Start Time: 17:00
End Time: 17:26
Alder BioPharmaceuticals, Inc. (NASDAQ:ALDR)
Q4 2015 Earnings Conference Call
February 23, 2016, 17:00 PM ET
Randall C. Schatzman - President and CEO
Larry Benedict - SVP, Finance
David Walsey - VP, Corporate Communication
Joseph Schwartz - Leerink Partners
Gregory Renza - Jefferies
Good afternoon, and welcome to the Alder Fourth Quarter and Full Year 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that the call is being recorded at the company's request.
At this time, I'd like to turn the call over to David Walsey, Alder’s Vice President, Corporate Communication. Please proceed.
Thank you. Good afternoon, and welcome to Alder's fourth quarter and full year 2015 financial results conference call. Just after market close today, we filed our annual report on Form 10-K with the Securities and Exchange Commission and issued our financial results and corporate highlights press release, which are available at www.alderbio.com.
Today on our call, Randall Schatzman, Alder’s President and CEO will provide an overview an update of the company’s business; Larry Benedict, Senior VP of Finance will review the financial results; and then we will open up the call for your questions. Mark Litton, Chief Business Officer is also with us today for the Q&A.
Before we begin, I would like to caution you that during today's conference call, we’ll be making forward-looking statements regarding future events or the future performance of the company, including statements about possible future developments regarding clinical, regulatory, commercial, financial and strategic matters. Actual events or results could differ materially. We refer you to the documents that Alder files from time to time with the SEC, and in particular, the company's annual report on Form 10-K filed today. These documents, which are available on the SEC’s Web site, contain and identify under the heading Risk Factors important factors that could cause actual results to differ materially from those contained in any forward-looking statements, including without limitation, risks and uncertainties related to the initiation, conduct and results of clinical trials, the availability of data at the referenced times, risk and uncertainties related to regulatory approval processes and compliance with applicable regulatory requirements; the sufficiency of Alder's capital and other resources; and market competition.
With that, let me pass the call over to Randy.
Randall C. Schatzman
Thank you, David, and welcome everyone. In 2015, we continued to focus our resources and efforts on ALD403, our wholly owned pivotal-stage product candidate for migraine prevention. The focus and the hard work of the Alder team continued to drive the program’s accelerated development and delivered important progress, which I’ll review with you shortly.
As many of you know, ALD403 is our transformative, novel monoclonal antibody being developed for the prevention of migraine that blocks the calcitonin gene-related peptide or CGRP. CGRP is a small protein involved in the transmission of and the heightened sensitivity to the pain experienced in migraine. This is now a well-validated mechanism of action as demonstrated by multiple agents, which target CGRP biology.
Appropriate focus on ALD403 is to optimize its therapeutic and commercial potential as a preventative treatment for migraine and build value for our shareholders. We believe ALD403 has the potential to be a successful and well-differentiated biologic agent that can transform the lives of a significant number of the 13 million U.S. adults living with migraine who are candidates for migraine prevention therapy. Our efforts to-date leave us well positioned to advance ALD403’s development and set the basis for Alder’s anticipated future commercial success.
Notable milestones in 2015 include the initiation of PROMISE 1, the first of two planned pivotal clinical trials intended to support a biologics license application to the FDA; completed enrollment and dosing of our Phase 2b trial in patients living with chronic migraine and our Phase 1 trial evaluating the pharmacokinetics and pharmacodynamics of two quarterly doses of ALD403 in healthy volunteers intended for self-administration; completion of two public offerings of Alder common stock with the total net proceeds of approximately $407 million.
The appointment of two biotechnology veterans to our Board of Directors; Paul Carter, Executive Vice President of Commercial Operations at Gilead and Paul Cleveland, Chief Executive Officer of Avalanche Biotechnologies; and expansion of the Alder management team to support the successful development and commercialization of ALD403. As we continue our focus on ALD403 in 2016, we will advance the pivotal trial program and build on the foundation we are studying for U.S. commercialization.
Important 2016 events anticipated to support these objectives include announcing top line 12-week data later this quarter from our 600-patient Phase 2b double-blind, randomized, placebo-controlled, dose-ranging clinical trial of ALD403 in chronic migraine patients. Together with this Phase 2b dataset, we will also announce top line 12 and 24-week data from our Phase 1 placebo-controlled, multi-dose clinical trial evaluating the pharmacokinetics and pharmacodynamics of two doses of ALD403 administered quarterly in healthy volunteers.
And then around midyear, we will announce top line 24-week data from the 600-patient Phase 2b chronic migraine study. Data from these two studies will support the continuing advancement of the ALD403 program and will provide important information to refine the design of our next clinical trials, particularly with respect to elucidating the optimal dose levels of ALD403 to progress forward.
Our additional plans for 2016 include initiation of PROMISE 2 in the second half of 2016. This is the second of our two planned pivotal clinical trials intended to support a BLA submission to the FDA for ALD403. PROMISE 2 will be a double-blind, randomized, placebo-controlled, multi-dose trial evaluating the efficacy and safety of multiple dose levels of ALD403 in patients who suffer from chronic migraine.
We also plan to initiate a late-stage, double-blind, randomized, placebo-controlled, dose-ranging, multi-dose trial in migraine patients utilizing a once per quarter formulation for self-administration as a single injection based on insights provided by the Phase 1 study. In addition, we will continue to expand our management team to support the development and commercialization of ALD403.
Our accelerated development of ALD403 results from the solid foundation laid by the robust data demonstrated in our Phase 2 proof of concept study. The clinical data from that double-blind, randomized, placebo-controlled, proof of concept trial of ALD403 in patients living with frequent episodic migraine demonstrated important therapeutic attributes that we believe have the potential to offer a best-in-class therapeutic profile.
These include, first, outstanding efficacy. In the trial, ALD403 provided substantial relief to frequent episodic migraine patients with approximately one-third of patients experiencing migraine-free relief in any given month. For example, 41% of patients had no migraines in weeks 9 through 12 following a single dose of ALD403. Further, over the entire three-month study period, the number of migraines was reduced by half in 61% of patients and 16% of patients were completely migraine-free as compared with placebo. In addition, this relief was delivered with no significant observed tolerability or safety issues.
Second, the speed of onset of that therapeutic effect. In the proof of concept trial, ALD403 delivered migraine prevention rapidly. In the first weeks after treatment, 28% of patients receiving ALD403 were completely migraine free. From our early commercial work, we believe rapid delivery of migraine-free relief is very important to patients. And then third is the durability of therapeutic effect. In May of 2015, we presented positive six months follow-up data from this trial in an oral presentation at the International Headache Society meetings in Valencia, Spain.
The data show that a single IV dose of ALD403 demonstrated continued efficacy over six months for the preventive treatment of migraine. 11% of patients had no migraines whatsoever for the entire six-month follow-up period. This very durable effect following a single administration of ALD403 provided the basis for our strategy of pursuing quarterly dosing, which we believe is another very important attribute for patients, physicians and payors, alike. We believe that this infrequent quarterly administration can provide patient convenience and can better drive patient compliance, thereby resulting in better disease management overall.
In addition to these important attributes, we plan to provide the convenience of two modes of administration. We are continuing to pursue formulations of ALD403 that can be administered quarterly by either infusion or by self-administration. We believe that by providing patients and physicians a choice between two routes of infrequent quarterly administration will allow a customized treatment paradigm that best suits each individual patient’s preference and circumstances.
By contrast, the therapeutic profiles of current therapies for migraine prevention are all challenged by safety, tolerability and efficacy limitations. We believe there is a critical need for new migraine treatments with improved safety and better efficacy profiles. The scale of need is large. Approximately 33 million American adults live with migraine. Of this population, we estimate that approximately 13 million patients are candidates for preventative therapy. And of this subset of candidates, approximately 3 million have chronic migraine representing the most serious segment of the migraine patient population.
To get a sense of the scale of the need for migraine prevention, consider that the 13 million candidates in the U.S. for migraine prevention is roughly five times the size of the number of patients in the United States with rheumatoid arthritis. If approved by the FDA, we intend to commercialize ALD403 independently in the United States. Given that about 50% of migraine prevention candidates are treated by neurologists, 70% of which have access to infusion suits, we believe that a sales force of 75 to 100 detailers can properly address this group as well as headache centers in the United States. Outside of the U.S., we intend to seek one or more strategic arrangements to develop and commercialize ALD403.
Next, I would like to touch briefly on our clinical candidate ALD1613, our novel monoclonal antibody that inhibits adrenocorticotropic hormone or ACTH. We believe this candidate has the potential to treat patients with congenital adrenal hyperplasia as well as those with Cushing's disease. Congenital adrenal hyperplasia is an orphan disease resulting from a mutation in cortisol synthetic enzymes that causes overproduction of ACTH. In contrast, Cushing's disease is an orphan disease driven by long-term exposure to cortisol as a result of the increased expression of ACTH produced by a pituitary tumor. ALD1613 is currently undergoing investigational new drug enabling non-clinical studies and we plan to submit an IND filing to the FDA in the second half of 2016.
So where does these transformative monoclonal antibodies come from? At Alder, we discover and develop our own antibody clinical candidates. We believe that not all antibodies are created equal. Alder’s team of scientists has created a proprietary platform that allows us to discover and engineer antibodies with selected properties that we believe optimize the therapeutic potential for patients. Specific properties which we consider key to best-in-class therapeutic antibody include high affinity and slow off rates, long half life, favorable formulation characteristics and the ability to be manufactured consistently and reproducibly at larger scale.
We believe the differentiated profile of ALD403 compared to the other anti-CGRP antibodies is the direct result of the Alder team’s ability to optimize for each of these properties. In addition to ALD403, the team has demonstrated the ability to deliver on these best-in-class characteristics with clazakizumab and now more recently ALD1613, thereby enabling the potential for a deep pipeline of transformative therapeutics to benefit patients while building value for our shareholders.
With that, I will now turn the call over to Larry to review our financials. Larry?
Thanks, Randy. We continued to invest heavily in our drug development activities during 2015 and ended the year with $381 million in cash and investments. During 2015, we generated cash inflows from two public offerings of approximately $407 million.
Today, I will focus on highlighting our financial results for the fourth quarter and full year 2015 and then provide our financial outlook for 2016. Please refer to this afternoon’s press release and 10-K filed with the SEC for further details.
For the fourth quarter and for the full year 2015, we did not record any revenue compared to the previous year. Revenues in 2014 were primarily derived from our collaboration with Bristol-Myers Squibb for clazakizumab, which was terminated in December of 2014.
Research and development expenses for the fourth quarter of 2015 totaled $21.6 million and $69.6 million for the full year, an increase of $36.2 million compared to the full year of 2014. The increase in spending in 2015 reflects our continued investment in our drug development activities for the ALD403 program.
In particular, we saw a $19.8 million increase in clinical trial costs related to the ongoing chronic migraine clinical trial and the initiation of the PROMISE 1 clinical trial. We also saw a $3.6 million increase in manufacturing costs for ALD403 drug supply for existing and planned pivotal clinical trials.
We also continued to invest in our ALD1613 program incurring $5.3 million in costs for the full year of 2015 for manufacturing, drug supply and other pre-IND activities. It is also worth noting that we have increased compensation costs as a result of an increase in our R&D headcount to support Alder’s development activities.
General and administrative expenses for the fourth quarter of 2015 were $4.8 million and 16.7 million for the full year of 2015. G&A expenses increased due to increases in our G&A headcount as well as increases in market research, business insurance and other administrative costs.
Net loss for the fourth quarter of 2015 totaled 26.2 million or $0.60 per share compared to a net loss of $6.9 million or $0.22 per share on a fully diluted basis for the same period in 2014. Net loss for the full year totaled $85.5 million or $2.11 per share compared to a net income of 8.9 million or $0.30 per share on a fully diluted basis for 2014. This reflects the revenue recognized from our agreement with Bristol-Myers Squibb for clazakizumab as I had mentioned earlier.
Finally, we believe our available cash and cash equivalents investments will be sufficient to meet our projected operating requirements into Q4 of 2017, taking us through the announcement of important datasets from our clinical trials. This roughly equates to seeing operating expenses increase twofold over 2015. However, we may see period-to-period fluctuations in quarterly and annual operating results as we continue to invest heavily and opportunistically in our drug development activities.
With that, we will now open up the call to your questions.
Thank you. [Operator Instructions]. Our first question comes from the line of Joseph Schwartz of Leerink Partners. Your line is open.
Great. Thanks very much for taking the question. I was wondering, first of all, as we look forward to the Phase 2b study in chronic patients, how much do you think that you might have to give up on efficacy at lower doses of ALD403?
Randall C. Schatzman
Thanks for that question, Joe. Our anticipation is, as you know, when we go back and you look at the proof of concept study that we ran that that 1,000-milligram dose given by IV infusion into those patients lasted out past six months in this case. So we believe that that dose overall is overkill, if you will, in terms of what these patients will need for quarterly dosing, which is what we’re aiming for. So the Phase 2b study is looking at doses that come down from that 1,000-milligram level and we think overall that there are doses below 1,000 milligrams that we’ll continue to deliver both the level of efficacy that we saw there but as well as the rapidity of onset.
Okay. And then one more question on this study before I move to Phase 3, will patients in this Phase 2b study for ALD403 in chronic migraine have the opportunity to enter into an open-label extension study?
Randall C. Schatzman
In this case, they will not.
Randall C. Schatzman
I was going to say, Joe, the open label and the long-term safety database will be formed both by the patients that are on PROMISE 1 and those that will ultimately move into PROMISE 2.
Okay. Now as we start thinking about PROMISE 1, is there any more information on the status that you can provide such as sites that have been activated or even enrollment updates?
Randall C. Schatzman
Yes, what I can tell you is, is that our guidance remains the same; that we expect to be able to report top line data from that in the first half of 2017. And so far the recruiting for that is on schedule.
Okay, good. And then are there any logistical protocol or conduct changes for PROMISE 1 relative to how Phase 2 was performed in terms of diary [ph] management or anything at all, any major changes?
Randall C. Schatzman
No major changes. Obviously, we continue to follow patients on a daily basis as they report their experience every day in terms of their migraines and the properties of the migraines that they may have had. In that sense, it’s very similar. As you know, the endpoints that we are using for that study is also the same as we used in the proof of concept study where we were able to demonstrate a significant difference between treated groups and placebo as reported by the responder analysis over the 12-week period, which is the primary endpoint that we’ll be using for PROMISE 1 as well.
Okay, great. Well, we look forward to the data and thanks for taking my questions.
Randall C. Schatzman
I appreciate it, Joe. Thank you.
Thank you. Our next question is from Gregory Renza of Jefferies. Your line is open.
Hi, guys. Thanks for taking the question. Just a quick one. Based on market research, how do you potentially using multiple injections to get to that quarterly dosing goal versus say fewer injections in a frequency that can be closer perhaps to that of competition?
Randall C. Schatzman
Yes, that’s a great question, Gregory. Our goal obviously is, is to deliver that quarterly administration as a single injection, and we think that that will be important to differentiating ALD403 from the other programs that are out there. At this point in time, we think that the antibody is capable of delivering that due to its potency and due to the efficacy that we already demonstrated in our proof of concept trial.
Sure. Okay, thanks. And then with respect to 403’s rapidity of onset, how should we best think about this as a different – your long term in the context certainly of other characteristics that you’ve been speaking about?
Randall C. Schatzman
Well, we think that as we have reached out to patients to talk to them about what’s important to them, typically the patients that we’re studying are having a large number of migraines every month. In the chronic migraine patients, it’s upwards of 15 or more migraines every month. And if you’re having that, you’re having four or five migraines every week. And what patients have said to us is that they don’t want to wait around for months to have relief from that number of migraines, they’d like to see it right now. Right now we have been able to show that ALD403 delivers migraine relief in the first weeks after that initial dosing of therapy and that goes along with what patients have said they’d like to see.
Great. And just one last one, if I may. Based on a new disclosure of a fourth patent family for 403 in your 10-K just released today with respect to regulating glucose metabolism, I’m just curious, is that around shoring up your migraine indication or is it pointed perhaps to shoring up your indications as well?
Randall C. Schatzman
Well, the scientists at Alder here are always looking out for additional things that we might pursue with our products. And as such, we will continue to aggressive pursue any intellectual properties that crops up in the lab and that’s one of the observations that they had, so we filed patents on it.
Great. Thanks for taking the questions.
Randall C. Schatzman
Thank you. That does conclude our Q&A session for today. I would now like to turn the call back to Mr. Randall Schatzman for any further remarks.
Randall C. Schatzman
Thank you, operator. Our goal at Alder is the discovery, development and commercialization of best-in-class therapeutic antibodies with the potential to meaningfully transform treatment paradigms where patients currently have limited medical options. With ALD403 and its emerging therapeutic profile, we believe we have the opportunity to transform the way migraines are prevented and significantly improve the lives of patients living with migraine.
We have demonstrated our ability to be nimble and innovative and believe this will not only serve to benefit the clinical and commercial success of ALD403 as our lead program but coupled with our antibody platform technology will enable us to continue to add superior candidates to our pipeline and continue to build long-term value for our shareholders. We look forward to reporting the top line Phase 2b product migraine data along with the Phase 1 quarterly self-administration data in the latter part of this quarter.
Finally, I’d like to take the opportunity to thank the team at Alder for their continued dedication and tenacity, and also the patients and medical professionals who are helping to advance the development of ALD403. I’d also like to thank our shareholders for their ongoing support. Thanks for your time today, everyone.
Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude today’s program. You may all disconnect. Everyone, have a good day.
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