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spk06: Ladies and gentlemen, thank you for standing by and welcome to the Concert Pharmaceuticals Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Justine Konigsberg. You may begin.
spk01: Good morning and welcome to Concert Pharmaceuticals' fourth quarter 2021 investor update. Joining me this morning with prepared remarks are Roger Tung, our CEO, and Mark Becker, our CFO. Our prepared comments today will be brief, so we can jump right into the Q&A portion of the call, where we will then be joined by Nancy Stewart, our Chief Operating Officer, and Jim Casella, our Chief Development Officer. As a reminder, today's discussion will include forward-looking statements about your expectations, plans, and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our most recent 10-K filed with the SEC. Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call. With that, I would now like to turn the call over to Roger.
spk04: Thank you, Justine, and thank you, everyone, for joining us for our fourth quarter update. 2022 is the year for CTP543. The finish line is in sight, and assuming success in our Phase III program in alopecia areata, we intend to move as rapidly as possible to file our NDA with the FDA in the first half of 2023. As we look back on this past year, Concert's team executed extremely well on the CTP543 clinical program. particularly in light of the challenging and changing COVID-19 landscape during the past couple of years. The team's focus and responsiveness in implementing an initial clinical plan and responding to shifting conditions has paid off. The achievement of our 2021 milestones positions us strongly for the year ahead. This will be a data-rich year for Concert, with the first 543 Phase 3 data readout expected next quarter. Let me outline the status of our CTP543 program and expected upcoming data readouts. We have fully enrolled both of our pivotal trials, ThriveAA1 and ThriveAA2. These trials collectively enrolled over 1,200 patients in the US, Canada, and Europe. This was no small feat, and we did it within the timelines and goals initially laid out before the onset of the COVID-19 pandemic. We expect to report top-line results this year from Thrive AA1 in the second quarter. The Thrive AA2 top-line results are expected to follow soon thereafter in the third quarter. All patients in the Thrive AA trials and other CTP543 efficacy studies are eligible to enroll in the open-label long-term extension studies, whereby they will receive active treatment We will also continue to collect long-term safety data to support RNDA. The North American Open Label Extension Study has been ongoing since April 2019, providing us with a wealth of additional data. According to a recent paper, there could be up to about 1.5 million alopecia areata patients in the US with a sizable subset having moderate to severe disease. Currently, there are no FDA-approved treatments However, even with other potential players in the market, given the extent of patient need and the clinical profile we've seen to date with CTP543, we believe it's a blockbuster opportunity. Patients have waited a long time, and we hope to provide them with an important therapeutic option. All of these factors, from our strong execution of the clinical program to the market opportunity, give us momentum and confidence as we prepare to move our focus from late-stage development to commercializing CTP543. As I conclude my remarks, let me emphasize why we're excited about 543. First, CTP543 is a potential best-in-class compound for alopecia areata with multiple Phase II clinical trials supporting its efficacy and safety profile. Second, alopecia areata is a very large untapped market opportunity in the medical dermatology space for which, to date, JAK inhibition is the only mechanism that has demonstrated consistent clinically meaningful efficacy. We expect to be a key player in the alopecia areata market. Lastly, even beyond our currently issued patents, we believe we will have IP protection for CTP543 for many years out. Our team has consistently demonstrated its ability to execute. We intend to do the same in 2022, and as mentioned, it will be a data-rich year. We have sufficient cash to bring us past data readouts for both CTP543 Phase III clinical trials. With that, let me turn the call over to Mark, who will review our financial results.
spk08: Thanks, Roger. As I review our 2021 financial results, Please reference the financial tables found in today's press release. Revenue was $32.6 million for the year ended December 31, 2021, compared to $7.9 million for the same period in 2020. Revenue during 21 primarily related to the $32 million cash payment received from Vertex for the purchase of the potential future milestones under our 2017 asset purchase agreement related to VX561. Research and development expenses were $87.6 million during 2021 compared to $61.6 million during 2020. The 2021 increase was primarily related to the ongoing CTP 543 Phase III clinical program. General and administrative expenses were $22.5 million during 2021 compared to $18.9 million for the same period in 2020. The 2021 increase was primarily attributable to higher external professional service expenses and non-cash stock-based compensation. Our net loss for the year ended December 31, 2021 was 80.1 million or $2.33 per share compared to a net loss of 74.8 million or $2.40 per share for the same period in 2020. We ended 2021 with 141.6 million in cash, cash equivalents, and investments, which we expect to fund the company into the fourth quarter of 2022 based on our current operating plan. In November, we raised $65 million from BBF and RA Capital. The raise consisted of three components, the sale of common and preferred stock, warrants, and a portion of the potential future ABP 786 royalties under our existing licensing agreement with Avenir. we have the potential to receive an additional 103 million upon the full exercise of the warrants, which we would expect to fund the company beyond the anticipated submission of our NDA for CTP543 in the first half of 2023. As Roger mentioned, 2022 will be a data rich year for Concert and continued success with CTP543 gives us the foundation to advance this important drug to market. We look forward to keeping you updated on the upcoming key milestones for the company as the year progresses. This concludes our prepared remarks, and we would be happy to address any questions.
spk06: Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. If your question has been answered or you wish to move yourself from the queue, please press the pound key. Our first question comes from Jason Butler with JMP Securities.
spk07: Hi. Thanks for taking the questions. Obviously, an exciting few months ahead. Roger, maybe just as you're wrapping up AA1, going through the kind of quality control process, can you just walk us through, are you seeing any impact from the pandemic or experiencing any surprises with missing data, or are you navigating that process without issue? Thanks.
spk04: Hi, Jason. Thanks very much for the question. That's really a clinical one that I'll let Jim answer.
spk05: Hey, Jason. How are you? So, As you know, it's been quite a couple of years. We've been doing very well in conducting our trials during the pandemic. I think we adapted early on. We're not seeing any major issues here, Jason. I think we're on track for the readouts that Roger mentioned previously. So I think we're in good shape.
spk07: Great. And then just one more from me. Can you talk about the work that you're planning and doing, you know, between, you know, the phase three readouts and potential launch in terms of commercial prep and, you know, on the education and awareness side, what your plans are? Thanks.
spk04: Sure. So we are in the process of working with a couple of consulting groups right now. We're also working with members of our board who are commercially focused on And we're in the process right now of doing physician segmentation, looking at targeting initiatives, and really slipstreaming, I would say, off of work that's also being done by our competitors. There's quite a bit that's happening, multiple initiatives that are going to position us to be in a good position, we believe, by the time of 2020. uh, late NDA and, and into launch.
spk07: Great. Helpful. Thanks for taking the questions.
spk00: Thank you.
spk06: Our next question comes from .
spk00: Great. Thanks for taking the questions. Uh, so maybe just a couple, obviously with the data coming up, just to sort of hope you can maybe frame expectations here a little bit. Um, one, uh, just in terms of timing, I know you were saying second quarter, I see clinicaltrials.gov says primary completion date is May. So should we assume it's more sort of later part of the second quarter as opposed to, you know, sort of April? Just if there's any, you can comment there. And then in terms of the actual data, obviously, you want statistically significant results. Could you just sort of frame what you're hoping for in terms of sort of clinically meaningful data? And then you talked about this being a potential best-in-class product. Just based on what you know now, kind of where do you see sort of the differentiating factors you're hoping to have relative to, you know, I guess your key competitors, I guess, Lilly and Pfizer in the space? Thank you.
spk04: Sure. Go ahead, Brian. Go on, Jim.
spk05: I was going to say, hi, this is Jim. In terms of the timing, I think, you know, the best we could do right now is say that, you know, we are on track for second quarter and, you know, and I feel very comfortable about that. We can't give any more color on the specific timeframe within there. In terms of clinical meaningfulness, I think this relates to the primary endpoint that we're using, which is achieving a SALT score of 20 or less. There was work done early on and a publication that suggested, based on results from patients and experts in the field, that having 80 or more percent scalp coverage represents a clinically meaningful response. So that of course corresponds to a SALT score of 20 or less. So that's our primary endpoint. So we're clearly designed to achieve what would be considered a clinically meaningful response. So that's why we have the primary endpoint of the SALT score of 20 or less. So in terms of best in class, the data we have from our phase two using the SALT 20 criteria we see very favorable responses with our 12-milligram dose giving approximately 42% response rate of those achieving a SALT score of 20 or less and something close to 30% for our 8-milligram BID dosing. So just, again, not comparing apples to apples, but when you look at our data so far, we believe we have the best-in-class profile compared to the other data that's been reported.
spk00: Okay. All right. Thank you very much.
spk06: Our next question comes from Roy Ruckoff with Jefferies.
spk09: Hi, good morning, and congrats on the progress, and thanks for taking my questions. Looking back at your open label extension study data, only about 23% of patients discontinued, but the number of enrolled subjects continued to drop past week 60. So just wondering if you know how many of these patients kept taking 543, and what would you expect based on your observations to be a typical duration of therapy for these patients on 543?
spk05: Yeah. Hey, Maury. Thanks. It's a great question. I think your observations are correct, and I think there's one complicating factor in that when we had subjects that were dropping out during the open label extension study, the data that reported was really in the heart of the pandemic. And in a lot of cases, patients were dropping out because it became difficult, centers became difficult, they were not open, there were staff shortages, et cetera. I think in general, we're seeing a very favorable profile in terms of patients staying in the open label extension trials. Our 5001 trial, the Thrive, the patients coming in from our phase two work, they've been on drug for in some cases, three years plus. So we've had a lot of patients that have continued to stay on drug. There's obviously been, you know, people move, you know, people do, you know, have other life obligations where they can't come into the clinic as often. So I think those are some major reasons why people have not continued to I think we're seeing a lot of enthusiasm for staying on drug as long as possible, so I think that's why we're seeing, you know, good results in our open label extension in terms of patients staying in.
spk09: Got it. That's helpful. And for the Phase 3 extension, can you talk more about what you're seeing there and how many patients are staying on study there?
spk05: I'm sorry. For the Phase 3 extension, you know, for the The subjects rolling into the open label extension study, we have, as we reported previously, we had over 90% of subjects rolling in from our earlier work, and we continue to see a very, very high, greater than 90% rollover into the open label extension.
spk09: Got it. Okay. And just as a follow-up to the earlier question on competition, I think the latest commentary from Pfizer is that they intend to file in the first half of 22, and you're indicating that you would like to file in the first half of 23. How are you thinking about positioning with 543 and entering the market relative to both Pfizer and Lilly timelines?
spk04: Yes, so we remain to see what the actual timeline of approval is for both of those entities. As you know, there was a significant delay in approval of JAK inhibitors for the atopic dermatitis, and so we'll have to see how FDA responds to the use of or the application of JAK inhibition in alopecia areata. We think that we're close in terms of the timelines to our competitors. And as Jim indicated, the data that we have, which has been consistent across multiple efficacy phase two studies, has positioned us to be hopefully, potentially and hopefully the best of the entities in terms of its clinical profile. So we think we'll be highly competitive.
spk09: Got it. Okay. That's That's helpful. And maybe last question just on IP. There were the oral arguments in February and a decision for the 659 patent is expected around May 12th. Just wondering if you could talk about how you're thinking about outcome scenarios and next steps.
spk04: Well, I think it's fairly straightforward in terms of outcome scenarios. In a win scenario, which we discussed, We believe the oral arguments went well for us and we're certainly hopeful of a positive outcome. In a win scenario, unless there was significant legal error, we think that that closes the case out and gives us active patent coverage into the 2037 timeframe plus PTE. In a lose scenario, we have the opportunity to either either end, petition to the director for reassessment, assuming that she's, actually she has been confirmed, or to go to the Federal Circuit Appeals Court to address what we would believe would be legal errors because we think we had strong arguments for the validity of the patent.
spk09: That makes sense. Okay, thank you for taking my questions.
spk05: Thank you.
spk06: Again, ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. Our next question comes from Esther Kong with Brandenburg.
spk03: Hi, good morning. Thanks for taking my questions. So my first question is assuming positive Phase III data from both trials of CTP543 What steps remain prior to NDA submission? And then I've got a follow-up.
spk05: Yeah, hi, this is Jim. So, you know, obviously, you know, once we get the phase three results, that will comprise the, you know, the major evidence for efficacy as well as, you know, the safety data generated from not only the phase three trials themselves, but those subjects rolling into the open label extension study. Obviously, there's a lot of work that goes on to getting the NDA filed. We are still wrapping up some of the other supporting studies that will be needed to include into the NDA. I think we're on track to do all that. As Roger mentioned earlier, there's all of that work going on between now and the filing.
spk03: Any additional details on those supporting studies?
spk05: Yeah, so some of those are phase one. We talked about before that just part of a standard package requires something like a thorough QT study. So there's studies like that. We've also listed in CT.gov that we're doing a study that will help support labeling. That's our durability study. So as those studies wrap up as well, those will be included in the NDA package.
spk03: Okay, and then my second question is on commercialization. Any details on the potential size of the sales force, physicians you're targeting, anything like that? Thanks.
spk04: Yeah, so we're still early in the commercial assessment phase. We have multiple streams of activities that are going on to get to a fine point in those questions. You know, we think that there have certainly been changes in terms of the size of sales forces for a given product relative to the pre-COVID timelines. But, you know, that's something that we'll be working over the course of the coming couple of years to really nail down the best answers and bring in the personnel to support it. Nancy, do you have any additional comments?
spk02: I think that's exactly right. I think, you know, previously when we looked at the number of derms and med derms, you know, we thought a sales force and MSLs of about 100 or less would have been appropriate. But now, as Roger said, given how things are changing with the COVID landscape, you know, we are assessing all of those assumptions. In addition to really nailing down, you know, our forecast and making sure we're just commercial – our readiness for entering the commercial arena is solid with payer evidence and KOL mapping and the other activities that you would expect.
spk04: And just to be clear about that, our assessment is that it's likely a reduced number rather than an increased number.
spk03: Correct. Correct. Right. Got it. Okay. And then, sorry, just one follow-up to that. And then just any feedback from KOLs that – you know, have looked at the data and what their thoughts are on CTP543. Thanks.
spk04: Jim, do you want to answer that?
spk05: Sure. We have a lot of KOLs working with our drug in the trials. There's been a lot of enthusiasm from the very beginning, and I'd say that that enthusiasm continues as we continue discussions with the KOLs.
spk03: Thank you.
spk06: And I'm not showing any further questions at this time. I'd like to turn the call back to, actually, we do have, actually, my apologies, turn the call back to Justine.
spk01: Thanks, Kevin. Thank you, everyone, for joining us this morning. If there are any follow-up questions, please don't hesitate to reach out. This concludes today's call.
spk06: Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.
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