Aptinyx Inc.

remarks, we will open the call for your questions. Please be advised, the call is being recorded at the company's request. At this time, I'd like to turn the call over to Nick Smith, Vice President, Corporate Development and Investor Relations at AppNix. Nick, please proceed.

Thank you, operator. Good afternoon, everyone, and thanks for joining us on today's conference call to discuss AppNix's financial and operating results for the second quarter of 2021. Our press release describing the financial results and recent highlights is now available on our website. Today on our call, Norbert Riedel, our Chief Executive Officer, will review the recent business updates. And then Andy Kidd, our President and Chief Operating Officer, will review progress across our development programs. Followed by Ashish Khanna, our Chief Financial Officer and Chief Business Officer, will review the financial results. In addition, Catherine King, our Senior Vice President of Clinical Development, and Harold Merck, our Vice President of Medical and Pharmacovigilance, will be on the line for the Q&A portion of the call. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements. Please see the forward-looking statements disclaimer in our financial results release issued this afternoon and the risk factors in the company's current and subsequent filings with the SEC. I would now like to turn the call over to Norbert to kick things off.

Thank you, Nick, and hello, everyone. We appreciate you taking the time to join us on this afternoon's call. Before we get to the discussion of our productive second quarter, I am pleased to share that we have set a plan in place to transition the role of CEO over to Andy Kidd, our current president and chief operating officer. While we are announcing this plan now, the change in roles and responsibilities will not become effective until January of 2022. This succession plan has been well thought through and follows on the appointment of Andy to the role of President, which took place last December. Given his deep knowledge of the business and his track record of building and growing teams, the Board of Directors and I are confident that Andy is the ideal person to take over the role of CEO. Since joining AppLinix in 2017, Andy has been crucial to the success of our organization. Leading many of our internal functions and serving as the lead executive on our product development teams, Andy is intimately involved in all aspects of our business. He has been a great teammate for everyone within the organization, and I have no doubt that he will excel in the role of CEO. I am looking forward to continuing my partnership with him during and after this transition. As our R&D execution progresses at an exciting pace and we move closer to the important readouts ahead, now is the ideal time to be initiating this leadership change to ensure continuity during a period of potential significant growth next year. As part of this plan, I will transition into the role of executive chair and will remain actively involved alongside Andy and the other members of our board through and following the major milestones ahead. I remain fully confident in the promise of our innovative technology platform to deliver novel therapeutic options for patients suffering from underserved CNS conditions. And I believe this transition plan is consistent with our focus on recognizing that value for patients and for shareholders. Aligned with the upcoming transition, I am pleased to have Andy deliver the updates on our clinical programs. So Andy, please proceed. Thank you, Norbert.

This is an exciting chapter for Aptodex. I'm honored to have the opportunity to lead a fantastic group of colleagues. I've had a great experience at Aptenix since joining in 2017, and I'm looking forward to continuing the important work our team is doing to bring these medicines to the patients that need them. We're on the cusp of some crucial milestones, and I'm glad to discuss the recent progress across our programs and also highlight several important plans for the future. Let's start with NYX2925, which we're developing as a novel therapy for two indications in the chronic pain area. painful diabetic peripheral neuropathy, and fibromyalgia. At present, each of these indications affect millions of people in just the United States alone, and together represent a substantial unmet medical need. It's especially important to better alleviate pain symptoms with therapies that are safe, well-tolerated, and without abuse potential. We're currently conducting a Phase IIb study of NYX2925 in each of these two indications. We believe that NYX2925 has the potential to address many of the unmet needs in this space and could be a novel and differentiated therapeutic solution for patients who are suffering from chronic pain. We've continued to make significant progress throughout the summer, and enrollment in both of our Phase IIb studies is tracking very well. we remain on schedule to redive data from both studies in the first half of 2022. I'm particularly pleased by the dedication of our team who've implemented measures to streamline enrollment of qualified subjects amid the ongoing pandemic while prioritizing the safety of all involved in the studies. We look forward to providing additional updates on timelines as enrollment progresses. Let's move on to NYX458, our product candidate in development for the treatment of cognitive impairment associated with Parkinson's disease and dementia with Lewy bodies. The cognitive deficits stemming from Parkinson's and dementia with Lewy bodies can place a significant burden on the overall quality of life for both patients and their caregivers. Unfortunately, there are no viable therapies available today that can sufficiently address the decline in learning, memory, and executive function brought about by the progression of these neurodegenerative disorders. We're very excited by the prospects of NYX458, given its novel mechanism and compelling preclinical data in non-human primates. We're currently evaluating NYX458 in a phase two exploratory study to assess safety and tolerability and to detect therapeutically relevant activity on cognitive deficits, utilizing specific measures of attention, memory, and executive function. To recap on some of the study details, this is a two-arm, double-blind study comparing a 30 milligram dose of NYX458 with placebo in approximately 100 patients over a 12-week treatment period. I'm very pleased with the steady progress we've made over the past few months on enrollment, and we remain on schedule to report data from this study in the second half of 2022. While we're starting in Parkinson's and dementia with Lewy bodies, we recognize the broad relevance of positive NMDA receptor modulation and the opportunity to further develop NYX458 across numerous cognitive conditions. Finally, we'll discuss NYX783 and our plans for the next stage of clinical development in post-traumatic stress disorder, or PTSD. PTSD is a very serious and common mental health disorder that can affect people from across a range of backgrounds who've been exposed to a variety of harmful traumatites. The current pandemic has served as a stark reminder of the impact of this disease. There are only two currently approved pharmacotherapies in PTSD, both SSRIs that were approved more than 20 years ago. Due to inconsistent efficacy and tolerability, this remains an area of significant unmet need. In June, we outlined our future development plans in PTSD, which will consist of two well-powered independent studies evaluating daily doses of NYX783. These studies will build on the learnings from our Phase II exploratory study in which NYX783 demonstrated encouraging activity on PTSD symptoms. Both studies will be randomized, double-blind, placebo-controlled studies. Each is expected to enroll approximately 300 patients, include a 10-week treatment period, and use the FDA-accepted endpoint of CAHPS5 total score as the primary endpoint. One study will evaluate one daily dosing of 50 mg of NYX783 against placebo. The 50 mg dose performed well in the prior Phase II study, and we believe the signals we observed in that study show its potential to deliver clinically meaningful effects in a larger study. The other study will evaluate one daily dosing of 150 mg against placebo. Our earlier clinical trials demonstrated a strong safety and tolerability profile, and our selection of 150 milligrams is based on positive preclinical efficacy data. A significant reason that we've decided to conduct two separate studies is to mitigate placebo effects and reduce variability. It's well described that larger numbers of arms in psychiatric studies can increase placebo effects. In addition, as you increase the number of arms and sites in psychiatric studies, you also introduce multiple additional sources of variability that can significantly impact the ability to separate from placebo. We've worked on these study designs with a number of leading experts and also incorporated the feedback received from the FDA during our Type C meeting in April. Based on our discussions in that meeting, if the data are sufficiently positive, we believe these studies can potentially be registration supportive. Of course, that consideration will always be a matter for review by the FDA. With these clinical plans finalized, we expect to commence the 50 milligram study in the fourth quarter of 2021 and the 150 milligram study in the first quarter of 2022. As we approach the initiation of these studies, we remain incredibly excited about NYX783 and its potential to address the significant unmet medical needs associated with PTSD. Across our programs, there is a lot of positive momentum, and the coming year is shaping up to be a very exciting one. I look forward to keeping you updated as we approach these multiple important readouts. With that, I will now turn the call over to Ashish to review our second quarter financial results.

Thank you, Andy. As we make progress across each of our programs, we are fortunate to be supported by a strong cash position. We anticipate our current cash will enable readouts from multiple Phase II clinical studies in 2022 and fund our operations into the year 2023. Beginning with the balance sheet, We ended the second quarter with $129 million in cash and cash equivalents compared to $141 million at the end of 2020. The majority of our spend was focused on research and development related to our ongoing clinical studies across chronic pain and cognitive impairment. R&D expenses were $14.8 million for the second quarter compared to $8.4 million for the same period in 2020. We expect R&D expenses to increase throughout 2021 based on our three ongoing clinical studies, as well as the initiation of our Phase 2B program in PTSD toward the end of this year. We reported G&A expenses of $5.1 million for the second quarter, compared to $4.8 million in the same period in 2020. And finally, our net loss for the second quarter was $19.9 million, compared to a net loss of $12.6 million for the same period in 2020. With that, I'll now turn the call back over to Norbert.

Thank you, Ashish. The next 12 to 18 months have the potential to be a transformational period for Aptonyx. With a strong financial position and a dedicated team focused on the continued execution of these four programs, we expect this to be a very exciting time. We are happy to take your questions now.

At this time, if you'd like to ask a question, please press star then the number one on your telephone keypad. To withdraw your question, press the pound key. And your first question comes line of Laura Chigot with Web of Securities.

Good afternoon. Thanks for taking the question. And congratulations to both Norbert and Andy on the upcoming transition. Maybe one question on the succession plan, and then I have a follow-up. But Norbert, I think you alluded to this in the prepared remarks, but I'm wondering if you could expand on the timing and the rationale for the move now versus later. And again, congratulations to both of you.

Yeah, thank you, Laura. Thank you for the congratulations. So I'm glad you asked the question. So first of all, The transition will not be effective until January of 2022. You know, I have always looked at succession planning as one of the key responsibilities of any CEO. And so we have worked on this really with the board in a very thoughtful and planful way, all the way back to starting with the promotion of Andy to president and CEO last December. You know, when you ask why now, there's personal reasons. I'm going to be at the helm of this organization literally six years as we come to the end of this month. It's been a terrific privilege to serve as the CEO of the company. But I also will turn 64 years old this coming October and want to spend more time with my family. I want to have more time for other activities and commitments I have but with a very clear primary commitment to Aptinix in the form of being the executive chair of the board and remaining an employee of the company. The timing, I felt, was ideal. The board felt the same way after we had completely disclosed next steps in our development of PTSD. And we are still far enough away from our data readout in our pain studies And that seemed to be an ideal window, not to in any way cause stakeholder or shareholder concerns, because I'm, of course, very sensitive to that. And so that's basically the framework that led us to announcing it today. And for it to be seamless and smooth, it will actually be giving Andy and I even more time now to basically translate this change into It would be now in January into the actual transition over, and I think it's a very, very exemplary way of leadership change that I'm quite proud of. So I'll leave it with that, Laura, but thank you for the commentary.

Thank you. Maybe one quick follow-up there. This is probably a naive question, but with respect to the Phase II readouts coming up in the first half of 22, both of the studies we noticed are showing primary completion dates of June in the clinicaltrials.gov listing. So I'd just like to better understand the communication strategy here. Should we be anticipating separate readouts for the trials, or would this be in a single announcement? Thank you, and congratulations again.

Yeah, so Laura, we mentioned before that both trials are enrolling as planned. We will not be able to comment further on the studies and their results until we are closer to completing enrollment. And at that point, I think we can provide a little bit more guidance. But at this point, we are still very confident that first half of 2022 is the timeframe for the result of those studies.

Thank you. Next. And your next question comes live. Mark Goodman with SVB.

Lyrick and six book taking the question. This is really on the line from Mark. Have one quick question regarding the face to be trial was 783. Can you remind us about the rationale for selecting the 1 50 big windows? Even though you shave those responsive observe so far and I do have any I think you mentioned the preclinical data to support . Thanks.

Yeah, happy to answer that. So it's a little bit of a trade-off. And you mentioned the inverse U-shaped dose response. That's one of the factors that went into our thinking in selecting the 150 milligram dose. were the ones I mentioned, you know, the fact that from a safety and tolerability point of view, we're not constrained yet by safety and tolerability in selecting doses. And then our preclinical data. So as we were selecting a dose, we were thinking about the fact that we do have some preclinical data that shows that doses that are higher in the range may be effective. but we're also concerned, to your point, about it going too high on dose because then we would be worried that the inverse U-shape effect would be visible. So it was a balance and a trade-off between those two factors, and I think what we liked about 150 milligrams is that it seems to be both well within the effective preclinical range while also being, you know, well differentiated from the 50 milligrams. And so that's why we settled on 150, but it very much was informed to the point in your question with the inverse U-shape.

Thanks. That's very helpful. And good luck on the CM transition.

Thank you. Thank you very much.

And your next question comes from Charles Duncan with Cantor Fitzgerald.

Yeah. Thanks, Norbert and Andy and team, for taking my question. And let me add my congratulations to both of you and your opportunity set going forward. But I did want to ask you a few questions with regard to 783, in particular on the clinical trial design Could you help us understand where you'll be conducting the two studies? They seem relatively large compared to some we've looked at, and so that's good news. Also, will you include all comers or all types of phenotypes for enrollment? And then do you allow cognitive behavior therapy to occur during the studies?

Thanks, Charles. So thanks for the congrats. And yes, happy to answer all of those questions. I think You know, for the duration, sorry, for the location of the studies, you know, we're going through kind of feasibility right now. I think it's certainly quite possible that we'll be able to conduct both of those studies within the U.S. That's certainly our, you know, our thinking going into that. But we can confirm that, you know, when we're a little further down the line with actually selecting specific sites. That's our intention, though. Then with respect to the phenotype of the patients and all comers, I think our goal, as we've talked about before, is to enroll a broad and representative population with PTSD. That's quite important, something we discussed with something we believe is important. And so in terms of, you know, various different parameters around trauma and patient background sort of characteristics, there will be some diversity there. I think one we've talked about is time-sensitive trauma. patients with full durations of time since trauma outside of 12 months, which is the minimum, and with a cap that will likely be high of at least 20 years or so. But within that, we will undertake some stratification to achieve what we think is a representative sample, actually, for clinical trials, which is to have a population skewed towards the shorter end of time since trauma in terms of the median being less than 10 years and so forth With respect to cognitive behavioral therapy, we will not allow certain types of psychotherapy in the study. Cognitive behavioral therapy is one of them. Exposure therapy is another, and a couple others. Really what you would consider evidence-based and more intensive forms of psychotherapy for PTSD are not allowed. alive during the study. We do allow other forms of psychotherapy, provided there's no change to the regimen of psychotherapy that occurs during the study to be in the background. Very helpful.

Yeah, you answered the question very well, Andy. Last question is regarding reduction of variability or placebo effects. Do you intend to have enrollment criteria that require a certain baseline cap score and or no change or limited change from screen to randomization?

So I think with respect to placebo effects, there are quite a few things that we'll be looking at to attempt to manage the placebo effect. I think some of those are things we'll talk about in more detail at the time that we're initiating the studies when, of course, we can go into detail. you know, detail with, I think, more finality on some of those things. And that will include the role that screening might play in that. I think it's probably better to comment in more detail as we kick off the studies.

Super. Thanks for taking my questions. And again, congrats to you and to Narber.

Thank you, Chuck. Thank you.

Your next question comes from Richard Burrell with Cohen.

Good afternoon, guys. Thanks for taking the question. So I actually have a question on the 458 phase II in Parkinson's disease, dementia, and Lewy body. And Andy, you mentioned that you'll be looking at endpoints in attention, memory. Oh, no, wait. Hang on. Yes. I think it's attention, memory, and executive function. If I asked you to sort of rank order those endpoints in importance to the disease and also sort of which of those three cognitive functions the mechanism suggests you might see the first benefit and the greatest benefit, what would you think? How would you answer?

Yeah, thanks for two. I'm going to ask Harold to comment a little as well, maybe. But I think the simple answer is that they're all clearly linked to NMDA receptor function, actually, and that depending on the individual patient, I think they can all be extremely debilitating. So it's a little hard to rank them in those ways. And I think, you know, the way that they interact with each other also can be, you know – can be disabling, so that if you have deficits in both memory and executive function, for example, that can be more significant problems. I think it's a difficult concept to sort of talk about ranking them. I think the good news is our mechanism should be applicable, and that's why we've selected them, obviously, is our mechanism should be applicable to all. We have different tests for each of them. And I think at this point, what we're really more interested in is a holistic perspective on what does the drug do across and within each of those domains. But Harold, I'll let you comment maybe a little more.

Yeah, so I think what's quite important to keep in mind is that there's a fairly strong excitatory element within this trial. So the trial is served to identify the right patient population. We deliberately extended the patient population from originally just Parkinson's disease dementia to the biologically very similar but broader concept of, let's say, cognitive dysfunction in the context of ipacinuclein diseases. And this allows us to dig a little bit deeper into the data when they are available to see where do we find the sweet spot for those subjects who respond to the best and also in which areas do these subjects respond the best. It would provide the best basis for the following particular phase to be tried.

Got it. And then as you've As you look at PDD versus LBD, have you had conversations with the agency that cognitive dysfunction in either of these conditions is sort of understood to be similar? I'm just thinking about the example with DRP and how the agency's understanding of a condition across different underlying pathologies may change over time?

Yes, I think it's a great question, and it's certainly a discussion to be had. But I think the good news is that there is common underlying biology, to Harold's point. That means that it's quite relevant for us to be studying them, you know, together with the same endpoints and the same drug. And so I think we'll have to wait and see how those regulatory discussions unfold. But I think our side of that is that we think there's a common biology, and we think that these patients are all good patients for the drug.

Got it. Thanks for taking the questions. And your next question comes from the line of Miles Minter with William Blair.

Hi, guys. Thanks for taking the questions, and congrats to Norbert and Andy on the CEO transition. My question's a bit more higher level, and it's more to do with the confidence that in these PTSD trial designs that, if positive, they would serve as the pivotal trials. You guys had the recent FDA interaction at the Type C meeting, and I'm just wondering, like, how confident you are coming out of that. I just ask because there's been... I can count two, maybe three setbacks that have recently been given by the Division of Psychiatry where alignment was with the FDA. And then, you know, once the filing has gone in, it's shocked a few of us. So I'm just trying to get some clarity around your degree of confidence that this is definitely a, at least to support the efficacy claims, this is what you need on those trials if they read out positive.

Thanks. Thanks, Miles. I think what we've been saying is that we have confidence these designs can serve as pivotal, if sufficiently positive, but we understand that that is ultimately going to be a matter of FDA review. The meeting we had was a Type C meeting. It was not a complete end of Phase II meeting. We don't have a full agreement. on everything that has to be contained within an NDA, nor were we seeking that. So I think that the way we were positioning these studies is that they're designed in the same way that pivotal studies should be designed for our FDA discussion. And therefore, as positive, one or each of them, both of them can serve as pivotal studies. But there would still be more work to be done in development beyond that. You know, there would be other aspects of an NDA, for example. I think you alluded to that, that these could only really support certain of the efficacy claims. I don't think we were trying to position it as these are the two pivotal studies that are needed. I think our perspective is more these are two independent studies. we would need two positive pivotal studies to get an approval. It's a matter of discussion as to whether those can be at different doses or would have to be at the same dose. So I think our expectation is that there will be another phase of development after these studies, but that there is a good chance that these studies of positive can serve as pivotal, and then obviously by doing so, hugely de-risk that next stage of development.

Yeah, for sure, understood. And then maybe just to follow up, following up on Shaz's question on the 783 trial designs, you're going to exclude patients with complex PTSD, is that correct?

So formally, because there isn't a separate diagnosis of complex PTSD in the DSM, we will not formally be excluding patients with complex PTSD. There may be other characteristics of complex PTSD that would otherwise be excluded, but as a specific exclusion, complex PTSD will not be one of them.

Okay. Thanks for the questions, and congrats again.

Thank you, Mike.

And your next question comes from Gary Nachman with BMO Capital Markets.

Hi, thanks for taking my question. This is Edmond Huang, filling in for Gary Nathan. Yeah, I just wanted to, I had a question on NYX 78.3 as well. So based on your Type C meeting with the FDA, what would you expect that you would need to show on Cas5 total score to be had considered as registration supportive? And based on your discussions with KOLs, what is actually considered clinically meaningful?

Yeah, so, you know, the key thing is obviously to be able to separate from placebo successfully. And we talked, I think, a lot in our remarks about some of the strategies that we're putting in place to do that. And in the way that the study is powered in order to separate from placebo, of course, it depends a little bit on how well you manage the variants of the therefore what difference in CAHPS 5 scores you would need to separate from placebo. I think our assumption is that a separation in the mid-single digits on the CAHPS 5 score would be sufficient to show that separation. You know, it's interesting when you talk to KOLs, though, they talk more about factors like change from baseline, the number of patients that have a particular magnitude of response rate from baseline. In the real world, obviously, that's how they think about whether a drug should be prescribed to a given patient. So I think there's a little bit of a balance of wanting to show a good response rate across a, you know, reasonably strong number of patients, but then also satisfying, of course, the requirement to design the study in a way where we can separate from placebo with still a clinically meaningful improvement in Cas5. And we think that somewhere in the single digits is probably that. Got it. Thanks.

And your last question comes from the line of ROM. with HC Wingright.

Hi, thanks for taking my questions and congrats Norbert and Andy on the role transitions here. Just wanted to clarify a couple of points relating to the efficacy outcome measures in the 458 trial. My understanding is that some of these outcome measures are specifically evaluating psychiatric domains, including suicidality. Can you talk a little bit about those in the context of the PDB and LDB indications, as well as their potential implications if you see robust impact on these measures for development of 458 on a more neuropsychiatric level?

So that specific measure, Ram, is really being included more as a safety measure. So, you know, it is very important in that study to assess safety and colorability. You know, the key outcomes that we're looking at for efficacy are the specific neurocognitive tests that we talked about a little bit directed towards the three cognition domains, attention, memory, and executive function. neurocognitive tests in total. We'll be looking at those primarily as we assess efficacy. So I think the specific scale you mentioned is more on the safety side.

Okay, great. And then with respect to the CAHPS 5 measure, assuming that you see a significant impact on that particular efficacy measurement, What do you think the read-through might be for utilization of 783 in other stress-related disorders? How readily extrapolable, if you will, might the impact on the CAHPS-5 measure be?

I mean, it's a difficult question to answer because the CAPS-5 is clearly an instrument specifically, you know, developed for PTSD. It essentially obviously contains the diagnostic criteria for PTSD. So it's a little difficult to comment on that, I think, and particularly because the pattern of response in different questions may lead people to draw different conclusions. I think right now, you know, we're really mostly focused on PTSD with 783. The other indications that we have talked about as being interesting for us to develop 783 in lie in the area more of substance abuse and alcohol abuse. We will not likely see very much on that in this study because we are excluding substance and alcohol abuse from the study. But I think we do still have plans to pursue those indications We had great preclinical data in those areas, and I think if we would move forward to those areas, that's one of the very high up the list of areas we would next go into in terms of clinical studies.

Thank you.

I'm sure there are no further questions at this time. I'd like to turn the call back over to Norbert for any closing comments.

Thank you, operator, and thank you all for your questions. We appreciate your time and attention. Please be well and enjoy the rest of your day. Bye-bye.