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spk03: Good day, and thank you for standing by. Welcome to Concert Pharmaceutical Second Quarter 2022 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 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Justine Konigsberg, Senior Vice President, Corporate Communications and Investor Relations. You may begin.
spk01: Good morning and welcome to Concept Pharmaceuticals' second quarter 2022 investor update, which will include a discussion of our recently reported phase three results for CTP543 in alopecia areata. Details of the top line data are available in our corporate slide presentation, which can be found in the IR section of our website. 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 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.
spk05: Thank you, Justine, and thank you, everyone, for joining us for today's update. During the second quarter, we reported several key positive developments related to our CTP543 program in alopecia areata led by outstanding Phase III top-line data from the ThriveAA1 study. We're extremely pleased that our ThriveAA2 study released earlier this week produced similarly impressive top-line results, confirming and underscoring the rapid high level of efficacy observed with CTP543 in the treatment of moderate to severe alopecia areata. Our team is moving apace to further review and fully consolidate our clinical and non-clinical data, and we're advancing to filing a new drug application with the FDA, which is planned for the first half of 2023. Let me describe the market opportunity that we see before us. We envision that CTP543 will be well positioned to address an important unmet need for a large underserved population of patients with alopecia areata. Given the extent of patient need and the strong clinical profile we've seen to date with CTP543, we believe it has blockbuster potential. Based on current market assessments, there are multiple hundreds of thousands and potentially up to approximately 1.5 million patients in the U.S. with sizable subset having moderate to severe disease. with positive and consistent top-line results from both tri-A registration studies, we believe that CTP543 has demonstrated highly competitive product profile. We were one of the first companies to see the opportunity to develop groundbreaking treatments for alopecia areata. And now that we have our positive phase three data in hand, we're one step closer to providing what we hope will be the best-in-class treatment for patients. Both of the phase three Thrive AA clinical trials were randomized, placebo-controlled, double-blinded, multicenter studies evaluating the safety and efficacy of 543 in adults aged 18 to 65 years old who have 50% or greater scalp hair loss. Both trials were conducted in the US, Canada, and Europe. Each study included two doses of CTP543. 8 milligrams and 12 milligrams twice daily compared with placebo for 24 weeks. The primary endpoint for both trials is the percentage of patients achieving an absolute SALT score less than or equal to 20 at week 24 treatment, which we believe represents a clinically meaningful result. SALT, or the severity of alopecia tool, is 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 scalp. In the ThriveAA1 study, the primary endpoint met statistical significance in both the 8 milligram twice daily and 12 milligram twice daily dose groups compared to placebo. The treatment difference for both dose groups of CTP543 versus placebo at 24 weeks had a p-value of less than .0001. ThriveAA1 also met all the key secondary endpoints in both doses. These key secondary endpoints included statistically significantly higher levels of patient satisfaction with a scalp hair compared to placebo after 24 weeks of treatment and statistically significant hair regrowth as early as eight weeks. Similarly, we saw consistent results in Thrive AA2, our confirmatory phase three trial. As we announced earlier this week, The Thrive AA2 study met the primary endpoint for scalp hair regrowth and statistical significance in both the 8 and 12 milligram twice daily dose groups relative to placebo. The treatment difference for both dose groups of CTP543 versus placebo at 24 weeks had a p-value of less than .0001. Additionally, with regard to our key secondary endpoints, We again showed highly statistically significant patient satisfaction relative to placebo at both doses of CTP543. And we continued to see a rapid onset of effect with statistically significant differences from placebo in attaining SALT20 or better as early as 12 weeks into dosing. Treatment with CTP543 was generally well tolerated in both trials demonstrating a safety profile that we believe is well-suited for its proposed indication. Based on the results of Thrive AA1 and Thrive AA2, we continue to believe that CTP543 has the potential to be the best-in-class treatment for adults with moderate to severe alopecia areata. Many patients are impacted with alopecia areata in the prime of their lives, and for many people, the disease causes severe consequences, broadly and negatively impacting their ability to live their lives. With effective treatments just starting to become available, we hope that awareness for alopecia areata continues to grow and that it's truly recognized as a serious autoimmune disease and not misunderstood to be an inconsequential cosmetic condition. We're on the cusp of great change for the alopecia areata treatment community, And Concert is pleased and proud to be part of it. Let me pause here and turn the discussion to Mark, who will provide an overview of our financial results.
spk08: Thank you, Roger. As I review our second quarter 2022 financial results, please reference the financial tables found in today's press release. Research and development expenses were $20.9 million during the second quarter of 2022, compared to $20.2 million during the second quarter of 2021. We continue to have clinical costs associated with the open label extension studies for CTP543. And as a reminder, the North American extension study is expected to continue until approval. General and administrative expenses were $4.8 million during the second quarter of 2022, compared to $5.6 million during the second quarter of 2021. The decrease in general and administrative expenses relates primarily to a decreased non-cash stock-based compensation. Our net loss applicable to common stockholders for the second quarter of 2022 was $24 million or $0.59 per share compared to a net income applicable to common stockholders of $5.4 million or $0.16 per share for the same period in 2021. We ended the second quarter of 2022 with $153.7 million in cash, cash equivalents, and investments. This includes $73.5 million of gross proceeds received in June 2022 through the combination of a follow-on equity offering and the exercise of a portion of the warrants issued in connection with our November 2021 financing. Together, we expect that these two transactions will extend our cash runway into the second quarter of 2023. The gross proceeds received through the follow-on equity offering total $54.6 million before underwriting discounts and offering expenses which included the full exercise of the Green Shoe. The proceeds received through the partial warrant exercise by BVF and RA Capital totaled $18.9 million. We have the potential to receive an additional $70 million upon the exercise of all remaining outstanding warrants that we issued in connection with our November 2021 financing. With two positive phase three readouts behind us, we are optimistic about the future opportunity for CTP 543. Alopecia areata is a large and underserved market that affects millions of patients around the world. With CTP543, we have the ability to make a major positive impact in the lives of these patients. We look forward to our planned NDA submission in the first half of 2023, and this concludes our prepared remarks. We'd be happy to address any questions.
spk03: And thank you. As a reminder, to ask a question, you'll need to press star one one on your telephone. Please stand by while we compile the Q&A roster. One moment for questions. And our first question comes from Jason Butler from JMP Securities. Your line is now open.
spk07: Hi, thanks for taking the question. First, can I maybe just ask for you to give a little bit more color on you know, work that needs to be done between now and submitting the NDA, including regulatory interactions, and then also, you know, how you're advancing your plans to commercialize the product. Thanks.
spk06: Hi, Jason. This is Jim. Thanks for the question. I'll answer the first part. So, things are progressing. It's great to have both of our positive phase three trials behind us. We just reported out the top line data for Thrive882. Obviously we have more data coming in. We'll be finalizing our clinical study reports for both Thrive881 and Thrive882. We have some other supportive studies to wrap up in the phase one world. These are mostly for labeling purposes and those studies are being conducted or have been completed and they're on track to support the filing Also, on the clinical front, as you know, we are conducting a Phase II durability study, and we'll be able to report out part of that data in the NDA as planned. And the open label extension study is continuing as we've rolled over subjects from Thrive A1, Thrive A2, as well as the Phase II subjects. Our intent is to have a large safety database to report in our NDA. that will be comprised of the phase two and the phase three subjects that are rolled over. Our goal is to have a large number of patients in there, so as we continue to enroll subjects in there and they gain more time on drug, we'll have a cut of those data and provide those in the NDA as well. So things are progressing very nicely on all the clinical side of things, and we're really on track to file in the first half of next year.
spk02: Hi, it's Nancy, and I'll answer your commercial question. We are absolutely laying the groundwork to ensure commercial readiness, and we're doing the appropriate activities to prep for a successful launch. And these include things like payer evidence planning to ensure market access, KOL and early adopter mapping, understanding the patient journey, patient advocacy work, medical communications, just to name a few.
spk07: Great. And just one quick follow-up for Jim. Just in terms of the extension study, what's patient retention been like in the, you know, patients that enrolled earlier in the, you know, that have been in there for several months? Obviously, we're at a really high enrollment rate or transfer rate from Thrive AA1 and AA2, but just what's the... persistence been like? Thanks.
spk06: Yeah. So, Jason, it's a great question. As you know, we have had very high enrollment rate. For example, with Thrive881, Thrive882, we've had, you know, greater than 95% of the subjects who were eligible to rollover did rollover. The study's been ongoing for a while. We have patients that have been on drugs for over three years. And a large number of patients have been on drugs for over two years. And obviously, as we count backwards, we've had a large number of patients on for a year. I don't have an exact number for you for the retention rate, but it's been very high. So I would say it's clearly showing the motivation of the patients to stay in the trial. But it is something that is very, very high numbers. And I'm sorry I don't have the exact number because it changes. The number in this trial changes daily now as we've rolled subjects in.
spk07: Okay, great. Thanks for taking the questions.
spk03: Sure. And thank you. And one moment for our next question. And our next question comes from June Lee from Truist. Your line is now open.
spk04: Good morning. This is Leson for June. Thank you for taking my questions and congrats on the data. Just to kind of look through the data and maybe not to nitpick, but What was the nature of the one SAE that was possibly treatment related in each trial? I'll start there.
spk06: Sure, Les. Yeah. We did have a number of SAEs reported in each trial. Most of those SAEs were determined not to be related to study treatment. But in Thrive AA1, we did have one subject with possibly related SAE. That was somebody who had a fever and possible meningitis. There were some extenuating circumstances there, but the investigator thought it was prudent to call that possibly related. In Thrive AA2, we had an individual in the 8 milligram BID dose group. Of the five, we had one subject who was possibly related, and this individual had pneumonia associated with the flu, and the investigator in their judgment thought that this could be possibly related because of the possible effects of JAK inhibitors on immunity. So I think those are the two cases where we had possibly related SAEs. As I said, there were other SAEs in each trial that were determined to be not related to study treatment.
spk04: Got it. That is helpful. Thank you. And then when looking at achieving absolute SALT score of 20 or less, can you comment on why you think separation versus placebo at the Higher dose was, the 12 milligram dose was higher in your Thrive AA1 study versus AA2?
spk06: I think, you know, there's a couple points difference between those. I think, you know, it's clearly within the range of each other. You know, they're a few points apart. I think the important thing about the findings with the 12 milligram dose as with the 8 milligram dose is that we have very consistent findings between both studies. These data show that we have a high level of efficacy for both the 8 and the 12 milligram BID. I think these are reported to be, you know, the highest numbers that have been out there, you know, looking at the literature. So I think they're definitely within range of each other. I think Thrive AA2 is a very good confirmatory study. So I wouldn't say that there's, you know, major difference between the two findings for the 12 milligram dose, but I think they do support each other as as a high level of efficacy.
spk05: I'll also note that the trajectory of response is continuing to move upwards through the 16, 20, 24-week timeframe. As Jim has reported previously, that efficacy continues to rise beyond the 24-week time point to a significant extent. So I think what you may be looking at is just a little bit of a kinetic phenomenon of where that patient group is at that particular 24-week endpoint. But we think that the efficacy of 543 clearly continues to be greater than is estimated by that point.
spk04: Got it. Thank you. And then what is your strategy for dose selection heading into the NDA filings?
spk06: Yeah, our plan from the beginning has been to investigate both the 8 milligram and the 12 milligram dose group because in our dose ranging phase two trial, we determined that those were the two effective doses and we ruled out another dose that was not as effective. Our strategy all along has been based on conversations earlier in the program with KOL who thought that having two doses available to patients would provide a lot of flexibility for physicians and for patients to choose the best dose for the subject. Our plan is to file both doses. We have good data for both and high efficacy for both. and then make a determination as to what the recommended starting dose will be. That will be a conversation with the FDA, but we do believe that the 12 milligram dose group is clearly one that has shown consistently higher results than the eight. It shows good benefit to a lot of patients, but generally is better performing than the eight. So obviously our recommendation would be to start with the 12, but we will have those conversations. Our plan is to file both.
spk04: Okay, thank you. Just the last one, if I may. You did mention that you will present open label extension study along with the filing. Was that something you're going to share with the street as well prior to NDA submission? Thank you.
spk06: Yeah, so, Wes, I mean, obviously, you know, we've been focusing on the Phase III program, and patients have been rolling over into the Open Label Extension study. We will need to do a more formal analysis of the Open Label Extension data, and our plan is to be presenting those data at some future meeting.
spk04: Great. Thank you for taking my questions, and congrats on the data again. Great. Thank you.
spk03: Thank you. And one moment for our next question. And our next question comes from Maury Raycraw from Jefferies. Your line is now open.
spk09: Hi, this is Kevin on for Maury. Thanks for taking the question and congrats again on the great data. Just wanted to ask with the two de-risking phase threes in hand, how are you thinking about partnering XUS or even US and what are some scenarios for what the timeline could look like there?
spk05: Hi. Thanks for the question, Kevin. We are, in fact, very pleased to have that data with us now. As we said before, our intent is to commercialize ourselves in the U.S., so partnering ex-U.S. would make sense. We don't discuss business development specifics, but I think it's safe to say that there's good interest in the asset that is continuing to accrete now that the second phase three data has been released. And as far as the US is concerned, as Nancy indicated, we're doing the work that's necessary to move us in a position to commercialize. We've never ruled out a partnership, but our first intent is to move forward ourselves.
spk09: Okay, great thanks and then just just to follow up on on IP going forward so. Could you just lay out what you think are you know possible scenarios and what you think are likely scenarios, you know as you move into filing and launch.
spk05: Well, with respect to our own patents, as you know, we had confirmation from the PTAB of the validity of our dosing and method of use patent, which is valid to 2037, which will be an orange book listable patent on approval of CTP543. There's potential for extension of that, possibly out another year. And we're continuing to work on the composition of matter patents, which is valid. And we believe that there are strong reasons why it should continue to be valid and will continue to be valid. So that's playing out as we go along. Okay, great.
spk09: Thanks. I'll hop back in the queue. Thanks.
spk03: And thank you. And I am showing no further questions. I would like to turn the call back over to Justin Klonsberg for closing remarks.
spk01: Thank you, Justin. Thank you for joining us this morning. If there are any follow-up questions, you know, please don't hesitate to reach out. This concludes today's call. Thank you.
spk03: This concludes today's conference call. Thank you for participating. You may now disconnect.
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