Achieve Life Sciences Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 13, 2024

There are 9 speakers on the call.

Operator

Greetings, and welcome to the Achieve Life Sciences Second Quarter 2024 Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. And as a reminder, this conference is being recorded. I would now like to turn the call over to Nicole Jones with Investor Relations.

Operator

Thank you, Nicole. You may begin.

Speaker 1

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. From Achieve Life Sciences, we are joined by John Bincich, Chief Executive Officer Doctor. Cindy Jacobs, President and Chief Medical Officer and Jerry Yuan, Principal Accounting Officer. Management will be available for a Q and A session following today's prepared remarks.

Speaker 1

Before we begin, I'd like to remind everyone that today's conference call contains forward looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to Achieve documents available on our website and filed with the SEC concerning factors that could affect the company. I'll now turn the call over to John.

Speaker 2

Thank you, Nicole, and thanks everyone for joining us. We are excited to provide an update today on the tremendous progress we have made on the cytisinicline development program from both the clinical and regulatory fronts. In recent weeks, several key accomplishments have provided excellent momentum for furthering our mission of bringing cytisinicline to the millions of people who are battling nicotine dependence. Furthermore, we are pleased with the recent refinancing, which will propel us towards our first NDA submission for smoking cessation, which remains on track for filing in the first half of twenty twenty five. We will go through each of our achievements in more detail, but briefly in the last few months, we have received FDA breakthrough therapy designation for cytisinicline for treating e cigarette or vaping nicotine dependence.

Speaker 2

We initiated and gained significant traction on the ORCA OL trial evaluating the long term safety effects of cytisinicline. We were added to the U. S. Russell 3,000 and Russell Microcap indexes and we refinanced our outstanding debt agreement with SVB. We are very pleased with this progress and the support we are receiving from the scientific, regulatory and financial communities that are setting up cytisinicline for great success.

Speaker 2

I'll now turn it over to Cindy, who will give an update on recent regulatory and clinical advances. Cindy?

Speaker 3

Thank you, John. Recently in July, we were very pleased to have FDA grant cytisinicline breakthrough therapy designation for the vaping cessation indication. Breakthrough therapy designation is important because it offers access to an FDA cross disciplinary project management team for interactive communications with senior managers and reviewers at FDA. This will be beneficial in completing the regulatory requirements necessary for expanding cytisinicline treatment as the first approved pharmacotherapy in treating nicotine dependence for e cigarette cessation, not only in adults but also possibly for an adolescent vaping population. The public heightened issue surrounding the increasing e cigarette use in young adults and adolescents justifies the need for urgent action towards a solution.

Speaker 3

Breakthrough therapy designation will help to accelerate our proposed clinical program with more active FDA input. Although there is a general understanding that using e cigarettes is safer alternative to smoking combustible cigarettes, this has led to the perception that e cigarettes or vaping nicotine is safe, resulting in a new younger generation becoming addicted to nicotine. The developing body of scientific and medical evidence is now showing that long term e cigarette use can be harmful and may lead to more severe addiction due to the high nicotine levels in vapes. Long term e cigarette use may also contribute to potential lung injury, asthma, COPD and negative cardiovascular effects. At the annual March meeting of the Society For Research on Nicotine and Tobacco, guidance from experts in the field was presented based on Project VECTOR, which stands for Vaping and Electronic Cigarette Toxicity Overview and Recommendations.

Speaker 3

Several recommendations were presented, which included people who do not smoke should not use nicotine e cigarettes and people who use e cigarettes should avoid long term use of e cigarettes. These recommendations cardiovascular system and exposure to cancer causing chemicals in vaping aerosols as well as preventing sustained nicotine dependence. Breakthrough therapy was developed to expedite the clinical development of products that treat serious conditions, which there is an unmet need and when there is preliminary evidence demonstrating potential benefit. Our justification was that long term vaping may lead to serious conditions, that there are no approved treatments to assist people in quitting and that the positive results we observed in our ORCA V1 trial showed the potential benefit of cytisinicline in this setting. These criteria were all instrumental in granting us breakthrough status.

Speaker 3

We've already submitted a request for a Type B meeting with FDA that will start interactions with their cross disciplinary project management team and will also serve as an end of Phase II meeting for gaining agreement on the development plans for vaping cessation indication. Moving on to our lead indication smoking cessation and the status of the long term cytisinicline exposure trial. In May, we initiated the open label ORCA OL trial, which is collecting long term exposure data on cytisinicline. ORCA OL is recruiting subjects who participated in our previous Phase II and Phase III trials. We are pleased to report that all 29 clinical sites are actively enrolling subjects.

Speaker 3

Enrollment has been going very well and more than half of the proposed six 50 participants have already been enrolled onto the study. Over the next few months, we will be monitoring the treatment discontinuation rate, which is currently very low. The enrollment objective is to ensure that we achieve the required 300 subjects exposed for 6 months at NDA submission. Providing that subject retention rates continue to remain high, we anticipate possibly closing out enrollment in advance of the 650 enrollment cap, possibly within the next 2 months. As a reminder, the primary analysis for this study will be to evaluate the rate of serious adverse events thought to be related to cytisinicline treatment.

Speaker 3

And we have engaged the same independent data safety monitoring committee who had oversight of ORCA-two, ORCA-three and ORCA V1 studies to oversee and review safety events during this open label study. We plan to provide general summary updates following the completion of these committee safety reviews with the first meeting expected to occur in the Q4 and subsequent meetings to be determined by the committee members thereafter. Based on our agreement with FDA, the necessary clinical data from ORCA OL remains on track to support an NDA submission during the first half of twenty twenty five. As we continue our monitoring of subjects being treated in the open label study and their exposure timing, we can further refine our guidance in the future on the NDA submission timing. Overall, I'm very pleased with the rapid progress we have made both in the clinic and with regulators since our last update.

Speaker 3

I'll now turn it back over to John.

Speaker 2

Thanks, Cindy. Turning now to the financial updates. We recently completed a $20,000,000 debt refinancing with Silicon Valley Bank that refinanced our existing debt facility and extended the maturity date from August 1, 2024 to December 1, 2027. This refinancing continues our partnership with SVB and further solidifies their confidence in Achieve and the cytisinicline program. The refinancing also lowers our cost of capital, extends our cash runway and provides access to additional capital as cytisinicline moves through the regulatory approval process with FDA.

Speaker 2

I'll now hand the call over to Jerry for additional financial updates. Jerry?

Speaker 4

Thank you, John. Good afternoon, everyone. As John mentioned, we successfully entered into a debt refinancing agreement with SCB that provides for up to $20,000,000 in availability. Under the terms of this new agreement, the $20,000,000 term loan is divided into 3 tranches. The first tranche of $10,000,000 was received at closing.

Speaker 4

The second tranche of $5,000,000 will be available upon FDA acceptance of the new drug application for cytisinicline and the final $5,000,000 launch will be available subject to SVB's discretion and credit committee approval. The outstanding principal will accrue interest at a floating rate per annum equal to the greater of 7% and the prime rate minus 1%. The loan facility includes an interest only period through December 31, 2025 followed by 24 monthly payments of principal plus interest to the maturity date of December 1, 2027. Upon achieving certain regulatory and financial milestones, there is an option for a 6 month extension to the interest only period and maturity date. Furthermore, the initial outstanding debt including principal and accrued interest subject to certain terms and limitations can be converted into Achieve's common stock at SVB's discretion before repayment at a conversion price of $7 per share.

Speaker 4

Subsequent tranches may be converted based on a 150% premium to achieve stock closing price at that time with a minimum price of $4.85 per share. Importantly, while the loan is outstanding, SEB cannot short sell or hedge achieved stock. We can repay and retire all outstanding convertible debt at any time before conversion by paying a premium based on the repayment date. Let's now turn to the Q2 financials. As of June 30, 2024, the company's cash, cash equivalents, restricted cash and short term investments were $61,300,000 as compared to $66,400,000 for the prior quarter.

Speaker 4

We believe our current cash balance is sufficient to provide us runway into the second half of twenty twenty five. The company incurred a net loss of $8,500,000 for the quarter ended June 30, 2024 as compared to a net loss of $8,200,000 for the same quarter in the prior year. Net loss for the 6 months ended June 30, 2024 decreased to $15,000,000 as compared to $17,200,000 for the same period in 2023. We expect our quarterly operating expenses will increase as we progress forward with the ORCA OL trial. I'll now turn the call back over to John.

Speaker 2

Thank you, Jerry. Smoking remains the leading cause of preventable death, killing over 8,000,000 people globally each year, including nearly 500,000 in the U. S. Smoking is recognized as a major cause of various cancers of respiratory disease and lung injury, cardiovascular disease, type 2 diabetes and dementia. We believe that cytisinicline can help address the root cause of these disorders and have an impact through disease reduction.

Speaker 2

Focusing on COPD as an example, according to the CDC, approximately 80% of COPD is caused by smoking and 38% of the 16,000,000 U. S. Adults with COPD currently smoke. If we are able to help patients with COPD quit smoking, there is potential to significantly reduce the number and severity of exacerbations and in the long term potentially reduce the number of COPD patients. In addition, vaping continues to be an emerging health crisis with an estimated 11,000,000 adults and 2,000,000 middle and high school students using e cigarettes in the U.

Speaker 2

S. The long term health effects from inhalation of vape products that are heavily unregulated is of utmost concern. These statistics highlight the urgent need for effective cessation treatments, especially since no new products have been FDA approved in nearly 20 years. There are no FDA approved treatments for e cigarette cessation and concern is growing as evidence emerges on their long term use. Cytisinicline has the potential to be a 1st in class treatment to address the unique challenges of quitting vaping.

Speaker 2

Currently, there are more nicotine products available than any time in history, which has been fueled by continued innovation in ways to deliver nicotine to consumers. This includes the increasingly popular flavored nicotine products like ZYN, which has seen triple digit growth in recent years. Regardless of the nicotine delivery mechanism, we believe cytisinicline can play a critical role in addressing this health crisis and achieving better long term outcomes for patients. We've had a great first half of twenty twenty four and expect the momentum to carry forward as we look to our objectives for the remainder of the year. We are now focused on closing out enrollment and continuing our focus on monitoring of subjects in the ORCA OL trial, continuing preparations for the NDA submission, which remains on track for the first half of twenty twenty five and conducting the end of Phase 2 meeting with FDA for the vaping cessation indication.

Speaker 2

The support that we expect to receive from FDA having a breakthrough status should further de risk the program and expedite our ability to move through the regulatory approval process. We look forward to providing further updates on the vaping program after our end of Phase 2 meeting with the agency has been conducted. In closing, we are excited about what lies ahead for the company in the coming months. We greatly appreciate the dedication of our trial participants and healthcare providers and the continued support of our shareholders. We remain committed to advancing our mission and in our belief of cytisinicline's potential to help millions of people overcome nicotine dependence.

Speaker 2

In parallel, we believe strongly that we can create shareholder value by bringing to market the 1st new FDA approved nicotine dependence product in nearly 2 decades with the potential to become the market leader and generate substantial revenues. Thank you for joining us today. We look forward to continuing our progress and we will now open the line for questions.

Operator

Thank you. At this time, we will be conducting a question and answer session. And the first question comes from the line of Thomas Flaten with Lake Street Capital. Please proceed with your question.

Speaker 5

Hey, good afternoon everybody. Congrats on all the progress. Cindy, a couple of questions for you. You mentioned the retention rate in your prepared comments. I was wondering if you could share with us what that is?

Speaker 5

And then also can I infer from your comments around potentially ending enrollment sooner that enrollment pace is accelerating?

Speaker 3

Well, the enrollment actually started off in an accelerated manner and we don't give exact numbers, but given that we have over half of the intended 650 kind of tells you how well that enrollment has gone over the last couple of months. Our most important thing now is looking at the discontinuation rate. And if the discontinuation rate remains low and it's like single digits, then we're looking at how many subjects we really need to enroll to get then 300 at 6 months and 100 at 1 year. We certainly don't need 500 to 600 subjects at 6 months and 1 year. So that's where we're looking at when do we then look at closing enrollment early to basically save costs on the trial.

Speaker 5

Got it. And then once you have the 300 patients with 6 months of data, are there any other gating items that we should be thinking about as it relates to completing the NDA package? Or is that pretty much set and you're waiting to staple this kind of to the back of it?

Speaker 3

That is the last piece for the ClinReg for the NDA. I mean, obviously, once you get to 6 months, you have to monitor all the data, collect it, lock the database, write it up. So there is that period of time. But then you feed then or kind of thread the results of that long exposure into the ISS documents that will be ready and waiting for that last piece of information for the NDA.

Operator

Got it. Appreciate it. Thanks so much. And the next question will come from the line of Justin Walsh with Jones Trading. Please proceed with your question.

Speaker 5

Hi, thanks for taking the question. Can you expand on the potential advantages of having vaping cessation specifically on your label versus broader labels focused more generally on nicotine?

Speaker 2

Yes. Thanks for the question, Justin. So, with respect to the labeling, I think the core indication will be smoking cessation for nicotine dependence and there can certainly be some off label usage in other forms of nicotine addiction. But I think with respect to vaping in particular, we think it'd be very powerful to be able to promote directly to e cigarette users given the size of that market. We look at smoking overall here in the U.

Speaker 2

S, there's approximately 28,000,000 adult smokers and the vaping indication is now 11,000,000 and growing. So, it is a very, very large segment and I think to be able to promote as the first and likely only treatment there, we think would be very powerful.

Speaker 5

Great. And a quick follow-up. I don't know how much you can actually say, but I was wondering if there's any color you can provide on potential discussion points leading into your end of Phase 2 meeting with the FDA?

Speaker 3

You want me to take that, John?

Operator

Yes, Cindy.

Speaker 3

Yes. So for the end of Phase 2 meeting, we'll have a list of questions that will all be based that we have smoking cessation as our first indication. The biggest one will be that we only need 1 Phase 3 because of the Phase 2 is a supporting trial. And there'll be other discussions as far as what do we need and any additional safety data because we'll have all the long term exposure from this open label study that should be appropriate for the vaping cessation as well as the smoking cessation indication. So we'll get some good clarity and agreement on what is required so there's no surprises and we can actually then advance to that supplemental NDA faster.

Speaker 4

Great. Thanks for taking the questions.

Operator

And the next question comes from the line of Frank Brisebois with Oppenheimer. Please proceed with your question.

Speaker 4

Hi, this is Dan on for Frank. Thanks for taking the questions. Just quickly one regarding the open label ORCA. We know this is a safety trial, but will you be looking at any efficacy in this trial? Is there anything from an efficacy perspective that you could get from this trial potentially for labeling purposes?

Speaker 4

Any thoughts there?

Speaker 3

Yes, we will be looking at efficacy, especially for retreatment of individuals that have already been treated with cytisinicline as well as individuals that were originally on the placebo seeing it for the first time. FDA definitely views this as a primary safety study. So I'm not sure because it's not a randomized study that we're going to get any of that in the label, but certainly we will be publishing it and we are collecting efficacy.

Speaker 4

Thank you. Thanks for taking my questions.

Operator

And the next question comes from the line of John Vandermosten with Zacks. Please proceed with your question.

Speaker 6

All right. Thank you. Hello and good afternoon. Wanted to ask what your screening success rate is for the OL trial? And then also on that same theme, have you been able to enroll a lot of the 12 week cytisinicline exposure patients and enroll a bunch of those or is it then pretty even between, I guess, the patients that were in the placebo, the 6 week and 12 week?

Speaker 3

Sure. I mean the one nice thing is the screen fail rate. We look at screen sales. The screen fail rate has been half or even lower than what we normally see, which we kind of hopefully expected because most of these individuals had already screened through and were on the previous ORCA studies. So we'd hope the screen fell rate would be low, which it is.

Speaker 3

Interesting, all of the Phase 3 and even the Phase 2 vaping study, 2 thirds of the individuals coming in. So coming in. So we are getting some placebos, which is great because then that means we have more subjects overall treated with cytisinicline. And then we also have those coming in that helps us get to the 6 month and 1 year sooner.

Speaker 6

Okay, great. And when we look at the breakthrough therapy designation that was granted and you kind of look at the way that could help you, I mean, I guess I could see 3 ways where it might help accelerate the trial pace, reduce the cost or increase the likelihood of ultimate approval there. Those three areas, what do you see as the biggest help from this FDA program?

Speaker 3

I think both right now, quicker agreement to what the Phase III clinical trial will look like. And then once that we're getting through that trial, then negotiating a rolling submission. And then obviously upon having it being submitted to priority review. So it's kind of taking time off through all aspects of the development.

Speaker 6

Great. And last question, it was still on the baking theme. You had some monies coming in from the grants. Have we received that all yet? Or are there still funds that are going to be offsetting some of your expenses in the future?

Speaker 6

How do we how does it look on that side of things?

Speaker 2

Yes. On the grant side of things, the vaping Phase II trial, which is where the grant was directed previously, we have received all the funding related to that. So that's now complete. But we'll continue to look for future opportunities in particular given the strong support we've received from NIH and NIDA historically.

Speaker 6

Great. All right. Thank you, Jonathan. Appreciate

Operator

it. And the next question comes from the line of Michael Higgins with Ladenburg Thalmann. Please proceed with your question.

Speaker 7

Hey, guys. This is Farhana on behalf of Michael. Congratulations from us on your progress this quarter. So one question from us. Last week JAMA published a series of papers on vaping.

Speaker 7

And following the recent breakthrough therapy designation, are you hearing any activities from the FDA, the NIH or any other government agencies that may support your development in the vaping indication?

Speaker 2

Yes. Thanks for the question Farhana. We're continuing to track all the activities going on across the spectrum in particular with respect to vaping in particular. So we do expect more support on that front. I think the biggest piece that we're looking to here in the near term would be through the breakthrough designation now that we have that in place with FDA.

Speaker 2

And then as I just mentioned previously, continuing to see if there's additional support we might be able to garner from NIH and NIDA. I think those are the 2 most critical areas. And I think when you look across the overall landscape of what's being done in terms of other existing smoking cessation products being studied across the vaping indication, there really isn't too much happening in that space. So we think driving this program forward quickly can really move the needle in a category that has no approved products currently.

Operator

And the next question comes from the line of Ilya Zubkov with Freedom Broker. Please proceed with your question.

Speaker 8

Good afternoon and thank you for taking my question. My first question is on the ORCO L trial. So given the swift recruitment of trial participants, do you plan to publish any interim results from the trial this year?

Speaker 3

Published? No. When we go and have and complete our Data Safety Monitoring Committee, we will at least give an update as far as where we are with the safety monitoring in general, but right now not publishing it.

Speaker 8

Okay. Thank you. And I have another one on the anticipated TCEEGR trial. I know that it is difficult to discuss the details before meeting with FDA. But as the high risk of vaping for adolescents was mentioned, are you considering targeting this population in e cigarettes study as well?

Speaker 3

Yes, but more in a post marketing kind of arena. So the most important thing for us is to complete a Phase 3 for vaping cessation in young adults. But like our other studies, young adults we define as 18 years and older. So we will have younger adults and looking at that as well for a future potential adolescent program.

Speaker 8

Great. Thank you. I'll pass the

Speaker 6

line.

Operator

The next question is a follow-up from Thomas Flaten with Lake Street Capital. Please proceed with your question.

Speaker 5

John or Cindy, I just wanted to confirm. So assuming you have a good end of 2 meeting with FDA around the end of the year, what would be your intentions be with respect to actually starting a study? Would that be done under your own account? Or would you anticipate working with a partner on that? And what would timing be?

Speaker 5

I'm just thinking from a modeling end

Speaker 2

of Phase 2 meeting, really understanding what's required through the end of Phase 2 meeting, really understanding what's required going forward and seeing what sort of support we might be able to garner from FDA to accelerate that. I think with respect to starting a new trial, it's really probably more middle of next year at the earliest. The focus is going to continue to be getting that NDA on file first half of twenty twenty five and driving the core indication forward to approval.

Operator

Excellent. Appreciate it. Thanks, Joe. Thank you. At this time, we have reached the end of the question and answer session.

Operator

Now I would like to turn the call back over to the management team for any closing comments.

Speaker 2

Thanks again, everyone, for joining us today. We look forward to providing additional updates as we progress through the balance of this year and drive the program forward towards NDA submission in the first half of twenty twenty five. So again, appreciate the continued support and have a great afternoon.

Operator

And ladies and gentlemen, that does conclude today's teleconference. You may disconnect

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