DURECT Corporation

Q4 2022 Earnings Conference Call


spk_0: greeting than welcome to the direct corporation fourth quarter two thousand and twenty two earnings call at the time ah participants are in a listen only mode a question and answer session will follow the formal presentation if anyone should require operators systems during the conference please press stars zero on your telephone keypad please note this conference is been recorded
spk_1: i will now through the conference over to our hosts tim pap chief financial officer thank you you may begin good afternoon and welcome to direct corporations fourth quarter twenty twenty two a conference call this is tim path chief financial officer of direct before we begin i would like to remind you of are safe harbor statement during the course of this call we may make forward looking statements regarding direct products development expected product benefits or development plans future clinical trials are projected financial results these forward looking statements involved risks and uncertainties that can cause actual results to differ materially from those and such forward looking statements further information regarding these and other risks can be found in our as you see filings including our ten k and tank use under the heading risk factors to begin i would like to review our fourth quarter and full year two thousand and twenty two financial results total revenues in two thousand twenty two were nineteen point three million dollars compared with fourteen million in two thousand twenty one two thousand twenty two revenues included ten million dollars of milestone payments related to our pozner agreement with in a cough law two thousand twenty one included approximately five point two million dollars of revenue attributed to an upfront license payments a on sale of manufacturing supplies and experience in a call commercially launch pozner in september two thousand twenty two for the fourth quarter of two thousand twenty two revenues were three point three million compared with seven point three million for the prior year this decrease is due to the in a call up front license revenue we recorded in queue for two thousand twenty one already expense was thirty six point nine million dollars in two thousand twenty two as compared to thirty one point eight million for the prior year and ten million for the fourth quarter compared with eight point four million for the prior year the increases were primarily due to higher clinical trial expenses for ongoing affirmed trial contract manufacturing expenses or lexical sterile and employee benefit costs partially offset by a decline in already spending on pozner sg and a expenses were fifteen point nine million as compared to fourteen point four million for the prior year primarily due to higher employee benefit costs and patent expenses for the fourth quarter as dna revenues were four point three million compared with four point five million for the prior year so relatively flat as of december thirty first two thousand twenty two we had cash and investments a forty three point six million as compared to seventy million at december thirty first two thousand twenty one and cash burned for two thousand twenty two was twenty six point four million dollars we also completed a registered direct offering in february twenty twenty three raising a point eight million in that proceeds bring our pro forma cash to fifty two point four million dollars
spk_2: we believe our cash on hand sufficient to find operations into the first quarter of two thousand twenty four now i would like to turn the call over the gym for an update uncertain of our programs thank you tim hello everyone thank you for joining us today for a fourth quarter two thousand and twenty two update the fourth quarter was a strong one with consistent forward progress on are some trial we're excited to remain on track to announce topline results from our state to the offense while in the second half of this year lama continues to dress nicely we have now just more than two hundred and sixty patients at of on target and three hundred we continue to expect completion of enormous in second quarter of two thousand and twenty three if successful we believe a firm has potential to support an nd a violent our goal is to dazzler sickle cell as quickly as possible to approval any a h an indication for which there are no a therapeutic the primary focus of the company is on completing enrollment in our face to be a file a lawsuit a sterile and patients hospitalized the severe a h a fun is a three hundred patients placebo controlled double blind multinational study the to act a doting aunts and a placebo and of one hundred patients eat we currently have over sixty sides open including leading hospitals in the united states australia the you and the uk we are working world renowned litter centers and some of the world's preeminent thought leaders in a eight yes he has granted our much equal sterile age program fast tracked designation and a positive result in a from could support and india a pilot with this in mind much to costco has the potential to be the first f d a approved treatment for a age where there is a substantial unmet need for patients as a reminder a h is a lethal and costly disease that represents an unmet medical needs with no a pool therapy eight result in about one hundred and fifty eight thousand hospitalizations per year and united states and hospitalized patients have a ninety day mortality rate approximately thirty percent this suggests over forty thousand deaths in the united states each year for may eight we estimate that is us alone on average more than a hundred people die every day from the study our goal is a company is to bring a safe and effective treatment of the stations to help alleviate the suffering and save lives a h continues to represent a significant cost isn't about patients and healthcare system but the vast majority not receiving a transplant the average cost of treating a hospitalized a a patient can read some approximately fifty thousand to approximately one hundred and fifty thousand dollars for those patients who receive another transplant the average cost is approximately eight hundred seventy five thousand dollars per transplant if the united states and these patients are subject to a lifetime of immunosuppression article sterile represents a potential multibillion dollar opportunity in the s a enough while simultaneously provide substantial overall cost savings to the healthcare system
spk_1: age is also global concern
spk_2: allowing russian of the potential to serve x u s h patients and their healthcare systems these at us markets represent additional attracted market opportunities
spk_3: hop top and instead of the a fun trial will be successful is driven die or compelling face to a steady data the mechanism of action she goes to our was tied directly into the biology of a h and are multiple preclinical animal studies where we observe the profound survival benefit and multiple relevant a cute or good
spk_2: injury models in summary we continue to made great strides in the sun and haven't enrolled more than two hundred sixty patients to date and have over sixty clinical sites open we on track to complete dosing the last patient and the a friend trial in the second quarter this year which would enable reporting apartheid results in the second half of issue this successful we believe a phone has the potential to support and any a pilot
spk_0: we would now like to take any questions you may have thank you and ladies and gentlemen at this time will be conducting our question and answer session if you would like to ask a question please press star one on your telephone keypad a confirmation tongue the case that your lives in the question que you may press star followed by the number two if you would like to remove your questions from the que
spk_4: for participants using speaker equipment in may be necessary to pick up your handset before pressing the starches
spk_1: efforts question comes from france swap there's a club with oppenheimer please their question i think saying the question and read on on stand on track here and i just wandering in terms of the potential of the data to have an nd a filing what what gives you that confidence that you wouldn't need another trial for for filing it's good comes from a couple of directions but the the primary one is that there are no approve therapies today for this disease and the mortality rate is so high in of the ninety day mortality as is thirty percent and depending on your melts score can be even higher know if it's up and i'll at norman speak to this is woven to just north of twenty five male to get significantly higher so you've got a very high mortality and know therapy out there that being said we've had some communications at the ft a that have indicated as well the potential for that but they will never commit anything until they have the data in hand quite frankly to have this mission again that that's what we sit right now both with the of the a and the email
spk_2: but norm would you want anything to that
spk_1: nothing says hello thanks i think i think that covers it on and he it is one of the fia regulations is a specific
spk_4: as the specific and to as it's site that topic is specifically address
spk_1: the end and fifty confirmed that it does qualify under these circumstances you just mentioned and maybe it's a second one hit norm on on them in terms of see eligibility of patients here for getting a liver transplant you just may be discussed that percentage of patients with age that aren't even eligible just because of how recently they have been consuming other so it's turn it's it's a moving target because until a few years ago there was an absolute rule that was observed by those sensors that people had to the aston for six months and that started to fall away and and centers increasingly have dropped the of the requirement the absolute requirement for six months and so even the area so the same say guidance to say you could consider in a severe patients and having said that you know it's it's never going to be a solution to the problem because they are only about nine thousand transplants available as of those are for things other than alcohol view
spk_5: a foreigner have thousands transplants and
spk_1: you know hundred and sixty thousand admissions is is a huge in dallas will never be able to solve the to transplant to the time sector has become
spk_5: less rigid
spk_1: it comes down more now to to numerous social factors and be a little factors rhonda to an end of go ahead not was just gonna say norman our dimension of the social factors whether or not you have the insurance by the you can pay for it also comes to play unfortunately
spk_6: and and which is there percentages of people the you expect would be insured to to
spk_1: be treated while we earn patients who have a h that there is over eighty five percent or so of have insurance but one one needs death in order to to get a transplant pretty much i don't remember that yep yep if it's the the trial the a lot of experts who work and transplant centers that a lot of patience is admitted to places where transplant isn't an option unless a patient gets transferred out there gotcha okay and then leslie and just as where this is this is the year where the data is is coming here so it's very exciting for i guess the older nine to eight like is a sterile now but any thoughts on commercialization says it says the us you talking about the x us opportunity as well which is unfortunately a large opportunity and burgess wondering any thoughts about maybe and you know the amount of reps ages the commercial bill that would be necessary if able to file off this data
spk_7: in order to get ready to see get a better feel for what will be necessary to take this on your own and you know other thoughts had to take it commercial on your own elite elite you are in the us is just any color on on commercial that would be helpful thank you
spk_1: yeah first off yeah x us we we would expect that we would have a partnership in place and and so that's up a process that that's ongoing within the u s we look forward to doing it ourselves in there some long tail things that teeth louis who's are or head of commercial here it a direct heir a business development is wealth is already has and away and he can speak to some of his initiatives so they ask a question and thanks has flied i would say as far as commercial activities at this point in the drama process or certainly are looking into the market access aspect of things and given that this is likely going to be delivered under at the i in in patients the son and under drg we don't lot of landscaping work on current status care and those prophecies as far as marking strategy we have very spot readiness review process is already underway to ensure that all her across national teams are line on the same plan on going into taught my results and as soon as we turned that card so i can give you specifics on ah sales for sizing and and all that work an ongoing right now on sites as surely by the time get the top iraqis it for results think we're in the right on preparation as state of mind at the right level on to the a move very quickly upon positive results the i think we get safe to say be under hundred yeah yeah for hospital of like again yeah we always start with somewhere and on every want i've worked on somewhere between fifteen one hundred now and for hostile these product that i think now that range is still applicable here every summer longer kill things like the codes in the like we you know you've already got their the emotion you good totally agree in enters of awareness for emma cells and what not or his age something that a liver transplant dogs are very much aware of or is it something based on factors there's nothing really that's been working and the steroids haven't really been working for a long time that there's a lot of education that that still needed maybe you can speak an enormous follow up on that it to different perspectives but the same yeah at night at the very good point and down one that we certainly took to heart and actually it's a great entry point for our new disease were in a site that we actually just launched called explore h epigenetics and so there is awareness of a h particularly for the past couple of years we've seen an increase in incidence rates on unfortunately over that the course the to the years and pandemic i'm so it has become higher on on folks radar screens for a gas rose and have tall just ah but the intersection between age the current treatment paradigms which we we all think and hepatology just think our sub par and out why they're still high i'm and that will need hum the intersection between age and the role that epigenetics may play is a reason why we've developed this educational website on that's that's and unbranded just purely looking at that again that intersection of epigenetics and also get hepatitis i'm so encouraged you and others to to prove that website but some in between now and and top and results and down until we actually i the like the product certainly education around age and old epigenetics a play and that is a high priority for us absolutely enormous maybe can speak to it from the clinicians perspective an awareness of of this molecule yeah and especially especially for the patients had get admitted to for the hospitalized your a age can be a pretty broad spectrum some very mild disease was very low risk to the suicide mission level where people come into hospital and weeks fact he of somewhere between thirty and fifty percent death row eight for people who work in hospitals it's it's no surprise completely overwhelmed most transplant hepatology practices and most transplants programs it's sort of displaced so much stuff as become and a it's it's it's a crisis and in many ways
spk_5: i i can't having not work in a community hospital most of the people we see with severe age or friends food from somewhere else
spk_1: so that sort of second level where you have a few hospitals that take reasonably high acuity patients
spk_0: the death
spk_8: as i i'm pretty sure those people know yeah in in my practice i would get colds trauma hospital it's not always gastroenterologist saints have got his patients with age so i think this very wide recognition in at the hospital practices and have been he and in two ticks to keep comments in terms of hematologist there is i would be prepared to save there is not a hepatology in the united states who is unaware of either age or of this product it is it it's received extremely
spk_1: i'm extremely close scrutiny people have varied sides about it and i hope
spk_2: i hope to results as good as we expect them to the back cia awareness is not going to be a big issues and to the to decide to keep mentioned it's really sort of for the next level of people that said teach you know more about a chance to really designed to spread the word downstream as it were
spk_1: great thank you very much progress on seen on track here thank you
spk_5: thanks man
spk_1: or next question comes from kristen close go with cancer or fitzgerald's least they're question
spk_5: hi good afternoon things are taking my questions and you're getting very close to that finish line i'm sure the first question i had was what is your understanding on whether or not there are different his still pathological see no types of these decisions and even if that isn't the case would you expect and ninety way to behave differently across different populations where is the mechanism quite broad you address this
spk_9: let me speak to that for sure but you know there there are maybe some subtle suggestions of of certain genetic components with certain populations are successful with leak was about a fluctuation in south america where that's a possibility but i think generally there isn't much known that storming for you
spk_5: the the kids to pathological
spk_10: diagnosis is more or less smells you know this from a previous discussions in the us practically no one biopsies these patients
spk_8: some people actually i'm including me object to the tune of his biopsy proven it's really just
spk_11: there are those constellation of finding is no there's no classic is to logic finding that defines a h
spk_1: usually shows a number of features it's a mix number and the diagnosis in i would guess ninety five percent or more of cases is when they called the the prognostic value of the biopsy they've been a few pages that researcher at that my opinion and the team several of my senior colleagues is that biopsied gives very little is this north prognostic or diagnostic value
spk_12: and getting the last season is is it is somewhat the are people who really believe the biopsy shows some has some value the and and yeah i didn't mean to denigrate those people's opinions such a lot of people do not think that divides the as much in in a
spk_1: any regard okay seen some to mind us what you've shared publicly related to the power and that were into his trial and what's your leaders understanding or expectation on how the placebo arm would behave and might have published findings a natural history around this ninety day point sounds like years citing about thirty first
spk_9: that mortality as is times
spk_1: yes me i say
spk_8: okay so it's a blind set he i can we don't know which is falling into what group bucks our of our into point
spk_9: in points of observed in points kids are very close to a project to the point that the statistician and i and several other player people at your it works on prior to coming up with the final for to call so we're we're more or less on track or anything like that
spk_1: you're you're you're referring to the it's very surprising paper that was published the on on a surprisingly low mortality but that is a historic low and no one gives other papers have not demonstrated that that number and for sure our country to his son is well about that okay and then outside of the primary endpoint ninety day mortality or liver transplants clear reminder sadeghi secondary outcome measures you're going to be looking at as wow and whether you're looking at different martyrs cell counts are other factors that are gonna help you understand the contribution deliver injury thank you again
spk_8: so we we have we have a lot of and sixteen points the the two most prominent are looking at twenty a day outcomes of those some mortality
spk_13: we have been the hierarchical fast
spk_0: at transplants so event meeting transplants with this followed by desk followed by twenty eight a transplant or death followed by twenty eight days mortality
spk_14: and then a variety of biomarkers that's a and friend all of that of of my head the things like little score young belt progress and then we'll also stratified by by the and in rome and mills got it thanks again
spk_15: thanks christian
spk_14: thank you to surmise it as a question press star one to remove yourself from superstar to or next question comes from at arse with a c when right place the request
spk_16: hi everyone thinks we're taking my questions on her legs and grab on the continued partner isn't stain on track
spk_14: or worse a couple questions around that case
spk_17: just to make sure that come june thirtieth reach for a moment
spk_14: our first just looking at the pace given no over two hundred patients we're were rolled on the november second of phase and you now have over to succeed
spk_18: as of today
spk_14: so over the last four months that comes out to about fifteen fishy some once a month and i'm just wondering if it's better it's a fair way of thinking about russian that would indeed
spk_1: from from the current point get you to the target of three hundred fighting in june and then the second question just or yeah no i'm fine lines but also the activities that are involved from the point of last patient last dose oi for second dose is necessary for that last person to the data reader what what activities are involved in the process of those number of months first off yeah your calculations i think it's is fine it's it's in my for my where i sit probably a bit on the pessimistic side i certainly hope both will do better than than just barely squeaking and but you know the team's doing a great job in been rolling and whenever that last piece unless was it occurred and it actually isn't from the last dose it's from when they were enrolled in the a study in day one they get the first dose that's when the ninety day clock starts and so from that last tasted dosed one can count for ninety days then add as even now we're doing real time clean up and normally can give us a specific number by the it is a very high percentage already have the data that will likely to clean up in the and that's a constant process with any clinical trial the the extent that you can you like to in real time i keep the data as for each of the patients as well organized and and inquiry anything that needs to be queried and in and kind of iron out any any discrepancies or or any data points are missing in the like and
spk_5: so let's just say we have north of eighty percent of that you know wrapped up or or in hand by the time to get less space unless visit then you've got another the team feels very optimistic they feel too i'm kind of saying probably closer to three but in be and that two to three my time frame that we will continue to clean up to date until we get to the point where we feel comfortable enough to really a that we want to go to the enhanced and pencils down and when have data lock and at that point within just a very short time they just a few days will will have zia will have the information and will have the data set we look forward to announcing so
spk_1: it'll come pretty quickly and it's really just a matter of cleaning up the data to make sure his watch like the database it's really difficult and you should never actually go back if you want to use it as pivotal trial you gotta be really done when you when you when you like it
spk_9: and so that's the most critical piece actually as those last few months where you're going through and and and making sure that you've got everything
spk_1: well understood in well in hand
spk_9: norman
spk_1: yikes i i agree with incomes just said we are
spk_14: the the activities and yeah we're we're sitting the
spk_19: time is and proceeding at a decent pace
spk_14: i don't think i i'm more optimistic send your projection they caused
spk_20: as a typically during the holidays both tiles slow down on a bit so
spk_14: we have picked up the pace again and i'm pretty confident that we will finish on time
spk_21: in terms of what what to do we're preparing for the final analysis so where's he at the mothers with appearing on a the reporting shells and all of the as kinda to of it's the tables or reach the populated the or as you can imagine a trial of this size the us year thousands of data point
spk_14: and in his team says we want to make sure that we decided on all of our analyses and you can always do a post hoc analysis but i'm doing doing it prospectively gives everyone a lot more confidence and so we're trying to make sure we haven't left anything out before we before we do the date of as these days luck
spk_22: great thank you that's very helpful maybe a couple more for me more on the commercial side
spk_14: and
spk_23: you open it up to anyone before so he wants to give
spk_14: some comments appreciate that so
spk_24: as you mentioned earlier think jim
spk_14: there's a wide recognition of a problem in the hospital for i think actually was mormon and and also no hepatology the us is unaware of either age larson costume
spk_17: which is also of course very encouraging from the prescribers perspective
spk_25: so
spk_1: given that background i'm just wondering if you could comment on the
spk_26: cd five percent of patients that have insurance what break down
spk_1: do you think that's his ass and and and to agree that you had any sort of interactions you know even just tangentially what are your thoughts about the degree of receptivity i'm on a parasite sex well let's let's see you speak to the to the pay peace but as as far as the the percentage of patients who have insurance of that the hundred and fifty some odd thousand hospitalizations for year i would say the vast majority of from what we can glean it's just north of eighty maybe neither eighty five percent of those patients
spk_7: and so
spk_1: that would put put them in in the right place from from that standpoint and the coffee this disease unfortunately is is horrific when you take that number one hundred fifty thousand and you multiply it by a number that somewhere between fifty and hundred fifty thousand you know you're you're clearly running up a huge bill it's it's in the five plus billion dollar range and that's not taken into account at all the the cost of liver transplant which as doormen tells us there aren't that many liberals mammal there's maybe four thousand some odd but that's four thousand times almost a million each so that's a that's a very expensive components well see you at all this together and you're talking about a substantial cost to the healthcare system the united states somewhat less than that europe or not much is it still quite quite large in europe as well as patient populations a little bit bigger i think and and other markets around the world so we think that sets as a very well to have a product that can save lives member about thirty percent he's people are dying and and can be you know very rewarding to our shareholders as well so we think that that we can create a very successful product for direct save the healthcare system and equal amount of money in that range and ah and still be there to be able to save lives between keep you can speak specifically to enhancing awareness and and pairs the i had this is keith good question and a day eighty percent or so that are insured it i would say to a the next of medicare medicaid and and five insurance probably being a little bit more heavily towards medicare medicaid and when we look at the and i as twenty nineteen data
spk_27: that we published on previously on but i think the value proposition to the hospitals on we are certainly doing a lot of research round that and building our case
spk_0: that's i just back to the primary endpoint other from been ah
spk_1: as statistically significant reduction and
spk_0: in in mortality and liver transplant that and and of itself for these huge benefit to to deter people on and have them

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