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Chimerix, Inc. (NASDAQ:CMRX)

32nd Annual JPMorgan Healthcare Conference Call

January 16, 2014 3:30 PM ET

Executives

Kenneth I. Moch – Chairman and Chief Executive Officer

Analysts

Carter L. Gould – JPMorgan Securities LLC

Carter L. Gould – JPMorgan Securities LLC

Good afternoon. My name is Carter Gould. I’m a member of the biotech equity research team here at JPMorgan. Thank you for attending this afternoon. Next up is Chimerix. Presenting for the company will be President and CEO, Kenneth Moch.

Kenneth I. Moch

Thank you, Carter. Good afternoon, everybody, and welcome to your last several hours. We’re delighted to be here. As a public company, I do have to refer you to our forward-looking statements filed with the Securities and Exchange Commission in our various documents. So Chimerix, we are an antiviral therapeutics company developing novel antivirals against a series of clear unmet needs. We went public last April in an IPO that raised $118 million of gross proceeds. We ended the third quarter of 2013 with about $117 million in cash.

The primary use of proceeds was to fund our Phase 3 SUPPRESS trial of our lead compound brincidofovir, previously known as CMX001 and that trial was focused on the prevention of cytomegalovirus, a double-stranded DNA virus in seropositive – CMV seropositive stem cell transplant recipients. What we’ll talk about today predominantly is the SUPPRESS trial, but the picture I want to paint for you is not only around the primary endpoint, but around the breadth of opportunities with brincidofovir based on its broad activity against double-stranded DNA viruses. This Phase 3 trial is up and running. The data is expected in the middle of 2015.

We have, just give to you a composition of matter patent overview, we have patents that go to 2031, some base patents that went to 2020 and then some recently issued composition of matter patents are going to 2031. And as for the management team, a number of my colleagues are here today. We are broadly experienced in the development of novel drugs, particularly in the antiviral space. We recently were pleased by the addition of Linda Richardson as our Chief Commercial Officer. She’s had JPMorgan trial by fire and been with a company about a week now. Also our Chief Financial Officer, Tim Trost, is in the audience as our several other colleagues, and our Chairman, Ernie Mario here in the front row. So we’re delighted by the attendance of several members of the Chimerix team.

The focus of this conversation would be on brincidofovir, but just briefly to touch on a couple of other aspects of the company, we have a second compound that is based on our lipids technology, which is the underlying and founding technology of the company. This lipid technology gave rise to both CMX001 brincidofovir and CMX157, which we licensed to Merck in July of 2012. The key things about the CMX157 deal; it’s a lipid form of tenofovir. Merck paid us $17.5 million upfront for that, and as part of the deal, did a deep dive into the base patent estate for the company, because that overlaps between CMX001 and CMX157 provides sustenance to people about the technology. We also have a significant pipeline of nucleosides and nucleotides and that will we hope bear fruit in the coming years in term of other product opportunities for Chimerix.

So let’s step back for a second and talk about double-stranded DNA viruses and the bad news is that each and every one of us has been exposed to and probably carries multiple double-stranded DNA viruses. We are exposed to them during childhood. Many of these viruses infect us and then remain latent throughout life. But as we evolve, as we go through various procedures, as we receive different drugs, these viruses have the opportunity to either infect us with a first time or reactivate and that’s the problem that we are working to address with brincidofovir.

To just give you a quick example of it all, we no longer allow kids to get chicken pox, we now immunize, but the problem with that is that we are no longer exposed to little kids who are walking around with chicken pox, we have lost our herd immunity as adults and the increased number of shingles, kids, people with shingles is dramatic, six-fold increase in people – number of people, the ages are declining. So if you think about what’s going on with that other drugs, [indiscernible] side effect is JC virus is activating that’s a double-stranded DNA virus, the polyoma virus. So when you think about what’s going on now, there’s an increasing evidence of these double-stranded DNA viruses affecting our every day life and the pathological consequences of this can be dramatic.

I won’t go into this chart in great detail, but suffice to say the following. There are five families of double-stranded DNA viruses that affect humans. Each and every one of those viruses has known and direct pathological consequences and indirect effect, because these viruses can cause other double-stranded DNA viruses to do bad things to us, and that’s what is the primary focus of our work with brincidofovir, it’s affecting all of these viruses, creating the first broad spectrum antiviral against double-stranded DNA viruses.

So what is brincidofovir? The lipid technology that founded this company allowed us to take an existing FDA approved molecule, cidofovir, which is dosed by IV methodology and make it an oral drug that has significantly enhanced efficacy and significantly altered side effects. So cidofovir itself, IV is an widely nephrotoxic drug, so nephrotoxic that the black box warning says as few as one or two doses can lead to nephrotoxicity and/or death.

I’ll show you a slide a few slides from now that shows that we actually believe that brincidofovir is nephroprotective. So we’ve taken a drug and dramatically altered its side effect profile. Simultaneously, we’ve also increased the efficacy of the drug and you can see that here. These are the EC50s for various drugs that are on the market or those in development. The headline here for those of you not familiar with EC50s is [indiscernible], the lower the number, the better off you are. And you can see that brincidofovir is highly powerful against all five families of double-stranded DNA viruses and it’s the only the drug that has that capability that’s known or in development at this time. So this allows the broad spectrum positioning and the fact that going back to the point that many people have many different viruses, you can’t – you don’t need to be – treating for just one virus is not the way to go and that’s why we think positioning of brincidofovir and the story really is multiple viruses, multiple conditions, that’s the way we’re evolving the compound. So being very specific in our first indication, our initial indication in hematopoietic cell transplantation, we believe that the prevention of viruses, particularly the prevention of reactivation of cytomegalovirus, should be the standard of care, but it has not yet become that, because all the other drugs that have been tried have side effect profiles that do not allow them to be used. The risk benefit ratio simply doesn’t work.

The current standard of care is a drug called Valcyte. It is used in preemption, that’s when you’ve already shown reactivation of the virus and the reason it can’t be used to prevent is that when they tested it about 20 years ago, while it was active against the cytomegalovirus, it also caused a dramatic increase in neutropenia and increased the rate of other opportunistic infections and increased fatalities. So the opportunity exists to develop a drug that prevents the reactivation of these viruses and that’s where we’re taking brincidofovir.

So our Phase 3 clinical trial is called the SUPPRESS trial. The primary endpoint, as I mentioned, is the prevention of reactivation of cytomegalovirus, but the image I’d like you to have in your mind is that we are trying to collect not only data on the primary endpoint, but on many other double-stranded DNA viruses, where brincidofovir has activity as well as endpoints relating to kidney function, neutropenia, other infections and then looking at the overall economics that can come from a drug that has the broad spectrum power that we believe brincidofovir has and you’ll see that as the theme of the rest of this presentation.

So quickly the SUPPRESS Trial. It’s a 450 patient trial, 2 to 1 randomization. I’ve mentioned the population. These are by the way you receive the stem cell transplant generally as a therapy for hematological disorder or genetic disorder, okay. That’s why you get a stem cell transplant. We are looking to dose these patients for 14 weeks and then follow for an additional 10 weeks, so it’s really a six-month trial for these patients. We’re looking at superiority over placebo, because no other drugs are approved for prevention and we believe this trial is adequately if not overpowered for the primary endpoint, so that we can get better data on many of the secondary endpoints.

People have asked us throughout this conference will there be interim looks, the answer is there is an interim analysis of safety that goes on – there is a DSMB that looks at safety quarterly, but there are no interim efficacy looks, because we don’t want to stop this trial early, we want to collect as much data about all of the other endpoints as possible. This trial is designed to complete enrollment during 2014 and we expect to report data mid 2015. The piece of news relating to enrollment will be when we’ve completed enrollment we will announce it.

The trial is based on data generated in the Phase 2 trial that I’m proud to say was published in September in The New England Journal of Medicine. It’s one of about two dozen Phase 2 trials that have been published in The New England Journal over the last decade. While there are a lot of trials with powerful outcomes, and for this trial, the p value of the primary endpoint was 0.002, which was looking at whether or not patients had detectable CMV at the end of the trial, but really this talks to the standard of the need for a new drug to change the standard of care in stem cell transplantation and CMV.

The primary endpoint for our Phase 3 is a slightly different endpoint, but also one that was extremely powerful and that was at any time during the trial does the patient reactivate to a level that requires moving to treatment with Valcyte or another preemptive therapy. So what you see here are the various doses in our Phase 2 trial and the green is our Phase 3 dose, 100 milligrams of brincidofovir twice weekly, the orange is obviously placebo and this is looking at whether or not at any time during the trial patients crossed over a 1,000 copies of cytomegalovirus. That is the one of the basic primary endpoint for our Phase 3.

Here is another way of looking at it and this is also looking at that 1,000 copy threshold. So you can see the placebo patients on the bottom, the 15 of 47 of those patients who did not have reactivated CMV at base line crossed over the 1,000 copies per mL threshold, none of the patients who received brincidofovir did a p value of 0.001. So this is the base way of looking at our Phase 3 trial and actually in the Phase 3, we stratified patients who were at higher risk of reactivation to proceed to cord blood stem cell transplant, p-cell depletion or have major HLA mismatch, any reactivation is sufficient to move them to preemptive therapy. For people who did not have those, particularly the preemptive character – early characteristics, they have to cross over the 1,000 copy threshold.

So I mentioned that CMV is the primary endpoint, but we are looking at a number of secondary endpoints, I’ve talked about those briefly. Let me give you a little bit of insight into those secondary endpoints. So during the Phase 2 trial, we looked at kidney function, we looked at GFR, we looked at serum creatinine levels, we looked at microhematuria and what we saw was a statistically significant impact of brincidofovir on those measures. So as you can see on this slide, this is from our Phase 2 trial, patients who received brincidofovir, look at the red, a 100 milligrams twice weekly, had an improvement in their glomerular filtration rate. Patients who received – well, who got placebo had a decline in their kidney function. This was consistent across the three measures I mentioned, reaching statistical significance.

When we looked at how this correlated, what it correlated most clearly with was whether or not the patients had BK virus, a polyoma virus, which is a double-stranded DNA virus. So you can see that this is obviously something we’re looking at. It’s very important. It’s one of the first times or it is the first time. People have seen this in the stem cell arena. When you talk to solid organ transplant professionals, particularly people who do kidney transplants and you look at the potential to protect kidney function, you can understand why we are excited about this as a potential major next step for our evaluation of brincidofovir.

This is data from our Adenovirus trial, our 202 Study, and I know it’s a little hard to see from the back, but there are a couple of things to see here. One is the consistency of data. If you look at the bottom two boxes on the right hand side, the bottom or the placebo patients in this small 48 patient trial and you can see that the adenovirus, another double-stranded DNA virus, the levels here are all over the place for these patients and for this trial, you already had to have detectable adenovirus to enroll, and you can see brincidofovir’s effect in suppressing the adenovirus.

That was a small trial. It did not reach statistical significance overall. It was the first trial ever run, placebo-controlled trial ever run for adenovirus patients, but for patients who had over a 1,000 copies of adenovirus at baseline. Seven of eight patients on brincidofovir went below the limit of detection versus one of eight patients on placebo and that did reach statistical significance. Equally if not more interesting to us was the mortality affect of this. Again not reaching statistical significance, but again seeing a very clear trend of a mortality differentiation in a short period of time with adenovirus patients. We do not think based on what we know that this is due slow – solely to the effect of brincidofovir on adenovirus, but again points out that these patients were – had many different viruses and we think this is part of a cumulative effect and it is one of the secondary endpoints for the SUPPRESS trial to look at all-cause mortality.

So we’ve also looked at healthcare utilizations, stepping back to our Phase 2 trial, what we saw in that trial was that patients who received Valcyte or [indiscernible] the current standard of care, the preemptive therapies had significantly increased bone marrow toxicity, kidney toxicity and severe adverse events. In our Phase 3 trial, we’re following the patients out through 24 weeks, collecting a significant body of data relating to the implications of preemptive therapy versus what happens when patients are prevented from developing CMV with brincidofovir and that will help us with our pharmacoeconomic analysis, so that we have safety, efficacy, health utilization pharmacoeconomics as part of our discussions when we bring this product to market. Obviously, our Chief Commercial Officer is extremely interested in the outcome of this particular analysis.

So let’s look at the safety and tolerability profile. I mentioned before that cidofovir itself is widely nephrotoxic and I also have now shown you that not only is there no evidence of nephrotoxicity associated with brincidofovir, but there is actually evidence that it is nephro protective. There’s also no evidence of hematological or bone marrow toxicity in SUPPRESS and so what – sorry, in the Phase 2 trial, so what makes that very interesting is that we are now able to dose earlier with brincidofovir than we did in our Phase 2 and or the – any other company or drug has done in its studies, because of that, there’s no evidence of hematological effects.

What that means is that we will be able to capture the 20% or so of patients who had actually reactivated CMV prior to engraftment. In the Phase 2 study, we had to wait until patients had engrafted to start dosing with brincidofovir, because of the concerns that existed for all drugs about hematological toxicity. Having seen none, the FDA is now allowing us to start dosing as early as possible. So we expect that 50% of the patients will begin dosing within a week and 90% within two weeks and while I can’t go back in time to show you that curve, what you’ll see is that most of the events for brincidofovir occurred very early on and then it stabilized out once patients had the dose of brincidofovir on board. We have a six day half-life. It’s a long acting drug, but for the placebo patients that continue to have events all the way through the trial and so you can expect to have increasing event rates for placebo patients again going back to helping us with the power of this particular SUPPRESS trial.

And finally, we’ve implemented a safety monitoring management plan. The dose-limiting tolerability for brincidofovir is diarrhea. It’s actually a good side effect to have if you want to think about it from the standpoint of these patients, because after their time in the hospital they go home to their local sites and if they have a type of side effect they could not easily recognize, they may well show up at the hospital with a fungal infection in their hard palate and things really in bad shape for them.

Here if you have an increased number of stools, you can determine that you maybe having a side effect from brincidofovir, and here surprisingly for an antiviral drug, the way to manage that is to miss the dose. We stop a dose and the diarrhea does not go away, it’s not due to brincidofovir and so in our Phase 2 adenovirus trial, we had one patient who stopped dosing due to the diarrhea, due to the side effect and that’s it. So with the Safety Monitoring and Management Plan, we expect to have a drop out rate due to diarrhea in the low single digits, which means we fundamentally control the side effect and that’s the only side effect of any significance that we’ve seen with brincidofovir to-date.

So the SUPPRESS trial we believe now also incorporates the key learnings from what you’ve just seen in the Phase 2 trials and also the 400 or so patients who’ve received brincidofovir in their expanded access program to increase the probability of success of this Phase 3. To start, antivirals in general have about an 80% probability and correlation between the Phase 2 and Phase 3 through the analysis that the [indiscernible] have done. The Phase 3 trial is directly based on the design of our Phase 2 trial, so it’s all consistent because of the hematological safety that I’ve mentioned to you, we can now begin dosing earlier, pre-engraftment, allowing us to capture additional patients and get the drug on board before CMV reactivates.

When we looked at the 20% or so of patients who did reactivate early, it wasn’t until about week third – sorry, day 13 that that reactivation began, so we’ll be able to capture many of those patients and hopefully prevent their reactivation in the SUPPRESS study. And finally with the SMMP in place, we’ll manage the GI symptoms, there are ALT elevations that are due probably – that are not due to any histopathological consequences, they are transient and gone when you stop dosing the drug, so it’s something to watch, but not something we’ve ever seen, but we will manage that as part of the SMMP to make sure that we don’t see anything that’s unexpected during the Phase 3 trial.

So taking overall, we believe that brincidofovir can change the standard of care in the stem cell transplant arena, but I want you to take into your mind not only this, but the broad spectrum of this in what we’re trying to accomplish. So we’ll be able to prevent CMV, I know there’s a lot in the slide, but looking at, we’ll be able to demonstrate the broad spectrum antiviral activity of this compound. Obviously, the Phase 3 trial is designed to reinforce the lack of myelotoxicity and the lack of nephrotoxicity and hopefully demonstrate the nephro protective characteristics and we’ve already had over 900 patients who’ve received brincidofovir, will have a data base, a safety data base approaching 1,200 to 1,300 patients by the time we complete the SUPPRESS trial.

So looking at this now in terms of the market opportunity, the initial market, and again, I have to reinforce the word initial is in the stem cell transplant arena moving into the solid organ arena. In terms of stem cell transplantation, there are about 20,000 stem cell transplants right now in the U.S., you can fundamentally double that for Europe. 7,000 or so were allogeneic and to think about CMV, about two-thirds of the American population has been exposed to CMV. So it’s one of those look left, look right moments for this group, and that’s the probability of reactivating.

If you are somebody who is seropositive for CMV and you’re getting a stem cell transplant, you have an 80% probability of reactivating. That’s the initial target market just to start with the SUPPRESS trial, but obviously it goes much broader than that. We have publicly discussed the fact that we believe the next trial we will undertake, which will be used for traditional approval would be in solid organ transplantation, particularly focused on kidney transplantation, obviously to open the market into that arena as well and then we would look at a series.

Our Chief Medical Officer, Michelle Berrey in working with our Chief Commercial Officer, Linda Richardson and the team, will look at a series of smaller studies that we can focus on other viruses and other disease states to begin to broaden the broad spectrum positioning of brincidofovir. We believe we can commercialize this drug ourselves. It’s a very concentrated market. There are about 200 transplant centers in the U.S., because of our Compassionate Use Program, many of these centers have already been exposed to and used brincidofovir.

So looking at this company going forward, 2013 was a very exciting year for the company. It was an extremely productive year for brincidofovir.

In 2014, we’ll move forward with the SUPPRESS trial, we’ll agree on the next steps with the solid organ transplant trial, we will be opening up activities in Europe for the company, will be looking further at pediatric indications and how to work to build the pediatric transplant arena and other pediatric diseases, we will work to identify other potential applications, begin our commercial activities and I think this is one of the other importance – important points for investors, we will begin to present and publish data in other viruses and other disease states, particularly data generated through our Compassionate Use Program, the 430 or so patients who received brincidofovir compassionately, but also coming out of our placebo-controlled trials.

And along those lines just to set the stage, at the beginning of the year, we already have been notified that we have two abstracts, which have been accepted for presentation at the BMT Tandem Meeting, which will be in Grapevine, Texas in February, one of those will be about immunocompromised pediatric patients, so again, SUPPRESS is focused on adult patients. These are pediatric patients. The other will be in adenovirus. We have over a 100 patients who’ve received the drug who had adenovirus and we just were notified that we will be presenting data at the International Heart and Lung Transplantation Meeting on brincidofovir in solid organ transplant recipients. So this will be the first time the drug you will see data relating to our activity in the SOT arena. We have slightly less than a 100 patients who’ve received the drug in our Compassionate programs, who had received solid organ transplants.

So that’s the story of the company. You can look for data coming forward throughout the year. You can look for the SUPPRESS data around mid 2015. We will certainly notify everybody when we’ve completed enrolment and there’ll be a lot of publications painting the broad spectrum picture of this very powerful drug throughout the course of 2014. And with that, I thank you for your time. I guess, we have a breakout session to answer questions and we’d be certainly glad to do so. Thank you very much.

Question-and-Answer Session

[No Q&A session for this event]

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