PDS Biotechnology Corp (PDSB) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Edge Therapeutics Fourth Quarter and Full Year 2017 Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

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

Thank you, Bruce. Good morning, everyone, and welcome to today's conference call to discuss our fourth quarter and full year 2017 financial results and corporate highlights.

Let me remind you that 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 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 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.

One more comment. Following today's call and Q&A session, the company will be in a quiet period until we announce the outcome from the interim analysis of our Phase III NEWTON 2 study, which is expected by the end of April. While we acknowledge that some of you may have questions in the coming weeks, we appreciate your understanding and look forward to reengaging with everyone once we've communicated the outcome of the interim analysis.

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

Thanks, Greg, and good morning, everyone, and thank you for joining us today.

Since 2009, Edge has been focused on developing EG-1962 in order to help advance the standard of care for patients with aneurysmal subarachnoid hemorrhage or aSAH. We believe that EG-1962 has the potential to improve patient outcomes compared to the current standard of care, oral nimodipine, by delivering 100 to 1,000x the concentration of nimodipine directly into the cerebrospinal fluid in the brain with sustained delivery over 21 days.

Results from our Phase II NEWTON study and nonclinical studies supported our hypothesis and provide a rationale for our Phase III NEWTON 2 study of EG-1962.

We believe that oral nimodipine, while shown to be effective at improving patient outcomes following aSAH, provides limited efficacy due to suboptimal drug exposure in the brain. In fact, it's virtually impossible to get concentrations of nimodipine that are similar to those provided by EG-1962 into the brain with oral nimodipine without causing dose-limiting and potentially life-threatening hypotension.

In 2007 (sic) [2017], Edge achieved meaningful progress towards our goal of addressing the unmet need in patients with aneurysmal subarachnoid hemorrhage. Our Phase III NEWTON 2 study is proceeding on track to the interim analysis after we completed the preplanned futility analysis in December.

We also began preparing for potential commercialization of EG-1962. In fact, a key step in establishing the supply of EG-1962 for potential commercialization was securing a commercial supply agreement with an external manufacturer for EG-1962.

In addition, as part of our pre-commercial planning, we continue to gain a better understanding regarding the health economics and the tremendous economic burden of aSAH patients.

We expect to report the top line results of our Phase III NEWTON 2 study in late '18. By the end of April, we anticipate reporting the outcomes from the formal interim analysis for efficacy upon completion of the 90-day follow-up visit of the first 210 patients in NEWTON 2.

Now during recent investor meetings, we received a number of questions regarding the various scenarios around the interim analysis. The DMC, or Data Monitoring Committee, can recommend one of the following possible outcomes from this analysis: The DMC may recommend proceeding to full enrollment of 374 patients. This is the outcome that we planned for. In this case, the study needs to achieve a 10% to 15% absolute difference in the proportion of favorable outcomes of EG-1962 patients versus oral nimodipine patients at 374 patients enrolled.

As I previously (inaudible), we expect top line results from the full NEWTON 2 study in late 2018. A key point here is that we have spoken to hundreds of our target customers, the neurosurgeons and neurointensivists, and to them, a clinically meaningful benefit is around a 10% to 15% absolute difference in outcome. We believe that the sample size of our NEWTON 2 study is designed to detect that effect.

Or the DMC may recommend stopping the study with 210 patients based on overwhelming efficacy. Remember that there is a considerably higher threshold to stop the study for efficacy at the interim time point than to achieve success at full enrollment.

For the study to be stopped early, the results from the interim analysis would need to be greater than about 20% absolute difference in the proportion of favorable outcomes amongst EG-1962-treated patients versus patients receiving oral nimodipine. Now in this case, we would go meet with the FDA and the other health authorities to discuss submission of a market application following the interim analysis.

Another scenario, if the study nearly missed the threshold for stopping at the interim, is that the DMC may recommend stopping enrollment and waiting for the efficacy data from the additional patients randomized after the 210th patient up to the time of the interim analysis.

Now we also often get asked, is there a formal futility analysis? So there is no formal futility analysis built into the interim analysis. However, the DMC, as you know, may recommend amending or terminating the study for safety concerns or based on benefit risk assessment that does not justify additional subject enrollment.

So now for some of you that may be new to the Edge story, I'd like to briefly review some of the key components of the NEWTON 2 study. It's being conducted at about 75 centers in North America, Europe, Israel and Australasia. The study design was informed by 3 key factors: our encouraging Phase II study results, input from thought leaders in neurosurgery and neurocritical care, and discussions with regulators.

We've designed the Phase III study to mirror the key design elements of the Phase II NEWTON study. That is we've used the same patient population at WFNS 2 through 4s, with an external ventricular drain, or EVD; the same comparator, EG-1962 versus standard of care, oral nimodipine; and the same assessment for efficacy with GOSE with favorable outcome defined by a score of 6 through 8.

Now we expect the results of the NEWTON 2 study, if positive, to form the basis for our marketing application to the U.S. FDA for the approval of EG-1962 for the treatment of aneurysmal subarachnoid hemorrhage. If positive, we also plan to pursue regulatory submissions in other geographies.

And from a manufacturing and supply-chain perspective, we believe we're in a solid position as we prepare for commercialization, having secured that commercial supply agreement with the external manufacturer of EG-1962 for initial product launch and thereafter.

Now turning to other pre-commercial activities for EG-1962, let me briefly touch on some key findings from independent research on commercial payers' views of EG-1962.

The research findings suggest that EG-1962 pricing flexibility and access would be supported by payers based on a 10% to 15% improvement versus standard of care. And as I mentioned, that is the primary endpoint of the NEWTON 2 study. So we think a 10% to 15% absolute difference may support premium pricing based on payer research. Now most payer respondents were emphatic that EG-1962 management should be left to the hospitals.

So with that, I'll turn the call over to Andrew to discuss our financial results.

Thank you, Brian. As of December 31, 2017, cash, cash equivalents and market securities were $88.1 million compared to $106.4 million as of December 31, 2016. Net cash used in operating activities were $40.7 million for the year.

Research and development expenses for the fourth quarter were $10.8 million, inclusive of approximately $0.6 million of noncash stock compensation expenses.

For the full year 2017, R&D expenses were $34.3 million, including $2.7 million of noncash stock compensation expense. R&D expenses during 2017 reflected increased spending primarily due to an increase in external expenses related to EG-1962 development, EG-1964 formulation development and personnel-related costs for the NEWTON 2 study.

General and administrative expenses were $5.3 million for the fourth quarter, including approximately $0.9 million of noncash compensation expense. For all of 2017, G&A expenses were $17.7 million, including $3.5 million of noncash compensation expense. G&A spending during 2017 reflected increases in personnel-related costs, investor relations costs, stock-based compensation expenses and legal and professional fees.

We reported a net loss of $13.9 million in the fourth quarter and $50.9 million for the full year 2017. As of February 22, 2018, we had 30.9 million shares outstanding.

As we look ahead, our expected cash burn is roughly $50 million to $60 million in 2018. Based on our current plans, we expect our cash and cash equivalents to be sufficient to fund our operations through the full data readout from our NEWTON 2 study, which is anticipated to incur in late 2018, with a cash cushion left over afterwards.

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

Thanks, Andrew. So in closing, 2018 will be a pivotal year for Edge. Looking ahead, we believe that we are operationally and financially well-positioned to execute on our corporate growth strategy, in particular, continuing to advance EG-1962 through achievement of key additional clinical milestones, including the NEWTON 2 interim analysis by the end of April and, if the study continues to full enrollment as planned, top line results from the study in late 2018.

In 2018, we're also focused on expanding our pipeline by conducting additional preclinical development in order to select the next Precisa-based development candidate, as well as pursuing external business development opportunity to acquire additional products for our development and potential commercialization portfolio.

So thank you all again for joining us today. We appreciate your continued support. Operator, we're ready to take questions now.

(Operator Instructions) And our first question comes from the line of Marty Auster from Crédit Suisse.

I had 2 quick ones this morning. First on the interim, thanks for laying out the possible scenarios for the company. It sounded from what you described like this is not an option, but I was wondering if you could confirm whether the company has flexibility to expand the planned enrollment for the NEWTON 2 study based on any recommendations coming out of the interim. And then my second question was on manufacturing. Congratulations on the arrangement with Oakwood securing commercial supply for EG-1962. Are there any changes being made to the process between the clinical trial material that was prepared and the commercial material at Oakwood? And then can you walk us through whether CMC or any of the -- if there are any changes that's likely to be a gating factor in terms of timing of your filing with the FDA? And in general, what your readiness for filing would be if you were to succeed on the interim analysis.

Okay, sure. So let me go with the first question. So for 1962, the manufacturing with Oakwood, there have been no changes and no substantial changes made as we look forward to the clinical supply to the commercial supply. We've been doing pretty much fine tuning of things, but no substantial changes. So we believe that things are on track if we do hit on the interim analysis, from a manufacturing standpoint, we believe that things are going at least according to plan. Now as far as the interim analysis and expanding patients, at this time, we don't expect to increase the sample size of the study going forward. So we're looking at 374.

Could you -- sorry for the follow-up, but could you confirm if there is flexibility, if there's an adaptive kind of capability in the trial for you to kind of consider adjusting the end if you need to or want to based on that interim?

I do believe there might be. But actually, let me throw that over to Andrew. Because I know, Andrew, you've asked this question recently to Herb.

Yes. No, that's right, Herb -- or Brian. So my understanding is that the DMC cannot recommend an increase in the sample size. We do have some discretion internally as to whether or not we can increase it. But as you mentioned, our current plans are not to change the sample size for the study.

And the next question comes from the line of Jason Butler from JMP Securities.

First one, can you just give us any additional color around the feedback you've got from payers specifically, as well as hospitals when you speak to them about pricing?

Yes. I'm going to give you -- Andrew and Dan, our COO, had been doing a lot of work on that. So Andrew, do you want to provide some color or any additional comments? We've gotten a lot of it back.

Yes, sure. So I'll start off with the responses from hospitals. So we used an independent research company to go to the payers -- I'm sorry, I started off with hospitals but I meant payers. So with regard to the payers, we used an independent research company to go to 5 of the largest payers. We gave them the characteristics of EG-1962 at a 10% to 15% improvement to standard of care. And this is really something just for us to start gauging pricing. So it was meant to cover a wide range of prices. And we tested -- and again, this is in our deck that I think is on our website and we've been using it at various conferences. We tested price points from $25,000 up to $150,000 and the responses that we got were varied. 3 of the 5 said they would pay for the product. And again, this is in our deck that I think is on our website and we've been using it at various conferences. We tested price points from $25,000 up to $150, 000. And the responses that we got were varied. 3 of the 5 said they would pay for the product at any price point we tested based on the 10% to 15% improvement and positive outcome. The other 2 said it will go through various levels of review within their processes. But none of them said that they wouldn't pay for it at any of the price points we tested. So this is -- this is indicative. It's positive. It's what we wanted to hear. It's in no way a guarantee that payers are going to pick up this product right away. But certainly, it gives us encouragement that at a 10% to 15% improvement, we can justify premium pricing. In terms of the physicians, as Brian mentioned, we didn't need to use primary -- or a research company for that, we have access through Loch and through our commercial team to hundreds of neuroscientists and surgeons. And they've been very consistent that a 10% improvement in standard of care is what they need to see to justify moving from the old standard of care, which is the oral, to our product. So we believe that those are the 2 keys to getting access to the market. And we are very comfortable at a 10% -- plus improvement, we are going to be successful on both fronts.

Yes. I would say, to echo the point that Andrew said, the 2 things we really look at is the clinical point is 10% to 15% with doctors, and that's where we went out and tested it with payers. And that's also how we set up and designed the NEWTON 2 study, to show that 10% to 15% effect, absolute difference.

Great. And then just a quick follow-up. Have you received feedback from European regulatory agencies that, that 10% to 15% benefit over standard of care would also support approval in Europe?

Yes, we met with the European authorities also. So we believe that the protocol that we're using in NEWTON 2 is harmonized. And as you know, we have European centers enrolling as well as other centers outside, In Australasia and throughout the world, Canada. And we did meet with Health Canada as well.

And our next question comes from the line of Paul Matteis from Leerink.

This is Ben Burnett on for Paul Matteis. I had a question about powering in the Phase III. So for the interim analysis, you've said that you need approximately a 20% effect for EG-1962 over oral nimodipine. So I guess just thinking about the variability and the powering at this point, if you hit that, what is the probability that the interim would be positive? Could you guys disclose that?

Can you ask your question again? I'm not quite sure [what you are referring to]...

So I guess I was asking -- if you hit the 20% -- go ahead.

So what we've done it -- so we powered, as you probably know, we mentioned, we powered the overall study at 85% power. But we didn't use much [else], I can tell you, on the interim analysis. So that's why it's such -- it's a very high hurdle to hit that 20% absolute difference.

Okay. So you haven't said commentary around how -- I guess, how the interim would be powered?

No.

Okay, okay. That was -- and just to clarify, the 85% powering for the completed study, that was for the 10% to 15% effects, as you were talking about.

Yes, absolutely.

Okay. And if I may, just one more question. Just about the patient mix that you're seeing into Phase III, do you have any visibility into the baseline WFNS level of patients entering in the study? And I guess, if you do, how does this compare with what you saw in Phase II?

So we do have visibility. But this is an ongoing study, so it's one of those things that we don't give out until the study is completed. We expect the scenarios between the 2s and 3s and 4s to be similar to what we see in the -- in general studies in the past. So -- but we don't give out specifics on an ongoing study.

And our next question comes from the line of [Alex Kirschner] from Maxim.

You actually answered my question.

(Operator Instructions) And I'm showing no further questions at this time.

Okay. Well, then, we would like to thank everyone again for the questions and for your ongoing support of Edge Therapeutics, and hope you have a great day.

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