Chimerix, Inc. (NASDAQ:CMRX)
Q2 2014 Results Earnings Conference Call
August 7, 2014 8:30 AM ET
Joe Schepers - Executive Director, Investor Relations and Corporate Communications
Michelle Berrey - President, CEO and CMO
Tim Trost - Chief Financial Officer
Linda Richardson - Chief Commercial Officer
Katherine Xu - William Blair
Phil Nadeau - Cowen & Company
Good morning. And welcome to the Chimerix Second Quarter 2014 Financial Results Conference Call. Today’s call is being recorded. All lines have been placed on mute. (Operator Instructions)
At this time, I would like to turn the conference call over to the company’s Executive Director of Investor Relations and Corporate Communications, Joe Schepers. Please go ahead, sir.
Thank you. And welcome to Chimerix second quarter financial results conference call. On the call today are Michelle Berrey, President, CEO and CMO; Tim Trost, CFO; and Linda Richardson, Chief Commercial Officer.
Before we begin, allow me to read Chimerix’s Safe Harbor regarding forward-looking statements. During the course of this conference call, the company will be making certain forward-looking statements such as statements relating to certain R&D programs, including our Phase 3 SUPPRESS trial or future clinical trials of brincidofovir also known as CMX001 and related matters. These statements involve risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements.
These risks and uncertainties are discussed more fully in Chimerix’s filings with the Securities and Exchange Commission, including without limitation its most recent quarterly report on Form 10-Q, its most recently filed reports on Form 8-K and other documents subsequently filed or furnished to the Securities and Exchange Commission.
All forward-looking statements made on this call speak only as of the time they are made and Chimerix undertakes no obligation to update these statements to reflect subsequent events or circumstances.
I also want to point out that company issued a press release this morning containing financial results for the second quarter 2014. The press release is available on the company’s website at www.chimerix.com.
At this time, I would like to turn the call over to Michelle Berrey.
Thank you, Joe. And thank you all for joining us this morning. Today, I will provide an overview the first half of 2014 for Chimerix and Tim Trost will discuss our second quarter financial results. Following our formal presentation, Tim and I will be joined by Linda Richardson for the question-and-answer session.
The first half of 2014 has been an exciting and very busy time for all of us at Chimerix. We successfully completed our common stock offering in May with gross proceeds of just over $119 million.
These proceeds are targeted primarily for funding the company’s research and development programs and preparing for the planned launch of brincidofovir. With this financing, we have a solid financial position into 2016, which will follow the date read out for the Phase 3 SUPPRESS trial.
I want to extent the personal note of appreciation to our three outgoing Board members whose terms with Chimerix ended in June, Farah Champsi, Wende Hutton, and Art Pappas provided important guidance to Chimerix over the last several year during a significant period of growth and transition to a publicly traded company. Thank you.
At our annual meeting in June, we added four new independent directors to our Board, Jim Daly, Cathy Gilliss, John Leonard and Patrick Machado, were each named as directors. These individuals bring important expertise to our organization in the areas of research and development, commercial operations and global marketing and organizational growth.
The primary focus for all of us at Chimerix for the remainder of 2014 and 2015 continues to be the brincidofovir pivotal development programs in CMV and adenovirus. We are preparing for regulatory submissions and approvals, and beginning commercialization activity.
In support of this we continue to build our corporate infrastructure by adding key employees with strong experience in the areas of commercial, clinical, regulatory and medical affairs.
I will begin with some updates on the brincidofovir Phase 3 SUPPRESS trial and CMV prevention. We recently conducted our third quarterly review by the independent Data Safety Monitoring Board.
Following their unblended review of all Phase 3 data with a specific focus on renal and hematologic safety parameters and GI tolerability, once again there were no recommended changes for the clinical conduct of the SUPPRESS trial.
We expect to enroll the final patient into SUPPRESS by year end or early in 2015, the study data to be reported in the second half of 2015. This revision regarding the potential timing of our last patient enrolled is predominately driven by the significant variability and time required for IOB review and approval processes at some transplant centers which has been longer than initially expected.
We recently initiated several high-volume centers and announcing enrollment at these sites, including sites in Europe and Canada. We expect to see a more consistent enrollment pattern going forward.
Earlier this year we initiated discussions with European regulators regarding the brincidofovir development program, culminating in formal scientific AdVise in early May. The EMA scientific AdVise working party indicated that CMV viremia leading to initiation of preemptive therapy will be considered a clinical endpoint and thus could lead to a full approval with successful completion of the SUPPRESS trial alone.
This approach differs from the currently agreed accelerated approval path in the U.S., which requires a second confirmatory study. The correlation of CMV viremia with CMV disease from our prevention study in renal transplant recipient could be one of several mechanisms for obtaining traditional approval for CMV prevention for brincidofovir in the U.S.
CMV remains a significant risk in immunosuppressed population, including adult and especially pediatric solid organ transplant recipient. The impact of viral infection on pediatric and adolescent kidney transplant was highlighted in a review article published in this morning New England Journal of Medicine.
Over the last 25 years increasing rates of CMV, EBV and BKV were noted in this population, likely related to the increasing use of potent immunosuppression with resulting post-transplant complications, graft loss and death.
To adjust this unmet medical need, we have been progressing discussions with the U.S. and European regulators regarding a prevention trial in renal transplant recipient. During the recent world transplant Congress in San Francisco, we convened panel of experts to obtain additional feedback on our trial design, which we plan to finalize by the end of 2014 and initiate in 2015.
Because multiple viruses contribute to infectious complications and graft loss in kidney transplant recipient we are evaluating ways to include overall graft function as a potential way to demonstrate the broad antiviral benefit of brincidofovir.
From the safety perspective, it was important for us to demonstrate the lack of hematologic toxicity with brincidofovir before dosing stem cell transplant patients prior to engraftment in the SUPPRESS trial. From this stem cell transplant patient the most important goal is to protect the graft the new bone marrow.
The hematologic safety data for brinci with over 1000 individuals allowed us to begin dosing in SUPPRESS soon after the transplant independent of engraftment. For kidney transplant recipients graft survival has improved with the availability of potent immunosuppression but 10-year graft survival is still less than 50%. The lack of nephrotoxicity for brinci was demonstrated in the Phase 2 study published last year in the New England Journal.
At World Transplant Congress last week we presented new data and patient from the expanded access trial that switch to brincidofovir from the nephrotoxic antiviral cidofovir and foscarnet. More than 80% of these patients showed improvement in renal function during the first week of brincidofovir treatment even those who would had severe renal impairment over -- who were on dialysis when they began brinci.
Demonstration of the safety and broad spectrum efficacy in the renal transplant population would provide us with an important opportunity to address the need for our broad spectrum antiviral in patients whose graft survival is limited by risk of multiple viral infections.
At World Transplant Congress we also presented data showing that brincidofovir demonstrated antiviral activity against clinically or virologically resistance CMV in renal transplant patients who had failed all other antiviral.
These data in kidney transplant recipient are representative of the more than 100 patients who received brinci for resistant of refractory CMV infections many of whom had more than one active viral infection, supporting a potency of brinci against multiple DNA viruses.
In addition at World Transplant Congress we presented clinical data from the brincidofovir expanded access trial showing that brinci had significant and clinically relevant activity against adenovirus and CMV in pediatric and adolescent liver transplant recipients.
Importantly, clinical activity was demonstrated in these patients against other viral infections as well, including antiviral virus, BK virus and varicella zoster virus. These and vivo data supplement the antiviral activity that has been demonstrative in vitro.
In March of this year, we begin a pilot study of brinci for the treatment of life threatening adenovirus infection and I have already exceeded the initial target enrollment of 20 patients. As of today, we have treated 36 patients at 24 sites and are continuing to enroll patients in the pilot potion of the pivotal Phase 3 study which will be know as AdVise.
Patients are receiving open-label brincidofovir as a same dose that is being studied in the SUPPRESS trial, 100 milligram twice weekly. Just this week we learn that data from the pilot trial in adenovirus has been accepted as an oral late-breaker presentation IDWeek in October. We look forward to the opportunity to present the virologic and important clinical outcomes data at this conference.
Data from the pilot portion of the AdVise trial will be submitted to the FDA along with our final study design which is planned to evaluate two different durations of brici for the treatment of adenovirus infection.
We remain in discussion with the FDA regarding the size of the study and the timing of the end-point, but anticipate finalizing and initiating the pivotal AdVise trial by the end of 2014.
During the second half of 2014, we plan to continue to prevent published data on brinci favorable, safety and tolerability profile and broad spectrum of antiviral activity, as well as brinci’s potential applications in diverse patient population.
Two abstracts describing brinci’s barriers to viral resistant have been accepted for oral presentation at ICAAC in September and an additional abstract is being accepted for presentation at the Liver Meeting in November.
With regard to our important development program for the treatment of smallpox, we are currently in formal discussions with BARDA regarding option segment two which would fund continue development of brincidofovir under the animal rule for the treatment of smallpox.
In the event that we received positive news form BARDA, our smallpox counter measure development program would enter the equivalent of Phase 3 testing later in 2014 in support of an NDA submission.
We look forward to keeping you apprised of our progress with brinci and other R&D initiatives, including our active discovery program focused on viral diseases, including adenovirus and influenza and other infections that impact global health.
A key objective in 2015 would be to progress an additional compound and to preclinical assessments and to potentially advance the second compound in the clinical testing. By capitalizing on our lipid technology platform in our chemical library, we've been able to progress compounds, which have unique profiles and different spectrums of potent antiviral activity.
I will now hand the call over to our CFO, Tim Trost for a review of the financial results for the second quarter 2014.
Thanks, Michelle, and good morning, everyone. As Joe mentioned in his introductory remarks, earlier today we issued a press release containing our financial results for the second quarter 2014.
Beginning with our balance sheet, Chimerix had $200.6 million in cash and cash equivalents, $7.1 million in debt and approximately $35.4 million outstanding shares of common stock at June 30, 2014.
Turning to our statement of operations, Chimerix reported a net loss of $11.7 million or $0.39 per basic and diluted share for the second quarter of 2014. During the same period in 2013, Chimerix reported a net loss of $12.5 million or $0.91 per basic and diluted share.
Revenues for the second quarter of 2014 increased to $919,000, compared to $808,000 million for the same period in 2013 due to an increase in the second quarter of 2014 and reimbursable expenses associated with the Chimerix’s ongoing contract with BARDA.
Research and development expenses were $8.1 million for the second quarter of 2014, compared to $6.3 million for the same period in 2013. This increase is primarily due to the effect of increased costs related to the ongoing enrolment of the Phase 3 SUPRESS trial. The pilot portion of the Phase 3 to adenovirus infection and growth of the company's clinical, regulatory and development group.
We continues to expect significant increase in R&D expenses for the full year 2014 compared to full year 2013 due to these same cost drivers. R&D expenses maybe uneven from quarter-to-quarter.
General and administrative expenses increased $4.4 million for the second quarter of 2014, compared to $ 2.2 million for the same period in 2013. The increase is primarily due to growth of the company's corporate infrastructure, operating as a publicly-traded company and one-time severance related compensation expense of $1.6 million. For the full year of 2014, we continue to expect an increase in G&A expenses compared to the full year 2013.
Loss from operations was $11.6 million for the second quarter of 2014, compared to a loss from operations of $7.7 million for the same period in 2013. The variance is due primarily to the increase in costs related to ongoing Phase 3 trials and as previously discussed one-time severance related compensation expense.
Net interest expense was $138,000 in the second quarter of 2014, compared to $415,000 in the same period in 2013. The decrease is primarily based upon a declining outstanding loan principal balance, as the company continued to pay down debt.
For the second quarter of 2014, there were no fair value of warrant charges as all of the outstanding preferred warrants converted to common stock warrants upon the completion of the IPO in April 2013. For the second quarter of 2013, the company recorded a $4.4 million expense due to the change in company valuation during that period.
Again as a reminder, the second quarter 2014 financial results as well as this morning’s announcement are available on the investors section of the website.
I would now turn the call back to Michelle.
Thank you, Tim. Before we take questions, I want to emphasize some important points. During the second quarter of 2014, we significantly strengthened our financial position. We added several new independent directors to our board and we continue to add key employees to critical areas of the company.
Since March, we’ve enrolled nearly twice the anticipated number of patients in the pilot portion of the Phase 3 AdVise study for adenovirus infections. Assuming the BARDA contract is awarded, our small pox counter measure development program is expected to enter the equivalent of Phase 3 testing in 2014.
Looking forward to 2015, we intend to progress the second compound in the clinical testing and to continue preclinical assessment on additional internal asset in areas of unmet medical need such as influenza and norovirus. Most importantly, we remain confident that the successful completion of the Phase 3 SUPPRESS trial lead to brinci’s approval as the first compound for the prevention of CMV and HCT patients.
We are also optimistic about the opportunities for brinci to demonstrate broad spectrum antiviral activity, improvement in non-relapse mortality and the benefit and healthcare utilization in the SUPPRESS secondary endpoint.
I will now turn the call to the operator for questions.
(Operator Instructions) Our first question will come from the line of Katherine Xu from William Blair. Your line is now open.
Katherine Xu - William Blair
Good morning. I’m just wondering on the delay -- slight delay on SUPPRESS. Michelle you said it’s because certain centers were enrolling slower. How -- could you just provide us with some more details and why that was and is it unexpected from your side?
Yeah. Good morning Katherine. So just to clarifiy, we wanted to be very transparent about the enrollment for SUPPRESS and some of the lack of easy predictability on our enrollment patterns. We found over the last six months in particular that there were some transplant centers that had more cumbersome review and approval process were a little slower in getting up two full enrollments than other centers.
We are now seeing with the initiation and enrollment from some of the larger centers and more consistent screening and enrollment pattern. It is still quite possible that we will complete enrollment by the end of 2014. But we wanted to be transparent that we may see the final patients of the SUPPRESS trial enrolled in the first few weeks of 2015.
Katherine Xu - William Blair
Great. Thank you. And what data is really driving the final desire of AdVise at this moment. Do you need some data from the pilot’s trial or do you not or it’s pretty much set by now?
We do have general agreement with the FDA on the design of the AdVise trial which will look at two different durations of therapy and patient with disseminated adenovirus, we are planning to look at both six and 12 weeks of brinci. One of the interesting things we’ve seen so far in the pilot data and again you’ll see much more granularity on this in October is that different types of immunosuppressant, relative immunosuppressant that we’ve seen.
We are again going through this population to make sure that we are being inclusive and our patients who are at risk of rapid progression to what is often a failed disseminated adenovirus infection. One of the things that we are also looking to the pilot data to confirm is for those patients who relapse after stopping brinci, how quickly do we see that adenovirus relapse. And that will really play a larger part in determining where the primary endpoint is assessed. Is it two weeks after discontinuation of brinci, is it four, is it six?
And that’s really one of the final things, we are looking to confirm with the pilot data as I reviewed quite a number of patients. And I think, a surprising number of patients have sort of come out of the woodwork. I think there was a lack of testing for adenovirus in many cases because there was no -- there wasn’t a therapy available frankly.
So I think that’s also one of the last things that we’re looking to confirm prior to finalizing the endpoints and obviously the implications that has scored statistical analysis for the study. So we do anticipate having that finalized for the end of 2014 and converting the sites that are actively enrolling into the pilot portion and to the formal Phase 3 AdVise study.
Katherine Xu - William Blair
Okay. And lastly, on the European side, you start talking to them about the first integration you are pursuing or is it -- what is the plan there. I mean, do you plan to go through regulatory processes in parallel in both continents or European is kind of lagging at this moment?
I would say we’re certainly progressing those in parallel because we had the advantage of a longstanding relationship with the FDA that certainly made initiation of our regulatory strategy and our sites in the U.S. that much more rapid. But we are certainly progressing both at the EMEA level as well as individual country held authorities. We are including -- we are getting interest from several European countries and potential participation in the AdVise trial.
So that’s a newer component that really we had not anticipated discussions with when we submitted our regulatory package for discussion with EMEA for the scientific advice, we had not initiated the adenovirus trial. So it was something that to add to our agenda for discussion there.
We are continuing to progress with individual countries throughout the summer and fall and anticipate submission of our SUPPRESS data for review and approval in Europe as well as in the U.S. From commercialization perspective, we’re in the midst of our review of potential commercialization strategies in Europe and should have more information by the end of the year about our strategies there.
Katherine Xu - William Blair
Thank you very much, Katherine.
Thank you. (Operator Instructions) Our next question will come from the line of Phil Nadeau from Cowen & Company. Your line is now open.
Phil Nadeau - Cowen & Company
Good morning. Thanks for taking my questions. First I guess, on the adenovirus trial. Michelle, you understanding that given the design that you have come up with it, this is likely to be -- to be to be sufficient to be the confirmatory study and convert the approval, assuming you get an approval on the SUPPRESS trial to a full approval?
Yeah. Hi. Good morning, Phil. Thanks for the question. So with the adenovirus trial, the AdVise pivotal trial, it is planned to be a single study for full approval of brinci for the treatment of disseminated adenovirus infection and would because of it the clinical end point be a single study that would get us approval for that indication.
For the CMV prevention indication, again currently our plan and discussions with the FDA would results in an accelerated approval for CMV. As I mentioned earlier, there are several different potential roots for us to achieve traditional approval for that CMV prevention indication, one of which would be meeting some of the significant secondary endpoint, since SUPPRESS including non-relapse mortality or graft survival.
The other options there are if we can come to an agreement as a scientific community as along the lines that what we’ve discussed with the European authority, namely that CMV viremia, that results in an association of preemptive therapy is in fact a clinical endpoint and that should be appropriate endpoint for a full traditional approval in the U.S. as well. So I think, we’re progressing on all front but our current understanding is, it’s for an accelerated approval for the CMV prevention indication.
Phil Nadeau - Cowen & Company
Okay. If -- you’re understanding that it doesn’t change if some of the secondary endpoints if they don’t come through or you don’t reach an agreement with the FDA and CMV viremia leading to therapy, would you then anticipate having to do a second study?
Well, our plan is to conduct a second confirmatory study in solid organ transplant recipients. So sort of independence of whether or not we received an accelerated approval or a full approval on the SUPPRESS trial. Either way we want to have data in the solid organ transplant recipients. Our current plan is to -- our first population would be the kidney transplant recipients because of the opportunity for us to demonstrate the potential activity of Brinci against BK virus and EBV especially in the younger kidney transplant patients.
So independent of whether we need that trial for our full approval, it is a trial that we intend to finalize by the end of this year then initiate in 2015. Again, that will be before we have the data for SUPPRESS. So as I mentioned, that’s our plan and we are actively pursuing finalization of that study design with ongoing conversation both with regulators and our other advisors in that area.
Phil Nadeau - Cowen & Company
In the solid organ transplant trial, if you’re going to look at an endpoint of kidney transplant graft survival at this time and the early data that you’ve seen. Do you have a sense for how large of a study that would need to be and how long with endpoint you need to examine?
No. Much of a data for survival of the graft or for GFR that is for example, less than 45, something that demonstrates less than optimal results for those patients are usually one year. We are looking at the literature and available single center databases to see. If we can get a good point estimate for a six-month post transplant.
So those are our two potential timing for that measure. Obviously, we will be counting data specific for CMV infection in these patients. But wanted to make sure that we can really shed light on the importance of these other viral infections and the need for a broad-spectrum antiviral as was highlighted in today’s article, particularly in younger transplant recipients where viral infections are increasing and having a significant impact on graft survival.
Phil Nadeau - Cowen & Company
Great. Thanks for taking my question.
Thank you. And at this time, I’m not showing any further questions. I would now like to turn the call back over to Michelle Berrey for any closing remarks.
Thank you, Charlotte. We thank you all for your participation in today’s call and we look forward to updating you again very soon. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day.
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