Brickell Biotech, Inc.

Greetings, and welcome to Brickell Biotech, Inc. First Quarter 2021 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garth Russell, with LifeSci Advisors. Thank you. You may begin.

Thank you, Operator, and good afternoon, everyone. Joining me on today's call are BRICLS Chief Executive Officer Rob Brown, Chief Financial Officer Bert Martial, Chief R&D Officer Deepak Chadha, and Co-Founder and Chief Operating Officer Andy Squalor. Before we begin, I would like to remind everyone that this conference call and webcast will contain certain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly release these results, the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes that differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our most recent filing on Form 10-K. and other periodic reports on Form 10Q and 8K as filed with the SEC. I would now like to turn the call over to the company's Chief Executive Officer, Rob Brown. Rob, the floor is yours.

Thanks, Garth. Good afternoon, everyone, and thanks for joining us on our call. The beginning of 2021 has been a very exciting time here at Brickell. We continue to steadily advance our lead program, soft pronium bromide, through Phase III pivotal clinical trials, evaluating its safety and efficacy as a potential best-in-class treatment option for primary axillary hyperhidrosis, also known as excessive underarm sweating. This year, we've achieved some key milestones for soft craniobromine. First, we announced that patient enrollment was completed in the CARDIGAN1 study, and the CARDIGAN2 study surpassed 70% enrollment. As a reminder, both Phase III pivotal clinical studies are evaluating soft-pronium bromide gel 15% against placebo in approximately 350 patients each with primary axillary hyperhidrosis. Both cardigan studies remain on track, and we expect to announce top-line results from the Phase III program in the fourth quarter of 2021. Second, we are pleased to have the results of our Phase III open-label long-term safety study of soft-pronium bromide gel highlighted during a late-breaking oral presentation by Dr. Stacey Smith at the American Academy of Dermatology's 2021 virtual meeting experience in April. These results are important as they further support the safety, tolerability, and efficacy data we previously observed in our Phase IIb study. Considering primary axillary hyperhidrosis is a chronic condition, we expect this long-term data along with the two Phase III Pivotable Clinical Studies to form the basis for our prospective NDA filing. Third, in March, we hosted our first-ever Hyperhidrosis KOL event for investors, analysts, and other interested stakeholders. The event was led by two highly distinguished hyperhidrosis thought leaders in Drs. Adam Friedman and Joel Cohen. Through this event, we were able to share what many hyperhidrosis patients deal with in managing their daily lives, what the current treatment options are, and why we believe that hyperhidrosis remains an undertreated medical condition, adversely affecting their quality of life. If you are unable to attend the event, I encourage you to watch a replay, which can be found in events and presentations, on the investor sections of our company's website. Now turning to our Japanese development partner, Kaken Pharmaceuticals. As we previously announced, Kakan is still in the early stages of its commercial launch of soft-pronine bromide gel 5% in Japan under the brand name eClock for the once-daily treatment of primary axillary hyperhidrosis. The eClock launch is an important milestone for both companies, with Japan being the first country to approve soft-pronine bromide for any invocation and eClock being the first topical prescription product for the treatment of primary axillary hyperhidrosis in the country. As a reminder, BRICL is entitled to receive sales-based milestone payments, as well as tiered royalties based on a percentage of net sales of ECLOC in Japan. Finally, as a result of certain warrant exercises and proceeds raised through our ATM offering program, we've strengthened our balance sheet with $34.8 million of cash as of March 31st, 2021. This added financial stability provides us with sufficient cash runway to fund our operations in the next year and allows us to continue executing on key activities that will enable us to submit a new drug application with the FDA for soft bromine bromide gel in 2022, pending a successful outcome in phase three pivotal programs. Let's now turn the call over to Deepak to provide a clinical update. Deepak?

Thanks, Rob. Greetings, everyone. As stated by Rob in his opening remarks, we have been pleased with patient enrollment today in the two U.S. Phase III pivotal studies evaluating sopronium bromide gel 15% for the treatment of primary axillary hyperhidrosis in approximately 350 patients each study. As announced in April, the Cardigan 1 study completed its enrollment, and the Cardigan 2 study, which started enrolling patients approximately two months after Cardigan 1, has now exceeded 70% enrollment. Based on the current enrollment rate for Cardigan 2, we remain on track to complete enrollment in the third quarter and report top-line data for both studies in the fourth quarter of this year. As a reminder, each subject participating in the Phase 3 Cardigan studies will be treated with either soft premium bromide gel 15% or placebo for six weeks with two-week follow-up periods. The core primary efficacy endpoints, as agreed with the USMPA, are the proportion of subjects achieving at least two-point improvement on the patient-reported outcome assessment, that is the hyperhidrosis disease severity measure, HDSM-AX scale, and the change in gravimetric set production, each from baseline to the end of treatment. This is a good time to mention that, We have recently published validation results for BRICL's proprietary SDSM-AX scale in the peer-reviewed Journal of Drugs and Dermatology. The published psychometric analyses conclude that the SDSM-AX scale is a well-defined, reliable, and consistent measure that is expected to improve the assessment of hyperhidrosis treatment effects compared to pre-existing scales such as the hyperhidrosis disease severity scale, or SDSS. Furthermore, the results demonstrate that a one-point change in SDSM-AX severity score on a five-point scale of zero to four represents a clinically meaningful change in primary axillary hyperhidrosis severity. Turning now to our previously completed phase three open-label long-term safety study. It's worth noting that The standalone study was not conducted as a conventional Phase III open-label extension study where patients from pivotal studies roll over into an open-label extension study. Hence, this study provides a more complete clinical data set evaluating treatment-naive primary axillary hyperhidrosis patients who were not previously acclimated to soft prunium bromide gel treatment. As many of you may already be aware, The results from this study were presented last month in a late-breaking oral presentation at the American Academy of Dermatology's 2021 virtual meeting experience. This study assessed the long-term safety and efficacy of sopronium bromide gel 5% and 15% for 48 weeks of treatment in patients 9 years and older with primary axillary hyperhidrosis. 300 patients across 30 U.S. sites were randomized in 1 is to 2 ratio to receive either soft perineum bromide gel 5% or 15%. Based on the outcome of the study, daily treatment with soft perineum bromide gel was generally well-tolerated, and efficacy assessment showed clinically meaningful and sustained improvements in sweat severity through the 48 weeks of treatment. For those interested in reviewing the results of this study in further detail, feel free to visit the events and presentations page in the investor section on our website for a replay of the conference call we hosted in April discussing the data. Finally, the past few months have been very productive for the company, and we are well positioned to execute on our goals this year. The progress we continue to make speaks not only to the strength and resilience of our efficient and committed team, but also the excitement we have about the potential of sopronium bromide to be an important treatment option for the millions of patients in the U.S. that suffer with primary axillary hyperhidrosis. With that, I will now turn the call over to Bert to provide a financial overview.

Bert? Thanks, Deepak. and good afternoon to everyone on the call. Before I provide a summary of the first quarter financial results, I want to encourage you to read our full consolidated financial statements and MD&A contained in our quarterly report on Form 10-Q, which can be accessed through the Investors section of our website once filed with the SEC. Starting with cash and investment, As of March 31, 2021, we reported $34.8 million in cash and cash equivalents, having spent $5.9 million in cash for operating activities during the first quarter of 2021. We believe our current cash position will support our operations beyond the top line results of the U.S. Phase III Pivotal Program and into 2022. Revenue for the first quarter was approximately $17,000, which was the royalty revenue we recognized from the sales of eClock in Japan by our Japanese development partner, Kaken. This was compared to $1 million in total revenue reported for the same period in 2020, which was attributable to the recognition of an R&D payment we received pursuant to our license agreement with Kaken. R&D expenses were $6.1 million for the first quarter of 2021 compared to $2.7 million for the first quarter of 2020. This increase was primarily due to an increase in clinical costs related to the Phase III cardigan studies that were initiated in the fourth quarter of last year. G&A expenses totaled $3 million for the first quarter of this year compared to 2.5 million for the first quarter of the prior year. This increase was primarily attributable to increases in compensation-related expense and professional fees. Lastly, net loss for the first quarter of 2021 was 9 million compared to 4.1 million for the first quarter of 2020. With that, I will now turn the call back over to Rob.

Rob? Thanks, Deepak and Bert, for your recap. This is really an exciting time for BRICL as we continue to work together and build momentum behind our ongoing Phase III pivotal clinical program. This concludes our prepared remarks. I'll now turn it over to the operator to open it up for questions. Operator? Thank you.

Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Leland Gershel with Oppenheimer & Company. Please proceed with your question. Leland, you're live? Are you muted on your side?

Oh, sorry. I thought I had unmuted. Here we are. Hi. Sorry about that. Good afternoon. Thanks for taking my question. I hope you can hear me okay now. Yes, I have a couple of questions for you. One, you know, looking back to the long-term safety study update you provided and talked through at the end of last month, I wanted to ask you, as we look at the data from that, understand that it wasn't a formal efficacy study, but a long-term safety study. Nonetheless, if you look at the two different doses of the 5% versus 15%, it looks like you approach efficacy of the 15% with the 5%, albeit with perhaps a much more favorable tolerability profile. I'm wondering how that information may affect your thoughts going forward with product development. Could that be a perhaps an extension strategy in the future for the U.S. market, obviously 5%, I believe, is the Japanese strength. So I wanted to hear your thoughts there. And then also the question with regard to the sale by Lilly of Pubrexa to another company and how that may affect marketplace dynamics, you know, in the hyper-versus space going forward. Thanks.

Sure. Hey, thanks. Thanks for the questions, Leland. You know, I'll start with the long-term safety and deep hockey. If you want to ask feel free. So, you know, obviously we were excited about the efficacy data. We saw the fact that both the doctors, you know, did quite well and held and sustained their efficacy over the whole study. You know, the PRO that was used for the long-term safety study was similar to the one we used, the same as we used in the 2B and is one of our primary endpoints in the Phase III And in the 2B, we also saw that the 5% and 15% on the TRO had relatively similar efficacy. We didn't see that in the reduction of sweat measurement, the GSP tool, which is why we focused on the 15%. But it does give us encouragement that, you know, there may be the potential to look at a 5% down the road for the company. Deepak, anything you'd like to add?

I think, Rob, you covered, you know, the aspects with the GSP and meeting the second core primary endpoint, the reduction in sweat with GSP. And that's the primary reason we are taking the high concentration 15% as part of the phase three. And always, you know, like we will be interested as part of the lifecycle management to bring the lower concentration of subclinic bromide.

And in terms of the second question, Leland, in terms of the sale of Cubrexa, we were encouraged by that. Obviously, you know, the launch of Cubrexa has been hindered by, you know, Jermira's decision to focus their resources on a different asset, sell the company, then obviously a pandemic, and then, you know, Lily acquiring the asset right at the beginning of the pandemic. So never really got fully – engaged if you will and then obviously them selling it to another another party that's a pretty tough launch for some for a product to go through so we're encouraged that there's a company that's focused on dermatology that's going to go out and talk about hyperhidrosis you know when you have a marketplace like this where there's a big net need and a lot of people who aren't seeking treatment awareness of the of the condition and that there are treatments is the most important And in many ways, all the companies involved help each other in the sense that they create greater awareness and greater noise. And when you do that, you get a bigger marketplace. So we see one of our biggest competitors being ignorance or a lack of understanding that there's treatments out there. And so having somebody who's committed, dedicated, and excited about the space, I think, can only help us as we go forward. Thanks very much for the additional comment.

There are no further questions. I'd like to hand it back to Robert Brown for closing remarks.

Okay, thank you, Operator, and thanks for everyone taking the time this afternoon to listen to our update. I wanted to close out the call by thanking the clinical trial sites and the hyperhidrosis patients for their ongoing interest in support of our Phase III clinical program, not to mention the French and Brickell team as well as the Contract Research Organization for their outstanding commitment and tremendous contributions. We look forward to keeping you all updated on the progress of these studies over the coming months. As always, please feel free to reach out to us anytime with any questions, and we hope you all have a great rest of your day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.