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spk05: Welcome to the Cerebral Therapeutics Fourth Quarter and Full Year 2020 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, you will have the opportunity to ask questions during the Q&A portion of the call. Please note that this call may be recorded. I will now hand the call over to Matt Calistri, Vice President of Investor Relations.
spk04: Thank you. Good morning, everyone. We appreciate you joining us for our Fourth Quarter and Full Year 2020 earnings call. On today's call, you will be hearing from Dr. Tony Coles, our Chief Executive Officer, Dr. Ray Sanchez, our Chief Medical Officer, Dr. John Renger, our Chief Scientific Officer, and Kathy Yee, our Chief Financial Officer. During our call today, please refer to our press release from this morning detailing our 2020 performance, as well as our updated corporate presentation, both of which are available on our website. I would like to remind you that we will be making forward-looking statements that reflect our current views related to our financial performance, future events, and industry and market conditions, as well as forward-looking statements including the potential attributes and benefits of our product candidates and the format and timing of Cereval's product development activities and clinical trials. We strongly encourage you to review the information that we file with the SEC regarding specific risks and uncertainties. I will now hand it over to Dr. Tony Coles, chairperson and CEO of Ceravel, to provide an overview of our achievements and outlook.
spk09: Thanks, Matt, and good morning, everyone. Thank you all for joining us for our first quarterly results call as a public company. I look forward to outlining our numerous achievements from 2020 and our outlook for this year. Here at Ceravel, we remain steadfast in our goal to become the premier neuroscience company. As you may recall, Ceregal was founded in 2018 with a rich and deep portfolio of 11 small molecule programs that have benefited for more than 10 years and over a billion dollars of investment at Pfizer. Within this portfolio, we now have five clinical programs that we expect will generate up to eight data readouts by the end of 2023 as we continue to leverage our receptor subtype targeting approach to addressing some of the most vexing questions in neuroscience. In the first quarter of 2020, in response to the onset of the COVID-19 pandemic, we paused enrollment in all of our trials as patient safety is always our top priority. I'm proud to say that thanks to the hard work and creativity of our team, we have been able to safely reinitiate and start dosing in all of our current clinical trials, which includes three phase three trials for tevapidon and Parkinson's, phase one and two trials for our gabapam, derigabat, and anxiety and epilepsy respectively, and our phase 1B trial in schizophrenia for our M4 selective positive allosteric modulator, CVL231. Meanwhile, we have continued to expand our capabilities as a company growing our organization from approximately 65 employees at the end of 2019 to just over 100 employees by the end of 2020, with the majority of that growth in our REV departments. In the fourth quarter of 2020, we completed a groundbreaking GoPublic transaction. The business combination with ARIA 2, a special purpose acquisition company for SPAC, along with a pipe transaction that together yielded net proceeds of $440 million. This deal enabled advancement of our lead programs and provided us with a cash runway into 2023. This year, our momentum continues. We have two key data readouts coming later this year for CVL 231 and Duragabat. We're opening our 60,000 square foot Cambridge Crossing headquarters complete with over 15,000 square feet of lab space to enable speedy and efficient drug discovery and the exploration of new targets. We have multiple INDs forthcoming for preclinical programs, and we're focused on leveraging enabling technologies such as gene editing and artificial intelligence to identify new drug targets for neuroscience diseases. We're proud of how far we've come at Cerevel in such a short period of time, as we seek to transform what is possible in neuroscience and bring new treatment options to patients with challenging diseases like schizophrenia, anxiety, epilepsy, and Parkinson's. To provide additional detail on our clinical efforts, I'd now like to ask Dr. Ray Sanchez, our Chief Medical Officer, to review our pipeline progress. Ray?
spk02: Thank you, Tony, and good morning to all of you. As you know, at Cerevel, we have a broad and diverse pipeline of clinical and preclinical stage molecules. Over the course of 2020, we've made great strides in advancing our drug candidates into the clinic. As Tony mentioned, we have begun dosing patients in all our ongoing clinical trials, and I'd like to update you on each of our upcoming data readouts. I'll start with CVL231, our M4 positive allosteric modulator, or PAM, which is currently in a Phase 1B trial in patients with schizophrenia. This is a two-part trial. Part A is designed to evaluate the safety and tolerability of multiple ascending doses, and Part B is a placebo-controlled, double-blind, pharmacodynamic assessment to detect trends in the antipsychotic potential of the compound as measured by the PANS total score over six weeks of treatment. Although this Phase 1b trial is not designed to demonstrate statistically significant differences in efficacy, we hope to identify a magnitude of effect that will inform the designs in later stage clinical trials. To date, we've completed Part A and are currently dosing in Part B. We can now refine our timing for the data readout of both parts of the trial to mid-year 2021. We also expect to complete two PET receptor occupancy studies for CBL231. Those data will allow us to fully characterize the compound and select the appropriate doses for future clinical trials. In January, we hosted an R&D event during which we discussed in detail our DERIGABET program in epilepsy and anxiety. DERIGABAT is an alpha-235 selective GABA-A receptor PAM with great potential to provide therapeutic benefit without the limitations seen with non-selective GABA-A PAMs like benzodiazepines. We are currently dosing in our ongoing clinical trials in both anxiety and epilepsy. Our phase one proof of principle trial in acute anxiety is expected to read out in the second half of this year And our Phase 2 proof-of-concept realized trial in focal epilepsy is expected to read out in the second half of 2022. For tevapidon, our Phase 3 clinical trial program, also known as the TEMPO trials, is ongoing. We continue to dose in all three of the Phase 3 trials, TEMPO 3 in late-stage Parkinson's and TEMPOS 1 and 2 in early-stage Parkinson's. We expect data from TEMPO3 in the first half of 2023 and data from TEMPOS1 and 2 in the second half of 2023. This month, we also submitted an IND for CBL871, a D1D5 partial agonist, the next potential therapy to enter the clinic for us. We plan to begin an exploratory phase 2A trial in the second quarter of this year to pursue a novel indication in dementia-related apathy. Since this is a new indication and CVL871 is a compound that we haven't discussed publicly before, I would like to take time today to walk you through both this disease state and our approach with CVL871. If you now turn to page 35 of the accompanying presentation for today, you will see that apathy is among the most common neuropsychiatric comorbidities associated with dementia, afflicting almost half of 50 million dementia patients globally. It represents a constellation of symptoms including diminished motivation, social disengagement, and a reduction in emotional responsiveness. These symptoms result in a loss of interest in personal well-being and relationships as well as interference with normal daily functioning, including motivation to eat, dress, maintain personal hygiene, and take medications. The presence of apathy has been shown to be related to decreased quality of life, increased morbidity and mortality, along with early institutionalization and significant caregiver burden. Apathy is also a strong predictor of disease progression. Despite the debilitating nature of the condition, there are currently no approved medications to treat dementia-related apathy. Therefore, the unmet medical need in this area is significant. Turning now to page 36, We believe that CVL871 can be a potential treatment to address the constellation of symptoms that constitute dementia-related apathy. CVL871 is a D1-D5 partial agonist that has a slightly different profile from Tavapadon. Where Tavapadon drives up to 70% functional response at the dopamine D1-D5 receptors, CVL871 has a lower level of partial agonism at approximately 40% functional response. This feature potentially makes it an optimal compound for modulating the complex neuronal pathways to control motivation and reward, pathways where dopamine D1, D5 receptors play a key role. We are interacting with the FDA to define the regulatory path and clinical development plan to achieve an indication in dementia-related apathy, as the agency has demonstrated interest in the development of therapies to treat neuropsychiatric symptoms of dementia, including apathy. Our first step with CBL871 is our planned initiation of an exploratory phase 2A clinical trial in the second quarter of this year, with data expected in the second half of 2022. Page 37 of the presentation details the design of the trial. It is a 12-week randomized double-blind placebo-controlled trial with the primary objective of evaluating the safety, tolerability, and pharmacodynamics of two fixed doses of CVL871 in patients who have clinically significant apathy and a diagnosis of mild to moderate dementia. Our goal is to enroll about 75 patients into three arms, three milligrams daily of CVL871, one milligram daily, and placebo. Several clinical assessments will be utilized to measure changes in the severity of the patient's apathy during treatment. These include the neuropsychiatric inventory apathy domain, the dementia apathy interview and rating scale, and the apathy evaluation scale. We think that CVL 871 is an important program addressing a novel indication that has the potential to provide meaningful benefit to millions of dementia patients and consequently their caregivers. We're looking forward to updating you on our continued progress with this program. Overall, we're very pleased with the progress of our pipeline. We're continuing to execute on our six ongoing clinical trials and two open-label extension trials for our lead programs, including CVL231, Derigabat, and Tavapidon, as we also prepare to initiate our Phase 2A trial for CVL871. Additionally, we have an extensive preclinical and early discovery pipeline. I'd like to ask Dr. John Renger, our chief scientific officer, to now discuss some of these earlier stage programs. John?
spk03: Thank you, Ray, and good morning, everyone. I'd like to spend a few minutes updating you on our early pipeline. In particular, I'm pleased to announce that we expect to receive cooperative grant funding from the National Institute on Drug Abuse, or NIDA, to support the development of CVL936, and opioid use disorder. As you may recall, CBL936 is our D3-preferring dopamine receptor antagonist, which is designed to block D3 signaling within the brain while also simultaneously reducing inhibitory signaling with the D2 receptor subtype. CBL936 has shown encouraging activity in translationally relevant preclinical models of both substance use cessation and relapse using both nicotine and opioid-induced cues. During 2020, we concluded dosing of the cohort one of our phase one single ascending dose trial CVL936 in healthy volunteers after receiving sufficient clinical data for the intended purposes of the trial. We are currently evaluating that data and formulating plans for continued development of this compound. We are excited about the potential for 936 as an important therapeutic option in substance use disorder. I'm looking forward to updating you on our continued progress. Finally, as Tony mentioned, we're opening our Cambridge Crossing headquarters. Of the nearly 60,000 square foot facility, over 15,000 square feet of the wet lab space will enable greater drug discovery flexibility and speed our internal drug discovery program efforts. Within our lab, we're focused on essential core capabilities to leverage our own internal expertise to drive solutions to complex scientific questions and establish unique intellectual property positions. including the development of novel bioassays. Importantly, our lab will also provide the infrastructure to support compound synthetic and formulation activities, human iPSC cell models, in vivo genetic models, and biomarker identification capabilities for both our lead programs and our early pipeline. With respect to our early discovery pipeline, we have multiple INDs forthcoming, in addition to the one already submitted for CVL871. As we outlined during our R&D day in January, we're studying our Kappa opioid receptor antagonist, CBL354, as a potential therapy for depression and substance use disorder, and we plan to submit an IND in the second quarter of this year. In addition, we're evaluating subtype selective modulators of PDE4 enzymes as targets for multiple disease areas, including depression, schizophrenia, and neuroinflammatory conditions. We're planning to submit an IND for a selective PDE4B inhibitor by the end of this year. Beyond these two programs, we're continuing to work on identifying new targets for potentially disease-modifying neurodegenerative indications. So as you can see, 2020 has been an extraordinarily productive year for Cerevel, and we are very much looking forward to many exciting updates in 2021 and beyond. I'd now like to turn it over to Kathy Yee, our Chief Financial Officer, to review the specifics of our financial performance and our outlook for this year. Kathy?
spk06: Thank you, John. I'll start by discussing our 2020 financial results, and then I'll spend a few moments on our cash position and expected runway. Starting with last year's operating results, R&D expenses in 2020 were $103 million compared to $50 million in 2019. The increase in R&D expenses was primarily attributable to the advancement of our lead clinical programs, including initiating dosing in all of our ongoing clinical trials, as well as investment in our early discovery efforts and increased headcount costs to support continued pipeline execution. General and administrative expenses in 2020 were $46 million compared to $33 million in 2019. The increase was driven primarily by investments in infrastructure, IT, and headcount to support organizational growth and higher facility costs associated with the commencement of the lease for our new headquarters in Cambridge Crossing. G&A expenses for 2020 also included approximately $5.5 million of one-time expenses related to the completion of our gold public transaction and other financing activities. As of December 31st, 2020, cash and cash equivalents were 384 million compared to 80 million as of December 31st, 2019. Our cash position was bolstered in the fourth quarter of 2020 by the completion of our gold public transaction that yielded approximately 440 million in net proceeds. This raise has allowed us to enter 2021 with a very strong balance sheet that will enable us to execute on our lead programs and continue to develop our earlier stage assets. Looking forward, we expect R&D expenses to increase this year as we ramp up patient enrollment in our late stage trials for Tabapadon and Derigabat, as well as additional investment in our early discovery efforts. We expect G&A expenses to stabilize through the end of this year as growth in our organizational infrastructure approaches a steady state. Over the next few years, we are looking forward to multiple potential value-creating data events, including two important readouts this year. Based on these trends, we expect our cash balance to fund our operations into 2023. We continue to think creatively and opportunistically about bolstering our balance sheet to support our extensive portfolio. We have 11 clinical and preclinical assets and up to eight data readouts between now and 2023, which should provide ample opportunity for value creation as we continue to progress our pipeline. I'd like to now hand the call back over to Tony to conclude.
spk09: Thanks, Cathy. As you can see, 2020 was an extremely productive year for Cerevel, and we have entered this year with significant momentum. I opened today's call by sharing our aspiration here at Cerevel to become the premier neuroscience company, and we certainly remain on track to achieve that ambition with a broad, deep, and rich pipeline of new potential therapies. We have numerous programs underway that seek to address high unmet needs for millions of patients with neuroscience diseases, including schizophrenia, anxiety, epilepsy, Parkinson's, and as Ray and John have highlighted for us today, dementia-related apathy and substance use disorder as the newest considerations. At Cerevel, we're leveraging our unique expertise in neurocircuitry to advance our deep portfolio and ultimately to bring new medication to the patients who need them. Before I conclude, I want to thank our employees who are so committed to making a positive impact on patients' lives, and also thank all the physicians, caregivers, and participants in our clinical development programs. I also want to thank our investors for their support and belief in our mission. It is true that we could certainly not do this without you. With that, operator, we can now open the floor for questions.
spk05: Ladies and gentlemen, if you'd like to ask a question, please press star then 1. If your question has been answered and you'd like to move yourself in the queue, press the pound key. Again, that's star one to ask a question. Our first question comes from Paul Matisse with Stiefel. Your line is open.
spk01: Great. Thank you so much. I have one schizophrenia question and one on your dementia apathy program. On the schizophrenia readout for 231, I guess, given that this study is not p-value driven, would you agree that the best way to kind of evaluate these data is to sort of compare the PANS reductions to what Karuna saw and think about seeing something in the margin of that as a hurdle. And then on the apathy program, I was wondering if you could maybe go a little bit deeper into how you might plan on selecting patients. Specifically, how do you think about differentiating apathy versus depression or agitation and Would you include patients in this study that also had depression, were on antidepressants, et cetera? I guess maybe really in a more direct way, how can you specifically homogenize the population to this specific symptom that you're talking to? Thanks.
spk09: Thanks, Paul, for both questions. I'm going to ask Ray to take both questions, but let me just make a very quick comment. And I know that you and others are very well familiar, but there are some listeners who may not appreciate that the CVL231 study in schizophrenia patients is still a phase 1B study. So the primary goal is safety and tolerability. But Ray, why don't you talk about how we think about looking at that particular trial and making our decisions for the next steps of development. And then we'll move to Paul's question about dementia-related apathy.
spk02: Sure, Tony. So just, yeah, the question regarding CVL231 and the schizophrenia trial is, So, Paul, it's a good question. You know, we don't have any preconceived ideas of what the PANS reduction should look like or would look like. We want to see the totality of the data so that we can then use that information to inform the design of our next phase trials. So I don't want to speculate at this juncture of what that may look like, and the data will, of course, inform us moving forward. In terms of the dementia-related apathy, It's a good question. As you know, that trying to diagnose patients with apathy is going to be quite critical. We're using the new diagnostic criteria for apathy, which has been in development with the ISCTM working group and with the agency. We're really looking to identify them using a criteria of the NPI apathy domain score of four or greater, which suggests significant apathy in an early to mid-stage dementia population. But really understanding that delineation, as you're pointing out, will be one of the critical factors in the Phase IIa trial to ensure that, one, we are diagnosing the patients and really enrolling the correct patients, which is critical based on what I just outlined. And two, that we choose the correct endpoint so that we can carve that path forward for registration. But all important considerations as you're raising as we develop and execute this program moving forward.
spk09: Great. Thank you very much. Operator, why don't we take the next question?
spk05: Our next question comes from Michael Yee with Jefferies. Your line is open.
spk08: Hi, guys. Thanks. I will ask a follow-up question on 231 as well.
spk07: Given what you just said about no preconceived notions, maybe you can describe some of the thoughts around what 20 mg BID and 30 mg QD have on receptor occupancy, and how to differentiate those two doses. And is there an idea that you just want to see a nice healthy delta and with good safety tolerability, you'd push that forward and you just don't want to read too much into exact numbers on the result. I was pulling up the Karuna data, right? It's like 11 to 12 point benefits. So rather than set a bar, are you just trying to show some healthy delta and show good safety tolerability and receptor occupancy data? Maybe just talk to that a little bit, particularly the differences between the two doses. Thank you.
spk09: Okay. Thanks, Mike, for the question. Ray, why don't you take that one? You may be on mute, Ray.
spk02: Apologies. That question cut out part of it. Michael, if you could repeat part of it again.
spk08: Yeah, the question is, in the 231 study, you have a 20-mig BID and a 30-mig QD. Can you just talk about the differences between those two doses receptor occupancy, thoughts around those two doses and what you'd like to see in between those two.
spk02: Great. So I'll let John talk, Michael, around the receptor occupancy. But we're really looking at those two doses in terms of its far-vengal kinetic profile. and really understanding the sustainability of efficacy as a function of its PK profile, meaning will it have reasonable therapeutic levels sustained throughout the course of the day in order to achieve the antipsychotic effect that is needed in a 20-BID model versus a Q-day model, and then looking at that at those parameters. But John can speak more to the receptor occupancies achieved with both those two doses.
spk03: Michael, thank you for the question. So what we believe is based on projections that 10 mg BID is actually enough to achieve 70% receptor occupancy. Of course, the intent of a PET receptor occupancy study is to confirm that What we're really looking at with the two doses of 30mg QD and 20mg BID is maintaining a receptor occupancy over 24 hours with the BID dosing to extend the exposure over the daytime as well as the night so that there is drug available the next morning. Our plan is to have a once-a-day drug, and this will help inform us. The difference between the two dosing presentations will help inform us on the importance of a formulation on whether we need to maintain receptor occupancy over the 24 hours and whether that equates to an improvement in the PAN score. But the other important point of the PET receptor occupancies, as you know, is we need to understand a dose range going forward in both 30 milligram and 20 milligram doses we believe are really at the upper end of what we need to test for efficacy. And so what we really want to understand is what is the rest of the dose range going to look like and what are the appropriate doses to take forward into the late stage program where we have to cover a dose range to really understand the safety and advocacy safety benefit ratio as we move forward.
spk08: Thank you. That's very helpful.
spk09: Okay. Thank you for the question. Operator, we'll take the next one.
spk05: Our next question comes from Greg Savanovis with Goldman Sachs. Your line is open.
spk10: Hi, good morning. Thanks so much for the update and for taking my questions. I've got two this morning. One is on the dementia-related apathy program, and the other is more on the financial outlook. Maybe on the first question, given that it's a relatively new area for me, but can you give us a sense of what the history has been in terms of looking at therapeutic interventions in dementia-related apathy? I think I've come across some... studies with uh denepazil and bupropion and i'm just wondering um you know what has been the success or lack thereof that's been seen with industry and how that might help frame how we look at the opportunity that you see um for your asset and then my second question just has to do with uh really um modeling out 2021 and uh is SG&A, the fourth quarter number, is at a good run rate to look at for the four quarters in 2021. And then on the R&D side, should we just be thinking about a steady evolution and increase in R&D throughout the year? Thanks.
spk09: Okay, great. Thank you. Thank you for the question. Kathy, why don't we take the financial question first, and then we'll lateral to the question around apathy, standard of care, and therapies studied.
spk06: Yes. So to address, Greg, your question on the R&D expenses, it will steadily increase throughout the year as we increase our patient enrollment. I think it should be something that we should expect. In the G&A space, the Q4 was I think a good representation, I would say, for the four quarters coming in 2021.
spk09: Okay, good. Thank you, Kathy. Great. Kathy's spot on with that. The only thing I would add is, obviously, as the year progresses and assuming we've got all these trials up and running, it is likely that we will add some headcount. to support the expansion of the programs. But we're really focused on the disproportionate share of our spending behind the clinical programs and our early discovery efforts. So we'll keep a very careful eye on SG&A, as Kathy suggests, and really make sure we're investing in the programs. Ray, do you want to take Greg's first question about the therapies that are currently used in apathy?
spk02: Sure, Tony. Thank you. And thank you for that. It's a great question. So apathy is something that's being recognized more and more in the last decade as something that, as I mentioned earlier in the call, can be quite debilitating to patients with dementia. However, our motivation really to address it is that, but also the fact that there are no approved therapies. And the reason for that is that if you look at the anticholinesterase inhibitor's there's really no proven effect that they work well in treating apathy. The SSRIs and SNRIs have been used historically, but with really no established benefit. In fact, in some cases, they can actually worsen the apathy symptoms as well. But there is some evidence supporting the hypothesis that modulation of dopamine signal may improve apathy in patients with dementia, that it's been obtained from trials that have been done with methylphenidate, As you know, that's the dopamine and norepinephrine reuptake inhibitor. And there are a couple of trials that have been done that show significant effects there. And so our hope is that with this compound, because of its roughly 40% partial agonism, that it will work optimally in areas of the brain that the mesolimbic areas of the brain that actually are related to motivation and reward, which operate under lower and more balanced dopaminergic tone compared to the motor pathways that don't suffer from the same level of profound dopamine-producing neuronal loss. And so that's our thesis, and our hope is that we will be able to show those benefits in this patient population. But again, Nothing approved, and the medications that are currently used are not effective, which is the impetus underlying why we're excited about this program moving forward and why the agency is working closely with us moving forward as well.
spk10: Ray, maybe just a quick follow-up just on how you're thinking about the clinical development program, and I understand that discussions are still ongoing with the FDA in terms of endpoints, but Is there a clear primary endpoint on efficacy that's universally embraced, or is there an opportunity for you to think creatively about a novel endpoint?
spk02: Right. So the methylphenidate trials used the neuropsychiatric inventory, the NPIA, and they looked at the apathy global score. We're going to be using a series of endpoints, including the NPIC, which is a broader scale that takes caregiver burden into consideration, and some other scales that I mentioned earlier in the call that will give us an idea of which one will probably be most sensitive to really delineate the best approach to detect the improvements in apathy. So, in fact, that's part of the exercise of developing this Phase 2A trial is to conduct the trial, collect that data, do the necessary validation work, work closely with the agency and their teams to really look at what would be an ideal primary endpoint moving forward that will really heighten the benefits of this therapy and what it is that would be a reasonable and credible way to evaluate the improvements in apathy. So we are literally carving the path forward by working very closely with the agency naturally to do so. Okay. Thank you very much.
spk09: Very good. Thank you. Thank you. And thanks for the question. Operator, we'll take the next question, please.
spk05: Our next question comes from Uma Rafat with Evercore ISI. Your line is open. Oomer, your telephone may be muted.
spk09: Operator, is the line still showing active?
spk05: Yes, sir.
spk09: Okay.
spk05: Oomer, if your telephone is muted, please unmute.
spk09: Our next question. Oh, go ahead, please, operator.
spk05: The last person left the queue there, no further questions.
spk09: Okay, very good. We may have had some technical problems there. Well, just to wrap, thank you guys for joining us this morning. It was a great 2020, very successful on all fronts, and 2021 is shaping up to be an equally promising year. We anxiously await the results of CPL 231 in the midyear, the DeRigabat Anxiety Study and Healthy Volunteers. and we look forward to providing continued updates on our progress as we move through the year. So thank you guys for joining us, and enjoy the rest of your day.
spk05: Ladies and gentlemen, this does conclude the conference. You may now disconnect. Everyone, have a great day.
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