Xenon Pharmaceuticals Inc (XENE) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Xenon Q1 2015 earnings call. (Operator Instructions) I would now like to turn the call over to Ian Mortimer, CFO and COO. Please go ahead.

Thank you, operator, and thanks, everyone, for joining us on our call and webcast today to discuss our financial results for the first quarter of 2015. Joining me on today's call are Simon Pym Stone, our President and CEO. Following this introduction, Simon will provide perspective on Xenon's performance in the first quarter of 2015, and then I'll review the financial results for the quarter. After that, we will open the call up for your questions.

Please be advised that during this call we will make a number of statements that are forward looking, including statements about our capital position and anticipated financial performance, the timing of IND or IND-equivalent submissions with regulatory agencies, the initiation of future clinical trials, the timing of end results from ongoing clinical trials and pre-clinical development activities, the commercial launch of Glybera in the European Union, our achievement of certain milestones under our collaboration agreements, the plans of our collaboration partners and their interactions with regulatory agencies, and the status and timing of additional product candidates and related development activities.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statement.

So now I will turn the call over to Simon.

Thank you, Ian, and good afternoon, everyone who has dialed in today. Thanks for joining Xenon on our conference call and our webcast today to discuss our first-quarter 2015 performance and to provide a perspective on our Company's progress and plans. We also look forward to taking your questions following these prepared remarks.

In the first quarter of 2015, we continued to build on our performance in 2014 and made good progress in advancing our pipeline of partners and proprietary programs. We believe that our accomplishments further underscore the therapeutic potential of our technologies and our ability to utilize unique insights into human genetics to identify novel targets for the discovery of innovative treatments for rare and intractable diseases.

As many of you know, our business model is to pursue therapeutic indications in rare or orphan indications that we can develop and potentially commercialize on our own and to expand our pipeline in commercial opportunities by also forming strategic alliances in larger indications that leverage the resources and established market presence of our partners.

Our pain partnerships with Teva and Genentech exemplify the strategy, as pain indications are large markets and require significant resources for development and commercialization. Our strategy has been to augment our genetics capabilities by building an integrated drug discovery and development infrastructure, including a very strong focus on ion channel biology and chemistry. We believe that this integrated approach provides significant business advantages. First, it allows us to maximize the potential of our platform to build our pipeline and also to diversify our business through partnering, thereby reducing our reliance on a single product, providing additional funding and potential validation and ultimately driving our progress.

I would like to briefly highlight several important first-quarter achievements. I will start with our partner programs at Teva and Genentech in the area of pain.

We have two development-stage small molecule product candidates progressing in our pipeline targeting the sodium channel NaV1.7, which plays a critical role in pain sensing. One is a topical product with Teva and the other is an orally active selective small molecule inhibitor partnered with Genentech.

We were delighted in April to announce jointly with Teva that the first patients had been enrolled in a phase 2b clinical trial of our topical NaV1.7 inhibitor, TV4570, in post-hepatic neuralgia, or PHN. TV4570 is topically applied, a small molecule inhibitor of the sodium channel NaV1.7 and other sodium channels, including those that are expressed in the pain-sensing nerve endings in the peripheral nervous system.

Prior to partnering with Teva, we had conducted multiple phase II proof-of-concept clinical trials that showed promising activity. And it was on that basis that Teva is pursuing the phase II program, including in post-hepatic neuralgia. We anticipate that data could be available from this program in the second half of 2016.

In addition to the PHN trial that recently got underway, Teva is also continuing a 300-patient, randomized, double-blind, placebo-controlled, phase 2B clinical trial for TV4570 in osteoarthritis of the knee. We anticipate top-line data from the study to be available in the third quarter of this year.

We're also seeing strong progress in our partnership with Genentech to develop GDC-0276 and other selective orally active small molecule inhibitors of NaV1.7 for the treatment of pain. We continue to expect enrollment to be completed in the second half of this year and the expanded phase 1 single- and multi-ascending dose trial for GDC-0276 being conducted in healthy volunteers.

We are also pleased with the progress we are making in our second pain focus collaboration with Genentech to identify additional novel genetic targets that play a role in regulating pain in humans. We look forward to identify new pain targets for drug discovery this year.

Moving to our proprietary programs, we have been pleased with our progress in advancing these wholly owned assets towards clinical development. We expect that XEN801, our SCD1 inhibitor being developed as a treatment for moderate to severe acne and potentially other dermatological indications, will enter clinical development later this year. We are on track to complete the IND-enabling studies and file an IND-equivalent application in mid-2015 to initiate a Phase 1 clinical trial. We anticipate that the clinical protocol will be a Phase 1-2 design where we expect to complete two cohorts of healthy volunteers in Phase 1 and then move into the Phase 2 portion of the trial before the end of this year. We expect the Phase 2 will enroll approximately 100 patients with moderate to severe acne in a 12-week randomized placebo-controlled trial.

The primary endpoint is expected to evaluate the change in total lesion count from baseline. We would expect this Phase 2 portion would complete and provide top-line data in 2016.

Our program to develop a potent and selective inhibitor of the sodium channel NaV1.6 for the treatment of orphan disease Dravet syndrome, a severe form of childhood epilepsy, is also progressing well. We continue to expect to select a development candidate and file an IND in this program in 2016.

A quick update on Glybera. Glybera is the first product whose active ingredient was derived from our platform to receive commercial approval and is currently the only gene therapy product to receive approval in Europe. Glybera is very specifically indicated for the treatment of a subset of adult patients diagnosed with the orphan lipid disorder lipoprotein lipase deficiency, otherwise known as LPLD, confirmed by genetic testing. And these patients suffer from severe or multiple pancreatitis attacks despite dietary fat restrictions. LPLD is a severe metabolic disease of inadequate lipid metabolism that results in pancreatitis and, in some cases, in death. Glybera as a product was developed by our licensee, uniQure Biopharma, and is being commercialized by uniQure's partner Chiesi.

UniQure has reported that while Chiesi expects the first patient may receive treatment by mid-2015, as Chiesi has sole control over commercialization in Europe, uniQure will not be providing additional guidance regarding European commercialization progress. Given that Xenon will also not be in a position to provide guidance on this product, we are entitled to receive as a royalty a percentage of what uniQure receives from Chiesi from Glybera sales.

So all in all, we believe we are off to a very strong thus far in 2015, building on great progress in 2014 and the achievements in that year. And we believe we are on track with our stated goals. As always, we truly appreciate the support and interest from our shareholders and collaborators. We look forward to working with you as the year progresses.

Now I would like to ask Ian to briefly review our financial performance for the quarter and to review our 2015 upcoming milestones. Ian?

Thanks, Simon. I will provide a high-level overview of our first-quarter 2015 financial statements and then finish off with reviewing the upcoming milestones for the remainder of the year.

For the quarter ended March 31, 2015, we reported total revenue of $4 million, compared to $5 million for the same period in 2014. Revenue in both periods was primarily derived from Xenon's collaboration agreements with Teva and Genentech.

The decrease was primarily attributable to $0.8 million recognized in Q1 2014 relating to the upfront payment from our December 2011 Genentech agreement. No such amounts were recognized in the current quarter, as the upfront payment was fully recognized by December 2014. The remaining decrease was due to less FTE funding from both Genentech and Teva and the change in foreign exchange rate between the US and Canadian dollar.

Research and development expenses for the quarter ended March 31, 2015 were $3.4 million, compared to $2.5 million for the same period in 2014. The increase of $0.9 million was primarily attributable to a $1.5 million increase in pre-clinical and discovery program expenses primarily related to an increase in spending on our XEN801 and NaV1.6 sodium channel inhibitor programs, partially offset by decreases in Teva and Genentech collaboration expenses.

G&A expenses for the quarter ended March 31, 2015 were $1.8 million, compared to $1.4 million in the same period in 2014. The increase of $0.4 million was primarily attributable to additional expenses incurred as a public Company.

Other expense was $3 million for the three months ended March 31, 2015, as compared to other income of $0.3 million for the three months ended March 31, 2014, a change of $3.4 million, and primarily attributable to a $3.1 million unrealized foreign exchange loss.

Our net loss for the quarter ended March 31, 2015 was $4.2 million, compared to net income of $1.4 million for the same period in 2014. The decrease was primarily attributable to lower revenue, higher operating expenses, and unrealized foreign exchange losses recorded during the quarter ended March 31, 2015. We ended March 31, 2015 with $75.4 million in cash and cash equivalents and marketable securities, which we believe puts us in a strong financial position to continue to execute on our key stated business objectives.

To recap what we believe will be a busy period of milestones for the remainder of 2015 and into 2016, under our Teva collaboration, we expect top-line results from the phase 2B 0A clinical trial of TV4570 in the third quarter of 2015. And we expect continued progress in the phase 2B clinical trial in PHN, with data available in the second half of 2016.

In our Genentech collaboration, we expect Genentech will complete enrollment in the GDC-0276 phase 1 trial in the second half of 2015. And we are continuing to collaborate with Genentech on the identification of novel pain targets emerging from our genetics research collaboration.

Moving to our proprietary pipeline, we expect to advance XEN801 into clinical development, including the initiation of a phase 2 proof-of-concept trial in the second half of 2015 in moderate to severe acne patients.

We expect to continue to make progress in our Dravet Syndrome NaV1.6 program, and we expect to identify our next target for drug discovery and development later this year.

And lastly, we will provide updates on the launch of Glybera in the EU when they are made available by uniQure and Chiesi.

So we intend to be busy and have a productive 2015 and, at the same time, to continue to manage our business efficiently from a financial perspective.

So that provides an update from both Simon and myself. And operator, we will now open the call up for questions.

(Operator Instructions) Biren Amin, Jefferies.

Just I guess on 45070, in the phase 2 OA study, are patients allowed any over-the-counter NSAIDs or pain products that might influence the data point -- or data set?

They are allowed to rescue, Biren. This is Simon. Thanks for the question. Yes, they are allowed to rescue using such products. And obviously we are analyzing that as part of the study. There is a wash-up going into the trial, but these patients are allowed a rescue during the trial. That will be, obviously, built into the analysis.

And how are the top-line data going to be presented? Is that going to be through a press release, or is that something that Teva would potentially save for a presentation at a medical meeting?

The top-line data will be a press release. We have coordinated that with Teva to be able to communicate that to our stakeholders. I would expect the full data set would be communicated at a future medical meeting.

And then on 0276, is Genentech evaluating any pharmacodynamic measures in the phase 1 trial?

It's Simon here again. At this point in time, we really just are not at liberty to make a disclosure around pharmacodynamic plans. Right now the disclosure has been this is a phase 1, single- and multi-ascending safety tolerability study. We had hoped to be able to provide further guidance on next steps beyond the safety study as the study moves forward. So that's as much as I can say at this point.

All right. Great. Thanks.

(Operator Instructions) John Newman, Canaccord.

This is Kevin in for John. Thanks for taking my question.

The first question I have is in regards to the Genentech GDC-0276, would you guys be providing the indication that Genentech will be going after before the completion of the phase 1 clinical trial?

And the second question I have is you have the collaboration with Genentech for the discovery in alpha pain, and you guys also have your own extreme genetics drug discovery target platform. What is the difference in terms of the two collaborations on where you guys will be discovering new pain medications between Genentech versus your own extreme genetics platform? Thanks.

I will answer the second question first and then maybe hand over to Ian on the first question. With respect to the collaboration, really our full commitment at this time as part of the collaboration with Genentech with them is to pain. So all of our pain genetics or discovery work in terms of new target discovery is being done in collaboration with Genentech. The discovery -- target discovery and validation work we are doing using the human genetics platform, the extreme genetics platform being done outside of Genentech, is all non-pain related. Our strong focus at the moment has been in neurological disorders.

So pain is really being done exclusively in partnership with Genentech in terms of new target discovery. Everything else right now is proprietary and being done outside of any other partnerships.

And then, Kevin, on your first question about indications that Genentech may pursue. Again, really to reiterate with Simon said earlier, right now we just can't provide any more guidance than they are undertaking a phase 1 safety study in healthy volunteers. As that study comes to conclusion later this year, we hope then to be in a position, based on our discussions with Genentech, to talk about next steps.

Okay, great. Sorry, if I can squeeze one more question in. Can you also just talk a little bit about the differences in selectivity between 45070 versus 0276? I know 45070 is a little bit more nonselective for -- it includes more than 1.7, versus the Genentech one is just purely 1.7. So if you could give a little rationale as to why this is a more non-selective sodium channel blocker, that would be great.

Sure. So 45070, as you say, is a non-molecularly selective sodium channel blocker. So no significant differences between the potency binding between NaV1.7 and the other sodium channel targets. It is a very what we call functionally selective agent. It finds in a very favorable state and voltage dependent manner. 0276, as you indicated, is a highly molecularly selective agent. So when you look at the potency of binding of the molecule against 17 versus the other sodium channels, it's in the region of 50- to 1,000-fold depending on the channel. Very, very different chemistries; different binding sites on the channel.

The approach with TV-45070, given that it is not molecularly selective, was, however, to develop a molecule that does potently inhibit NaV1.7, inhibits in a very state- and voltage-dependent manner. And because of it, potency on other targets, sodium channel targets specifically, some of which actually we feel might be very beneficial in that there are a number of sodium channels implicated in pain signaling in humans, we decided to develop that product as a topical agent. So the activity of TV-45070 is really local, focusing on peripheral nerve endings which are found in the skin's subcutaneous tissue. But through all of our work to date in pre-clinical animal models as well as our early human testing, we see the product TV4570 active ingredient actually having very low plasma exposures and high exposures within the epidermal, dermal layer, and subcutaneous tissues.

So we think there are some significant advantages to TV4570 in terms of how it binds. It does have potency against sodium channels other than 1.7. Some of those channels, we think, could be quite beneficial, such as NaV1.8, which is implicated -- been implicated in pain signaling including supported by human and mouse genetics. But the molecule, given it has activity against 1.5 in particular and 1.1, the cardiac and key CNS channels respectively, we have developed this as a topical agent to have a local effect rather than have a broad systemic exposure.

GDC-0276, on the other hand, we feel can be delivered systemically because of its exquisite degree of molecular selectivity in favor of NaV1.7. I hope that answers your question, Kevin.

Yes, that does. Thank you so much.

Thank you. And with no further questions in the queue, I would like to turn the call back over to Ian Mortimer for closing remarks.

Great. Thanks. And thanks for everyone for joining us on the call today. We look forward to keeping you informed of our progress and also meeting with you at upcoming investor conferences and meetings. We'll now end the call. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Have a good day, everyone.