PDS Biotechnology Corp (PDSB) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, welcome to the Edge Therapeutics first-quarter 2017 conference call. (Operator Instructions). As a reminder this conference call is being recorded. I will now introduce your host for today's conference, Greg Gin of Edge Therapeutics. Please go ahead.

Thank you, operator, and good morning, everyone, thank you for joining us today. Today we reported our first-quarter 2017 financial results and recent corporate highlights. Joining me this morning are Brian Leuthner, President and CEO, and Bert Marchio, Chief Accounting and Administrative Officer and Interim CFO. Brian and Bert will make brief prepared remarks and then we will open up the call for our Q&A.

Before we begin let me 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 webcast click the Investors link on the top navigation menu, then click on News & Events, then Events & Presentations on the left navigation menu.

There will be a taped replay of this call which will be available approximately 2 hours after the call's conclusion and will remain available for seven days. The operator will provide replay constructions at the end of today's call.

Today's conference call may contain certain forward-looking statements [with] 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 statements 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 material 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 Brian.

Thanks, Greg. I would like to welcome everyone to our call this morning. I will begin with a high-level summary of our first-quarter results and financial activities before handing the call over to Bert Marchio for a more detailed review of our financial performance.

We began 2017 with positive momentum driven primarily by substantial progress last year in our Phase 3 NEWTON 2 study of EG-1962 for aneurysmal subarachnoid hemorrhage. We've continued that momentum and we are very pleased that we remain on track with our previously stated anticipated timelines for our top-line efficacy data from the interim analysis and, if necessary, the full data readout. In the first quarter we also initiated our study assessing intracisternal delivery of EG-1962 for aneurysmal subarachnoid hemorrhage.

Now before I provide details on our clinical progress I wanted to briefly comment on our recently completed registered direct offering of common stock that was sold at a premium to the market price without any advantageous features over common stock. So this transaction was a result of an institutional investor conducting substantial due diligence and then taking a high level of interest in Edge and also feeling that the stock was undervalued.

During the transaction we secured $18 million in gross proceeds from the transaction and this allows us to further strengthen our cash balance and provides the capital that will allow us to expedite pre-commercial activities for EG-1962 that we had previously planned to initiate after the NEWTON 2 interim data readout.

Moreover, the financing provides additional financial flexibility to expand our product portfolio, including advancing our early-stage pipeline programs such as lumbar administration of EG-1962, EG-1964 for chronic subdural hematoma and some other potential opportunities. At the same time the transaction allowed us to broaden our strong shareholder base with a new healthcare dedicated long-term focused institutional investor.

So now let me turn to our clinical program. So let's begin with our lead program, EG-1962 for aneurysmal subarachnoid hemorrhage, or the more common -- known more commonly as a ruptured brain aneurysm. Remember that this is a catastrophic medical emergency associated with extremely high resource utilization both in the hospital and after discharge from the hospital.

This is a condition with poor clinical outcomes typically striking a patient population with an average age of 52 years old and right now only a single therapeutic treatment option available for patients stricken with this condition. Furthermore, there has been no new innovation or no new medicine to improve clinical outcomes in almost 30 years.

In our Phase 3 NEWTON 2 study we are assessing EG-1962 administered through an external ventricular drain versus the standard of care oral nimodipine. We designed the NEWTON 2 study largely based on our promising Phase 2 NEWTON North American data; so that is we got the same patient population, the same comparator and the same assessment for efficacy, although the NEWTON 2 study is a double blinded study. So we aim to reproduce the positive efficacy and safety results seen in the Phase 2 study.

Now as a reminder, EG-1962 is being developed under the US and the EU orphan drug and US fast-track designations. We continue to make progress in NEWTON 2 has we have increased patient enrollment and also activated additional clinical sites. Notably we are very excited to have activated our first clinical site in Europe. The European centers will now join many of the world centers of excellence for treating aneurysmal subarachnoid hemorrhage who are already active participants in our NEWTON 2 study.

Interest in the NEWTON 2 study continues to be very strong around the world and globally and we now have a total of 49 centers as of today open for patient enrollment in the US, Europe and Australasia.

It is also important to note that many of these sites have experience conducting clinical trials in subarachnoid hemorrhage and include most of the sites from the original NEWTON 2 -- NEWTON study, excuse me, in the original NEWTON study. So this experience is very important to ensure selection of the appropriate patients and also to adhere to the study protocol.

Also with NEWTON 2 our emphasis right now continues to be on monitoring and training investigators and the clinical staff to ensure patient selection for that NEWTON 2 study. In addition, we continue to provide 24/7 medical monitoring to field any questions from the investigators and the research coordinators.

So regarding the NEWTON 2 milestones, we remain on track with our previously stated anticipating timelines for a top-line data readout from the pre-specified interim analysis in the first quarter of 2018 and for a readout of the top-line results from the full study in late 2018.

So let's move on to the regulatory area. So you saw today we showed in the press release that the pediatric committee of the European Medicines Agency recommended granting a product specific waiver for EG-1962 across all subsets of the pediatric population. This waiver allows for a marketing authorization application filing without the requirement for the pediatric clinical studies.

So now for a quick update on our intracisternal and intrathecal development programs, and these are aimed at enabling EG-1962 administration through these other routes. These other administration routes would also allow us to expand access to EG-1962 to those aneurysmal subarachnoid hemorrhage patients who don't receive an EVD.

So during the quarter we initiated our control study evaluating intracisternal administration of EG-1962. Now with this study we are focusing on those patients that undergo microsurgical clipping for securing of the ruptured brain aneurysm who are not otherwise eligible for NEWTON 2. So again, we are focused on NEWTON 2 enrollment, but for those patients that are not eligible we will look to enroll them in the cisternal study of -- with EG-1962.

So a little bit about that study. This is a randomized controlled open label study, it is investigating the safety and the pharmacokinetic profile of EG-1962 injected directly into the basal cistern in the brain during surgical repair of the aneurysm. And we are comparing this to oral nimodipine in a group of 12 adult subjects with aneurysmal subarachnoid hemorrhage. So in this study nine subjects will receive treatment with EG-1962 while three subjects will receive standard of care oral nimodipine. We will also assess the clinical outcomes at 90 days of these patients.

Moving forward it to intrathecal or lumbar administration, what this involves is delivering EG-1962 into the cerebral spinal fluid, or the CSF, via a single injection into the lower back lumbar region of the spine. We anticipate initiating an animal study mid 2017 and we will look at the safety and the PK of delivering EG-1962 via the single lumbar puncture or injection and comparing it to the animal data that we have on file for the administration of either cisternal or intraventricular administration.

So, with that I will turn the call over to Bert Marchio for our financial review.

Thank you, Brian. As of March 31 cash, cash equivalents and marketable securities were $95.6 million, that's down from $106.4 million at year end; a cash burn of approximately $10.8 million that was in line with our projections. Obviously our cash position has improved since quarter end because of the registered direct offering that Brian described that brought in $18 million of gross proceeds.

Research and development expenses for the quarter were $7.6 million inclusive of approximately $600,000 of non-cash stock compensation expenses. R&D expenses in the first quarter reflected increased spending on our ongoing NEWTON 2 study for EG-1962, spending on other clinical programs and increases in personnel costs.

General and administrative expenses were $4.2 million for the first quarter including approximately $900,000 of non-cash stock compensation expense. G&A spending during the first quarter reflected increased personnel costs, nonrecurring executive separation costs, stock-based compensation expenses, facility costs and professional fees. We reported a net loss of $12.2 million for the first quarter. As of yesterday, May 2, we had 30.8 million shares outstanding.

As we look ahead we expect operating expenses to increase as we continue adding sites and enrolling subjects in our NEWTON 2 study of EG-1962 and as we continue to advance our other development programs including lumbar and cisternal and build our infrastructure. Based on our current plans we expect our cash and cash equivalents to be sufficient to fund our operations through full data readout from our NEWTON 2 study which, as Brian said, is anticipated to occur in late 2018. And now I will turn it back to Brian.

Thanks, Bert. So in summary, we are executing our clinical plan for our Phase 3 NEWTON 2 study on target. We continue to focus on activating additional study sites and ensuring the quality of the data and the patients that the sites enroll. And we are looking forward to the anticipated interim and full data readouts from our NEWTON 2 study in the first quarter of 2018 or later in 2018 respectively. At the same time we are making progress on our other development programs.

So with that, 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 our other development programs at Edge Therapeutics. So, operator, we are ready to take questions now. Thank you.

(Operator Instructions). Paul Matteis, Leerink.

Thanks so much for taking my questions, I have a few. First one -- the first one is on how many -- I'm just curious if you can tell us how many patients you have enrolled in the US and outside of the US relative to your initial plan and how you are tracking relative to your expectations.

The second one is I would love to maybe just -- if you could talk a little bit about the intracisternal study and what you see as a successful outcome and how you are defining that in this study.

And then the third thing is you've talked a lot about statistical power on the primary endpoint. I'm wondering how you are thinking about statistics on key secondary endpoints that may better convey pharmacoeconomic value like duration of ICU stay and duration of hospital stay. Thanks so much.

Sure. Thanks, Paul, for the question. First one on patients enrolled, we have not given that out. What we just continue to say is we are on track for the interim readout in first quarter of 2018, which is 210 subjects, and also full data readout the end of the year for 374 patients.

What we do have is we have now increased our clinical sites enrolling at 49 sites. And as we mentioned, we just got our first European site up in Germany a few days ago, so there continues to be tremendous excitement in Europe. So that is where we are on that.

Cisternal as far as what would success look like. First thing, obviously, this is a safety and pharmacokinetic study. So what we hope to do is just evaluate the safety of the drug given via cisternal administration and then look at that PK. And we are gathering data obviously from -- we have our PK results from our earlier NEWTON study when we administered EG-1962 intraventricularly. So we will be comparing that.

So I think that is really what we want to look at is are we getting similar levels in plasma and just compare to what we have. And obviously we are looking at the functional outcome used in the Glasgow outcome score extended in that study.

Regarding the powering, yes, as you know, we have spoken about this. From a statistical standpoint we are really focused on the primary endpoint which is the Glasgow outcome score extended because obviously that is what FDA cares about from a standpoint of approvability.

Some of the secondary endpoints we are collecting but we really haven't spoken about the statistics around that. But we are keenly looking at, as you mentioned, the ICU length of stay, the total hospital length of stay, the -- where patients actually go after they go out of the hospital. Because, as you know, in the first NEWTON study patients on oral nimodipine, so standard of care, they were in the ICU a [median] of 17 days, in the hospital for 25 days and still two-thirds of the people ended up going to rehab. So we want to understand that.

And we are also looking at other measures that look at the really intensity of care, intensity of treatment on the hospital. So as we get all of this health economic data we will be able to make what we feel is a strong argument if the data continue to look like what we saw in the NEWTON study. Does that answer your questions, Paul?

Yes, great. Thanks so much, Brian, really appreciate it.

Jason Butler, JMP Securities.

Congrats on all the progress. Two questions. First of all, can you give us a sense of what proportion of patients you expect to enroll in NEWTON 2 from the US versus Europe and Australasia and then talk about any differences in how these patients are managed in the different countries?

And then the second question, you talked about how the increased cash position provides the opportunity to advance some earlier stage programs. Any plans at this point to broaden the use of the delivery platform to molecules beyond nimodipine? Thanks.

Sure, thanks, Jason. All right, first question is what's our assumptions on the proportion of patients. And I would think North America -- we look at it is really North America and ex-North America. And right now, based on our assumptions, we believe we are going to have I would say more patients in the US because we started a little earlier on the sites in the US and North America.

We don't know exactly that split as we start to see the enrollment numbers coming in from Europe. But we essentially -- in our assumptions when we were looking at the modeling we were thinking that the percent of patients enrolled per site would be roughly equal between ex-North America and North America. So again, I'll probably next quarter be able to provide a little bit more insight as we start to see how well Europe enrolls.

The thing that we do know generally about the European sites are it is -- these are really high enrolling or, excuse me, high-volume centers because in Europe it is much -- it is even more concentrated efforts from the centers of excellence. So the volume, the subarachnoid hemorrhage volume at the centers that we are doing is on average higher in Europe.

Also, if we are looking at the interim analysis, clearly we would expect many more of the percentage of patients to be in the North American centers because we are looking at 210, but then that would -- getting closer to even out when we go 374. So that is where we are looking at from that perspective. I believe -- I wrote down your second question, Jason, if you can remind me what that was again.

Sure, just if you have any plans at this point with the additional cash you now have to expand the uses of the delivery platform to other molecules?

Yes, yes we do. We think Precisa is a very good way to be our engine for future value creation. EG-1964, we don't spend as much time on that, that is taking a different API, a drug called aprotinin, and using it in the chronic subdural hematoma population. So this population is another orphan population. We believe it is a little bigger than the aneurysmal subarachnoid hemorrhage from a patient population.

But again, there is no therapy out there to really help in that population and we are using Precisa and, again, looking at targeted and sustained release delivery using Precisa. So we do expect and we do plan to look at other Precisa-based products and develop our portfolio.

Great, thanks again for taking the questions.

(Operator Instructions). Vamil Divan, Credit Suisse.

Just two if I could. So one, you talk about the interim analysis earlier next year and then before the final. Just in terms of managing expectations, can you just give us a sense of how much we should focus on that interim and in your interim planning how much are you focusing on that interim potentially being positive versus just having to go through the end of the study, again, just in terms of managing investor expectations as we get closer to that?

And then second, just on the cost side or the pricing side of this equation, obviously the data is going to sort of drive things. But wondering when we might have more insight from you guys around what you think is reasonable in terms of pricing, if there is any other sort of additional survey work or updated thoughts you have that are beyond what you have shared previously that would be helpful just to give us a sense of how to model things. Thanks.

Sure, thank you, Vamil. So the first question is interim analysis. And here is how we look at it -- and obviously we have to plan that we are going to hit at the interim analysis, but we clearly know that it is a hurdle.

If you look at the NEWTON 2 -- or NEWTON data, there was a 32% absolute difference between the proportion of subjects that had a favorable outcome that were treated with EG-1962 versus those that were treated with oral nimodipine. So we had a 32% delta. To when at the interim we would need to show approximately a 20% difference in the proportions of favorable outcome.

And then, as we've talked about before, if you look at the full study, we would need to show around a 10% to 15% difference at the full study. So again, we need to show a 20% difference. The difference is this is a blinded study, the NEWTON 2 versus the open label Phase 2 so -- or excuse me, the open label original NEWTON study. So again, I believe we could show a difference or frankly we wouldn't have built that in, but it is not a slam dunk by any means.

So on one hand from a financial perspective we are planning to go all the way out to the full data read out. But from an operational standpoint here, well we are planning if we hit it we want to be ready so that we can get the regulatory documents in if we hit at the interim. We want to make sure that we have our pre-commercial activity started. So that is really how we look at it from our perspective.

Regarding health economics, we talked about this. Probably the best article we look at from a health economics standpoint as a foundation is this article published in 2010 out of Duke University Medical Center that just showed that those patients that had a deterioration cost $50,000 more in direct hospital costs than if they did not deteriorate. And this was in 2006 dollars.

So that is our baseline, to say what is the intensity of care for these patients in the hospital, but then also looking at the full course of care when they leave the hospital. Because, as I mentioned in our prepared statements, the average age is 52 years old. So this is a managed care population. So the hospitals costs, the rehab cost and then what we are trying to do here is take people, a young population, and get them back to work from an outcome standpoint.

So it is a really complex and intense digging of information that has really never been done except for that one article and that one article back in 2010 just focused on the inpatient costs.

So Dan Brennan and his group is really digging down. We are working with some of these companies that have the data mining capabilities; we are working with the Brain Aneurysm Foundation and talking to patients and caregivers. So we hope to have -- at least provide more data in the next few quarters to give you that.

But all the signals are showing us clearly that if we can replicate what we saw in NEWTON we are going to have a very, very strong health economic argument for this young patient population. Because essentially what we are doing, if we can prevent these delayed complications and have people have a favorable outcome.

And again, you may remember from the NEWTON study, almost a third of the patients had a Glasgow outcome score extended of an 8 at 90 days, which means they are basically almost back to normal. That is a substantial impact on these patients and could reduce expenses over the whole continuum of care.

So we are looking into it, it is a very, very complicated, deep dig that we are doing. But all the signs say this medicine can really provide a very strong rationale of wanting -- having payers want to pay for this to help the patients and also reduce cost in an institution. So that is what we are doing from the health economics.

Okay, thanks so much.

Ed Arce, H.C. Wainwright & Company.

Congrats on all the recent progress. Just a couple questions on the main study, NEWTON 2. If you could just remind us, I know this was something you went over recently. But if you could remind us in relation to NEWTON 1, any differences in inclusion criteria and in particular in the endpoint with regards to the pharmacoeconomic benefit that you just discussed?

Sure, thanks for the question. So, I am staring -- looking across at our Chief Medical Officer. And when I asked him after the first NEWTON study how can we do everything we can to ensure that we see the same results, he said, well don't change anything. So from our Phase 2 to our Phase 3 essentially the only difference is that the Phase 3 is a double-blind double dummy study.

So what is the same as the same inclusion criteria, so that is [WFNS] 2 through 4. So WFNS is this measure of consciousness when they come into the hospital. And patients with -- they have to have an external ventricular drain to give the drug, so that is identical.

The comparator is EG-1962 versus oral nimodipine, so that is the same. And the primary endpoint is this Glasgow outcome score extended which is in the cup point of the 6, 7 and 8 determines a favorable outcome. So we are looking at a proportion of favorable outcomes of EG-1962 versus oral nimodipine and that has been that same.

So everything has been the same, the same thing. We are looking at some what is called health economic drivers. First and foremost is if these patients deteriorate in this kind of three to 14 day window, many people have to get this intervention called rescue therapy. And rescue therapy is expensive, it is timing consuming and it is only marginally effective.

If you look at what we did in the Newton study, we reduced rescue therapy by almost 50%. So we are looking at that, we are looking at ICU length of stay which we decreased by 2.5 days from a median perspective in the first Phase 2 study. And we are looking at the overall hospital length of stay which, again, we decreased by 2.5 days in the NEWTON study.

And we are actually tracking whether these patients go home or they go to rehab because clearly, as everyone knows, spending time in a rehab facility is very expensive for the hospitals as well.

So with that, the only changes we are making are, again, it is a blinded study and we are going from 20 centers to roughly 80 centers. And but the randomization and it is a 1-to-1 randomization in the Phase 3 study versus a 3-to-1 randomization in the Phase 2 study. And obviously we did it 3-to-1 because we wanted to get more information about EG-1962 in that Phase 2 study.

But otherwise everything else is similar and that is why we are spending so much time on the quality of working with the sites to make sure that everyone is aligned and educated on the inclusion and exclusion criteria as we have gone out to a broader hospital-base.

Okay, great. And the other question that I had is on the intracisternal study that you mentioned. Some of these -- well, these patients, as you mentioned, don't qualify for the NEWTON 2. It would be helpful if you could just review some of those differences and in particular again the endpoints that you look to measure, especially since there has been very little studied in this area especially after (multiple speakers).

Sure. Sure so the intracisternal study, so if you look at patients, one thing they want to do when these patients have an aneurysmal subarachnoid hemorrhage or a ruptured brain aneurysm is the first thing they want to do is secure the aneurysm. And they will do that obviously for -- a couple ways. They will use endovascular procedures to secure the aneurysm or they will undergo microsurgical clipping.

So in the cisternal study what we are looking to study -- and doctors all the time come to us and they say, well, if I have a patient that I need to clip I have access to see right into the area in the basal cisterns underneath the brain. Why couldn't I inject the medicine directly into the basal cisterns? So that is really, quote, what we are answering. This is really customer driven on what we are doing.

And so, these patients would be WFNS 1s and 2s. They would not be eligible for the NEWTON 2 study because -- especially for the WFNS 2s they would not have an external ventricular drain. The endpoints we are looking at are similar to what we did in the Phase 2 NEWTON study. So we want to look at PK.

We are going to look at obviously safety. And then we're also going to look at in this population -- we are going to look at the Glasgow outcome score extended at 90 days and compare the two sides. We're also going to be looking at rescue therapy, we are going to be looking at vasospasm and delayed cerebral ischemia. We are going to look at infarction -- although we are looking at 12 subjects here.

We will also be looking at length of stay and pretty much everything that we looked at in the NEWTON study, we are just taking this to a cisternal administration. And again, this will be for those patients that if the medicine works and gets approved with external ventricular drain, this will be another option for doctors that may not have access -- or patients that may not be able to get the best [but] undergo microsurgical clipping.

So, that is why we are doing it is really based on customer demand and we are looking at the PK, safety. And then we will be looking at the efficacy endpoints that we looked at in the NEWTON Phase 2 study.

Okay, sounds good. And congrats again on all the progress.

Thank you for much, thanks for the question.

Thank you. There are no further questions at this time. I would like to turn the call over to Brian Leuthner for any closing remarks.

Sure, no I just want to thank everyone for their time, for tuning in and for your continued support for Edge Therapeutics. So thank you very much and have a nice day.

Ladies and gentlemen, this conference will be available for replay after 11:30 AM today through May 17 at 11:59 PM. You may access the remote replay system at any time by dialing 1-800-585-8367 and entering access code 7855024. International participants dial 404-537-3406. (Operator Instructions). This concludes the conference call today. Thank you for your participation. You may now disconnect at this time.