Chimerix, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Chimerics second quarter 2022 earnings conference call. I would now like to introduce you to your host for today's call, Michelle Laspaluto, Vice President of Strategic Planning and Investor Relations at Chimerics. Please proceed.

Thank you, and good afternoon, everyone. This afternoon, we issued a press release on our second quarter operating updates. You can access this press release in our investor section of our website. With me on today's call are President and Chief Executive Officer Mike Sherman, Chief Medical Officer Ellen Melamed, Chief Financial and Business Officer Mike Andreol, Chief Science Officer Randall Lanier, and our Chief Technology Officer of Omnipotence, Josh Allen. Before we begin, I'd like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to risks and uncertainties and other factors. These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties. At this time, I would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Good afternoon, everyone. Thanks for joining us. today we've been busy the past few months so let me get right to the details of the progress we've made and i'll start with tembexa in july we marked a significant milestone recording our first tembexa product revenue covered by two international agreements of 35 million dollars in aggregate this was only possible because we made the decision a couple of years ago to manufacture over 300 000 treatment courses of tembexa at our own risk without a contract, somewhat atypical in the biodefense space. Because of that decision, we were able to take advantage of this opportunity immediately, completing contracts and shipping products in a matter of days. If you're looking to isolate and assess chimerics execution as it relates to creating and delivering on contracts, these are great examples. The same decision to manufacture product at risk will also position us to respond immediately to place Timbexa into the US stockpile once the BARDA agreement is in place. We mentioned previously that the monkeypox outbreak introduced some new considerations for both BARDA and Chimeric, so we are and have been thoughtful to address those urgently. In the meantime, the international sales we've recorded have satisfied our near-term capital needs. You may be aware that while Timbexa was approved for smallpox, preclinical data does support the activity of Timbexa against multiple orthopoxviruses, including monkeypox. The FDA commented on that potential in their post-approval manuscript. The fact of the matter is no randomized control studies have been performed in humans with monkeypox with either of the FDA-approved antivirals for smallpox and There are still a lot of unknowns as the virus spreads and mutates into potentially more resistant strains. We're working with leading infectious disease physicians on potential options to generate additional data. Let me now turn to ONC201. Pleased to announce today the design details of our phase three action study of ONC201. This is the most advanced study in this H3K27M population of patients. I'll let Alan go into the design details, but let me make a few points up front. We've worked with KOLs across disciplines and geographies to design a trial with a probability of success that's high and multiple ways to achieve this efficiently. The action study is highly differentiated from the other Phase III studies that have been performed in the broader glioblastoma space. It really comes down to the Phase II data we have in hand and the circumstance in which it was generated compared to other drugs that really differentiate this drug's likelihood of success. I should first note that about a third of the studies in this space advanced to phase three without phase two data. For those that did advance based on phase two data, it was rare that the patient population was associated with a targeted genetically specified mutation like H3K27M. With that target, we can focus on the same homogeneous population of patients in phase three that were the source of the data in phase two. We can also identify those patients with the same tools used in phase two, which are reliable diagnostic methods already nearly universally used. The isolation of single agent activity is also critical. Many previous phase two studies have been conducted with drug combinations and or have failed to have adequate washout periods to distinguish drug effects. They then relied on time point endpoints like PFS compared to historical benchmarks. And in contrast, we've carefully isolated the single agent activity of ONC201 in our Phase II data. Importantly, we've measured tumor response using Raynaud criteria, the most rigorous standard. This method was developed to address some of the shortcomings of prior response rate measures, such as the Levin and McDonald criteria. Our overall response rate of 20 to 30 percent in the relapse setting using Raynaud, complemented by the durability of those responses evaluated by blinded independent central review, also increase our confidence relative to prior studies done using less stringent criteria. It's also critically important that our efficacy data was generated in the absence of anti-angiogenic drugs like Avastin, which can confound imaging and yield false response and progression assessments, which have historically failed to translate to phase 3 success for other drugs. Finally, the consistency across multiple clinically meaningful endpoints is particularly convincing. The ONC-201 data demonstrates a clear association between response and a reduction in steroid use and an improvement in performance status. There's also an association with survival as all responders were alive at two years or were alive at the data lock if that was earlier than two years. For patients who did not achieve a response, none were alive at two years. The internal consistency of this data is striking. We previously noted the ongoing work related to compiling safety data to strengthen the risk-benefit assessment of ALK201. Last fall, we reported just a summary of of safety data from the 50 patient efficacy cohort. I'm now happy to say we've completed a more robust assessment of over 200 patients, and the results reveal a very attractive safety profile as expected. I'll turn the call over to Alan to share more about the details of the Phase III action study, as well as hit on those findings in the latest safety assessment. Alan?

Thank you, Mike. I'm excited to briefly go over the details of our Action Phase III study. We expect to activate select U.S. sites later this year and continue into international sites throughout the first half of next year. ACTION is a randomized, double-blind, placebo-controlled, and multi-center study in newly diagnosed diffuse glioma patients whose tumor harbored the H3K7M mutation. Treatment with ALK-201 will occur following completion of radiation therapy. The study will enroll approximately 450 patients who will be randomized received, 625 milligrams of Octo-1 at one of two dosing frequencies, once or twice weekly, or placebo. The primary input of the study is overall survival. The study will also evaluate progression-free survival with an alpha control for both OS and PFS. OS will be assessed for efficacy at three alpha control time points, two interim analysis by the independent data monitoring committee, followed by a final assessment. The final PFS analysis will be performed using renal HGG by blind and independent central review. Participants in the study must have a Karnofsky or Lansky performance status, which is a measure of patient's ability to perform ordinary tasks of greater than or equal to 70 at the time of randomization. Key exclusion criteria are the presence of a primary spinal tumor, diffuse intrinsic pontine glioma, evidence of leptomental spread of disease, or cerebral spinal fluid dissemination. The study will take place at up to 120 sites in North America, Europe, and Asia Pacific. The first interim analysis anticipated early 2025 with data in 2026. The study has greater than an 80% power with an assumed hazard ratio of 0.65 for survival and 0.60 for progression-free survival. independent comparison would perform for each OCTO1 study group versus control at each time point. The study design builds on findings from the phase two data that should increase the likelihood that patients will respond to OCTO1. These factors include moving to an earlier line, likely including patients with less bulk disease, increasing the time for patients being on OCTO1, as well as limiting the study to patients with a KPS of greater than or equal to 70. All of these factors were associated with better response in the Phase II data set. In addition, the study's design has a number of elements which should support rapid enrollment. This includes a wider time window to identify patients, as there's a natural six-week gap between initial diagnosis and completion of radiation therapy. The presence of an H3K27 mutation will be identified as part of the standard of care at the time of initial diagnosis with widely available tests. In addition, patients are twice as likely to receive off to one of a placebo. We receive excitement from numerous KOs globally to participate in the study. Lastly, we've been keenly listening as FDA guidance and expectations for oncology development programs are evolving. In addition to an increased push towards randomized clinical trials and registration, FDA has pushed for evaluation of multiple doses and target indications, which has included discussions with chimerics. Noting that Onc201's efficacy was mainly based on the single dose and schedule, we incorporated an additional dose in the Phase 2 study with the upside of increasing study enthusiasm and probability of a successful study. This additional schedule has been well tolerated in previous Onc201 trials. In the meantime, we've been updating our Onc201 safety data analysis that includes a robust safety analysis performed by 2 in 11 patients. With this new state of data added to the data we've already reported, we now have a better characterization of this risk-benefit of this drug. In this analysis, treatment-emergent adverse events that were drug-related were generally grade 1 and 2. The most common events were headache, fatigue, nausea, and vomiting. The only related adverse event of grade 3 or higher that occurred in more than 2% of patients What's for T reported at 2.8%. Average events reported in the pediatric population were generally similar to those reported in adults. Only five patients, 2.4%, experienced a treatment-related adverse event leading to cytodrug discontinuation, reduction, or interruption. These events were neutropenia in three patients, hypersensitivity in one patient, neutrophil called disc decrease in one patient, and a pulmonary embolism in one patient. With the phase three trial soon underway and this data in hand, we plan to revisit the questions of accelerated approval based on the phase two data with the FDA in the fourth quarter of this year. With that, I turn it over to Mike and Joel to speak to our financial results.

Thanks, Alan, and good afternoon, everyone. With Alan's overview of the action study and rationale for why we're optimistic about its outcome, I wanted to just make a few comments on the potential commercial market for ONC201. As most of you are aware, diffuse gliomas are a particularly lethal form of brain cancer and H3K27M mutants are among the worst of what is already a poor prognosis. The unmet need for new therapies in glioma broadly and H3K27M mutants in particular is among the highest unmet needs in all of oncology. As it relates to ONC201, Our market research indicates that the unaided awareness of this agent for H3K27M mutants is already high, and following the participation in the action study of up to 120 sites across the major markets, we expect the association of this agent to H3K27M mutations will be nearly ubiquitous among top prescribing neuro-oncologists. If the action study is successful, we expect this awareness will translate to rapid adoption of the therapy in major markets. This likely adoption should be aided by a competitive landscape that is quite attractive. Specifically, we're not aware of any other phase two or phase three programs in the industry targeting this mutation. These dynamics likely make ONC201 unique in a market where there have been several examples of underperforming commercial launches in oncology in recent years. Consequently, we view the commercial risk here as relatively low and continue to view this as a worldwide annual revenue opportunity that should comfortably exceed $500 million. As Mike mentioned earlier, this past July we announced two international Tembexa procurement contracts totaling nearly $35 million. We've delivered nearly all of that product recently and will realize at least $32 million in revenue in the third quarter. On a pro forma basis, cash at the end of June would have been approximately $70 million when including this additional revenue. As it relates to the pending transaction for the sale of Tembexa to Emergent, in late July, the HSR waiting period expired. That satisfied one of the key closing conditions. The other two remaining key closing conditions are execution of the procurement contract with BARDA and BARDA's approval of a pre-novation agreement between Chimerics and Emergent. I know that investors are eager to have a BARDA contract executed, as are we. Certainly, the recent declaration of the monkeypox outbreak as a public health emergency by both the WHO and HHS has influenced how both parties are approaching the final details of this agreement. To that end, we'll work expeditiously with our counterparts at BARDA to finalize the contract as soon as reasonably possible. In the interim, we continue to operate the business in the ordinary course and will provide another update to the market on the finalization of the BARDA agreement when we can. With our current cash position, in addition to the expected cash generated from the sale of Tembexa, Temerix expects to be well positioned to advance the action study and other pipeline programs without concern of a near-term dilutive financing. Now, moving to our statement of operations, the company reported a net loss of $23.5 million, or $0.27 per basic and diluted share, for the second quarter of 2022, compared with a net loss of $17.8 million, or $0.21 per basic and diluted share, in the second quarter of 2021. Research and development expenses increased to $18 million for the second quarter of 2022 compared to $13.8 million for the same period in 2021. The main driver of this increase is the ongoing development related to ONC 201. General and administrative expenses increased to $5.8 million for the second quarter of 2022 compared to $4.4 million for the same period in 2021. And with that overview, I'll now turn the call back to Mike Sherman for closing remarks. Mike?

Thanks, Mike. Before I open it up for questions, I'd like to take a minute to welcome Christopher Jordan to the team as our Vice President of Regulatory Affairs. Christopher comes to us with over 30 years of pharma experience across all stages of product development. Some of our management team have had the pleasure of working with Christopher at Endocyte and Novartis, where he recently led the regulatory strategy and execution of the FDA approval and EMA submission of PSMA 17, or Pluvicto, as it's now known. His knowledge in the oncology field and track record of navigating complicated regulatory processes will be a great addition to the team as we continue the development of our oncology pipeline. With that, Brianna, I'll turn it over to you to open the call for questions.

Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question will come from Maury Raycroft with Jefferies. Your line is now open.

Hi. Thanks for taking my questions, and congrats on getting the Phase 3 design. For the Phase 3, you have two interim OS assessments by independent data monitoring committee at 164 events and then 246 events, and then the final at 327 events. If successful, could either of the initial interim assessments at 164 or 246 be enough to file for approval?

Yeah, those are designed such that with statistical significance at those endpoints, you'll have PFS in hand, response rate data in hand, and overall survival at those early endpoints, pretty significant advantages there. we would expect those to be the basis of a regulatory submission and approval.

Got it. And then also, can you talk more about the twice-a-week dosing and what you've seen in prior clinical data that supports the rationale for moving the twice-per-week dosing into the Phase III?

Yeah, I might just turn that directly over to Alan and Josh to share both the rationale for including it as well as some of the experience we've had with it in prior trials.

Yeah, this is Alan. I'll start. We have evaluated twice-weekly dosing and have been shown that this has been a safe regimen in several studies. One of the reasons we want to move this forward is we wanted to have the opportunity to have even a more intense dose. We know that we want to try to maximize the effect we've seen, and we really haven't seen any challenge so far with safety from the current dosing regimen. This also is addressed in part for what you've seen from the FDA regarding optimization of dose. And we think that this helps also address the situation where you do have two shots on goal and essentially you have two places for a patient to get on study with OCTO-1. And I'll pass on to Josh for an additional comment.

Sure. This is just speaking to the rationale, really comes from preclinical in vitro findings showing that the efficacy of OCT201 can be increased with prolonged exposure to the same concentration, a little bit of a sweet spot towards 48 hours of an incubation time, really leading to that maximal effect. So the thinking is that we're getting into these brain tumors with the current dose, achieving therapeutic concentrations, and if we can just prolong that duration for an extra day, by giving a second dose on a consecutive day there, that might be the key to unlocking an increase in efficacy based on those models. So that in combination with the safety experience in the clinic that Alex spoke to is what leads us to incorporate that.

Got it. I'll add one other thing, Maury. The notion that to encourage an enrollment in this trial, you would need to go to a two-to-one randomization anyway. if it were a single schedule. And so you kind of get that two-to-one benefit here with just a little bit higher end in aggregate. So it's, I think, a good use of the statistical power in order to get another shot on goal for success and still encourage patients to enroll.

Got it. Yeah, it's all helpful. And maybe last question for me, just I'm wondering if in communications with FDA, if they communicated on whether an accelerated approval path based on the phase two data and additional supporting data, if that's still on the table.

Yeah, as we discussed at our last call, we essentially delayed that conversation after their feedback earlier this spring with a focus on getting moving with the phase three trial and knowing that without this additional safety data in hand we were a little bit limited in our ability to make a strong case for the risk-benefit assessment so now that we have this additional safety data set which really plays out exactly as we expected we'll be able to go back to them so in the meantime we really haven't been push that conversation beyond the Phase III trial. We'll revisit that here later this year.

Got it.

Okay. Thanks for taking my questions.

Thanks, Maury.

Your next question comes from Joseph Tomei with Cowan. Your line is now open.

Hi there. Good afternoon, and thank you for taking our questions. Maybe the first one, just on OCTO-01, with the Phase III, you're administering shortly after completion of radiation. Is there a timeframe? that's mandated in the study and maybe you can compare this to the timeframe post-radiation that patients saw on 201 in the phase two analysis population, that would be helpful.

Sure, I'll let Alan answer that one.

So, there's a couple ways you're looking at this. One of the reasons we've done this way, we're allowing patients to start the screening process when they are initially diagnosed And then starting the radiation therapy. So you have plenty of time. You can actually grab the patient. There's a specific time frame which you should be randomized, which I believe, and I'll have Josh correct this. I think it's six to eight weeks post-radiation. I'm sorry, not post-radiation, post-initial diagnosis. But I want Josh to clarify the exact time. I don't have that in front of me.

Yeah, sure. We'll enroll in the range of two to six weeks post-radiation for this study. And that contrasts to the prior efficacy analysis in the relapse setting was more than three months, that washout period there. So this study is substantially moving patients up closer to radiotherapy, which we think will give them a better shot at having prolonged duration of therapy and perhaps better response response.

Okay, perfect. Thank you. And then maybe jumping over to Tim Bexa, is there a time limit associated with the EBS deal closing on when the BARDA contract needs to be finalized? Like you said, it has to be a 2022 event. And then second part of that, should we anticipate any substantial additional XUS revenues going forward or have you kind of hit the key markets? Thank you very much.

I'll let Mike hit those two questions.

Yeah, there's... There's an outside date in that agreement that's available there for both parties, Joe. It's September 30th in that agreement. And then as it relates to the international opportunity, we continue to have discussions with parties internationally. I think the declaration of the public health emergency, certainly by the WHO, continues to sort of activate interest in those conversations. So, you know, the The contracts that we entered into at the end of June were certainly ones that we were able to turn around very quickly. We'll continue to have those conversations in the weeks ahead.

Thank you very much.

Your next question comes from Ed White with HC Wainwright. Your line is now open.

Good evening. Thanks for taking my questions. Just circling back to the potential for accelerated approval, have you set a meeting date with the FDA yet regarding accelerated approval? And does using the two different dosing schedules in the phase three study somewhat hamper the expectations for accelerated approval?

Yeah, I'll let others add to this. We're preparing the materials that would be the basis for that meeting now as the safety data set has just been completed. I would suggest that having that study in place and up and running and really well advanced at the time an action from the regulators would be taken on an accelerated approval is a big part of what the FDA wants and needs to see in considering an accelerated approval. So I think that would actually provide some comfort. If we were exploring lower doses, I think that could be potentially problematic. in their review, but because we're actually exploring the potential of a more efficacious higher dose that obviously if it's not more effective or it's insufficient safety, then that would not impact an accelerated approval relative to the lower dose. It actually also simplifies some potential commercial issues that might arise if you were lowering your dose from an accelerated approval regimen. So I don't think it impacts in a negative way their consideration. In fact, I think having a robust design with certainty around having overall survival to confirm a full approval really was going to be required anyway. And this just gets them a much more robust assessment of that and, frankly, consistent with their guidance as it relates to for dose optimization that I think would be supportive of that conversation.

Hey, Mike, can I add to this? This is Alan. I think part of this goes back to the feedback we received and actually all facilities received from FDA years back. So dose optimization really wasn't in the situation back then. Things have evolved in FDA. So again, if you go according to what they've said, the L-substantialization is often more focused on the phase three aspect of that. So I do think I agree with Mike that we still have the reasons to discuss it. This is also a very high in the population with significant need.

Okay, thanks.

And then just on Canvexa, regarding monkeypox, have you been approached by any governments outside the U.S. regarding potential purchases due to monkeypox? And perhaps if you could just review in a little bit more detail the preclinical data for monkeypox and your thoughts on either you or emergent pursuing studies in monkeypox?

Maybe I'll, I think, Ed, as it relates to the conversations with parties outside the U.S., those were likely accelerated as a result of monkeypox, although maybe never directly referenced in that context, given the approval in smallpox. As Mike said, those conversations are ongoing. Maybe I'll turn it over to Randall just to make a couple of comments, knowing that there are a lot of unknowns in terms of the treatments for monkeypox. There is some pretty compelling basis to believe that Tembexa be an active and safe agent for use in this population.

Sure, Mike. So I'll start, I guess, with in vitro and just say that monkeypox is the second most sensitive orthopoxvirus we've ever tested. It's about twice as sensitive to tembexa as variola, about four times more sensitive than the mousepoxvirus that we use for approval. and about 14 times more sensitive than the rabbit pox virus that we use for approval. So from an in vitro standpoint, there's every reason to believe that monkeypox would be highly responsive to Timbexa. We also have two animal models, one of them in mice, which showed 100% protection from monkeypox virus infection with Timbexa, and then one in prairie dogs, where it was it was sort of intermediate protection, but it turned out that prairie dogs, like monkeys, actually, um, uh, anabolize Tembexa much faster. So the exposure within prairie dogs of Tembexa is about 15% that of human. And that's the reason that, that we saw kind of intermediate responses there. Uh, with respect to, to humans, Obviously, there's the published cases of three monkeypox virus cases in the UK, where all three patients responded very well to Timbexa. And the paper was actually fairly negative on the drug for reasons that we don't fully understand. But the patients receiving Timbexa did all fully recover. There was clear virologic effects. They did have transient ALT elevations that caused Timbexa to be discontinued, but the patients all responded fully. And I should just add that with regard to the ALT elevation, the manuscript ignored all of the FDA data, which was instead of three patients, was 392 tembexal recipients versus 208 placebo recipients, where the ALT elevations were 7% in the tembexal arm and 5% in the placebo arm. So all of the data suggests that this drug should work quite well for monkeypox.

Okay, great. Thanks for taking my questions. That's it.

Your next question comes from Shumet Roy with Jones Research. Your line is now open.

Hi, everyone, and congratulations on all the progress. A quick question on the ACTION trial. Possibly, Alan, if you can remind us, from the relapsed refractory glioma phase 2, what were the immediate prior treatment regimen for those patients? Was it mostly radiation and also... the temozolomide chemo. And the second is on action. Would it have been better to have a physician's choice of the control arm rather than a placebo? Just any thoughts.

Yeah, so I'm going to first go to the choice of the control arm. And I think it's important to note in the control in the phase three trial, post-radiation therapy, there really is no standard of care. Patients typically received the radiation therapy, and then they waited to progress the disease. So this is an ideal time to study this. It also builds on some of the factors we saw in the phase two trial that we think will actually increase the probability of the success. Typically in this study, you're gonna have a little smaller disease, you're gonna be on therapy longer, and we're gonna include the lower PPS score, and then we include in the 60s. So we do think these factors increase our probability of technical success in this population. I'm going to ask Josh to kind of go through what he found in the prior, since he was the one who was initially doing these trials from the Phase II studies. Josh?

Hi there. Yeah, with regards to the prior therapies and that recurrent experience, obviously all of these patients had radiation recurred and waited more than 90 days, as I noted on an earlier comment. In terms of additional therapies, these patients saw prior to getting OX201 tended, particularly in the adult population, to include chemozolomide, even though that chemotherapy is known to not have benefit within subsets of H3227. We still saw exposure to that, just given the quality of other agents. Other therapies included bevacizumab for symptomatic relief of edema. in addition to nitrosylurea, glycol, and musty. So really just a mixture of chemotherapy. And we're hopeful that moving earlier, as we've noted a couple times here, moving earlier in Lyme therapy prior to exposure to those chemotherapies will increase the likelihood of our patients' benefit of CO1.

Got it. Thank you for that. And one last question on ONC206. Just curious on the timeline, what are you thinking of to bring this drug pre-IND or in the clinic?

Yeah, as we mentioned, that drug is being evaluated in two studies, one a pediatric and another an adult. The adult study is being sponsored by the NIH and to be fair, our focus has really been on accelerating on 201 And so we are escalating that dose through that program. I would expect to be able to get into sort of the therapeutic window here into next year. But we'll report separately as we get closer to what we expect would be a data readout on that and a selection for an indication that we would pursue that. One of the things we've talked about in the past is that Even though the targets for ONC206 are the same as ONC201, that drug opens up different opportunities in terms of development within oncology, and so we would expect to pursue non-overlapping indications initially with ONC201.

Got it. Thank you so much for taking the questions. Thank you.

There are no further questions at this time. I will now turn the call back over to Mike Sherman.

Thanks, Brianna, and thanks again, everyone, for joining the call. We look forward to the next updates, particularly on the progress of the BARDA contract. Thank you.

Have a good evening. This concludes today's conference call. You may now disconnect.