Salarius Pharmaceuticals Inc (SLRX) 2017 Q3 法說會逐字稿

Welcome to the Flex Pharma Call to Discuss ALS Data and Q3 Business Update.

(Operator Instructions)

I would now like to introduce your host for today's conference, Elizabeth Woo, SVP, Investor Relations and Corporate Communications.

Thank you, everyone, for joining us this morning to discuss the Exploratory Phase 2 ALS Study and the Q3 Results. Earlier today, we issued two press releases and these press releases and the accompanying slides can be found on our Web Site at flex-pharma.com.

Today we'll be making certain forward-looking statements about future expectations, plans, events and circumstances, including statements about our strategy, future operations and the development of our consumer and drug product candidates, plans for future potential product candidates and studies, and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations and you should not place undue reliance on these statements.

Actual results may differ materially due to our risks and uncertainties, including those detailed in the risk-factor section of our 10-K filed with the SEC and other filings we make with the SEC from time to time. Flex Pharma disclaims any obligation disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise.

So after we walk through the slides, we'll open it up for Q&A. Joining us for this part of the call is CEO Bill McVicar and Chief Medical Officer Tom Wessel. John McCabe, Chief Financial Officer will join for the Q&A. I'm now going to pass the call to Flex Pharma's CEO, Bill McVicar.

Thank you, Elizabeth. Thank you for joining us on the call today. This is an exciting time for Flex Pharma. We're pleased to be sharing this very encouraging, although unexpected data that represents clear signs of the Anti-Cramping Activity of FLX-787, our dual TRP channel activator, and for the first time in patients with severe neurological disease.

From this small study, we had expected to learn about inter and intra subject variability to confirm our power assumptions for the ongoing US Trial. But we were pleasantly surprised to learn much more. Just to remind you, we had started a study in Australia in ALS patients in 2016. This study was a randomized, double-blind, placebo-controlled, cross-over study to evaluate efficacy and tolerability of FLX-787 in patients with Motor Neuron Disease.

The study design and patient inclusion criteria are shown on slide number 3. However, we announced in July of this year that this Australian ALS study was terminated early because enrollment was slow due to the small population in Australia, 23 million, with only 800 ALS patients diagnosed per year, spread over a large geographic range. So we decided to focus our resources on the larger, more robust US ALS Trial, which is now enrolling, and terminate the Australian ALS study early.

A summary of the results of the Trial are shown on slide number 4. In eight patients who completed the trial per protocol, FLX-787 treatment resulted in a statistically significant P less than 0.05% reduction from baseline in both cramp associated pain intensity and stiffness relative to the placebo control. These endpoints were based on daily assessments by the patients using a numerical ratings scale, or NRS.

Strong and consistent trends were demonstrated on multiple endpoints, including percent reduction in the number of cramps from baseline P 0.08, increase in cramp free days from baseline P equals 0.09, and improvements in both the patients' and the clinicians' global impression of change, both with P-values of 0.06. We are very encouraged by the consistent positive impact of FLX-787 across multiple efficacy endpoints related to cramping and the associated pain, particularly given the small number of patients completing the study.

These data, the first in patients with serious neurological disease, indicate the potential of chemical neurostimulation with FLX-787 to alleviate cramps and cramp-related symptoms. FLX was generally well tolerated in this patient population. These data demonstrate the potential for FLX-787 to benefit ALS patients who suffer from severe debilitating cramping in our ongoing larger, more robust Phase 2b Trial, the COMMEND study.

We are excited to advance the development of FLX-787 under Fast Track designation for ALS related cramping and look forward to 2018 with data readouts expected in MS, ALS, and CMT. Slide 5 summarizes the efficacy results from patients completing both cross-over periods per protocol.

In these data we can see the effect of the drug on cramping and ALS patients in the first two rows on the slide. We have included the run in data because each subject was compared to their own baseline behavior. Every subject is their own control. Anti-cramping effects seen were, number one, Flex-787 showed a median 31% reduction in cramps from baseline versus a 0.1% reduction for patients while on placebo controls.

Patients had a 4.4 cramp free days versus zero for the placebo control. And as mentioned before, Flex-787 demonstrated a statistically significant P less than 0.05% reduction from baseline in both cramp associated paint intensity and stiffness relative to placebo control based on daily assessments by numerical rating scale. Slide 6 provides details on the clinical and patient global impression of change endpoints. The FDA has told us that demonstrating a decrease in the frequency of cramping is likely and acceptable endpoint for registration.

But they would also need to see that this change was meaningful to patients. For example, using a patient reported outcome, the PGIC data on slide 6 is just that kind of endpoint. And we see from these data that 50% of patients reported feeling and improvement following Flex-787 treatment compared with 12.5% of those receiving the placebo control.

The clinicians who are also blind and have no way of knowing which treatment the subject was receiving. Evaluated the patients, and also reported improvement in 50% of subjects following Flex-787 treatment compared to 0% for the control group. This consistency between the patient's perception of improvement and the clinicians is encouraging.

Slide 7 is a reminder of the design of our ongoing Phase 2b ALS and CMT studies which were designed to deliver robust results. The Commend trial which focuses on ALS has many advantages over our smaller exploratory Australian ALS including longer run in and treatment periods, a higher dose, 30 milligrams three times a day, a parallel design and of course, a much larger population from which patients can be recruited.

The Phase 2 Commend trial is currently enrolling and is designed to evaluate Flex-787 in approximately 100 patients with Motor Neuron Disease who suffer from frequent cramping. This randomized controlled, double blind parallel design trial in the U.S. includes a 28 day run in period to establish a baseline in cramp frequency. Patients are then randomized to 30 milligram of Flex-787 administered three times a day on control for 28 days.

Patients will be evaluated for changes in cramp frequency as the primary endpoint with a number of secondary endpoints including cramp related pain, the PGIC, CGIC and spasticity. The Commit trial in CMT patients is essentially identical in size, scope and design but is in frequent cramping Charcot-Marie-Tooth patients.

Consistent with our goal to deliver high quality data from well designed trials in a timely manner, these two robust Phase 2 studies will provide important data readouts in the third quarter of 2018. And now, I'll ask our Chief Medical Office, Tom Wessel who was a treating neurologist for many years to comment on the next few slides.

I've been fortunate in my career to help develop a number of successful neuro drugs: Razadyne, Lunesta, while I was at Sepracor with Bill, and Ampyra. Based on these strong signals, I believe that we will be able to develop Flex-787 into a drug that will benefit many patients starting with ALS patients but expanding to numerous other who suffer from debilitating and painful muscle cramps.

As we have discussed before, slide 8 and 9 address the unmet medical need. Nearly all ALS patients report cramps, and these cramps are responsible for the majority of pain felt by patients suffering from this progress neurodegenerative disease. Cramping interferes with activities of daily living and sleep and reduces the quality of life for these patients causing the majority of them to seek treatments to control their cramping.

There are, however, no improved therapies for cramping in the United States forcing clinicians to rely on drugs approved for different symptoms that either work poorly, have significant side effects, some of which can be life threatening or both.

A list of the medications used off label for cramping appears on slide number nine. All of the options available today for treating cramps come with considerable drawbacks. Both Mexiletine and Quinine have FDA black box safety warnings as seen on the slide here.

Baclofen and benzodiazepines are both modestly effective and highly sedating and can cause ataxia and imbalance, which is obviously challenging for ALS patients who may be struggling to remain ambulatory. And I think the FDA recognizes this clinical dilemma and granted us Fast Track designation for this reason. In terms of safety, Flex-787 has been well tolerated to date, in both healthy subjects and ALS patients with only mild and transient GI effects.

On slide number 10; I'm excited about the Flex-787 data coming from our exploratory MS Spasticity study in Australia late first quarter of next year. The literature reports that roughly 85% of MS patients experience spasticity with about 40% experiencing moderate or severe spasticity which progresses with the disease. For these reasons, spasticity impacts the quality of life of even more patients than cramping.

Compared to the ALS population, there are more than 10 times more patients that suffer from MS and the associated spasticity, giving many effective treatment for MS related spasticity and extremely valuable tool for neurologists.

In contrast to cramping, where we have supportive activity data in humans from both electrically induced and spontaneously cramping models, the only human data that would predict anti spasticity activity with Flex-787 comes from the ALS data we are reporting today.

While the data does provide evidence of anti spasticity effect, in the patient reported NRS scales for spasticity and stiffness, spasticity assessed by modified Ashworth and Tardieu Scales did not show a treatment difference. However, we note that these ALS patients had a relatively low incoming spasticity burden compared to the MS population being enrolled in the ongoing Australian study.

This higher level of spasticity in the MS study would provide a better opportunity to test the potential of Flex-787 to improve spasticity. So while the MS study is a small exploratory cross over study with a liquid formulation and was designed to look for activity in spasticity rather than definitively approving efficacy, the results could be quite interesting.

Our plan is to enroll approximately 50 subjects in this exploratory study and report what we find in the first quarter of 2018. If the data are supportive, we would then file a separate IND for spasticity and initiate a larger definitive phase 2 MS study. As a reminder on slide 11, vagal nerve stimulation is a validated mechanism with approved indications in treatment resistant epilepsy, treatment resistant suppression, and most recently this year for cluster headaches, as electrical neurostimulation.

We believe that Flex-787 and its' mechanism which uses chemical neurostimulation, illustrated on the slide, has a similar potential, but is a more elegant and selective way to activate V1 and A1 TRP ion channels on the vagal, glossopharyngeal and facial nerves and to reset the levels of descending inhibition in the spinal cord, blocking the repetitive firing of alpha motor neurons that cause cramping.

Slide 12 shows other potential applications of chemical neurostimulation. We are excited to be exploring the expansion of this technology via proof of concept study in the neurologically impaired population of ALS looking at dysphagia, or difficulty swallowing, as well as studying its potential to help hemodialysis patients with normally functioning nervous systems who experience cramping during or between dialysis sessions.

On slide number 12, just to recap so far, in 2017 we have achieved a number of important milestones, including submission of our IND and FDA agreement to proceed and received of the Fast Track designation for ALS cramping that I just mentioned.

We've also initiated our definitive trials in ALS CMT, setting up 2018 to be a year of many important data readouts. We look forward to evaluating the potential to expand our chemical neurostimulation technology into new large areas of unmet need, including dysphagia, first in ALS, then possibly in Parkinson's Disease and stroke, as well as cramping in hemodialysis patients between or during renal dialysis sessions.

The data we have shared with you today are an important step in revealing the potential of this technology to impact the lives of patients with neurological diseases as well as those with normally functioning nervous systems. And with that, I'll hand it back to Bill.

Thank you, Tom. On slide 14, we summarize the third quarter results. We're reporting, also this morning, in a press release a consumer business revenue of $414,000. With a total revenue of $978,000 through three quarters, we are well on our way to exceeding $1 million for the year.

We look forward to 2018 to define the potential of our HOTSHOT business by testing refreshed branding and an expanded consumer target with a repeatable marketing model. And I'd just like to congratulate our HOTSHOT brand ambassador, Shalane Flanagan, who won the New York City Marathon yesterday.

Shalane is the first American woman to do that in 40 years. And we are just so pleased and proud of her. We know Shalane likes to use HOTSHOT before a hard workout. And all that hard work has now paid off. As of September 30, our cash balance is approximately $39 million, which carries us into early 2019, based on our current operating plan. With that, I will turn the call back to Elizabeth.

We'll now prepare to open up the call for the Q&A portion.

(Operator Instructions)

Mara Goldstein from Cantor Fitzgerald.

Great. Thanks very much for taking the question. On page six where you have the -- with the CGI scores, it looks like -- and again, I'm recognizing that these are a small number of patients in the study, but I'm just curious about any information you might have in terms of the onset of action and whatnot, just looking at the skew of the reported outcomes. You know, more towards minimally improved as opposed to much or very much improved.

Hi, Mara. Thanks for your question.

Hey, Tom.

I think the only observation I would make to that point is that we've looked at some of the data longitudinally. We graphed out cramps per day and cramp free days. And while it's not statistically significant, my impression that week two of the treatment seems to look slightly better than week one.

So I don't know whether this is a true accumulation or building of the effect off the drug, but I do know that it makes me enthusiastic to see what the four week treatments that we have in our ongoing US studies will produce.

OK. And if I could also just ask, the drugs that are used off label for cramping, like Baclofen and Clonidine and whatnot, do you have a sense, from a market research perspective, in terms of what the absolute number or percentage of prescriptions written that are off label for things like alleviation of cramps and whatnot?

No. I wish I could know that, Mara. It's an interesting question for us, as well. It's very hard, of course, to get that kind of data sorted by treatment code. What we do know is that if you look at the quinine scripts in the US that they far exceed the number of scripts you would expect to need to treat the burden of malaria.

So that tells us a little something, that indeed these products, even with the significant safety warnings, are being used to an extent in the US.

OK, and if I could -- I apologize, just ask one more question.

Go ahead, Mara.

On slide 17, would you have the patient disposition and analysis populations? There were four that were not included. What exactly is meant by three treatment repeated subjects?

OK, so...

We're glad you asked that, Mara.

Yes. Yes, to clarify that, Mara, what happened was there was an error at the Pharma sites, which caused those three subjects to receive the same treatment during the first and the second period. So they accidentally didn't get crossed over to a new treatment. So they got either active or placebo and both -- in the first and the second part of the crossover.

OK. All right, that's what I thought but I just wanted to confirm that. I'll step back and let somebody else ask some questions. Thank you.

You're welcome. So just one more follow up on that, Mara. That set of patients actually gave us a unique opportunity to look at the relative consistency of the response in the first and second part of the crossover.

You're welcome. So, just one more follow up on that, Mara. That set of patients actually gave us a unique opportunity to look at the relative consistency of the response in the first and second part of the cross over. And our view is that it's actually pretty comparable, so there was one active patient, and two placebo patients and you see the same type of response in the first treatment period and the second treatment period, which gives us some comfort relative to the design of the trial.

Michael Higgins from Ross Capital Partners.

Thank you, good morning guys. Congrats on the results.

Thank you.

Thank you, Michael.

If I can ask on the number of pills per day, did you notice any difference in the results? I understand there's eight patients to look at, but if there's any variability that you notice in the results, that'd be helpful to hear.

Yes, I think you're -- you hit the nail on the head there, Michael. There was just too few patients to sort that way, especially when you -- then looked at the treatment A versus treatment B. I can tell you that our plans for the studies is to treat everyone, three times a day. And everyone is getting a higher dose at 30 milligrams. So, I look at these data set as an indication that even with a little bit of BID mixed in, we seem to be able to see a clear signal of activity.

OK. Also, the -- there's a bit of a difference between the mean and the median results. What would the FDA be looking for in a pivotal, would that be the mean? And if so, how would you potentially adjust the design of the pivotal trials to restate a broad effect and hit that significant difference in those trials? Thanks.

Yes, and the reason of course that we would put the mean and the medians in these slides is because when you do have a small patient population, you want to be able to compare those numbers to kind of give you a sense that both of those are leaning in the right direction.

The reason that medians were used in this analysis Michael was that it was a non-parametric analysis using a low toxin analysis, or a ranked order analysis of the data. So, in these types of analyses, you always use a median. And I think that we would expect that for again, this type of data set, that those would be acceptable for an analysis of a pivotal trial as well.

OK, that's helpful to hear. Give us an update on your thoughts for the ongoing trials, the addition costs for those ongoing trials.

I don't think we've given specific guidance about the cost of those trials. But, suffice as to say that we are funded into early 2019, and those data will be coming in, in the -- in the third, excuse. Yes, those data will be coming in, in the third quarter of 2018.

And the line share of our investment is in the trial.

Right, right. And the last question from me would be, according to those quarterly announced trials are in dialysis, cramping and dysphasia. What drove those decisions to conduct those trials, what others might be run besides MS, CNT, and AOS? Thanks.

Those are -- that's a great question. I think when we look at the potential of chemical neurostimulation, we thought about all of the different muscle groups that could be hyperactive. And we wanted to make sure that we weren't restricting our thinking, and the investigation the potential of this technology to for example, just skeletal muscle.

So, we have actually got together with our group of researchers internally, and leveraged our scientific advisory board. And started thinking about for example indications where there was not a cramping endpoint, like dysphasia. And we found that there is indeed some literature data that is already shown that molecules with the similar pharmacology that is a duel acting trip activator can increase swallowing in the elderly.

So for us it seemed the natural extension of the potential of this technology, and then the real interesting thing for us on renal, in patients on renal dialysis is that, these patients actually have nerve -- nervous systems that are normal, and intact. And so, this gave us a chance to say, OK here's another normal nervous system that we can try to effect cramping in.

And we know we have some pulmonary data in both electrically induced cramps, and nocturnal leg cramps that would predict success. And we thought that would be a great amendment medical need to try to -- to test the technology on.

That's helpful, thanks guys.

Welcome.

Thank you.

(Operator Instructions)

Roger Fong, from Jefferies.

I see you saw the cramp associated pain activity in the stiffness showed a significance. Do we the -- the number of the reeducation of the percentage of the reduction?

I don't we think reported it on the slides, but you can see that the -- the numbers basically on slide 8 Roger, so you can see a baseline pain intensity and then how much it decreases on treatment.

And let me just make one comment about that, which is that remember this pain that we're measuring in this trial is not just a general look back at pain over a period of time. This is the pain associated with the most painful cramp.

And the reason I think that's important to -- for us to keep in mind is that we look like the drug is actually improving two things. It's improving the number of cramps, and then the ones that are still left, the ones that are still present, are less painful.

So it's really kind of a two pronged effect that we're measuring with this stuff -- with the drug in this study. So, did you find the data on slide 5, that gives you a look at the sort of run in and then amount that it decreases during treatment?

Got it. Maybe I did not have the slide, but I can find it later, thank you. Yes.

Sure, sure. You're welcome. Just to expand upon that a little bit, the fact that we see an increase in cramp free days, I think that's related to the fact that many of these patients that have lower frequencies of cramping, actually experiences benefit of then having an increase where the cramps are entirely suppressed, and they have a whole day that is cramp free.

Got it, yes. The cramp free data is very encouraging, great. So next question, so we know we have some kind of off label drug use in the cramping quinine, so do we have some public data or anecdotal data say how -- what's the efficacy of those data and how do they compare to our 787?

Yes, I mean we have a lot of data from the Cochran database, which actually looks at the effects seen across a number of different studies with quinine, and as you know, quinine is by far still the most used anti cramp drug worldwide.

Just to give you one data point, in the U.K., still today we're generating over four million scripts a year, so that's an enormous number. We had similar script levels in the late 1980's, and 1990's in the United States, but then of course the FDA clamped down on the use of quinine.

So it was broadly used in the United States, many patients just receive it through internet pharmacies and so forth, so are using it off label despite the black box warning.

Yes, how does that -- how does quinine effective in those patients?

Well, if you look at the in effect size across these various studies, it's actually very small, so it's about in the order of 0.13, if I remember correctly.

You can look that up and I'll send you that data if you like. We're seeing effect sizes here that are substantially larger, and we will report those at upcoming neurology conferences.

Great. Thank you. So, my last question -- so I think Bill mentioned that, so you will apply, you'll not only see the interavailability. So what other learning you from this study you think can apply to Commend's study?

Well, I think I would just say again what I commented on before, which is I think the longer treatment, the four week treatment, with the four week run in is going to give us a really robust look at those patients' cramping behaviors.

And the other thing that I think is very encouraging about this data set is that despite the fact that there is a high variability between subjects, so you may have one subject that cramps 50 times a week, and one that cramps 20 times a week, the consistency in their cramping behavior week to week is actually pretty good.

So what that means is the guy that's at 50 is living between sort of 45 and 55, and the guy that's at 20 is bouncing up and down a bit. What that means is that in these types of study designs, where every patient is compared to their own base line, that you can get a lot of power out of these studies.

And I think that's really why we were surprised with these data that we could see so much with just eight patients.

Yes, that makes sense. Thank you. Yes, that's all.

You're welcome.

(Operator Instructions)

At this time I am showing no further questions.

I would like to turn the call back over to Bill McVicar, CEO, for closing remarks.

Thank you very much. I just wanted to thank everyone for joining our call today, and for their interest and their good questions and I look forward to updating you in the future. Thank you.

Ladies and gentlemen, thank you for your participation today's conference. This concludes the program. You may now disconnect.