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spk03: Good morning, and welcome to Verios Therapeutics, Inc., fourth quarter and year-end 2020 Financial Results Conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please be advised that today's call is recorded at the company's request. At this time, I'd like to turn the call over to Angela Walsh, Senior Vice President of Finance and Treasurer with Vireos Therapeutics Inc. Can you proceed, Angela?
spk00: Thank you. Good morning, everyone, and thank you for joining us on today's conference call. We executed our initial public offering in December of 2020. The team was pleased to generate demand for the full offering as well as the full over allotment. with final gross proceeds of $34.5 million. The net proceeds of the IPO were approximately $31.1 million after deducting underwriting discounts, commissions, and offering expenses paid by the company. We are pleased to be with you today to discuss VarioTherapeutics' fourth quarter and year-end 2020 financial results, as well as to provide you with the progress we have already made in the past two months since the IPO. Please note that our financial results and company update press release is now available on our website. Given there are many attendees on today's call that are new to the Vireo story, we thought we'd start the call with our CEO, Greg Duncan, providing you with a brief updated corporate overview. Dr. Mike Genro, our Chief Medical Officer, will review our recent research and development progress with a particular focus on our Fibromyalgia Phase 2B program, and then I will return to review our Q4 financial results. In addition, Ralph Groswald, VP of Operations, is with us for the question and answer portion of the call. Before we would begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Any forward-looking statements are made only as of today and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements disclaimer in our financial results release issued this morning and the risk factors in the company's current and subsequent filings with the SEC. It is now my pleasure to turn the call over to our CEO, Greg Duncan.
spk04: Thank you, Angela, and good morning, everyone. We appreciate you joining us on the call today, especially during these extraordinary and challenging times. Brios Therapeutics was founded by Dr. William Pridgen, predicated on the hypothesis that several chronic pain-related disorders, including fibromyalgia and irritable bowel syndrome, may be triggered by the activation of the herpes simplex type 1 virus. As is well documented in the medical literature, the herpes simplex type 1 virus, or HSV-1 virus, as we'll refer to it on today's call, is a tissue resident virus infecting the vast majority of adults under the age of 50. In most cases, the HSV-1 virus resides in a dormant state. However, dormant HSV-1 can be activated by certain triggers, such as a major health challenge or anxiety related to job stress. Once activated, the HSV-1 virus begins to replicate, which in turn can trigger an abnormal immune response in susceptible individuals. Dr. Pridgen theorized that this cascade of HSV-1 activation followed by an abnormal immune response might be a potential root cause of the flare-ups of symptoms in diseases like fibromyalgia that can wax and wane over time. This thesis served as the genesis for various therapeutics focused on developing new combination antiviral inhibitor therapies with the end goal to improve care standards for patients suffering from chronic diseases like fibromyalgia and irritable bowel syndrome. Our lead candidate, Oral IMC1, represents a novel potential treatment approach that combines two specific mechanisms of action purposely designed to inhibit HSV1 replication, the ultimate goal of which being predicated on returning an activated or lytic HSV1 virus back to a dormant state. More specifically, The famciclovir component of IMC1 inhibits viral DNA polymerase and thus inhibits replication of the HSV1 virus itself. The celecoxib component of IMC1 inhibits the cyclooxygenase 2, or COX-2 enzyme, and to a lesser degree COX-1, enzymes that are thought to be involved in the prostaglandin pathway used by HSV to accelerate its own replication. We are unaware of any other antivirals in development for the treatment of fibromyalgia. This novel approach was a germane consideration in FDA-designated IMC1 for fast-track review for the treatment of fibromyalgia. IMC1 has also been granted a synergy patent based on the fact that neither of the individual components of IMC1 has proven effective in the management of fibromyalgia. yet the combined use of these two therapies has demonstrated significant treatment benefits in early stage clinical research. For reference, this unique mechanistic approach secured IMC-1 patent protection to 2033. To corroborate his thesis, our founder, Dr. Pridgen, conducted research in conjunction with the University of Alabama to further understand the role of HSV-1 virus activation as a potential root cause of chronic pain-related conditions. This research collaboration centered on a tissue biopsy study designed to assess the presence of active HSV-1 infection in patients with fibromyalgia and or a comorbid chronic GI disorder such as irritable bowel syndrome. This study corroborated the company's thesis by demonstrating that patients with fibromyalgia and a chronic GI disorder as well as patients with only a chronic GI disorder exhibited ongoing active HSV-1 replication. In contrast, the control patients in this study, those patients without fibromyalgia or a chronic GI disorder, exhibited almost no HSV-1 replication. This corroborative tissue biopsy evidence portends potential of IMC-1 as a treatment for fibromyalgia patients as well as patients with a chronic GI disorder, more specifically irritable bowel syndrome. Fibromyalgia was chosen as the first target for IMC-1 clinical research based on three criteria. The first reason being anchored to the pervasive dissatisfaction of fibromyalgia patients, healthcare providers, and payers with the three approved fibromyalgia medications, most notably related to poor tolerability. For reference, the three FDA-approved medications to treat fibromyalgia are Lyrica, Cymbalta, and Cervelo, all of which are CMS-mediated therapies that, in our view, have exhibited less than ideal tolerability in commercial usage. The second reason for selecting fibromyalgia for the first IMC1 proof of concept trial was predicated on less competition in the fibromyalgia research field. The third and most important consideration for targeting fibromyalgia relates to the potential to improve care for between 10 and 20 million fibromyalgia patients in the U.S. and for more than 200 million fibromyalgia patients worldwide. In the context of a large market opportunity and the clear medical need for new, safe, and effective fibromyalgia treatments, IMC-1's clinical efficacy and safety was assessed in a double-blind, placebo-controlled, multi-center trial of 143 fibromyalgia patients. The results from this Phase IIa proof-of-concept trial clearly demonstrated IMC-1's potential clinical benefits in treating fibromyalgia. In this trial, IMC-1-treated patients demonstrated statistically significant reductions in pain as well as statistically significant reductions in fatigue and improvement in patients' overall fibromyalgia symptoms. IMC-1-treated patients demonstrated improved functioning and improved overall global health status. This study also demonstrated that IMC-1-treated patients required less quote-unquote rescue therapy with low-dose opioids to control their pain when compared to placebo-treated patients. I think we'd all agree a new medication with the potential to improve fibromyalgia patients' quality of life and to reduce overall opioid use would represent a significant step forward in fibromyalgia patient care. IMC1 efficacy in treating fibromyalgia patients has generated significant excitement in the fibromyalgia research community. Additionally, the community's excitement is predicated on IMC1 exhibiting tolerability that was better than placebo in our Phase 2A trial. More specifically, patients of the placebo treatment group were three times more likely to discontinue therapy due to adverse events when compared with IMC1-treated patients. This is a rare finding, as the active treatment arm in virtually all other fibromyalgia studies exhibits a higher dropout rate due to adverse events as compared with the placebo-treated cohort. This is an especially encouraging result when viewed in the background of current patient and provider dissatisfaction with the tolerability of the three approved fibromyalgia treatments. Moving forward, the IMC-1 research programs will be managed by a seasoned executive team, complemented by a highly experienced board of directors with extensive development and commercialization experience for many category-leading medicines. This experience includes previous management responsibility for Zoloft, Viagra, Celebrex, Lipitor, Zyrtec, Lyrica, and Cervella, the latter two representing two of the three medicines approved by FDA to treat fibromyalgia. Furthermore, our chief medical officer, Dr. Mike Gendro, worked with the FDA to help define the process by which the agency reviews new drug applications for approval of fibromyalgia drugs. This is the same process used to approve Lyrica, Cybella, and Cybalta, and is still used today by FDA to guide development of new fibromyalgia drug candidates, including IMC-1. During the first quarter of this year, we assembled the full team we need to manage both the fibromyalgia Phase IIb trial and our concurrent chronic toxicology studies, and have commenced our IBS-focused research collaboration with Dr. Michael Camilleri of the Mayo Clinic. Let me turn the call over to Dr. Genro to update you on our research progress following our December IPO. Included in Mike's remarks will be an update on our top priority, our Phase IIb Fibromyalgia Trial. The Phase IIb Fibromyalgia Trial will henceforth be branded as the FORTRESS study. FORTRESS stands for Fibromyalgia Outcome Research Trial Evaluating Synergistic Suppression of HSV-1. Mike?
spk05: Thank you, Greg. Our team has been focused on preparing to execute on the two key research programs, the Fortress study itself and the concurrent chronic toxicology program to enable long-term dosing of IMC-1 in the future. Our operational activity started with refining the IMC-1 manufacturing process and scaling up our drug supply to support the development program. IMC1 and matching placebo will be available to start our programs in the second quarter of this year. The FORTRESS study is planned to enroll approximately 460 patients aged 18 to 65 who will be randomized one-to-one either to IMC1 or placebo, all of whom have been diagnosed using the 2016 American College of Rheumatology diagnostic criteria for fibromyalgia. The primary endpoint for this trial will focus on reduction in pain over time. Pain reduction will be measured daily by the NRS 24-hour recall scale via an electronic diary that the patient will use at home. In addition to assessing the fibromyalgia patient's pain reduction, we will also assess IMC1's ability to improve symptoms of fatigue, sleep disturbance, improvements in overall global health status, and improved patient function. I am pleased to announce there is significant interest in the fibromyalgia research community regarding participation in our forthcoming study. This excitement is a result of the encouraging results IMC1 demonstrated in our previous phase 2a trial, as well as recognition of the need for a new, safe, and effective fibromyalgia treatment. We expect to begin enrolling patients in May of this year as planned. Based on industry standard patient recruitment rates, we project recruiting patients throughout the balance of 2021 followed by a database lock and top line results available in the second quarter of 2022. While we cannot completely rule out recruitment delays related to COVID-19, we have observed that recruitment rates in fibromyalgia research trials have not been significantly impacted by the pandemic to date. We are excited about this forthcoming trial for a number of reasons, including the fact that in this trial we will be testing further optimized doses of IMC1 including an increased dosage of the antiviral component of the fixed-dose combination. Additionally, we will be measuring patients' pain on a daily basis, thereby reducing the potential for an increased placebo response often seen in pain research during patients' in-office study visits. We as a team believe IMC1's unique synergistic antiviral mechanism of action may have utility in treating other chronic functional somatic syndrome conditions as well. As announced in February, We look forward to working with Dr. Michael Camilleri of the Mayo Clinic to assess IMC1's effectiveness in treating symptoms of irritable bowel. In parallel with the startup activity on our fibromyalgia clinical trial, we're also commencing our chronic toxicology studies in two species. These studies will be required by regulatory authorities before we are permitted to dose study participants with IMC1 for intervals of one year or more, as we plan to do in our phase three program. The chronic toxicology program is timed to complete by the time the FORTRESS study does so that we will be able to propose a final phase three program to the FDA at the conclusion of the current study. With that update on our operational and research progress, let me turn it over to our Senior Vice President of Finance, Angela Walsh, to discuss our Q4 financials. Angela?
spk00: Thank you, Mike. Beginning with the balance sheet. we ended the fourth quarter with $29.8 million in cash. As previously noted, we expect our current cash from the common stock offering in December 2020, including execution of the full 15% over allotment to provide the company with operational runway until the end of 2022. With respect to our income statement, As a development stage company, we did not generate revenue in 2020 or in 2019. We reported research and development expenses of $0.03 million and $0.2 million for the fourth quarter and four year 2020, respectively, as compared to $0.26 million and $0.8 million for the fourth quarter and four year 2019, respectively. The decrease in research and development expenses for the fourth quarter and full year are primarily attributable to decreases in expenses for our human pharmacokinetics study conducted in 2019. We reported general and administrative expenses of $6.4 million and $9.8 million for the fourth quarter and full year 2020, respectively, as compared to $.3 million and $1.4 million for the fourth quarter and four-year 2019 respectively. The increase in general and administrative expenses for the fourth quarter and four-year are primarily attributable to non-cash expenses related to equity and share-based compensation, legal and accounting fees, and costs associated with being a public company. We reported a net loss of $6.5 million for the fourth quarter 2020 compared to a net loss of $0.6 million for the same period in 2019. For the full year 2020, net loss was $10.3 million compared to a net loss of $2.5 million for 2019. Based on our projections, we expect these proceeds to fund the Fortress trial, our chronic toxicology studies to support chronic dosing of IMC1 as well as operations through the end of 2022, which is approximately six months following our target for generating top line results from the FORTRESS trial. I'll now turn the call back over to Greg to moderate the question and answer portion of today's call. Greg?
spk04: Thank you again, Angela. In summary, fibromyalgia market opportunity is large, and market research suggests the community is dissatisfied with the existing fibromyalgia treatment options. The unique, fixed-dose, synergistic antiviral mechanism of IMC1 represents a completely new approach to treating fibromyalgia and potentially other somatic syndrome disorders. This novel approach is supported both by our fibromyalgia phase IIA data and the Fast-Track Review designation granted to IMC-1 to treat fibromyalgia, which to the best of our knowledge represents the first time a new drug candidate has been granted this designation for a fibromyalgia treatment. IMC-1 has already demonstrated clinical benefits in a Phase IIa fibromyalgia trial using the pain reduction assessment FDA uses to evaluate new therapies for a fibromyalgia indication. And finally, the Vireos Executive Team and our board of directors have extensive experience in developing many category-leading medicines, including having had previous management responsibility for developing and or commercializing Lyrica and Cervella, representing two of the three drugs approved to date by FDA to treat fibrinologists. We know biotech investors invest based on both scientific merit and beta, as well as based on the experience of a company's management team and its board of directors in a particular disease area. The Vireos team and our board has unsurpassed experience in developing and commercializing new therapies in the fibromyalgia treatment arena. We are committed to frequent and proactive outreach to the investment community and look forward to presenting at the Needham Virtual Healthcare Conference in mid-April. Operator, we are now ready for questions.
spk03: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk02: One moment, please, while we poll for your questions.
spk03: Our first questions come from the line of Ashok Kumar with Think Equity. Please proceed with your questions.
spk01: Good morning. Thank you, Greg, Angela, and Mike. Two questions. The first question is the development program costs. Greg and Angela, you laid out that the cash on hand, the $30 million, would be sufficient to support both the fortress study and the chronic toxicology studies. So to complete the development in the process, the phase three from 23 to Q2 or June of 24, could you just go over, you know, what it would take to complete the process, the additional costs? The second question is the expansion of IMC1 value proposition beyond FMI. So the proof of concept study with Mayo Clinic, could you please establish some timelines for the IBS proof of concept study? Thank you very much.
spk04: Thank you, Ashok, for your question. We'll start with a second question first. As you know, fibromyalgia is the top priority for our organization, but we as a team believe HSV-1 virus inhibition does hold promise in other potential disease areas. I'm going to ask Mike Jemrow to just outline the other areas we're looking to explore, and I'll come back on and answer the second question. Mike?
spk05: Thanks, Gary. In terms of the IBS program, the exact timing on that is not yet determined. We're talking to Dr. Camilleri about the scope and the magnitude of the study and whether we do that with Mayo Clinic exclusively or if we bring other investigators in. Discussion is ongoing, plus there will need to be some interaction with FDA to get an IND in place. So that's all going to be worked out over the next few months. In terms of the IBS program, though, Greg wanted me to speak a bit about why we would go that direction. And it's a logical next candidate for us to do a proof of concept study. We have open label data from our founder that showed that we seem to have activity in IBS. and particularly on IBS pain. And the tissue biopsy study that was conducted in University of Alabama as part of our phase 2A study of fibromyalgia also showed active HSV-1 replication occurring in IBS patients as well as fibromyalgia patients, again indicating that would be a logical target. And the IBS community is seeking better treatment options to control pain related to IBS, which is something the regulatory authorities are now requiring in IBS studies as well. So because we know there's some opportunity there and we think there's a common underpinning of this HSC1 virus, we think that's a reasonable direction for us to go to evaluate IMC1 to treat IBS pain. I think that's probably all we can say about that at the moment, Greg.
spk04: Yeah. Thank you, Mike. And Ashok, to answer your second question, as communicated, the proceeds from our December IPO provide us with operational runway through 2022. That gives us a full six months beyond the phased-to-be Fibromyalgia trial results of cash. We would use that time wisely to do two things. One would be to engage the FDA to align on the IMC-1 phase three program and financing requirements. We believe an asset A new asset in the fibromyalgia arena has significant potential, which will also portend interest from other life science companies. And so we could use that time to also assess external party interest. And then basically, once we have the clarity on the phase three program and have assessed interest, we can choose the best value maximizing approach for our shareholders. That may be a loan or it could be in partnership as we advance IMC1 development commercialization activities. As for the phase three program requirements, we will not know that until we have the data from the phase two B trial. And we will certainly need FDA's concordance with the phase three program requirements. We do believe that the size and the scope and the focus of this program could serve as part of a registration package. So we will make the case that one further phase three study is required, but that's obviously subject to FDA review, so that's not something we can provide a firm recommendation on moving forward. But we do have cash to get to the phase 2B. We have time with that cash to scope out the phase 3, and we can assess what's the best path forward, be that going alone or in partnership with another potential life science company.
spk01: Thank you, Greg, Angela, and Mike. Thank you.
spk03: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
spk02: There are no further questions in the queue at this time.
spk03: I would like to hand the call back over to CEO, Greg Duncan, for any additional questions and closing comments.
spk04: Yep, we have just one additional question via email, and I will ask Angela to come on this. And the question is, can you fund a second program, e.g. the IBS program, with your existing cash? Angela, would you comment on that, please?
spk00: Sure, Greg. I would be glad to. We are in early stage discussions with Dr. Kamilari at the Mayo Clinic. to assess how best to explore the clinical benefits of HSV-1 virus inhibition therapy for IBS patients. There are a range of options we are assessing as a potential complement to the Fortress study. What is clear is that if we pursue an IBS trial of the size and scope of our completed Fibromyalgia Phase II-A proof of concept trial, this will require additional cash beyond the cash we have on our balance sheet. That said, we have not decided the best path forward for exploring IMC-1 in IBS patients.
spk04: Thank you, Angela. And it looks like that concludes the questions. On behalf of the Vireos team, we wanted to thank you all for your interest in Vireos. And obviously, for those of you that are investors in Vireos Therapeutics, thank you very much for your support. We don't need to tell you, but we do like to say it. We do think we have the chance to fundamentally change the quality of care for tens of millions of fibromyalgia patients here in the U.S., and hundreds of millions of fibromyalgia patients in the ex-U.S. territories, and we remain committed to seeking that vision that Dr. Pridgen set up. We originally hypothesized about how antiviral therapy could improve the lives of many, many patients. We thank you for your time and attention, and we look forward to continued communication.
spk03: Thank you so much for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.
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