Aptinyx Inc.

Good afternoon and welcome to the APTENIX third quarter 2022 financial results conference call. At this time, all participants are on listening mode only. Following the formal remarks, we will open up the call for your questions. Please be advised this call is being recorded at the company's request. At this time, I would like to turn the call over to Patrick Flavin, senior manager of corporate development and investor relations at APTENIX. Patrick, please proceed.

Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Apptonix's third quarter 2022 financial and operating results. We invite you to visit the investor section of the Apptonix website to view our press release describing financial results and business highlights from the third quarter of 2022. On today's call, Andy Kidd, our President and Chief Executive Officer, will discuss our business and clinical development progress. Then Ashish Khanna, our Chief Financial Officer and Chief Business Officer, will review our financial results. In addition, Catherine King, Senior Vice President of Clinical and CMC Operations, is on the line for the Q&A portion of the call. I would 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 statement disclaimer in our financial results release issued this afternoon and the risk factors in the company's current and subsequent filings with the SEC. It's now my pleasure to turn the call over to Andy.

Thanks, Pat. Good afternoon, everyone, and thank you for joining us on today's call. The past few months have seen several major updates to our pipeline of clinical stage programs. In August, we announced that NYX2925 did not meet its primary endpoint in our Phase 2b study in fibromyalgia. and that we do not intend to focus our current resources on further development of NYX2925 in chronic pain. This outcome was obviously disappointing and underscores the significant challenges that exist in chronic pain drug development. Despite our disappointment in that result, we continue to have confidence in the potential of the remaining programs on which we focused our energy and resources, NYX458 in cognitive impairment and NYX783 in PTSD and opioid use disorder. We've always viewed our platform and pipeline as providing diversification of clinical risks. While our drugs are all derived from a common chemistry platform focused on NMDA receptor modulation, NMDA receptors play different roles in our different clinical indications. Therefore, our clinical stage pipeline provides multiple shots on goal with largely independent clinical risks, and we're looking forward to all of our remaining data readouts expected in 2023. I'm happy with the progress we've made over the last few months in positioning ourselves for these readouts. In August, we completed enrollment in our phase two study of NYX458 in cognitive impairment and expect to report data from the study in the first quarter of 2023. This exploratory study is designed to evaluate the role of NYX458 in improving cognitive function in patients with mild cognitive impairment or dementia associated with Parkinson's disease or dementia with Lewy bodies. Given the huge need for novel therapies in these disease areas, a positive signal should enable us to move into a larger study that we hope could serve as a pivotal trial and would position NYX458 as one of the few late-stage development programs for Parkinson's cognitive impairment. In addition, we've made steady progress on enrollment in our Phase 2b study of NYX783 in patients with PTSD and remain on track for a data readout in the second half of 2023. NYX 783 is also being developed for the treatment of opioid use disorder through research funded by a recently finalized $5.6 million grant from the NIH awarded to researchers at Yale University School of Medicine. Together with Yale, we expect to commence a phase one study of NYX 783 by the end of this year and complete it in the second half of next year. Importantly, we expect our existing cash resources of over $65 million provide operational runway into 2024 and support the data readouts from each of our clinical development programs. Let's discuss the Phase 2 study of NYX458 in cognitive impairment in more detail. The study completed enrollment in August with a total of 99 patients. The majority of these patients have a diagnosis of mild cognitive impairment or mild dementia associated with Parkinson's disease, with fewer patients diagnosed with dementia with Lewy bodies. The study is randomized, placebo-controlled, and double-blinded, and we'll evaluate 30 milligrams QD of NYX458 versus placebo over a treatment period of 12 weeks. Since this is the first time we're evaluating NYX458 in patients, the primary endpoint is safety and tolerability, and the efficacy endpoints are exploratory. We're taking a thorough approach to characterizing the efficacy profile of NYX458 by incorporating a range of cognitive assessments at secondary and exploratory endpoints. Each of these endpoints is designed to measure specific aspects of cognitive function. The first set of endpoints is based on six computerized neurocognitive tests provided by Cogstate, a leader in brain health assessments. These include the following tests, continuous paired associate learning, Groton-Mays, the identification test, international shopping list, and one-back and two-back tests. This battery of tests was chosen because they focus on specific aspects of cognition that are impaired in Parkinson's disease. We will assess changes from baseline and versus placebo in each individual test, as well as a cognitive composite score and four sub scores reflecting the different cognitive domains assessed by the tests. The cognitive composite score will combine the results of all six tests and provide a key measure of the overall cognitive effects of NYX458. The subscores are each based on different subsets of data from the six neurocognitive tests. There is a subscore for each of the following cognitive domains, attention, working memory, learning and memory, and executive function. In addition to endpoints based on the neurocognitive tests, we're also measuring endpoints related to everyday function. The ECOG-12 is a simple instrument that measures the patient's assessment of their performance on 12 functional abilities related to cognitive performance. The PDAC-15 is another instrument that assesses the extent to which cognitive impairment from Parkinson's disease impacts 15 activities of daily living. We're also measuring clinicians, patients, and caregivers' assessments of the severity and change in overall Parkinson's symptoms using the CGIS and CIVIC Plus scales. Together, all of this data will enable us to determine whether NYX458 shows a signal of improved cognitive performance and will also give us a sense as to what extent this improved cognitive performance impacts patient function. Our goal is to assess the nature and magnitude of the effects of NYX458 in order to guide the design of larger late stage studies. We hope to see a signal on overall cognitive performance and associated signs of functional improvement that could then be confirmed in future studies. Our immediate plans, if the data are positive, would include meeting with FDA to discuss the requirements for an NDA in this area and the design of our next clinical trial. Mild cognitive impairment and dementia associated with Parkinson's disease represent a significant area of unmet medical need and, accordingly, commercial potential. We believe this study will offer key insights into NYX458 therapeutic potential in this area and that the value creation from positive data should be substantial. We've worked hard to bring this study close to the finish line, and we look forward to reporting these results in Q1 of next year. Let's move on to NYX783. NYX783 is currently being evaluated in a Phase IIb study in patients with post-traumatic stress disorder, or PTSD. This study is evaluating 50 milligrams of NYX783 QD versus placebo in approximately 300 PTSD patients over 10 weeks of treatment and utilizing the change in CAHPS 5 total score as the primary endpoint. Key secondary endpoints include clinicians and patients' global impressions of disease severity and improvement. During Q3, we've completed activation of the full complement of study sites, all of which are located in the U.S., and we've seen our enrollment progress at a steady pace. As such, the study remains on track to report data in the second half of 2023. NYX783 is also in early clinical development as a novel therapy for the treatment of opioid use disorder, or OUD. Last week, we announced the finalization of a $5.6 million NIH grant awarded to our research collaborators at Yale University School of Medicine. The grant was issued under the NIH's Helping to End Addiction Long-Term, or HEAL, initiative and will fund an upcoming phase one study, as well as a subsequent larger proof of concept study to be initiated once the phase one study is successfully completed. Phase one drug-drug interaction study, which is being conducted by the researchers at Yale, is set to begin by the end of this year and is expected to complete in the second half of 2023. This study is an important safety and regulatory requirement, enabling later stages of development in OUD. It's an inpatient study that will assess the safety, tolerability, and pharmacokinetics of NYX783 in combination with oxycodone in individuals who use opioids. The primary outcomes of the study will evaluate a variety of safety-related measures. Secondary outcome measures will evaluate opiate withdrawal and symptom scales. Preclinical data from NYX783 and models of OUD, which served as the foundation for the grant and the phase one study, will be presented at the Society for Neuroscience or SFN annual meeting in San Diego next week. We're excited for this phase one study to commence and are pleased to be expanding the clinical evaluation of the therapeutic potential of NYX783 in a capital efficient manner. I'll now hand it over to Ashish to review our quarterly financials.

Thanks, Andy. Starting with the balance sheet, we ended the third quarter of 2022 with $66.5 million in cash and cash equivalents, compared to $106.1 million at the end of 2021. During this past quarter, we completed a handful of one-time payments related to closeout of our Phase 2b studies of NYX 2925 and chronic pain, securing manufacturing capacity, payment of major insurance policy premiums, and other corporate expenses. As these were planned and non-recurring payments during the quarter, our cash burn over the third quarter of 2022 was higher than our projections for expenditures going forward. Based on our projected expenditures through the remainder of this year and through 2023, we anticipate our existing cash balance will support operating runway into 2024. As Andy mentioned, this runway should be sufficient to enable data readouts from each of our ongoing clinical development programs. The majority of our spend during the quarter centered around research and development related to our clinical studies. R&D expenses were $10 million for the third quarter of 2022, compared to $16.2 million for the same period in 2021. The decrease in R&D expenses was primarily driven by the completion of our Phase IIb studies of NYX2925 in DPN and in fibromyalgia. We reported GMA expenses of $4.6 million for the third quarter compared to $4.9 million for the same period in 2021. Finally, our net loss for the third quarter was $15.3 million compared to a net loss of $21.2 million for the same period in 2021. I'll now turn the call back over to Andy.

Thanks, Ashish. We are excited to move into next year with the data readout. from our Phase 2 study of NYX458 and cognitive impairment in the first quarter, and with two re-diets from NYX783 expected later in the year. We're happy to begin taking your questions now.

If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by 2. Again, to ask a question, it's star 1. Our first question comes from Charles Duncan with Cantor Fitzgerald. Your line is now open.

Super. Hi, Andy and Ashish. Thanks for taking our questions and congrats on a decent quarter of progress. I wanted to start with a couple of questions on 458, particularly along the lines of if you could characterize the patient or the sample that you enrolled in the study Are these relatively late-stage patients? I think you mentioned that they had mild cognitive impairment, but are they unstable DOPA, L-DOPA? And also, do you think that ambulation or on-time, you know, on-time rates may be a compounding variable?

Yeah, thanks, Charles. It's Andy. So they are patients who will have, for the most part, as I mentioned, mild cognitive impairment or dementia at the milder end of the dementia scale. And that's kind of consistent with our inclusion criteria. We set a range on the Montreal cognitive assessment of 15 to 25, which is pretty much where that lands, MCI or mild dementia. As to their motor symptom severity, We did obviously try to exclude patients from the study whose motor symptoms were likely to be, you know, severe enough that they would interfere with the conduct of the study or with the administration of the cognitive tests. So that would likely mean that, you know, there's a range of how long these patients will have had Parkinson's disease and how severe their symptoms are, but we certainly want to exclude patients where it might confound the measurement of cognitions.

Okay, and can I assume that they are all remaining relatively independent or are they long-term care patients? And then I had a question about the ambulance.

Yeah, so they, you know, with mild dementia, they may or may not be, you know, fully independent. That's obviously one of the criteria for diagnosing dementia is that there is some impairment in function. But importantly, all patients in the study have to have a caregiver that's available to provide their assessment and also support to the patient. So even if they are not independent, they will have a caregiver in the study with them.

OK. And then you talked about cog state as well as, I guess, assessments of everyday function. I'm kind of wondering if you have a favorite or what you are most intrigued with reading out. And then when you think about subsequent steps, let's assume the study reads out positively, is there a preferred endpoint for, I'll call it registration or registration-enabling studies, and what would that endpoint be? Thanks.

Yeah, great question. So the from from the different endpoints, I think, as I mentioned, our hope would be that we see an effect on the cog state composite score, because that would be the clearest demonstration of an impact on overall cognition. And then I think we would like to see some evidence of improvement on the activities of daily living. The question there is with this sample size, how sensitive those instruments are, but I think we would certainly like to see at least a trend to improvement on the activities of daily living. So those are the endpoints that we'll probably scrutinize most closely. And then related to that, the reason for that in large part is because of the second part of your question, which is what would the endpoints be in a subsequent study? And we think that there's a range of different instruments that are all validated that could be used in a larger study, but they all have some combination of a test of cognitive function that is more similar to general cognitive function in that it will not be specific to a particular domain. And then we'll also have some element of functional improvement or activities of daily living included in it. So the likely instruments or endpoints for the next study would bear the closest resemblance to the endpoints that I just mentioned that we'd be spending the most time on. And then as to exactly which one is most appropriate would be guided by the data we see and then by discussions with FDA.

Okay, that's helpful. I will hop back in the queue on this one, but looking forward to seeing those results. Sounds like within a couple of months from now.

Yes, into queue one. Yeah, that's right, Charles. Thank you.

Okay, thanks. Our next question comes from Mark Goodman with SVB. Your line is now open.

Hi, thanks for taking my question. This is really on the line for Mark. I have a question for LRX458. Since we only have 30 minimized dose in a Phase IIa study, so what kind of data will make you comfortable that this is the right dose to move forward? And do you expect to start another dose reading studies before running a pivotal study?

Yeah, good question. So, of course, we'll look at safety, which is the primary endpoint. And then, as I mentioned in the previous answer, the key endpoints on efficacy to help us determine what effect size we see. And then I think based on that, we will decide if any future dose ranging is warranted and also, obviously, discussions with FDA. The goal of this study was signal finding, and we were, I think, comfortable to do that with a single dose. But depending on the data and FDA discussions, we've not ruled out doing further dose finding in the future. Got it.

That makes sense. And how long are you following those patients after the 12-week treatment? Do you think the 12-week will be the right duration to separate OX4858 versus placebo?

We will see, you know, what the time series of the data looks like. Our sense was that it would be based on our mechanism, based on our preclinical data, based on the fact that it's a symptomatic treatment versus a disease-modifying treatment. But we'll be interested to see what the time series looks like. In this study, we're following the patients up for a few weeks after treatment, but we'll decide the duration of the next study, I think, again, based on the data.

Got it. That's very helpful. Thanks. Thank you.

Our next question comes from Miles Minter with William Blair. Your line is now open.

Thanks for taking the questions. Maybe just following on from Charles' question about the ability of these patients to perform the test. Like, I know you're screening in based on MOCA and CGIS, but are you also screening in patients on their cog state test performance? And is there any safeguards that... if a patient matches that screening criteria, but motor impairment means they can't perform like the maze or something like that, is there safeguards to rule them out of the trial or do you treat that as missing data for this trial? Thanks.

Yeah, like I said, Miles, there is a part of the screening process is to try to ensure that patients are able to complete the tests from a motor perspective. Our expectation would be that for most patients, most of the time in the study, they will be able to complete the tests, at least based on motor capacity. And if there are difficulties completing the test, that that might be more related to cognition. If there is missing data for any reason in the study, then it would be treated as missing data if we're talking about the sort of modified intent to treat populations.

Okay. Then just a quick follow-up. I know you've mentioned that the majority of these patients will have Parkinson's disease and not Lewy body dementia. Can you classify those numbers for me? Because I know that a lot of these questionnaires are Parkinson's disease specific and their activities daily life and what they're impacted in may be different from a patient with Lewy body dementia. Thanks.

Yes, certainly. So we'll just as a technicality, The term Lewy body dementia, and it's rather confusing nomenclature, but the term Lewy body dementia is normally used to include both Parkinson's disease dementia and dementia with Lewy bodies, DLB. So it's dementia with Lewy bodies that I was commenting on that we've seen relatively few patients enroll in the study. I don't think we have the specific numbers to disclose today, but it's a low number. So the majority of patients in the study will either have MCI or dementia with Parkinson's disease. You're right that there can be some differences in symptoms between dementia with Lewy bodies and Parkinson's disease dementia. We had other inclusion and exclusion criteria in the study to try to essentially get to the right patients. And that's partly why probably fewer dementia with Lewy body patients made it into the study. But those that did were likely to have the right magnitude of cognitive impairment probably in the right domains and probably not confounded by other symptoms like psychosis. So I think we're comfortable with the patient population that we screened.

Okay, beautiful. Thanks for the clarification. Cheers.

Thanks, Miles. Our next question comes from Gary Nachum with BMO. Your line is now open.

Hi, this is Dennis Resnick on for Gary Nachman. Congrats on the progress and thank you for taking our questions. Can you provide context on how many patients will be enrolled in the phase one study for 783 and opioid use disorder? And then secondly, now that you're no longer progressing 2925 forward, can you just talk about and provide some more color on how you're going to be spending moving forward? Thank you.

Sorry, what was the last word, Dennis? How we're going to be spending, did you say?

Yeah, your spend moving forward. Thank you.

Yeah, certainly. Okay. Well, I'm actually going to pass the first question over to Catherine, and then maybe Ashish can take the second part.

Yeah, thanks, Andy. There are nine subjects in the drug-drug interaction that our colleagues at Yale University School of Medicine are conducting.

And with regard to expenditures, as you'd imagine, our projected expenditures going forward will be meaningfully lower than what you've seen in the past several quarters. as we aren't actively pursuing further development of NYX and N25 in the chronic pain. We expect that the existing cash will fund our operations into early 2024. We tend not to give quarter-by-quarter guidance as there are fluctuations along the way as the trials complete. Surely, it will be a lower number for R&D expense than you've seen in previous quarters.

Thanks. I should just maybe add a little bit, Dennis, to the nine subjects is adequate to meet the goal of the study, which is, as we mentioned, a drug-drug interaction study with oxycodone. It is a safety and a regulatory requirement. you can probably infer from the size of that study that quite a large portion of the grant that we've received will be then available for the subsequent proof of concept study that we could then start once the nine-subject study is complete.

That's very helpful. Thank you.

Our next question comes from June Lee with Truist. Your line is now open.

Hi. This is Awesome on for June. Thanks for taking the questions. So just a question on historical data points. So Robastic Mine tested out its primary after 24 weeks when it got approved. I'm just wondering, you know, given the dosing of 458 for the studies over a shorter period of time, you know, what bar would 458 have to meet at the 12-week mark on any of the Cox state tests or other primaries and secondaries to be considered signal finding, as you stated earlier? Thank you.

Yeah, it's a good question. Rivastigmine was obviously using somewhat different endpoints. There was also, I think, if I recall correctly, some dose titration involved in the, over the weeks of the study. So, you know, the bar I think that we would like to see is partly informed by, you know, existing therapies and also partly by the path forward. The existing therapies, and of course they're used in Alzheimer's as well as in Parkinson's disease, as well as what seems to be the emerging regulatory bar for approval in Alzheimer's disease, it's not clear in Parkinson's obviously because there haven't been approvals, seems to be standardized effect size of about 0.2. So that's essentially the difference between active and placebo divided by the standard deviation of the samples, just a way to standardize the results from different endpoints. So, you know, we might like to see something a little higher than that simply because we'd like the clinical trials going forward to be a more manageable size. But it's difficult to put a very specific cutoff in place because it does depend on which endpoints we see those effects and, you know, and details like that. But I think looking at the external benchmarks gives us a little bit of a guide.

Okay, and then just like a bit of a hypothetical follow-up. Now, say if you saw meaningful improvement in, say, just one or two of the sub-scores but not the others, how should we or even the FDA in the future interpret that?

Yeah, it's an interesting question. I think what we would like to, if that were to transpire, I think we would like to see there be some translation of that effect on one or two sub scores or domains into functional improvement, because I think that's probably how FDA would look at it, which is to say, you know, the rubber meets the road, essentially, in improving the patient's activities of daily living. If that can be done with an effect on a single domain or just a couple of domains, then that could be interesting. That's to be determined and confirmed in discussions with the agency, obviously, but I think that's how we would look at it.

Thank you. Our next question comes from Christina Chin with Cohen. Your line is now open.

Hey, guys. Thanks for taking my question. I also have a question on 458, and we see that the secondary endpoints are evaluated with six of the neurocognitive tests. Do you anticipate to see any differences in the composite scores between the MCI patients versus the DLB patients?

It's a good question. I think that's something we'd be interested to look at. I can't say at the moment that we would anticipate a particular difference because part of the goal of the study was to enroll subjects that met the inclusion criteria in terms of the severity and nature of the cognitive complaint, you know, without excluding the diagnosis, the specific sub-diagnosis that got them there. So I think that certainly will be part of the analysis. We will look at, you know, MCI versus Parkinson's dementia versus dementia with lewer bodies.

Got it. Thank you.

Our next question comes from Bubalan Pachyapan with HC Winerite. Your line is now open.

Hi. Thanks for taking my questions and congrats on the quarter. So just a couple from us. Firstly, with respect to 458 for CIPD, obviously you are deploying multiple cognitive assessment tests. to evaluate 458 efficacy. Can you discuss the sensitivity of these tests as it relates to cases where disease progression occurs?

Right. So sensitivity, well, really sensitivity in general. I think our hope is that the neurocognitive tests are relatively sensitive to change. And as I mentioned earlier, then as we get into functional tests and other endpoints, The sensitivity in the sample size may be a little less, but we still think adequate to see a signal. If there is disease progression over the course of the 12 weeks, then, you know, since our drug is a symptomatic improvement, we're assuming that in as much as there's disease progression over 12 weeks, it should be equally apportioned between the drug and placebo group. The drug group should be experiencing an improvement over what the symptoms would have been And since we're mostly interested in the delta between the active group and the placebo group, unless there was a large imbalance in disease progression between groups, then that should be okay.

Okay. Thanks for the color. And then with respect to 783 for opioid use disorder, how should we think about the placebo response in the upcoming phase to study?

Just to clarify, when you say the upcoming phase two study, you mean not the phase one drug-drug interaction study, but the study after that? Because that study, we have some thoughts on the design of that study, but we don't have a study design template that we can really discuss today.

Okay. Yeah, the other one.

Yeah. The phase one. Yeah, go ahead.

Yeah, go ahead. Yeah, that's the one.

Okay, so if you mean the phase one study, then it's primarily going to be a safety study looking at drug-drug interaction. Let me just check if Catherine's on if there's a relevant placebo comparison on any of the key measures. Catherine?

So there certainly is a placebo comparator, but I don't think we expect a placebo response in those endpoints as you described them, safety, tolerability, and PK.

Yeah. Yeah. Thanks, Catherine.

Thank you.

All right. Thanks for taking my questions. You're welcome.

There are no further questions waiting at this time, so I'll pass the call back over to the management team for closing remarks.

Thank you, operator, and thank you, everyone, for your questions. We appreciate your time and your attention, and we wish you all a very pleasant rest of your day.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.