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spk01: Ladies and gentlemen, thank you for your patience. Please remain on the line. Your conference will begin momentarily. Again, we do appreciate your patience. Please remain on the line. Your conference will begin shortly. Thank you. Amen. Thank you. Good day, ladies and gentlemen, and welcome to Achieve Life Sciences third quarter 2022 earnings conference call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Nicole Jones, CG Capital Investor Relations. Ma'am, the floor is yours.
spk10: Thank you, Operator. On today's call from Achieve, we have John Binsich, Chief Executive Officer, and Jerry Wan, Principal Accounting Officer. Achieve Management will be available for Q&A after the prepared remarks. 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 ACHIEVA 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.
spk03: Thank you, Nicole, and thanks, everyone, for joining us today. It was yet again a busy and exciting quarter for Achieve as we continue to advance cytosinicline through the clinic and closer to becoming the first new prescription treatment for nicotine dependence in nearly two decades. In September, we announced completion of target enrollment in our confirmatory phase three ORCA3 trial for smoking cessation. And just last week, we announced the earlier than expected completion of enrollment in our Phase II ORCAv1 trial for nicotine e-cigarette or vaping cessation. As a reminder, the ORCA III trial is the second and final randomized Phase III trial required for FDA submission and ultimately marketing authorization in the U.S. The design mirrors that of the previous ORCA II trial that read out with overwhelmingly positive results earlier this year. Both trials were designed to evaluate the smoking cessation efficacy, safety, and tolerability of three milligrams cytosinicline dosed three times daily over a period of either six or 12 weeks compared to placebo. The trials also share the same primary endpoint to evaluate smoking abstinence during the last four weeks of treatment, which is the FDA's approvable endpoint for smoking cessation medications. The outcome of ORCA2 further enhanced our belief that cytosinicline, if approved, has strong potential to become the new gold standard for the treatment of nicotine dependence. With single-digit rates of adverse events, cytosinicline's side effect profile is substantially better than what has been seen in currently available treatments. From an efficacy perspective, the odds ratios we observed in ORCA2 were unprecedented. With six to eight times higher odds of quitting, at the end of treatment compared to placebo. Additionally, our quit rates were impressive despite the highly addictive study population and the execution of the trial during a pandemic. We hope to see similar results from ORCA3 and look forward to sharing those with you in the second quarter of 2023. Vaping continues to be an important topic on a global scale. particularly with the alarming rate of adolescent users and new data reporting the potential harmful impacts to cardiovascular and respiratory health. The CDC released data last week indicating more than 2.5 million high school and middle school students were current users of e-cigarettes in the U.S. alone. There are also more than 11 million adult users of nicotine vape products in the U.S., and no treatments are currently approved specifically for vaping cessation. We pursued the ORCAv1 trial with the expectation that cytosinicline would be of interest to this growing and underserved population. The swift recruitment of ORCAv1 appears to reinforce our assumptions of the demand for treatment within this population. Recruiting at only five clinical trial sites, ORCAv1's target enrollment of 150 subjects was completed in roughly four months. Regarding the design, ORCAv1 will evaluate 12 weeks of cytosinicline versus placebo. As with the other ORCA trials, all participants will receive behavioral support throughout the study. The primary objective will be to evaluate for successful nicotine vaping cessation, defined as weekly abstinence for the last four weeks of treatment, with cotinine levels as biochemical confirmation of abstinence. Top-line data from ORCAv1 is also expected to be reported in the second quarter of 2023. With the two trial enrollment milestones behind us, we turn our attention to three key priorities over the coming months. First, continuous engagement with the ORCA III and ORCA V1 clinical trial sites and our third-party clinical research organization to ensure data reporting accuracy and adherence to timelines. Second, extensive preparations to support an NDA filing in the U.S. post-successful ORCA III trial results, including the completion of the remaining supportive trials required for filing. Third, commercial readiness, including launch preparedness activities and partnering discussions with interested parties who also believe in the immense potential of cytosinicline. Also, as part of our commercial readiness objective, we continue to work closely with our manufacturing partner, SoPharma, to ensure adequate commercial capacity at launch. As we announced today, SoPharma recently invested more than 3 million euros to complete the build-out of a new dedicated cytosinicline API purification suite at its primary manufacturing plant in Sophia. The new API suite complements SoFarm's capacity to produce nearly 3 billion tablets annually. I would now like to turn the call over to Jerry for the third quarter financial update.
spk05: Thank you, John. I will be providing an update on our cash position as of September 30, 2022, and reviewing our operating expenses for the third quarter. As of September 30th, 2022, the company's cash, cash equivalents, short-term investment, and restricted cash were $18.2 million, compared to $43 million as of December 31st, 2021. Our cash forecast includes reimbursements from the awarded $2.5 million grant received from the NIH to support the Phase II ORCAv1 trial to evaluate the use of cytosinicline as a treatment for cessation of nicotine e-cigarette use. As a reminder, approximately half of the costs from the ORCA V1 trial are funded through the grant from the NIH. With respect to our statement of operations, net loss increased to $13.1 million for the quarter ended September 30, 2022, compared to $6.7 million for the same quarter of 2021. Net loss for the nine months ended September 30, 2022, increased to $31.1 million, compared to $26 million for the same period of 2021. Operating expenses increased in the third quarter with the achievement of targeted enrollment in our ORCA III trial and initiation and enrollment in our ORCA V1 trial. We expect our quarterly operating expenses will remain elevated in the fourth quarter of this year before reducing in the first half of 2023 as the ORCA III and ORCA V1 trials reach completion. That concludes my financial remarks, and I will now turn the call back over to John.
spk03: Thanks, Jarek. 2022 has been a pivotal year for Achieve, with key highlights being the successful phase three trial results and completing enrollment in two other important studies. We are pleased that we continue to deliver on our milestones and the commitments we have made to bringing forward this important new treatment. Smoking and nicotine addiction directly impacts more than a billion people around the globe. In the U.S. alone, there remain more than 30 million people who smoke, and nearly half a million people die each year due to smoking-related illnesses. In an analysis we recently conducted with current smokers who want to quit, 80% overall stated they would be interested in a new smoking cessation product. In the segment we believe will be most appropriate for cytosinicline, 93% desired something new. The current treatments that are available have a high dissatisfaction rating from both smokers and prescribers, and new options are long overdue. More needs to be done to help people who want to quit and to improve and extend their lives. We believe we have a unique opportunity and responsibility to make a real difference with cytosinicline. Again, thanks all for your continued support in joining us today. I'd now like to turn the call over to the operator and open the line for questions.
spk01: Thank you. The floor is now open for questions. If you do have a question, you may press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's star 1. And our first question comes from Thomas Flatton from Lake Street Capital. Go ahead, Thomas.
spk07: Hey, guys. Thanks so much for taking the questions, and congrats on all the progress. I was just curious, John, any insight into, and I might have missed this, I apologize, publication of Worker 2?
spk03: Thanks, Thomas. Appreciate the question. So this is an activity that we are actively engaged in, in particular with Dr. Nancy Rigotti, who is the primary investigator on the ORCA-2 trial. So we currently have a draft manuscript that's being reviewed, and we hope to get that submitted in the near future.
spk07: And then on the SOFARMA expansion, was that done specifically to support your pending approval and launch?
spk03: That's correct. So the new API suite that was just recently completed, that is 100% dedicated to cytosinicline. And that was, you know, in furtherance of making sure that we've got, you know, appropriate throughput as we look to move this program forward to market.
spk07: And I'm assuming you guys are going to do a, you know, a pre-NDA meeting with FDA. And if that's incorrect, please let me know. And is it your intention to discuss with them the ability to squeeze in the vaping data into a potential label expansion this early? Or do you think there's other steps that are required in the interim?
spk03: Yeah, let me hand that one over to Dr. Jacobs.
spk02: Hi. Yes, we will be looking at including the vaping study as safety data. We won't have enough efficacy because that's a small phase two, but what we would be doing is discussing with FDA after we get approval for smoking cessation that we would only need to have one phase three study to add then vaping onto the indication in the label.
spk07: Excellent. Thanks, guys. Appreciate you taking the questions. Thanks, Thomas.
spk01: Thank you. And our next question comes from Francois Britois from Oppenheimer. Go ahead, Francois.
spk06: Thank you for taking the question here. So I'm just wondering how are you seeing Generics doing and, you know, if doing pretty well, how do you see any read-through for your product? And then just any updates on Chantix being removed from the market here?
spk03: Yeah, thanks, Frank. So we have been monitoring the first generic entrant, which has been from EndoPharma. And they did put out their Q3 earnings. And I think as we've indicated previously, they look to be on a run rate to achieve $300 million in sales here in 2022. And that is roughly 50% of the script volume that we saw with Chantix before it was withdrawn from the market last year. And keep in mind that Endo doesn't have reps on the ground. They're not marketing this in a way that a branded product would be. So I think that's quite impressive to see a run rate like that with what we've seen to be a fairly disliked product in VerenaClean. In terms of Chantix, the brand coming back to the market, we haven't seen any new indications from Pfizer in terms of a timing for that. So at the moment, it continues to be off the market in terms of the brand, and we'll continue to monitor to see if that changes here in the future.
spk06: Okay, and I'm just wondering, you know, any thoughts on the implication of a generic doing well for your product?
spk03: Yeah, I think, you know, we obviously, it helps solidify the size of the market that we're going into. So I think seeing, you know, a generic out there, you know, selling, you know, a healthy amount of scripts, I think does provide a nice tailwind. Again, given the differentiation that we see with cytosinicline, you know, being, you know, having single digit rates of adverse events, strong efficacy, as well as a shorter course of treatment option. I think it bodes well, you know, that it will resonate well in what continues to be a very robust market. One of the things that we are, you know, we will also continue to monitor for is, you know, further generics entering, but so far it looks to be only endo that's available today.
spk06: Understood. And then in terms of the e-cigarettes here, the V1 trial, is there any chance maybe compare and contrast the study designs between ORCA and the V1, Orca V1, and any reasons that e-cigarette cessation wouldn't, maybe cytosinicline wouldn't work as well for this type of nicotine addiction?
spk03: Yeah, so if we just think about the mechanism of action for cytosinicline, it's specifically targeting the nicotine receptors in the brain. And so You know, we think it should have applicability on a broad basis for various forms of nicotine addiction. You know, the data we've seen historically has all been focused on cigarette cessation. So we've got a high degree of confidence it works there. But it should have applicability, whether it's vaping, chewing tobacco, snooze, any form of nicotine addiction. But we haven't tried it there, so we've got to run the experiment and see if we can, again, show that. that efficacy in this new segment. And this is, you know, from a market perspective, the category that we're most excited about. I think when you look at 30-plus million e-cigarette users here in the U.S., the e-cigarette market is the next largest segment behind it with more than 11 million users. So we think it's the right place to be. We see that as a segment that will only grow over time. as big tobacco continues to redirect their marketing dollars there. And as we mentioned on the call today, seeing more and more data points coming out around the harms associated with e-cigarettes, we do see more and more folks in this category looking for solutions to help them quit, and we think we can be a viable solution there.
spk06: All right. Thanks, John, and congrats on the progress.
spk03: Yeah, thanks, Frank.
spk01: And our next question comes from Michael Higgins from Landberg Thalman. Go ahead, Michael.
spk09: Thanks, Amber. Thanks, John, for taking the questions. And congrats for me as well on ORCAv1's enrollment and the progress in your development efforts. A couple questions on the soil pharma construction of the API suite. Just trying to understand what are the next steps going forward here into gaining FDA approval of that supply and then the obligations that they additionally may have to you guys. Thanks.
spk03: Yeah, thanks, Michael. So, you know, the API suite, you know, we see as a nice milestone, you know, just in terms of our partnership with SoPharma and getting a dedicated facility specifically for our product. And I think having that in the same location as their tableting facility in Sophia, which is, you know, a less than 10-year-old facility, really is state-of-the-art, computer-controlled, I think, you know, puts their best foot forward as we think about moving this forward to an NDA submission. So I think there will be a lot of efforts as we move ahead to an NDA filing, continuing to work with SO Pharma to make sure that they are ready for an FDA inspection. And so that is a high area of focus for us as we drive things forward and parallel in the clinic with ORCA3 data coming together in the second quarter of next year.
spk09: Just to follow up with that, are you able to share with us when the FDA may be coming in to take a look at that facility?
spk03: Yeah, in terms of timing, you know, it will be unlikely that the FDA makes any visits until after an NDA is on file. So, we're still, you know, more than a year out from, you know, an anticipated NDA filing date. So, between now and then, again, we'll continue to be working with SOFARMA to make sure they're prepared for a future inspection.
spk09: Makes sense. Turning to ORCAv1, what can you share with us, and you may not be able to, but if you could share with us any makeups of the patients that have been enrolled, such as how many are dual users, age, duration of smoking, that sort of thing. Thanks.
spk03: I think for this one, I'll hand this over to Dr. Jacobs again.
spk02: Sure. For the study, no one could be dual users. That's just too complicated. So the subjects in the vaping study were vaping, nicotine only. And the demographics, we're seeing a younger crowd, obviously, where they're in their 20s and 30s versus the smoking cessation. Most were in their 40s, 50s, and 60s. So it will be a younger population in this study.
spk09: Thanks, Cindy. Do you know if the patients were receiving any text messages or anything unique about the what's called standardized behavioral support? Thanks.
spk02: Yeah, there is no really standard behavioral support for vaping cessation, so we basically took a lot of the materials for smoking and applied it then in a vaping cessation. We did this with our PI, Dr. Nancy Rigotti, and our key opinion leaders in the area. So the study does have standardized vaping cessation material. There was no, like, elaborate text messaging for that. We obviously have texting as far as taking meds on three times a day. That's part of the study. But everyone has the same counseling for stopping nicotine dependence. Basically, we're focusing on that when they come into the clinics every week as well.
spk09: That's helpful. And then one last one maybe you can help with here is the I think it was Q1 we're looking for a rinally impaired patient trial to finish up in the Phase I QTC study.
spk02: Still on track for those? We'll be initiating those by the end of this year, and so they will be completed sometime early to mid-next year.
spk09: Sounds great. Appreciate it. Thanks, guys.
spk03: Thanks, Mike.
spk01: And our next question comes from John Vandermortzen from Zax. Go ahead, John.
spk04: Hey, thank you. And John, Jerry, Cindy, good afternoon to you guys. I wanted to extend the question on the demographics of the patients. They were younger. Any other details you can give us on, you know, perhaps socioeconomic makeup or something else about them that perhaps is different than the normal smoker?
spk02: Yeah, we did not collect any socioeconomic information as they came in. We do see that, you know, roughly females and males are coming in, maybe a little more females, but that, you know, it's pretty average. I think the younger age is probably the one that stood out the most. Like I said, in the 20s and 30s where, you know, our average on ORCA2 was about late 50s. Okay.
spk04: And I think vapors are actually taking a material amount more of nicotine than smokers are. Does that change the potential efficacy of cytosine decline in any way? You know, maybe perhaps a longer duration treatment or something may be more effective or shorter. I'm wondering if you have any comments on that.
spk02: Well, we are collecting the amount of nicotine in their vaping. You know, there's so many different vaping devices. So we will have that information to do correlations to see if there is any difference right now. The only stratification factor is whether they at one time were smokers. They couldn't be smokers, obviously, and vaping, but we do have history as far as their previous nicotine consumption, whether they were smokers, they've always been vapers. Those kind of demographics we will have to be able to then look at the efficacy data in comparison with those demographics.
spk04: Okay. And last question is just on what the cash burn might be over the next 12 months now that you've completed the two, completed enrollment for the two final trials that you're working on.
spk03: Sure, yeah, on the cash burn side of things, as Jerry mentioned earlier on the call, you know, we would expect the burn to remain elevated here in the fourth quarter of this year, just given the heavy lift still with ORCA 3 as well as ORCA V1. And then as we get into 2023, we would expect that to start to come down. as those studies wrap up through the middle of the year. Got it.
spk04: All right. Thank you, John. Appreciate it.
spk01: Again, ladies and gentlemen, it's star one to ask a question. And our next question comes from Jim Malloy from Alliance Global Partners. Go ahead.
spk08: Hey, John. Thanks for taking my question. I was wondering if you could talk a little bit about how would you characterize sort of the partnership environment here as you're getting close to the finish line? Has it Has the dynamic changed at all? And then what really do you think, I know it's hard to tell with partnerships, what do you think triggers the partnership? Will someone pull the trigger in advance after the data, FDA approval? How do you guys see that playing out on your end?
spk03: Yeah, thanks for the question, Jim. On the partnership side, we'll say we've seen some kind of increased momentum on the other side of the ORCA II results. So that has been encouraging to see more folks come to the table. You know, I think in terms of a trigger, it's always hard to know. You've got to put yourself in the other shoes in terms of, you know, what's going to get them over the hurdle to go ahead and move forward with a term sheet. But we have and continue to believe that ORCID 3, as well as ORCID V1, is going to be an important measure. The smoking cessation indication. And I think ORCA V1 from a potential market expansion opportunity into a category, you know, that frankly doesn't exist today. So we have heard strong receptivity in terms of, you know, having the ability to move forward in the vaping category as well. So I think it's a culmination of things, but we do see the milestones that we'll expect to see in the second quarter of next year being important to those discussions.
spk08: Excellent. I think in the past you've discussed attempting to synthetically create the API versus the current tree grow. Any updates on where that stands? Do you think that's something that eventually will come along or is the synthesis just not worth the effort given the fact you can get it all you want from a tree?
spk03: Yeah, good question. So on the synthetic side, this is an area that we've looked into over the past several years in terms of looking for alternative ways to produce this outside of getting more plants in the ground. So far, that's proven elusive, just given what nature produces. It's not something that's easily replicated in vitro. So it's something we'll continue to look into. It's not something that we're actively exploring or researching currently, but we do continue to look for other ways to solve for that. But so far, it looks like we'll continue to focus on natural sourcing for the foreseeable future.
spk08: Final question for me. Thank you for that. It looks like, you know, your scientists are going to have some free time coming up here second half 23, or at least as ORCA 3 runs out. Any thoughts to the next things to bring in, if anything else makes sense to bring in?
spk03: Yeah, good question. You know, we've, you know, often looked at, you know, what might be complementary to what we're working on. I think for us, The most seamless expansion has been into the vaping indication and leveraging cytosinicline across, at the moment, other nicotine addictions. But as you may be aware, there could be other addictions outside of nicotine that could be applicable for cytosinicline. But it's something that we're always kind of scanning the horizon to see if there's other assets that may make sense that are complementary. And I think if things continue to progress successfully, you know, it's something that we will continue to evaluate.
spk08: Great. Thank you for taking the questions.
spk03: Thanks, Jim.
spk01: And at this time, I would now like to turn it back to Mashman for any closing remarks. Thank you.
spk03: Thanks, Operator, and thanks, everyone, for joining us today. You know, we're excited about continuing to deliver on our milestones, having both of our, you know, current pivotal trials now fully enrolled with ORCA 3 as well as ORCA V1. And we look forward to the continued progress and bringing forth the trial results to everyone in the second quarter of next year. So appreciate everyone's continued interest. We look forward to providing further updates in the near future.
spk01: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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