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spk01: Good day, and thank you for standing by. Welcome to the Concert Pharmaceuticals First Quarter 2022 Investor Update 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. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Justine Konigsberg, Senior Vice President, Corporate Communications and Investor Relations. Please go ahead.
spk02: Good morning and welcome to Concert Pharmaceuticals' first quarter 2022 investor update. Our prepared comments today will be brief, so we can jump right into the Q&A portion of the call. Joining me this morning with prepared remarks are Roger Tung, President and CEO, and Mark Becker, Chief Financial Officer. Nancy Stewart, Chief Operating Officer, and Jim Casella, Chief Development Officer, will join the team for Q&A. As a reminder, today's discussion will include forward-looking statements about our future 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 10Q filed with the FCC. 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.
spk08: Thank you, Justine, and thank you, everyone, for joining us for today's update. With top-line results from our pivotal clinical trials coming during this and the next quarter, We remain focused on bringing CTP543 to the finish line and assuming Phase 3 success, we're well positioned to file our NDA in the first half of 2023. Both of our Phase 3 Thrive AA clinical trials are randomized, placebo-controlled, double-blinded, multicenter studies evaluating the safety and efficacy of CTP543 in adults age 18 to 65 years old who have 50% or greater scalp hair loss. Each study is evaluating two doses of CTP543, 8 milligrams and 12 milligrams, twice daily, compared with placebo for 24 weeks. The primary endpoint is the percentage of patients achieving an absolute SALT score of less than or equal to 20, which is believed to represent a clinically meaningful result. Our top line data announcement from ThriveAA1 will include its primary endpoint and key safety data. We'll look to present more detailed findings from the study at future medical meetings. Recall that in our Phase II dose-ranging study, both the 8 mg and 12 mg twice-daily doses achieved a significantly greater proportion of patients with a SALT score of less than or equal to 20 relative to placebo. For those not familiar with SALT, or the severity of alopecia tool, it's a measure to determine the amount of scalp hair coverage by assessing four regions of the scalp that contribute to the total score, which ranges from 0 to 100. A SALT score of 0 corresponds to no scalp hair loss, while a SALT score of 100 corresponds to a total lack of hair on the scalp. As we shared in the past, there could be up to approximately a million and a half alopecia areata patients in the U.S. with a sizable subset having moderate to severe disease. Currently, there are no FDA-approved treatments. 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 has blockbuster potential in the treatment of alopecia areata. We're hopeful that phase three results will confirm our phase two and long-term open-label extension observations, and that CTP543 will be an effective and durable treatment for alopecia areata. with a generally well-tolerated safety profile consistent with its intended use. Among the JAK inhibitors being developed for the treatment of alopecia areata, our Phase II results of CTP543 appear to have a highly competitive profile, and we're working to bring it to patients as quickly as possible. I'd like to pause here and turn the discussion to Mark, who will provide an overview of our financial results.
spk09: Thanks, Roger. As I review our first quarter 2022 financial results, please reference the financial tables found in today's press release. Research and development expenses were $30.5 million during the first quarter of 2022 compared to $18.5 million during the first quarter of 2021. While the Phase III trials are winding down this year, we continue to have clinical costs associated with the open-label extension studies. the North American Extension Study is expected to continue until approval. General and administrative expenses were $5.5 million for both the first quarter of 2022 and 2021. Our net loss for the first quarter was $37.7 million, or $1.03 per share, compared to a net loss of $22.7 million, or $0.67 per share, for the same period in 2021. We ended the first quarter of 22 with $109 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. We have the potential to receive an additional $103 million upon the full exercise of warrants that were issued in our November 2021 financing. The warrants are tied to the Thrive AA1 and AA2 data readouts. If the warrants are fully exercised, We expect our cash runway will extend beyond the anticipated NDA filing, which is planned for the first half of 2023. We are at an exciting inflection point for the company as we prepare to release top-line Thrive AA1 data this quarter. We've worked hard to advance CTP543, and assuming success, the team here is very excited about this drug candidate moving toward an NDA filing next year. This concludes our prepared remarks, and we would be happy to address any questions.
spk01: Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Jason Butler with JMP Securities. Your line is now open.
spk07: Hi. Thanks for taking the questions. Obviously excited with the data coming up. Maybe you could just frame a little bit more based on the competitive landscape what we should be looking for from the SALT20. And then, again, just current thoughts on safety language on approved products for the class and just how you plan to approach the FDA with regards to the 543 label. Thank you.
spk10: Hi, Jason. Jim here. I think our expectation for our phase three trials are consistent with what we saw for our phase two. I think what we're looking for is consistency in the data readout on the 12 milligram and the 8 milligram BID dosing. I think we have good experience. We had a couple of trials in phase two that gave us confidence in our trial design for phase three, which is very similar to what we saw in our dose ranging trial. I think we're feeling pretty comfortable with the design and with the data we had, you know, entering into our phase three study. So I think we're, you know, we're looking for great consistency there as we had consistency in our phase two trials. I think the competitive landscape, you know, you've seen, you know, our, you know, Pfizer and Lilly competitors out there with data. I think, you know, our data is very competitive with what we've seen in phase two and our expectation is that we'll see, you know, consistency with our phase three results. I think as far as safety goes, the FDA has put language out there for JAK inhibitors across the rheumatology and the atopic derm space. I think that everyone's coming to grips with the FDA position on JAK inhibitors, but I think there's going to be a little difference with alopecia areata where there's no approved drugs for the treatment of alopecia areata. There might be some consistency in the safety language across the drugs, but I think the difference will be that alopecia areata has a significant unmet medical need. I think JAK inhibition is a very important mechanism in the treatment of alopecia areata, so it's very important for patients in terms of the mechanism here. And I think the data shows across the field that JAK inhibitors are very important as a mechanism to treat alopecia areata. So I think that's a very important consideration as we look at alopecia areata on the background of what the FDA has for the safety perspective.
spk07: Great. Thanks, Jim. And then just one more from me. Can you speak a little bit to the medical affairs and medical education planning that you're putting in place now for once you have data and starting to you know, get physicians up to speed on being aware of the product and your data set? Sure, absolutely.
spk10: You know, as you can imagine, it's a very active area of interest for us. One thing just as a little bit of background is, you know, we are working with a lot of the KOLs in this space as trialists. We have a very good representation in the U.S. as well as Europe and Canada of a lot of the experts, these experts are treaters. I mean, this is a space where the experience in treating alopecia areata are with these KOLs, and these KOLs are involved in the clinical trial. So we have a very good network of investigators who are probably the main treaters in this space as well. I also think that what we're seeing is for medical affairs, there's obviously gonna be education of patients and education of other dermatology experts who are in the hair space. And I think those are going to be very important aspects of the medical affairs piece. We know that there's a lot of patients who have been, you know, in the, who have alopecia areata who are maybe not in the mainstream of treatment because there's nothing available. So part of it's going to be to let them know that there's going to be treatments available, and I think it will bring sort of that latent population back into the treatment pool as well. So part of the whole medical affairs thing is going to be to bring, you know, treating dermatologists up to speed on the JAK mechanism, the importance of it, that it really does work, and understand the safety profile of it, but also getting patients to be aware that there is now a treatment option available.
spk07: Great. Very helpful. Thanks, Jim. Excitedly waiting for the data. Thanks for taking the questions.
spk01: Thank you. Our next question comes from Vamo Devon with Mizuho Securities. Your line is now open.
spk05: Great. Thanks for taking my questions. Maybe one to follow up on the discussion there on the competitive landscape and then one other separate question. On the commercial side, I'm just curious. There's obviously Lumient and some of the other jacks on the market already. I'm curious how you're thinking about pricing in this market. It's obviously a similar mechanism, maybe even the same drug in terms of aluminum, but obviously those are targeted for a much larger patient population than what you'd be going after with alopecia. So I don't know if you can just share some of your thoughts. Obviously, you've got to see what the data holds in the next few months here, but what your thoughts are sort of going into that data. And then my second question is just around the XUS opportunity. I think you guys have talked about this a little bit before, But just can you share your thoughts at this point? Again, obviously, while waiting for the data, how do you view the XUS opportunity for this product? And are you thinking about doing it yourself versus looking for a partner potentially? Thank you.
spk08: Hi, this is Roger. Thanks very much for the question. With regard to pricing, we It's a little early for us to talk about it right now. We don't have our phase three data yet, and frankly, I don't think it does us any good to discuss that respectively. We have said in the past that we think that the pricing structure for alopecia areata is probably consistent with the pricing for other autoimmune dermatological diseases, and we know that drugs in that space are selling in the range of maybe the mid-20s to about 60,000 a vacation year. But at this point, it's really just to talk about 543 per se. In terms of XUS, we do have an interest, of course, in commercializing XUS. We do not see ourselves at this time yielding a sales force. We have some interest and some discussions ongoing, but we don't discuss business development.
spk05: Okay, thank you. I'm not sure if it was my line or on something else. It was a little bit faint on the reply, but I think I caught what you were saying. So thank you so much. Sure.
spk01: Thank you. Our next question comes from Maury Raycroft with Jefferies. Your line is now open.
spk06: Hi, good morning, and thanks for taking my questions. I'm just wondering if you can tell us where you are in terms of closing out the Phase 3 with database lock and analysis.
spk10: Hi, Maury. This is Jim. So I think what we can say is that things are on track for our data readout this quarter, and things have been moving very nicely. As you can imagine, you know, it's a large trial. Lots of data to clean and make sure is ready to go into database lock. I'm feeling very confident that we're going to hit our scheduled deadline, and we'll be reporting data this quarter.
spk06: Got it. Okay, thanks. And then also just wanted to ask how you're thinking about the PTAB decision on a 659 patent expected next week, and if you can provide any specifics on what next steps are going to be for either outcome of that decision.
spk08: Sure. Yeah, this is Roger Morey. Well, we feel like we had very good oral arguments that the legal team, Concerts Legal team, did a great job. So we are very hopeful that we'll get a positive decision on that. And clearly, if we get a positive decision, we think that we're well set going forward well into the 2030s. If it is not a positive decision, we have the ability to and we intend to go to an appeal on that decision, which would probably involve either an appeal to the director or going directly to the U.S. Circuit Court of Appeals, and we think that we are in the right legally, so that's how we proceed. As I've mentioned in the past, we have other patent applications that are moving forward, which we think could also provide strong protection for CTP-543, and we'll move in parallel along with defense of the 659 and, by the way, the 149 patents that to gain additional intellectual property protection.
spk06: Got it. Okay. Thanks for taking my questions.
spk01: Thank you. Our next question comes from June Lee with Truist Securities. Your line is now open.
spk04: Thank you. Good morning. This is Les for June. Thanks for taking my questions. First, do you foresee any challenges in reimbursement discussions or do you think your competitors essentially paved the way for you given that They are slightly ahead on filing.
spk08: Hi, Les. Well, I think there will clearly be education that's required to get full reimbursement here. This is a medical disease, and one of the things that we need to ensure that the payers understand is that this is an autoimmune indication. In discussions that we've had up to date, when we have had initial exploratory discussions with payers, we believe that that's an argument that we'll be able to successfully make, but clearly it's something that we'll have to work on rolling out the commercialization.
spk04: Got it. Thank you. And then how should we model R&D expense tapering off as we head into the NDA filing? And at what stage will you kick off commercialization hiring. Thank you.
spk09: Hey, Les. This is Mark. So R&D will be tapering off. I mean, we have the phase three trials that are winding down this year. And so, you know, clinically, those will be tapering off. But as you might imagine, as we prepare for commercialization, those costs will be coming back up. So there will be sort of a switching of cost, if you will. into 23 and then into 24. The OLE trial, by the way, is continuing right through approval, so that remains, but the actual phase 3s themselves will be winding down.
spk04: Got it. Thank you.
spk01: Thank you. As a reminder, ladies and gentlemen, that's star 1 to ask your question. Our next question comes from Esther Hong with Berenberg. Your line is now open.
spk11: Hi, thanks for taking my questions. Congratulations on getting towards the finish line for CPP 543. So just it seems recently that there's been more pushback from FDA on NDAs than experienced a few years ago. And so I wanted to get your thoughts on some of this pushback, including some of the deficiency letters, any learnings from there that maybe are new that you're taking into account as you prepare your NDAs. and then a quick follow-up. Thanks.
spk10: Hi, sir. This is Jim. So, thanks. Great question. I think the most important thing for filing the NDA is to really make sure that you have the complete package that you need in terms of all the data sets, the clinical, the non-clinical, and the CMC. I think it's very important to make sure that you have an open communication plan with the FDA to make sure that the expectations are met from both sides. You know, we have had good discussions with the FDA. We know what we need to do. We have a large safety database. We have the endpoints that we know have been agreed upon with the FDA for the Phase 3s, and we've seen, though, consistently across the, you know, even the competitor trials. I mean, SALT20 is really, you know, what everyone's looking for. So I think the key is really to make sure that we are, you know, really fulfilling our obligation as a sponsor to have all the data necessary for showing efficacy and safety. We have a very large safety database. We have long-term open label extension study. We have some subjects that have been on the drug for over three years now. So I think we're doing our best to make sure that we are answering all the questions and checking all the boxes, including the For some of the supportive studies, you'll see in our clinicaltrial.gov listings that we've done DDI studies and things like that that are also important for the filing as well. So I think it really is a matter of making sure that we have a good plan and we have buy-in from the FDA and we've had good meetings with the FDA. Of course, we're not giving the details, but we will have pre-NDA meetings on both the CMC and the clinical side because those are expected and required and we'll also be doing those as well. So we will be also confirming with the FDA on the NDA submission piece as well. So I think we're in good shape, and we really know what we're doing here.
spk11: Great. And then just wanted to follow up. Any updates on what you're seeing in the open label extension study? Thanks so much.
spk10: I think the bottom line with the open label extension study is that First of all, we've had a very high percentage of patients roll over into the open labral extension study. We have reported on that at previous meetings where we've done cuts of the data to date. And I think it's fair to say that that trend has continued throughout our program. There still is a lot of interest for patients to roll over from the phase two or the phase three studies into the open label extension study. I think the take home messages are really continuation of effect. And again, these are things that we've reported at meetings in the past. We've seen the maintenance of efficacy. We haven't seen any new or troublesome emerging adverse events that are of any concern. So I think that the long-term exposure is really being looked at very carefully in terms of safety and efficacy, and I think we continue to see, you know, the similar profile that we saw, you know, reported on from our Phase II trials, but I think that's really where we are with the open-label extension. You know, no surprises in this case is a very good thing.
spk01: Fantastic. Thank you. Thank you. And I'm currently showing no further questions at this time. I'd like to hand the conference back to Justine Konisberg for any closing remarks.
spk03: Thank you. We'd like to thank 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. Thanks.
spk01: Ladies and gentlemen, thank you for your participation. You may now disconnect. Everyone have a wonderful day.
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