menu, then click on New & Events, then Events & Presentations on the left navigation menu.

There will be a taped replay of this call which will be available approximately two hours after the call's conclusion and will remain available for seven days. The operator will provide the replay instructions at the end of today's call.

Today's conference call 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 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.

And with that, I will now turn the call over to you Brian. Brian?

Thanks, Greg. Good morning everyone and thanks for joining us today. Let me start by saying that we've delivered solid execution against key priorities in the third quarter. Our primary focus during the quarter was activating clinical sites for our Phase 3 NEWTON 2 study of EG-1962 and commencing the enrolment of patients in these sites.

I am pleased to report that we now have multiple sites, including many leading academic centers actively screening patients and many sites have already enrolled patients into the study.

As we look to enroll the NEWTON 2 study as quickly as possible, our goal is to activate as many of the leading ruptured brain aneurysm treatment centers around the world as we can.

This process of bringing clinical studies sites on board to screen patients is going very well. This is due to the high level of interest among the sites in the NEWTON 2 study and the outstanding efforts of the entire Edge team and our partners.

We're pleased with our accomplishments and for more specifics on the sites that we now have screening and enrolling, please go to clinicaltrials.gov.

A key point regarding our NEWTON 2 sites is that not only are these among the top academic centers throughout the world, but these sites also have experience conducting clinical trials including some in the original NEWTON study. We are confident that the leading investigators in the field in these high volume centers that are part of NEWTON 2 have the necessary quality controls in place to ensure a perfect patient selection and protocol adherence.

We expect all of the sites participating in the NEWTON 2 -- and they should be up and running in the first half of 2017.

During this quarter, we hosted NEWTON 2 investigator meetings with neurosurgeons, neurointensivists and research coordinators, and it is clear from these meetings that there is a great interest and excitement for EG-1962 within this community.

In fact, in August, we held our North American Investigator Meeting in Chicago and at this meeting over 80 investigators and clinical research coordinators representing more than 40 academic centers attended. In addition, we hosted an Israeli Investigators Meeting in September.

Now, I wanted to note that during these meetings our investigators discussed with us the promise of EG-1962 and the program especially in light of the particularly poor outcomes and limited treatment options for patients in the field without improved therapeutic treatment options for almost 30 years.

Now we are deeply appreciative of the support and the enthusiasm expressed by our colleagues in the U.S., Canada, and in Israel and look forward to our European investigators meeting in mid-November and followed by the Asia Investigator Meeting in December.

As a reminder, we determine the overall design and the key elements of our Phase 3 study largely based on our successful Phase 2 NEWTON study. That is the inpatient population, same comparator, and the same assessment for efficacy.

Now the key difference between the two studies is that the Phase 3 study is blinded, while the Phase 2 was an open-label. NEWTON 2 will be conducted as a global multicenter or randomized, double-blind, placebo-controlled study that will compare the efficacy and safety of EG-1962 to standard-of-care oral nimodipine.

Patients will be randomized one to one to receive treatment with EG-1962 at 600 mg given through an external ventricular drain, or oral nimodipine. The primary endpoint will be the proportion of patients showing a Glasgow Outcome Score extended score of a 6 to 8, which is a favorable outcome at day 90 first versus oral nimodipine. The Glasgow is a well validated endpoint.

To remind you this is an efficacy endpoint that we used in our NEWTON North American Phase 2 study for EG-1962, which showed a 32% absolute difference between the two groups in the proportion of favorable outcomes across all feasible doses with 60% of the EG-1962 patients achieving a favorable outcome on the Glasgow Outcome Score extended, the GOSE scale, compared to only 28% of the oral nimodipine patients.

We believe that by employing the Phase 3 design which mirrors that of our successful Phase 2 study, it gives us the best chance of generating similar positive efficacy and safety results as those seen in the NEWTON study.

Further, we met with health authorities in the U.S., Europe and Canada to obtain agreements regarding the NEWTON 2 protocol design and the key elements of the study and we believe that this is a harmonized protocol for global marketing and authorization.

From a study size perspective, we design NEWTON 2 to be large enough and well powered enough for us to feel comfortable that we are detecting a clinically meaningful effect based on the data that comes out of the study.

The trial was designed to show a 15% improvement in the proportion of favorable outcomes for a subarachnoid hemorrhage patients treated with EG-1962 compared to oral nimodipine, and also to provide an 85% power, which leads to a sample size of 374 patients.

Now in interviews with our potential customers, they generally indicate that an absolute improvement of at least 10% is clinically meaningful to them. So the NEWTON 2 study designed provides for a pre-specified interim analysis for efficacy to be conducted by an independent data monitoring community when 210 patients have completed their 90-day assessments.

Here, if the results of the interim analysis are sufficiently positive, meaning a greater than 20% absolute difference in the proportion of favorable outcome among EG-1962 treated patients versus oral nimodipine patients, then consistent with the protocol, the data monitoring committee may recommend that the study be closed early due to robust efficacy.

Now in this case, we meet with the FDA and the other health authorities to discuss the mission of our marketing application. So that's the news today.

Now turning to the expected milestones for NEWTON 2. We anticipate top-line data from the interim analysis in the first quarter of 2018. Here, the potential outcomes of the interim analysis are one, the study could be halted early for positive efficacy; or two, the study will continue to enroll to either a re-estimated sample size of 300 patients or its target enrolment of 374 patients. Now if the study continues through full enrolment of 374 patients, we expect top-line data in the fall of 2018.

Now, shifting gears a little bit. Our clinical progress during the quarter also included the presentation of additional pharmacokinetic data of EG-1962 from the NEWTON study, and this continues to add to the growing body of data supporting the potential clinical and health economic impact of EG-1962 as well as to [pharmas] to become a significant new treatment for patients that suffer from an aneurysm or subarachnoid hemorrhage.

So after Daniel Hanggi, Chairman, Department of Neurosurgery at the University Medical Center in Mannheim over in Germany and the lead NEWTON investigator presented the data in an oral presentation at the European Association of Neurological Surgeon at their 16th European Congress of Neurosurgery in September. Here, the PK data showed that EG-1962 achieve the desired pharmacokinetic profile, which demonstrated stable plasma nimodipine concentrations following a single administration that did not exceed plasma concentrations of oral nimodipine given 60 mg six times a day.

Now in addition, EG-1962 demonstrated a desired high concentration in the cerebrospinal fluid versus oral nimodipine. With the EG-1962 levels at a 100 to a 1,000 times higher compared to plasma concentrations and also to CSF concentrations with oral nimodipine.

Now for a quick update on the cisternal study that we talked a little bit about on our last calls using EG-1962. As you may recall, the administration of EG-1962 through an external ventricular drain captures about 50% of the total ruptured brain aneurysm patients and that's being studied in our NEWTON 2 study.

The cisternal study will seek to expand that patient population for EG-1962 outside of those patients that require an EVD and will focus on patients that undergo microsurgical clipping for securing of their ruptured brain aneurysm, however these patients do not have an EVD placed.

While this is an open label study that will investigate the safety and pharmacokinetic profile of EG-1962 administered directly into the basal cisterns of the brain compared to standard of care oral nimodipine in a group of 12 adult subjects with ruptured brain aneurysm.

Clinical outcomes will be assessed as well. So we have started screening patients and we're on track for initiating enrolment for this study in the fourth quarter of 2016, so we anticipate data readouts from this open label studies in 2017.

So, this completes my prepared remarks on our clinical progress and I'd like to now ask Dan Brennan to say a few words. So, Dan joined Edge a few weeks ago in the newly created position of Chief Operating Officer. And I'm happy to have him on board obviously.

So, Dan is a proven and respected leader who has overseen corporate growth and strategic development during his 20 years in the biopharmaceutical industry. His extensive commercial background with orphan, central nervous system and hospital products will be critical as we begin pre-commercial planning in anticipation of the potential regulatory approval and commercialization of EG-1962. Dan will also evaluate growth opportunities to expand our pipeline. So specifically, Dan will be responsible for the pre-commercial planning, the market development -- and the market development activities which include the health economic assessment for EG-1962 evaluating ex-U.S. strategy for EG-1962 and also for business development activities within Edge.

So now I'll turn the call over to Dan. Dan?

Thank you, Brian, and good morning everyone. It's a pleasure to be here on my first Edge Therapeutics earnings conference call. While I've only recently joined Edge, I can tell you that I'm excited to be working with the team to continue to advance EG-1962 to the NEWTON 2 study and develop the pre-commercialization, commercialization strategies and the organization that will enable us to rapidly advanced EG-1962 if approved to people who are truly in need.

In fact, I recently had the opportunity to talk to several individuals from large academic centers about to join the NEWTON 2 study including the head of neurosurgery and clinical coordinators and managers. And they were very enthusiastic about the getting this study up and running at their sites and to begin screening for patients.

My experience with hospital-based therapies, CNS therapies and multiple orphan designated drugs along with my commercial launch and business development expertise will complement the already strong foundation in place here at Edge.

Previously, I served as Chief Operating Officer for Insys Therapeutics from 2015 to 2016. From 2009 until 2015, I was the Vice President and Group General Manager of Lundbeck's U.S. Neurology Business Unit and Business Development Group. During which time the Lundbeck U.S. Neurology group launched four specialty orphan products and achieved growth and sales from $60 million to $820 million annually.

Prior to that, I was at Abbott Laboratories serving as a divisional Vice President and General Manager of the Acute Care Hospital Business Unit, responsible for more then 80 commercial personnel and $240 million in hospital-based pharmaceutical sales.

I also served in various sales, marketing and new product development roles for Eli Lilly from 1997 through 2007, which included positions and training in Lean Six Sigma and global hospital critical care commercialization.

I look forward to sharing updates with you in the future about Edge's pre-commercial preparations and activities, market development activities including the health economic assessment of EG-1962 and other corporate progress.

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

Thank you, Dan, and welcome to the team. I'm pleased to report that Edge continues to be in a strong financial position. As we reported in our press release cash, cash equivalents and marketable securities total to $112.8 million as of September 30, 2016 compared to a $130.2 million as of December 31, 2015.

Research and development expenses in the third quarter were $6.7 million inclusive of approximately 567,000 of non-cash stock compensation expenses. This compares to $6.5 million of R&D spending for the third quarter of 2015.

General and administrative expenses were $3.6 million for the third quarter including approximately $666,000 in non-cash stock compensation expense as compared to $2 million for the third quarter of 2015.

We reported a net loss of $10.8 million for the third quarter as compared to a net loss of $10.1 million in the third quarter of 2015. The increase net loss in the third quarter reflects the aforementioned higher levels of R&D and G&A expenses.

As of October 28, 2016, we had 28.9 million shares outstanding.

As we look to the balance of 2016, we expect our operating expenses to increase as we progress of NEWTON 2 Phase 3 Study of EG-1962 and as we continue to advance our other development programs and build out our infrastructure.

Based on our current plans, we ended the third quarter with cash resources that we expect to be sufficient to fund our operations to and beyond on the full data readout from our NEWTON 2 study, which we estimate to be in the fall of 2018. So, we feel we are well capitalized and currently have no immediate financing plans.

Before I hand the call back over to Brian, I'd like to note that we filed our Form S-3 Universal Shelf Registration Statement for $200 million with the SEC on October 21st. The Shelf Registration Statement was filed as soon as practical following our one year anniversary of Edge's initial public offering which occurred in October 2015, which is a commonly utilized practice. Importantly, the registration provide us the opportunity to maintain maximum flexibility to manage our balance sheet and our business and to raise funds in a prudent manner as conditions and opportunities dictate while we continue to execute our growth strategy.

As stated in our Form S-3, any proceeds raised in sales of securities under this shelf are intended for general corporate purposes including research and development, general and administrative expenses, working capital and capital expenditures.

At this point, I will turn the call back over to Brian for closing remarks before we take questions.

Thanks, Andy, and thank you again for joining us today. We appreciate your continued support and look forward to updating you as we continue to advance through NEWTON 2 and other developments at Edge.

To summarize, we remain steadfastly focused on the key objective for Edge and that's mainly the execution of the NEWTON 2 study. And we're also well equipped both from a management and the financial perspective to execute on our development and our commercialization strategy for EG-1962. We are poised to advance a second development program that's the intracisternal administration of EG-1962 into the clinic in the fourth quarter of this year as well.

So operator, we're ready now to take some questions.

(Operator Instructions) And our first question comes from Joseph Schwartz of Leerink Partners. Your line is now open.

Thank you and congratulations on a very productive first year as a public company. SAH patients have a lot of issues when they present for treatment, so I was wondering what you're doing to ensure that they are managed consistently in the NEWTON 2 study. I'm thinking as much as controlling variability in the oral nimodipine control arm as well as ensuring that we see the most out of 1962?

Sure. Hi, Joe. Thanks for the question. I think as I mentioned the key here is to really focus on site selection and make sure that the sites [will] -- [here to] making sure that we have the protocol and they're following the protocol and they're really setup to do clinical trial.

So, we've really focused on getting the right sites up. These are sites -- they have -- many of them remote -- while all of them have done clinical trials, many of them have done trials in subarachnoid hemorrhage and many of them also are the NEWTON -- the Phase 2 study site. So, that's really what we're doing to ensure that there is consistency around treatment practices.

Okay, great. And then is there a certain profile of SAH patient that you want to have enrolled in NEWTON 2, and so what are you doing to ensure that you have the right kinds of patients? Are you also doing any kind of stratification amongst the patients that are screened or enrolled?

Sure. And a couple of the other things on your last question as well. As you know, there are treatment guidelines around how to manage these patients. So again we're focused on these sites that have experience. And as far as patients that we're looking to -- sure, we've talked about in the past and many of you have heard, one of the key predictors of how patients will do at 90 days is their consciousness level when they come into the hospital and that's referred to the scale to use is the World Federation of Neurological Surgeon. And we're making sure in this study that the protocol looks for WFNS' of 2 through 4s, which we believe are clearly the more salvageable group in the patients to have an EVD. So, we'll be stratifying by the WFNS in this study.

Thank you. And our next question comes from Jason Butler at JMP Securities. Your line is now open.

Hi. This is [Harry] on for Jason. Thanks for taking the questions. I just have two questions. One, if you could just provide some more detail in the design and protocol for the 12-patient open-label intracisternal trial. And second for Dan, now given the kind of pharmacoeconomic benefit [that's] shown in NEWTON for EG-1962, how are you thinking about positioning that to formulary committees? Thank you.

Sure. Harry, can you repeat, I'm sorry, I got your question for Dan. What was the first question, again? Sorry.

Yes. Sure. It's just some more added color around the protocol design for the 12-patient open label intracisternal trial?

Sure. Good question. So, on the cisternal, that's going to be very similarly design to the NEWTON study. We're going to be looking at the safety in the PK. The only difference is that we're going to be looking at WFNS 1 and 2 patients that do not have an external ventricular drain so that these patients will undergo microsurgical clipping, they do not have an EVD and they'll be WFNS 1 and 2 because we obviously didn't want to cannibalized patients in our NEWTON 2 study.

For the question on the health economic analysis and such, obviously this is early days not only for me, but also early days from thinking through this entire model, but we are doing work on that. And obviously with the NEWTON 1 study, if there is data that replicates the reduction in hospitals day, the reduction in ICU days that will all go into the analysis. And moving forward into formulary discussions, there will be champions from the neurosurgery level as well as the analysis that we'll put together from a model that includes those types of outcomes that we see against the standard of care, which is oral nimodipine and we'll bring all that together and have that available for the formulary committee to consider.

And considering Dan just started a couple weeks ago, that clearly the health economics is one of the things that we're looking at. But we're really -- he's just starting to delve in and understand the patient journey and all of the different aspects that are involved when you look at these patients, but we're glad to have him on board and he's been digging in already.

Thank you. And our next question comes from Louise Chen at Guggenheim. Your line is now open.

Hi. Thanks for taking my questions. There are few here. So first question just on the intracisternal delivery, can you talk about the market opportunity there and how that competes with your existing opportunity or adds to it. And then second thing is on 1964 and also 1963, do you have an additional updates on those products? And then last question that we get a lot, I'm just wondering if you could help with, is people ask us even though the NEWTON trial is open label, what gives you confidence that the results are predictive for the Phase 3 studies? Thanks.

Sure. Let's focus on the first then, cisternal. So, as you know with our current NEWTON 2 study, we're looking at patients that have an external ventricular drain and based on our research we've done, that's about 50% of the total number of patients that have an aneurysm of subarachnoid hemorrhage. So in fact, I was down at a site visiting a customer -- [interacted] with a customer recently and he said, "Okay, how can we get those other 50% that may benefit from EG-1962?" And clearly the first way is those patient that undergo clipping and don't have an EVD, the doctors have direct access underneath their brain so that they could administer this medicine right in to the base of cisterns where some of the blood is sitting and everything.

So, we are actually -- one of the things we've asked Dan to do also is to determine what percentage of that other 50% do these patients make up, so Louise, we're still working on getting the exact numbers. Clearly, it's not the whole 50%, it's less than that. But we're evaluating that exact number as far as quantifying it to give you guys some guidance. But clearly around the cisternal, doctors ask about this question all the time. But right now, it's a tough number to get quantitatively because there's no great stores that looks at all the patients and then cuts out those patients that don't have an EVD, that undergo microsurgical clippings, that don't undergo on coiling.

So along with that answer, I'll say we're trying to assess the actual percentage amongst that other 50%, but we're -- again, we along with our customers or potential customers are trying to help us hone in on that number.

Second thing is EG-1964 for those of you that know about that, that is to prevent recurrent bleeding after what's called a chronic subdural hematoma, another type of brain hemorrhage and we're using different API. We believe it's a -- from a concept standpoint and our customers really like it, the neurosurgeon really ask us about. We're in the formulation development stage and we hope to get that into the clinic as soon as possible, but we're really trying to get the formulation to program it and release the product the way that we feel will address the recurrence of the chronic subdural. So that's still working on.

We deemphasize EG-1963 just because from a priority standpoint, an internal resource issue from a strategic fit -- has been less of a strategic fit than say EG-1964, so that's where we are on EG-1963, we've deemphasize that.

And I think your last question was around what gives us confidence, I believe, from transitioning from our phase -- the NEWTON study to the NEWTON 2. And I've always asked -- first the NEWTON study as you know is a randomized controlled study, yes, it was open label, but it was randomized, controlled and I once said to both Loch Macdonald, our Co-founder and Chief Scientific Officer and then Herb Faleck, our Chief Medical Officer, how can we duplicate this?

And they looked me in the eyes and said, "The best way is to change nothing." And as you know going to NEWTON 2 study, the only thing we've really changed is we've made it a double-blind study. So that gives us the most confidence, it's the same inclusion criteria, it's the same comparator and it's the same efficacy endpoint that we are looking at. So that gives us the greatest confidence that we'll hopefully see the same results in our NEWTON 2.

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

Great. Thanks so much for taking my questions. So, just to -- want to sort of following up on some of the comments that you just made in the other questions. In terms of the sites, I think you said there's 65 sites that are in the NEWTON 2 study around that number. How many of those were in the prior studies have done prior work with you with the product?

And then second, can you just provide me -- one other question we get sometimes is around the orphan status that the oral suspension has, so can you just maybe update us on where -- how that would play out and you mentioned on where you think it would be clinically relevant efficacy results, if you hit those results with that exclusivity that may exist pretty other product. Thanks.

So thanks, Vamil. First question on the sites is, yes, in fact, almost all of them, all of the sites that were in NEWTON are going to be transferred into and will be a part of the NEWTON 2 study. So we felt there was an easy transition and frankly all of the sites wanted to be part of the NEWTON 2 study, so that's their perspective from our sites. And yes, we are looking for about 65 sites or so throughout the world, North America, U.S., Canada, Europe, parts of Europe and then also in Australasia.

Now, regarding the orphan, as you know we've been granted orphan. I think your question was around the -- there is an oral suspension out there and our philosophy and we've had discussions with FDA, is that the standard of care right now are the oral nimodipine gel caps. And when we submitted the protocol for our NEWTON 2 study, the FDA accepted that the capsules are the comparator for our study as standard of care.

So with that said, our plan is to go forward and go head to head against the standard of care, which is oral nimodipine, the gel caps, and go from there. So that's our plan. And we believe that by showing -- assuming that we show superiority versus the oral nimodipine gel caps that that will be sufficient to receive approval, so.

Thank you. I'm showing no further at this time. I'd like to turn the call back over to Mr. Brian Leuthner for closing remarks.

Sure. Thank you very much. And again, I'd just like to conclude by saying, we appreciate everyone joining us today in the call and we look forward to continue to give updates on our progress of the NEWTON 2 study as well as the cisternal study as we continue to move forward. So thank you very much and have a great day.

This conference will be available for replay after 11:30 PM Eastern Standard Time today through November 15, 2016, 11:59 PM. You may access the replay system at any time by dialing toll number 404-537-3406 or toll free at 888-266-2081.

Thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.