Regado Biosciences (RGDO) Q2 2014 Results Earnings Conference Call August 12, 2014 8:30 AM ET
David Mazzo - CEO
Don Elsey - SVP, Finance and Chief Financial and Compliance Officer
Chris Rusconi - SVP Discovery/Preclinical Development and Chief Scientific Officer
Steve Zelenkofske - SVP, Clinical and Medical Affairs and Chief Medical Officer
Michael Metzger - President and COO
Nicholas Pelliccione - SVP of Regulatory Affairs and Quality Assurance
Chad Messer - Needham & Company
Joon Lee - Cowen and Company
Good morning and welcome to the Regado Biosciences Second Quarter 2014 Corporate Update Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Mr. Don Elsey, Regado's CFO. Please go ahead, sir.
Thank you. Good morning and welcome to Regado's second quarter 2014 financial results and corporate update call. If you've not already received it, you can access the press release and the 10-Q filed by Regado at regadobio.com under the Investors' tab.
Leading today’s call is Dr. David J. Mazzo, Regado’s Chief Executive officer. Also joining us on the call today is Michael Metzger, our President and Chief Operating Officer; Dr. Steve Zelenkofske, our Senior Vice President of Clinical and Medical Affairs and Chief Medical Officer, Dr. Nick Pelliccione, our Senior Vice President of Regulatory Affairs and Quality Assurance and Dr. Chris Rusconi, our Senior Vice President of Discovery and Preclinical Development and Chief Scientific Officer.
I remind you that we will be making forward-looking statements throughout the call. Any statements that we make today other than historical facts are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements with respect to financial projections, estimates and their underlying assumptions, guidance, future performance, the progress of our clinical trials, including the REGULATE-PCI trial, enrollment in our clinical trials, including the REGULATE-PCI trial and the prospects for the completion of our clinical trials, including the REGULATE-PCI trial, and any regulatory approval of our product candidates and the successful commercialization and financial performance of our product candidates if approved.
Please be aware that all such forward-looking statements involve risks and uncertainties such as those detailed in our SEC filings, including our 10-K and 10-Q. Any forward-looking statements that we make must be considered in light of these factors. Actual results may vary materially.
With that, I will now give the microphone to Dr. Mazzo.
Thanks, Don, and good morning, everyone. Thank you for joining us for the Regado Biosciences conference call to discuss the second quarter 2014 corporate update and financial results.
We will begin today’s presentation with the review of the second quarter financials. The balance of the presentation will focus on second quarter operational highlights, along with the current status of our REGULATE-PCI clinical trial and the activities of the company in support of the previously announced DSMB efficacy, and safety analysis of the first approximately 3,250 patients in that trial.
At this time, I'll ask Don Elsey, our Chief Financial Officer to present the second quarter 2014 financial results.
Thank you, David. The financial results for second quarter of 2014 were in line with our expectations. For second quarter 2014, research and development expense increased to $18.5 million from $13.1 million in the first quarter of 2014 and $4.3 million in Q2 2013. This increase in spending was driven by the REGULATE-PCI trial.
You may recall the REGULATE-PCI trial was initiated in the third quarter of 2013 and reached over 300 sites and more than 3200 patients by the end of second quarter 2014. With the suspension of enrollment, the clinical spending levels have been significantly reduced. So there continues to be considerable work both internally and by our external collaborators to support the efforts of the DSMB.
G&A spending in Q2 2014 was $2.8 million versus $2.5 million in Q1 2014 and $1.1 million for Q2 2013. This increase was driven primarily by the addition of key personnel, as well as increased legal, accounting, compliance, and other external spending associated with being a public company.
The net loss for Q2 2014 was $21.4 million versus $25.9 million loss in Q1 2014 and $5.6 million loss in Q2 2013. On a per share basis, the loss was $0.63 per share versus $14.87 loss per share in Q1 2014 and $24.24 in Q2 2013.
Our average shares outstanding for the period increased to $31.8 million in Q2 2014, compared to 231,000 shares in Q2 2013 due to our initial public offering that was successfully completed in August 2013, as well as a subsequent equity offering that was completed in April of 2014.
Let me now turn to the balance sheet. Total cash and cash equivalents were $72.7 million, including net proceeds of approximately $57.5 million from the follow on offering completed in April.
As we stated previously, we anticipate our cash resources are sufficient to conduct REGULATE-PCI trial and corporate operations through Q1 2015. This runway could be extended if the REGULATE-PCI trial continues to be delayed for any meaningful period of time.
In addition, this runway could be impacted by the complexity and cost, of any corrective actions that we may choose to implement as a result for the DSMB recommendations.
And with that, I'll hand the microphone back to Dr. Mazzo.
Thanks, Don. I'm sure that majority of you listening, are most interested in the current status of the DSMB review of REGULATE-PCI data. But before I cover that, I'd be remiss – if I didn't review some of the operational highlights for the second quarter.
During the second quarter a number of significant accomplishments were completed, the most important being the pubic offering which we completed in April. This offering raised approximately $60 million and was critical then to the continuation of the REGULATE-PCI trial and remains critical to our ability to respond to the current situation.
During the second quarter we also secured two additional patterns for our technology, a European Patent giving Revolixys additional broad intellectual property protection in managing coagulation and treating patients with coronary artery disease. And the U.S. Patent covering composition of matter for anti- Factor IXa aptamers and control agents.
The quarter also served two Regado publications going to press. One in EuroIntervention based on the Phase 2 RADAR-PCI Trial demonstrating Revolixys question of ischemic events. And one, in the Journal of Thrombosis and Thrombolysis, which highlighted the data from the REG2 Phase 1 trial, demonstrating the dose and concentration-dependent attenuation of thrombin generation and subsequent restoration of following reversal.
Both of these publications highlight the importance of and provide support for the efficacy of suppression of Factor IX and anticoagulation.
Lastly, we were very happy to add Drew Fromkin, as a new Board member in June. Drew most recently served as CEO of Clinical Data prior to its acquisition by Forest Laboratories, and he brings significant drug development and executive leadership experience to Regado's Board.
Having said all that, I will now turn to the subject that occupies most of our attention these days, the current status of our REGULATE-PCI trial.
As we discussed on our call of July 3rd, enrollment in the REGULATE-PCI trial has been suspended. This action was taken voluntarily by the company following a recommendation by the trial of DSMB after a number of serious adverse events reported by investigators, at certain trial sites throughout the world.
It was concluded that conducting a flow safety and efficacy review, including a benefit risk analysis would be appropriate before additional enrollment took place.
As we stated during the previously mentioned call, the target date for completion of the safety and efficacy review is within approximately eight weeks, which takes us to the end of August through the very early part of September.
Based on progress to-date, including collection of samples and completion of all relevant laboratory testing, as well as adjudication of all serious adverse events and end points, by the independent and blinded clinical evaluation committee, we believe this target date remains reasonable.
We also, subsequent to our decision and announcement on July 9, Regado met by phone with the FDA to review the suspension decision and the company’s plan for review. During that meeting, the FDA agreed with our actions, and our review plans.
Additionally, the FDA placed the clinical hold on enrollment, and dosing of either study drug. According to the FDA, this action was taken to formalize their involvement in any decision to reinitiate enrollment and dosing of patients in REGULATE-PCI in the future.
As I just mentioned over the past weeks, the company has been dedicated to completing all actions necessary to facilitate the collection of clinical data, and samples to support the DSMB review. This includes the submission of patient treatment data, blood samples, angiograms and other information to the clinical events committee for blinded adjudication and compilation.
Following submission of the complete data set to the DSMB, they were unblinded to conduct a full statistical analysis to better understand benefit risk in the context of this study.
I want to emphasize that during this time the company and the trial leadership remain blinded, and as a result we have no further insight into the data for the trial than we had back on July 3rd.
With REGULATE-PCI clinical enrollment and associated supportive activities on hold, we have significantly reduced our near term spending profile. And during this time, we will continue to carefully manage our spending to adapt, which is only absolutely necessary.
That concludes our prepared remarks for today, and we’ll now be happy to take any questions that any of you may have.
Thank you. (Operator Instructions) Our first question comes from Chad Messer of Needham & Company. Please go ahead.
Chad Messer - Needham & Company
Great, thanks for taking my question.
So, assuming we're here back by early September from the DSMB, can you walk me through what you understand the process would then be. Obviously, you've got to go back and talk to the FDA about their clinical hold, how – there might be changes to protocol assuming the study is going to resume. How quickly do you think you can get back to sites and get back up and running given a positive scenario?
Hey, Chad. Good morning. Thanks for the question.
Speaking to the question of process, you've outlined it somewhat in your question, but response simply is that, we expect as I said, the DSMB response by the end of this month or early September. Once we have that recommendation from the DSMB, we’ll take some amount of time to internalize and fully understand it. And then we would prepare for a discussion with FDA, which could occur sometime thereafter.
The recommendation for the FDA from the DSMB is to, we initiate the trial. Then we would have to determine whether or not there were protocol changes involved or not. And frankly the level of change, if any change was required we’ll determine the complexity of the activities necessary to reinitiate which in-turn then determines the timings.
So, it’s really hard to predict how long it will take but rest assured that we could get the trial back and running. We believe relatively quickly depending on the extent of modifications that might be required.
Chad Messer - Needham & Company
(Operator Instructions) Our next question comes from Robyn Karnauskas of Deutsche Bank. Please go ahead.
Hey guys, this is Evan on for Robyn. Thanks for taking my questions.
My first question is, looking back to the 1,000 patient interim analysis, what change between that point in terms of the patients who are enrolling to between 1,000 in the 32, 34 when the trial was stopped? What was the difference in the requirements of patients enter the trial?
Evan, hi, good morning, thanks for the question. If you recall, the first 1,000 patients for the trial, we're in the cohort that we generally described as the elective group. And upon the DSMB analysis and go ahead after 1,000 patients, we then began enrolling the Group that we generally call the non-STEMI or ACS Group.
So, the difference in enrollment from 1000 to the 32,050ish number where we paused, is the inclusion of some percentage of non-elective or ACS patients.
I will emphasize however though that, based upon the physiology of the disease, it's really no expectation that the frequency or severity of any type of adverse events in that population should be any different from the original population.
Okay. So, what you're saying is that you don’t think that the substantial increases in the number of patients that really spread up, there's nearly 200% increase between the first interim and when the trial was stopped, that had any impact on these adverse events in a row?
Well to be clear when I said was, that I don't think that the inclusion of ACS or non-elective patients had any impact, but I would probably go as far as to say that the rate of enrollment, we don't believe has any impact on what was going on, all the sites were functioning. According to protocol we're well trained and well monitored.
Okay. Excellent, thank you.
And then, as the DSMB conducted review, what are potential next steps? What would really have to happen for the trial to begin enrolling again? And in terms of timing what's like the best case scenario and more likely base case scenario? What's to think about?
The process as I outlined a moment ago is really one of understanding the recommendation from the DSMB. And then having a discussion with the FDA to get their concurrence, if we’re about to reinitiate.
Once we would have FDAs concurrence, not only on the general principal of reinitiating but on any protocol modifications that might be recommended or required, we would then have to go through the process of implementing those protocol changes. Depending upon their level of complexity, they might require resubmission to other regulatory authorities. And their review on agreement in other countries, as well as to potentially to IRPs at certain institutions.
We certainly have to update the investigators brochure and of course the protocol itself and so on, perhaps do some additional training.
And so, all of those things have varying timeline. So, it’s really impossible for me to predict, how quickly, except I think we've demonstrated in the past that we’re quite capable of doing things a lot faster than most people anticipate.
And of course we would be motivated to go as quickly as possible and to implement whatever is necessary to get the trial reinitiated.
Of course, and then one final question. How does the halting of the trial impact the development of REG2?
Well, it has, at this point I would call it a tangential effect on REG2. REG2 was essentially paused in development for – really for two reasons. One was that we were ensuring that we had all of the drug supply necessary for REGULATE-PCI before we began to divert any of the active substance to REG2 preparation in clinical study.
And also we had focus really on REGULATE-PCI and managing very carefully the capital needs around that trial. That trial was enrolling arguably somewhat faster but certainly according to our original plan.
And as a result we dedicated most of our financial resources to the conducting of that trial which left minimal amounts of additional money for anything else in the pipeline in the very near term.
Okay. I understand that from the financial point of view. But in terms of – it is potentially the same drug or version of the Revolixys drug. Will the outcome of the DSMB really have tangible impact on the potential development of REG2?
It clearly could. But it’s hard to say right now and it really depends on - remember I don’t want to be redundant. But in the case of the trial data, what was seen has not yet been completely adjudicated. Then after the adjudication is done, which would allow us to know whether things that were originally called serious adverse events are in fact serious. Then if they're drug related, then to which drug are they related if they are drug related.
And then what is the potential mechanism of whatever serious adverse events might have been underlined and so on, so forth. So, right now you could have a full spectrum of implications for REG2, everything from, whatever happens to REG1 carries over to REG2 in entirety to absolutely no correlation.
And it really depends on what the analysis shows and the mechanism of whatever is under covered.
Great. Thanks for taking my questions. Really appreciate it.
Okay Evan. Thank you.
Our next question comes from Joon Lee of Cowen and Company. Please go ahead.
Joon Lee - Cowen and Company
Hey guys, thanks for taking my question. At what safety to efficacy level do you think would the, DSMB would allow the study to move forward? How many events do you think is allowable if at all?
Joon, good morning. Thanks for the question. As I've described several times before in public, the protocols and the charter for the DSMB do not describe any specific numerical trigger points for taking action or stopping as it relates to serious adverse events, either in terms of frequency or in severity.
All I can say from our perspective, I am going to be stating the obvious here, that, at the time that the DSMB made their recommendation for us to do a data analysis, the level of events in terms of both frequency and or severity or the combination thereof, rose to a point where they thought it was prudent to taken a look at the data.
Other than that, I really can't say very much, and certainly as I said, there are no specific numbers that would initiate a review, nor do I believe that there are specific numbers that will cause them to either continue to recommend a pause or to recommend a reinvestigation.
It will be the context of benefit risk overall and also the final outcome of the adjudication of all the events that they think that they have seen.
Joon Lee - Cowen and Company
Thanks. And so who - which agencies, obviously the FDA and the DSMB and anybody else involved in making this decision?
Well, the decision is made, I guess, to be completely fanatically pure. The decision is the company's. But we all know that the company can't do anything without the agreement of the FDA and it would be very unusual for the company or the FDA to do something that was contrary to the recommendations of a high quality independent DSMB.
So, you really shouldn’t view them as a triad working together.
Joon Lee - Cowen and Company
Okay. Thanks for taking my questions.
Sure, Joon. Thanks.
(Operator Instructions) This concludes our question-and-answer session. I would now like to turn the conference back over to Dr. Mazzo, for any closing remarks.
Well, I just want to say thank you to everyone for joining us today. And we'll look forward to reporting on the much awaited DSMB recommendations, and the next steps in the Revolixys program in the near future.
Thank you and enjoy the rest of your summer.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.