Harrow Q1 2023 Earnings Call Transcript

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May 4, 2023

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Chimerix First Quarter 2023 Earnings Conference Call. I would now like to introduce you to your host for today's call, Michelle Laspaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

Speaker 1

Thank you. Good morning, everyone, and welcome to the Chimerix First Corridor 2023 Financial and Operating Results Conference Call. This morning, we issued a press release related to our Q1 operating update. You can access the press release in our Investors section of the website. With me on today's call are President Technical Officer, Alan Melamed Chief Financial and Business Officer, Mike Andriole and Chief Technology Officer, Josh Allen.

Speaker 1

Before we begin, I would like to remind you that the statements made on today's call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties and other factors. These risks and uncertainties and other factors could cause At this time, I would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Speaker 2

Good morning, everyone, and thanks for joining. 2023 is definitely off to a good start from an execution standpoint. We Continue to open action study sites and now have regulatory approval for the protocol in 9 countries. The We remain on schedule for our first efficacy analysis in early 2025, which includes an initial overall survival assessment. We are pleased in the meantime to have a strong showing at the American Association For Cancer Research Annual Meeting this year with more than a dozen presentations related to the omeprodome platform.

Speaker 2

Those were presented by the Company and our collaborators at Brown University and the University of Michigan. The presentation by Doctor. Carl Koshman from the University of Michigan was the highlight. He presented clinical evidence of ONC201's ability to reverse 3K27 trimethyl loss. We've described previously the relationship between ONC201's molecular targets And the H3K27M target population, but this goes a step further.

Speaker 2

This is the first known Example of any therapy reversing H3K27 trimethyl loss. This is a characteristic which you may know has been linked To tumor growth and poor prognosis. So on top of the durable tumor responses observed in the Phase 2 data set, The overall survival advantage reported by multiple non randomized analyses of patients treated with ONC201 compared to all others. This provides additional confidence in the outcome of the action trial. I'll let Josh dig a little bit deeper into the science and why it matters in a moment.

Speaker 2

We also continue to progress SONK206 in the dose escalation studies. We expect the open label Dose escalation to run into the first half of twenty twenty four that will both inform the dosing strategy and create The opportunity to identify other signals of activity. As you recall, last quarter, we reported an investigator assessed response In a recurrent glioblastoma patient without the H3K27M mutation who received, ALK206 at one of the lower doses. This signals the potential for this drug in much larger patient populations compared to the H3K27m glioma indication. With that, I'll turn the call over to Josh for a deeper review on ONK201's ability to reverse this trimethyl loss and ONK-two zero six Development.

Speaker 3

Thanks, Mike. So I'd first like to expand on one of the novel findings from ACR that Mike alluded to, as it bolsters our confidence in the probability of success of ONC201 for the treatment of H3K27M mutant glioma patients in our ongoing Phase 3 action study. These findings suggest both in lab models and in patients' tumors That ONC-two zero one reverses what is thought to be the H3K27N mutations pathogenic hallmark. To put this into context, The H3K27M mutation directly causes sequestration of the PRC2 enzyme that normally carries out Tri methylation of histone H3 at position K27 as a repressive epigenetic mark to tamp down gene expression. Said another way, the H3K27M mutation found in tumors causes global loss of H3K27 trimethylation to to drive oncogenic gene expression.

Speaker 3

Turning back to the effects of ONC201, we already knew there were certain mechanistic vulnerabilities associated with H3K27 and mutant glioma that rationalized hypersensitivity. This new finding demonstrates a reversal Of the direct consequence of the mutation is a whole new mechanistic layer and gives us additional confidence in the potential utility of ONT-two zero one and the action study patient population. The reversal of the H3K27 trimethyl loss associated with ONK201 treatment was consistent, persistent and pervasive across patients and their tumors. While we have documented intraglioblastoma activity in other patient population, this new demonstration is particularly reassuring as consistent biological activity as a recommended Phase 2 dose in our targeted population. Furthermore, recent literature demonstrates that removing the H3K27M mutation to increase H3K27 trimethyl in established tumor models corresponds with a significant anti tumor effect and prolongation of overall survival.

Speaker 3

All of this data indicates that ARK201 has a direct effect on H3K27M mutant glioma in patients. It also sparks a number of scientific offshoots that are being pursued, not the least of which are the implications for additional indications that exhibit loss of H3K27 trimethyl through several mechanisms other than the H3K27M mutation. We look forward to sharing more as the science unfolds. Now turning quickly back to 206, this program remains on track to complete dose escalation by First half of twenty twenty four, you will recall our prior announcement of a monotherapy objective response in a patient with non 3 K27Ab recurrent glioblastoma who enrolled early in dose escalation. This has added to the enthusiasm for the program And further escalation is expected to target dosing on a twice per day, 3 days on, 4 days off schedule.

Speaker 3

When possible, these studies are collecting archival tumor tissue to enable molecular response signature studies downstream It will be cross informed by potential signs of clinical activity and parallel laboratory investigations that are expected to collectively inform a data driven path forward. With that, I'll turn the call over to Mike Andriole for a financial update.

Speaker 4

Thanks, Josh, and good morning, everyone. I'll provide just a quick update on our financial performance for the quarter and our cash position. For the Q1 of 2023, we reported a net loss of $21,400,000 compared with a net loss of $24,800,000 for the Q1 of 2022. The majority of our expenses were related to research and development, which decreased to $18,800,000 for the Q1 of $23 compared to $19,000,000 for the same period in 2022. A meaningful portion of our R and D spend Recently has been on clinical pharmacology studies needed to support a potential future NDA filing.

Speaker 4

This investment and the associated clin pharm work we are Finishing positions us well to prepare for a quick submission following the action study. Regarding general and administrative We continue to manage these tightly despite above average wage inflation over the past year. Those expenses increased slightly to $5,700,000 the Q1 of 2023 compared to $5,600,000 for the same period in 2022. Looking forward, we expect the financial impact of our previously announced reduction in With approximately $246,000,000 in cash and equivalents, net burn in Q1 was at the high end of what we expect for the year As Q1 included several non recurring items, including severance expense, upfront CRO payments associated with ramping up the action study and expenses related to TEMBEXA, which we paid in Q1, but won't be reimbursed by Emergent until Q2. Under our current operational plan, we continue to expect year end cash of around $200,000,000,000 which we expect will be sufficient To fund the organization into 2027, including through the primary endpoint readouts of the Phase 3 action study, which are expected to occur beginning in early 2025.

Speaker 4

We also expect cash balances to be sufficient to fund the initiation of efficacy studies for ONK-two zero six should they be pursued following the ongoing dose escalation work during this period. Importantly, we have not included any Non dilutive capital arising from our Tembeca agreement with Emergent in this forecast. So any procurement exercises over this period by the U. S. Government would generate an additional $31,000,000 milestone per full option exercised.

Speaker 4

We also have the potential to receive royalties from international In summary, any proceeds from Tembexa demand in the U. S. Or internationally would be incremental to our capital plan. And with that overview, I'll turn the call back to Mike for closing remarks. Mike?

Speaker 2

Well, thanks, Mike. Actually, we'll turn it to the operator and let's just open it up for questions.

Operator

Your first question comes from the line of Maury Raycroft from Jefferies. Maury, your line is now open.

Speaker 5

Hi, this is Kevin on for Maury. Thanks for taking my questions. Just had a quick couple on 206 To start, you said you expect the dose escalation to complete by the first half of next year. Are you giving any more color into where you're at with the escalation in terms of which cohort and whether you're able to Amend the protocol to dose up to 3 weeks and also just in terms of when we might see data if we're going to wait until the recommended Phase to doses found or not?

Speaker 2

Yes, maybe Josh or Alan can add to this, but The escalation has continued with the once a week dosing in parallel to Preparing for the more intense dose, and so expect that to happen that To initiate shortly. In terms of data, it's an open label trial, so we'll be able to provide updates as we have it. We expected the therapeutic window would be in doses that we could initiate Either late this year or early next year. So I think the notion that having some insight both into The dosing schedule and how that's playing out as well as potential signals on activity Are likely to be into the first half of next year.

Speaker 5

Great. Thanks. And for the Action Phase 3, you reiterated the early 2025 timeline for Initial data, can you just give any color on how that enrollment is going? Any feedback from investigators so far? And Any granularity on maybe regionally, how the trial is enrolling In U.

Speaker 5

S. Or ex U. S?

Speaker 2

Yes. You can imagine the U. S. Sites were active first. So that's Where most of the enrollment has occurred so far, I think the UK and Israel were the first sites outside of the U.

Speaker 2

S. To follow With the sites in Western Europe opening here over the coming weeks that will begin to ramp up There as well. The feedback has been really positive on the as we've rolled this out and began to activate sites, We've actually had more interest in participation than we anticipated initially. And so that may mean, we have an opportunity to activate more sites than the original plan. All planned, we'll see how that goes.

Speaker 2

But so far the patient enrollment per Site per month active has exceeded our expectations and yet it's early. So yes, I don't necessarily think can count on that continuing, although that's certainly the right side of the equation to be on as we're early in the study.

Operator

Your next question comes from the line of Noreen Kibria from Capital One Securities. Noreen, your line is now open.

Speaker 6

Thank you. Hi, good morning. Thanks for taking my question. So just a quick one on 206 first, going back. So how many Doses, are you able to comment how many doses have been completed at the current regimen, less frequent dosing regimen?

Speaker 6

I know that you're switching up to a more intense dosing, but

Speaker 2

I don't know if there's what to add to prior comment to Josh or I don't know if you want to chip in there.

Speaker 3

Yes, not a lot of color to add to be honest other than Where the study is moving, I think there was a prior question on if we're able to amend the protocol from where we are right now and That answers yes. So we previously commented the escalations continued well. That responder went up to a dose of 100 milligrams that we've reported Previously, yes. Future of the study will be aimed at moving as quickly as possible to the increased dose schedule.

Speaker 6

Okay, sure thing. And then on the update from AACR where Doctor. Koshman presented on the mechanism of 201 On the reversal of the histone, I was just curious if you're able to sort of incorporate that new finding into the action study in some way. For instance, maybe not you might not be able to get tissue samples, but like looking at ctDNA or CSF and looking indirectly at 2HG levels At the increase or decrease or in some way incorporating the new finding?

Speaker 2

I'll let Alan and Josh speak to that. I'll say for starters, it has no impact on our protocols. We're not amending In that way, and yet, I do think this is a metric that Can be interesting, both as we think about the development of ALK201 and ALK206, but I don't know if Alan or Josh you want to expand on that.

Speaker 7

Yes. Nouri, this is Alan. I'll answer. One thing I'll add is that we are collecting tissue on all patients that we can. Unfortunately, at this point, we haven't saved this tissue until we resolve the question of whether we need CDx and FDA, our hope is that CDx will not be necessary and we can use the tissue that we collect to do other additional study that will, I think, help the field And our understanding of the disease as well along to one better.

Speaker 7

So more to come after we clarified the need for the CDx.

Speaker 6

Got it. And just one more.

Speaker 3

Sorry, Naren, I was just going to quickly add, in addition to the tissue that Alan spoke about, we're also collecting blood samples as well. That Alan spoke about, we're also collecting blood samples as well. Like Mike mentioned, we don't expect this to change anything With the protocol, we have preserved optionality for additional molecular assays on tumor tissue, like Alan mentioned, and on blood samples as well. So We'll have an opportunity to dig in a little more later in the study. And of course, just to highlight, I think that's what Mike was getting at there.

Speaker 3

There's a lot of outside of the ACTTION trial as well as several other cancers types exhibit this trimethyl was lost as well. So we can be mindful of this Sweet. They contemplate future development, not just the 201, but also 206.

Speaker 6

Sure. And just one more. So with regards to Your participation in the Canadian Neuro Onc meeting, will there be any presentations from your collaborators there?

Speaker 2

Josh, you want to highlight that we're sponsoring that. If you want to comment, we'll have A team there. I don't think there's meaningful data expected to be presented there. Josh can clarify if That's right.

Speaker 3

Our team is actively on the ground as we speak at that conference sponsoring, engaging and the real focus of that is standing up The trial in that particular geography. So wouldn't expect there to be specific presentations, but a lot of conversations ongoing to stand the ACTU In Canada as quickly as possible.

Speaker 6

Okay, great. Thank you.

Speaker 2

Thanks, Doreen.

Operator

Thank you. Your next question comes from the line of Ed White from H. C. Wingeright. Ed, your line is now open.

Speaker 8

Good morning. Thanks for taking my questions. Just going back to the action study and the sites, congratulations with the European approval. How should we be thinking ultimately of the split between U. S.

Speaker 8

And outside the U. S. Sites And patient enrollment, what are your goals there? And I think you had said the initial goal was over 100 global sites, But you just said you might have some more interest. So how should we be thinking about that in totality?

Speaker 8

Thanks.

Speaker 2

Yes, I think broadly speaking, this isn't precise, but we estimate most of our patients will come From the U. S. Or North America, say 2 thirds, but obviously that there's some variability around that as we get We actually Europe is opening a little bit more rapidly than we anticipated, so that could impact that. And in terms of the total number of sites, I think 120 sites is sort of well within our expectation And could potentially go slightly beyond that. As I mentioned before, I don't for this size trial, we don't necessarily need that many.

Speaker 2

But To the extent that these sites end up being productive in terms of enrolling patients, it can always accelerate the timelines and Of course, the acceleration of timelines is among the best ways to preserve capital and preserve Tony, for other investments, so we're always keen to look for ways to accelerate. But yes, the short story is it Could be north of 120, but not much.

Speaker 7

Hey, Anand, this is Alan. This is competitive enrollment. And I can tell you when we did meet with our European flights at Iano, there is a lot of interest there. So Having Europe open as quick as we could, we could definitely change that balance depending on the sites and the excitement.

Speaker 8

Great. Thanks, Alan. And just thinking about the timing of data, You had mentioned that the first OS assessment is expected in early 2025. Are you still expecting The PFS readout sometime after that, but before the second OS assessment. And is the timing of that also in early 'twenty five or how should we be thinking about that?

Speaker 2

Yes. You can imagine there's some variability around that, Ed. The range of we do expect the PFS And that's a final PFS, mind you, to read out. Just after the OS, initial OS assessment, So still during 2025, probably not early 2025, but that's certainly potential. That second OS Would has the potential to also read out during later that year with final analysis happening in 2026.

Speaker 2

So, I do think that PFS will be second to that initial overall survival assessment.

Speaker 8

Great. Thanks, Mike. And the last question I want to ask is just a big picture question. Regarding ONT-two zero six, based on your small amount of clinical data so far, but also on your preclinical data, Where do you ultimately want to take the drug? I just want to get you to sort of compare what you're thinking as far as The ultimate markets for ONC-two zero six versus ONC-two zero one, including what can be probably termed niche opportunities?

Speaker 2

Yes, I'll start with that and maybe expand from there. And I'll say this trimethyl loss finding has sort of broadened our thinking The first comment is the fact that we've got demonstrated activity in a non K27m glioblastoma suggests there's a potential to access that segment, which is some 6 times the size of The patient population with the mutation. And that's not to diminish the 5,000 plus patients That have the mutation, it's an orphan indication and yet it's a significant opportunity in and of itself. Going outside of that mutation, you multiply that opportunity by about 6 in terms of the patients that You could reach. What becomes interesting though is pre clinically we see broader A potential for ONC-two zero six and so are in parallel to this dose escalation identifying opportunities both where we've seen Activity in models and now expanding that to and focusing on indications where this trimethyl losses is indicated As target opportunities, there's actually some overlap where that's been demonstrated and we have preclinical data.

Speaker 2

So, I think more to come on Where the focus will be in terms of indications beyond glioblastoma As we nail down the dosing strategy. Now Alan and Josh, if you want to expand on that.

Speaker 3

Yes, I think I agree. Just to say it a different way, Ed, I mean, I think We've seen clearly ONC-two zero six has broader activity in the lab, clearly a number of expansion opportunities. Some data presented at AACR shows that I don't think 206 is going to fit very well as a me too or a follow on in the context of H3K27 27 mutant glioma, sequencing those therapies in the lab doesn't seem to make a lot of sense for the data. We've yet to generate in vivo data that Adding to a set top of 201B in vivo setting for H3K27M mutant glioma is the most logical. Instead, it seems like There's a number of other opportunities that do present themselves and would make more sense.

Speaker 3

Clearly, within CNS, we've had Published data on a number of non H3K27 and mutant gliomas responding to the drug in lab models, and we've seen the first proof of concept Come through with that one responder in the trial. So like I mentioned, we'll have the privilege of letting the drug play out in the broad CNS tumor space, Collect molecular tissue so that we can do signal refinement when we get those signals coming through in the trial. So I think within CNS, it will clearly be activity Opportunities outside of K27M distinct from that of 201 that will be the most logical. And then of course, there's non CNS activity as well and a bunch of lab We'll look to refine throughout the course of the year as well, but could be additional leads to opportunities. Alan, anything to add?

Speaker 7

No, nothing there.

Speaker 8

Okay. Thanks for taking my questions.

Speaker 7

Thanks, Ed.

Operator

Your next question comes from the line of Troy Langford from TD Cowen. Your line is now open.

Speaker 9

Hi there. Congrats on the progress and thanks for taking our questions. Just in terms of the future data updates around ONT-two zero six, can you provide any more color or granularity around your expectations for what you would like The first day is that to include in terms of just like number of patients, dose levels, amount of follow-up, anything like that?

Speaker 2

I think we'll be able to we've held off until we got in To the actual dosing of this more intense to elucidate that strategy, but we'll be able to define that A little bit more in upcoming updates. I think the next thing will be essentially, obviously the focus on those Trials is always the safety and can you escalate safely and get into the anticipated therapeutic window. So, while to date No real safety signals that will be an important to update as we go. The efficacy signals are a little bit trickier to anticipate. We didn't expect to see a response at the dose that we saw in patients That we've previously reported.

Speaker 2

And so but that opens the window for activity to be seen From a response standpoint at any point. That having been said, it's less typical that you have a patient where you can Reliably measure tumor response because of prior therapies that confound measurements as we've So we've really only had a few patients where a response was potential And to see 1 in that setting is actually what was unexpected. But there are other ways to measure activity Via markers and so there's the potential to do that. It's important to remember that the primary goal of these This work is to define and a dosing strategy and the safety profile. But at the same time, if you're fortunate and we get the right patients, we may be able to provide additional safety signals I'm sorry, efficacy signals.

Speaker 2

As I say, that will likely happen more into 2024, but we'll keep you abreast as that date unfolds.

Operator

There are no further questions at this time. I turn the call back over to Mike Sherman.

Speaker 2

Great. Well, thanks again for joining us. Thanks to the Chimerix team and our collaborators for the good work that they're doing and strong So far and look forward to providing you updates in the coming months. Thank you.

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