Tobira Therapeutics' (TBRA) CEO Laurent Fischer on Q2 2016 Results - Earnings Call Transcript

| About: Tobira Therapeutics, (TBRA)

Tobira Therapeutics, Inc. (NASDAQ:TBRA)

Q2 2016 Results Earnings Conference Call

August 09, 2016, 04:30 PM ET


Ian Clements - Vice President, Investor Relations and Communications

Laurent Fischer - Chief Executive Officer

Christopher Peetz - Chief Financial Officer

Arun Sanyal - Chairman, Liver Study Section of NIH


Brett Larson - Leerink Partners

Ritu Baral - Cowen & Company

Ed Arce - H.C. Wainwright

Elemer Piros - Cantor Fitzgerald


Good day ladies and gentlemen and welcome to the Tobira Therapeutics 2016 Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host for today, Ian Clements, Head of Investor Relations. You may begin.

Ian Clements

Thanks very much Tanya and good afternoon everybody. I'd like to welcome you to our conference call to discuss our financial and operating results for the second quarter of 2016. Please note that a set of slides will be used during the course of this call. If you are listening by phone, these slides are available at To discuss our results and clinical initiatives, I'm joined today by several members of our leadership team; our CEO, Dr. Laurent Fischer; our CFO, Christopher Peetz; and for the Q&A portion of the call, our Chief Medical Officer, Dr. Eric Lefebvre.

I am also delighted to introduce Dr. Arun Sanyal. Dr. Sanyal's focus is chronic liver disease and its outcomes. He is former Chair of the Division of Gastroenterology, Hepatology and Nutrition VCU Medical Center, Richmond; Executive Director, Education Core, Clinical Center for Translational Research, VCU. He served as the Chair of the National Institute of Health, NASH Research Network and is the current Chair of the Liver Study Section of NIH. He is the founding member of the American Board of Internal Medicine Committee for Advanced Hepatology and also served as Chair for Liver Programming of DDW and on the World Health Organization Advisory Committee for Viral Hepatitis.

Dr. Sanyal is past President of the American Association for the Study of Liver Disease where he served many years. He has published over 250 scientific papers on his research into liver disease. He has also developed practice guidelines for various national societies, including being the author of the initial recommendations from the AASLD-FDA joint workshop on NASH drug development.

During the course of this conference call, we will be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties and reflect our current expectations and judgments. Examples of these forward-looking statements include statements relating to our expectations for the timing of clinical study results, the timing and success of future development of our product candidates, future expense levels and our business strategies.

Actual results could vary materially from the results anticipated by these statements. Investors should read the risk factors set forth in Tobira's Form 10-K for the year ended December 31, 2015 and any subsequent reports filed with the Securities and Exchange Commission.

With that said, I'll turn the call over to Laurent. Laurent?

Laurent Fischer

Thank you, Ian and many thanks for joining our call today and the slide today and to our normal format for this earnings call. We are delighted to be joined today by Dr. Arun Sanyal. Dr. Sanyal is the Chair of the Phase 2b CENTAUR scientific cenicriviroc and was involved in the design of the CENTAUR study. Dr. Sanyal is the lead author of the Hepatology script discussing the findings and recommendation of the joint FDA-AASLD workshop that took place in September 2013.

Chris will give a brief summary of our financials, but we will reserve the bulk of the time for Dr. Sanyal, who will give us an update on the current NASH regulatory landscape and will review the data from our CENTAUR Phase 2b study. Before that, I'd like to spend a few moments to review the data we announced last week.

Our 289 patients CENTAUR Phase 2b study, which is the first study that exclusively enrolled NASH patients with moderate to severe fibrosis demonstrated that after only one year of treatment with cenicriviroc twice as many patients treated with CVC to a clinically meaningful and statistically significant improvement in fibrosis by at least one stage without worsening of NASH compared to placebo.

I'd like to remind you that CVC has been granted fast track designation in this patient population. This is much needed progress for patients and physicians as it has been established that liver fibrosis is the factor that is most predictive of progression into cirrhosis liver transplant or death. It is also consistent with the mechanism of action of CVC and with the potent anti-fibrotic effects we have observed in animal models.

This study was conducted with scientific rigor including a central pathology reader for both the baseline and year one biopsy. This is of utmost importance given the fact that the primary endpoints for NASH trial are based on liver biopsies.

Tobira is the first company with a large well powered NASH trial to have met in a preplanned analysis a prospectively defined endpoint that regulators have recently recommended to use for Phase 3 studies to support marketing authorization under accelerated approval. In addition, we saw significant reductions in markers of systemic inflammation, interleukin sets, high sensitive CRP and fibrinogen in CVC treated patients.

Importantly, given the need for well tolerated therapies in this chronic setting, the safety profile of cenicriviroc was comparable to placebo with the most commonly reported adverse events of at least moderate severity in the CVC arm reported being fatigue in 2.8% of patients and diarrhea in 2.1% of treated patients.

The combination of a significant improvement in fibrosis with our dosing of NASH combined with the tolerable safety profile suggests that CVC has a favorable benefit risk profile in this unserved NASH patient population.

Since we spoke two weeks ago, we've already started to make rapid progress on our plan to submit and abstract to present the comprehensive data sets at a scientific meeting later this year. The CENTAUR data is compelling, consistent and robust. After one year of treatment with cenicriviroc we observed a clinically relevant improvement in patients fibrosis cohorts at least one stage without worsening of their hepatitis as measured by inflammation and ballooning.

The reason why these results are so compelling is that fibrosis, as I would like Dr. Sanyal elaborate upon further, is the single most predictive factors of disease progression in NASH. Given these results, we plan to use the improvement in fibrosis with our dosing of NASH exactly the same fibrosis endpoint as CENTAUR as the primary endpoint for a pivotal trial and we will focus on a similar patient population with advanced fibrosis.

Our experience in conducting the global CENTAUR study with a rigor of a total trial will position us well for Phase 3. We have already scheduled a Phase 2 meeting with the FDA in the fourth quarter to discuss the Phase 3 program in detail and initiate a global pivotal study next year.

Before turning the call over to Dr. Sanyal, I'll ask Chris to briefly address our financial results. Chris?

Christopher Peetz

Thanks, Laurent and good afternoon everyone. In addition to the financial results summarized in the press release issued earlier this afternoon, you can find further information on our financial results and the CENTAUR study in our Form 10-Q which was filed today as well. In order to allow time for Dr. Sanyal to address the regulatory landscape for NASH and his thoughts on the CENTAUR study results, I am going to keep my comments on the financials brief today.

Cash used in operations for the quarter ended June 30, 2016 was $11.6 million. Our net loss for the second quarter of 2016 was $13.3 million or $0.71 per share compared with a net loss of $11 million or $0.99 per share for the same quarter in 2015. With respect to the EPS comparisons to 2015 the change was primarily due to capitalization changes associated with our public merger in May 2015. Expenses in the second quarter of 2016 included the license fee paid to Dong-A for evogliptin.

As of June 30, 2016, Tobira had cash, cash equivalents and restricted investments of $41 million. This funds all ongoing programs including CENTAUR, ORION, PERSEUS, Phase 3 enabling studies and initial clinical work with CVC and evogliptin. Based on current expense projections, we believe we have sufficient capital to fund operations for the second half of 2017.

With respect to future capital requirements, we are currently assessing financing options to fund Phase 3, including partnering with a focus on non-core geographies such as Asia and other non-dilutive alternatives.

With that brief summary of our financial results I'd like to turn the call over to Dr. Sanyal.

Arun Sanyal

Thank you, Chris. So as I understand it, my charge today is to walk you through our current understanding of how drugs work in NASH and how that relates to getting a drug approved for NASH and finally, how the CENTAUR study fits into that paradigm.

So I'll start with slide number five and really spend a few minutes on this. And what you see in this slide from left to right are a series of gears which eventually result in what we think is the final end product of progressive fatty liver disease which is cirrhosis. So starting on the left, the initial perturbation that occurs in fatty liver disease is a metabolic perturbation and we now have fairly good idea about how the disease develops and we can model the development and the progression of the disease from its initiation to development of cirrhosis based on both animal data and corresponding human data. So that information piece is fairly robust.

So the first thing that happens in most cases is the development of obesity and insulin resistance, whereby you have increased metabolic substrates that is being fluxed through the liver. This increase in metabolic flux produces stress and eats up energy within the hepatocytes. That produces cell stress and cell stress leads to one of two things, it will either lead to an adaptive response and some sort of homeostatsis or it will trigger cell death. And the key process that occurs that drives the disease forward when you get cell stress is inflammation.

Once you get inflammation, which is being fueled by this metabolic stress, if you will, at some point the inflammation goes on autopilot and has internal amplification loops that are built in which then continue to make the inflammation worse. So little bit of inflammation is required for the adaptive tissue restoration, but if you cannot check the inflammation, if the stress driving the inflammation does not go away, the inflammation becomes self perpetuating and at that point it triggers and activates satellite cells to start laying down scar tissue.

So the progression to cirrhosis is a combination of progressive cell injury, cell death and fibrotic replacement. And ultimately this leads to what we understand as cirrhosis. So fibrosis is a critical component of this process that we can see under the microscope that tells us how far a disease in a given individual has progressed towards cirrhosis.

Another point to think about over here is that these three major processes; metabolic, inflammatory and fibrotic processes, they do not all work on the same time scale. So depending on your genetic background with the same degree of metabolic abnormality, you may get more inflammation or less inflammation and then depending on the amount of inflammation and genetic background and the time that you have inflammation you would generate a certain fibrotic response. And so, this process extends over a long period of time, but eventually once you get progressive fibrosis especially once you get to bridging fibrosis, the disease accelerates.

We have data that we will show at AASLD which shows that when you get to bridging fibrosis your progression to cirrhosis takes less time in general for NASH than if you have early-stage fibrosis where it may take longer. So keeping all of that in mind, what we learn here is that and this is part of the evolution of the fate [ph] is that depending on the target of any given treatment, the response that you see will show up first either in terms of an improvement in the metabolic abnormality or in inflammation or in fibrosis.

What does that mean? It means that if you use a drug that works primarily on insulin resistance and the metabolic engine that is driving the disease, then that drug will have a predominant effect on steatosis, for example, pioglitazone. It will have a big effect on steatosis, you will have an effect on inflammation, cell injury such as ballooning and then either if you have a very big effect sixe or you treat long enough you will see a signature on fibrosis.

Now in the CENTAUR study the cenicriviroc targets a downstream target and I think it is worth pointing out that this is really the first attempt at hitting a downstream target that we have actually data readout. The Gilead trial goes even further by looking at simtuzumab, but we don’t have a read out on that study yet. So this is really the first study that targets this interface between inflammation and fibrosis.

And so, how does that interface look like? So moving on to slide six, this again sort of recapitulates some of these core concepts that I walk you through is that when you get metabolic stress driven liver injury, the activation of macrophages plays an important role in the inflammatory response and the amplification of the inflammatory response and linking that inflammatory response to fibrogenesis and the critical receptor that is involved for this are CCR2 and CCR5 and these are also involved in hepatic stellate cells activation.

So essentially this drug does two things, it blocks an overactive inflammatory signaling pathway, very important point that this is not a primary immunosuppressant. It modulates the inflammatory response. It is not like giving somebody steroids and rendering them immunocompromised. And the next thing that it does is it disrupts the signaling to activate stellate cells. And so, essentially what you get from a combination of hitting that interface is a readout right which is adjacent to that interface which is fibrosis.

We hope in the long-term that with continued anti-inflammatory effects, you will also see some improvement in insulin resistance, but regardless of that, by blocking that fibrotic progression, which is critically required for progression to cirrhosis. We think that this drug has the potential for stopping the progression to cirrhosis which actually represents clinically meaningful outcome for these patients, because it is only when you get to cirrhosis that liver related outcomes start occurring, particularly liver failure, encephalopathy, ascites and even hepatocellular carcinoma, which can occur in pre-cirrhotic stages. But for practical purposes it still is largely in the domain of the cirrhotic population.

Now let me also talk to you a little bit about the NASH epidemic. This part I think, I know some of you in the audience and I know that you're pretty on top of this, so we can go through this pretty quickly and that this is again an extremely common problem and outside of oncology probably one of the most active area for therapeutic development.

This is being driven by the obesity as well as the diabetes epidemic. And we think that as the obesity epidemic flattens out, eventually if everybody is obese you can't have more obese people in the country, but diabetes is going to continued to raise for a while at least based on CDC projections.

So the consequence of that is already being shown. NASH is now the second most common indication for liver transplant overall. And actually, one of my fellows is going to present data at the American College of Gastroenterology showing that under the age of 50 it has already overtaken Hepatitis C as the leading cause of liver transplantation, which is partly because of the cohort effect, the population is getting older and also that Hepatitis C population is getting older.

So all those guys who were previously under 50 are now over 50 because there has been a precipitous drop in HCV related transplant. But NASH is now under the age of 50, the leading cause for liver transplantation, which again has implications for paediatric NASH.

And we have also understand that the critical progression to cirrhosis is really, important in terms of when those liver outcomes will effect and fibrosis really is the hallmark and the most important readout of that progression to cirrhosis.

Now I’m on slide number 10, right now for those of you who might have lost track of the slides. I didn’t mentioned, I apologize, I should have mentioned it the last time. So particularly as you saw on slide number 10, the focus of the patients in CENTAUR, were those with be highest risk of getting progressive fibrosis in NASH. So these are people who have fat inflammation F2-F3 fibrosis and have at least two features of the metabolic syndrome, type 2 diabetes and then increased BMI.

And this is as you know also a large part of the population with fatty liver disease. And this is, there is no question in my mind that this was exactly the correct population to study and they should continue to be the population for further study and even for Phase 3 development.

We've already talked about transplant and this continues to grow and remember that this is growing despite the fact a lot of patients have comorbidities that make them ineligible for a liver transplant, despite that it continues to grow at a really alarming rate as an indication for liver transplant. So there is a continued unmet need for this process.

And moving on to slide number 12, what you see here is that fibrosis is really the critical parameter that predicts mortality compared to other histological finding. And F2-F3 is really where the risk starts taking off. This is from the Angulo Paper and you can obviously see that once you get to F4 your potential health risk goes up 11 fold.

So fibrosis stage is really very, very important surrogate marker of the risk of progression to cirrhosis and which is in turn linked to clinical outcomes. And so, knocking down fibrosis is an important therapeutic goal.

And as far as regulatory pathways are concerned, I do want to point out that the field is definitely evolving and continues to evolve even as we speak. And so all the things we talked about six months ago with new knowledge and new information are being updated on an almost continuous basis. And he liver forum although I am biased having created it, I believe has played a really important role in keeping regulatory agencies engaged and active in the dialogue so that they learn as we learn and our learning is synchronized rather than us going off in different directions.

And so the history of endpoint evolution in NASH started back in 2011 when we started our first conversations on the subject, where we knew that NAS had not been fully validated with clinical outcomes, but we knew that steatohepatitis was more likely to result in cirrhosis and clinical outcomes than fatty liver. Thus we started with complete resolution of steatohepatitis as the endpoint because that was the best guess at the time.

Subsequently as more data came in, we learnt from the FLINT trial that you could improve all the features of NASH including fibrosis for the first time, but this was achieved without necessarily having a significant decrease in the number of people with steatohepatitis.

So that led to the idea that if all the features are improving, maybe you could have a lesser milder form of steatohepatitis and that led to the evolution of improvement in the NAS score without worsening of fibrosis and improvement in fibrosis regardless of the other features.

So, essentially saying, you have to improve all the features of NASH and hopefully that now we learnt one more step that depending on the mechanism of action, because once you've considered CENTAUR data in the context of the biology of the disease and where you are hitting it, it makes complete sense that as you move from metabologic perturbation to inflammation to fibrosis, if you are hitting it at the interface of inflammation right where it is leading to fibrosis, you would see initial improvement in fibrosis and some improvement in inflammation.

So I think where we are evolving towards is a mechanism of action linked intermediate endpoint, but at the end of the day, regardless of whether you have option A, B or C, they have to have reduced progression to cirrhosis. So if you start right from where the journey begins at metabolic disturbance, you will sequentially go through improved steatosis, inflammations, ballooning and then fibrosis. Here we are coming in further down the road and putting up a barrier. And so it is really, but ultimately what you have to do is prevent the train from getting to its destination which is cirrhosis.

And I think the - we are very hopeful, I don’t obviously speak for the FDA or DMA, but we are very hopeful that our ongoing dialogue through the liver forum, et cetera, will allow us the opportunity to continue this dialogue forward because all these have to be driven by the science and the science is pointing towards mechanism of action driven intermediate surrogate endpoints which will eventually have to be validated by demonstrating decreased progression to cirrhosis and we know that fibrosis is particular in this process.

So last part of this conversation will be about the CENTAUR Phase 2 data, where I will just point out some of the topline data that I can legitimately share with you at this point. So this is slide number 15. It shows 289 subjects. It is a global study, eligibility involved biopsy that was shown to have confirmed NASH with fibrosis, F2-F3 fibrosis. It was enriched with patients with type 2 diabetes, high BMI with greater than one criteria of metabolic syndrome and it was also we enriched for patients with bridging fibrosis about a third of the patients 38% right, third of the patients had bridging fibrosis and/or definite NASH.

The study completed enrolment on June 15, last year and with the baseline biopsies and we had our primary endpoint in July 16, and as all of you know recently the topline data were released. The primary endpoint was a two point improvement in NAS without worsening of fibrosis and then the other endpoint, key secondary endpoint were improvement in fibrosis stage without worsening of NASH or resolution of NASH. And in addition there were other biomarker and related endpoints. And so essentially that's where we are right now.

If you look at the total study slide number 16, it was about 166 subjects in the U.S., 123 outside the U.S. for a total of 289 subjects. And when you look at the population, slide number 17, this is from a poster presented at HEP DART last year. What it shows here is the fibrosis distribution on the left, and you can see that this is really the target population 38% with F3 and 29% with F2.

They also had some F1s in there about a third, and also by activity score you can again see that virtually the entire population here where in the higher NAS brackets from only about a quarter has at NAS of four so about 75% of the patients actually had higher diseased activity.

So these are people with lot of disease activity who already had what I would consider fair amount of fibrosis. And so that's what makes I think to me as a scientist who has been working this for a long time, really remarkable that we can get a fibrosis read out in one year. And we were hopeful, but we now actually have data to show that it indeed is reality.

The next slide, slide 18 just compares the, now the major trials that have been published. You can see that this right now we have a 52 weeks read out on the CENTAUR and the NAFLD activity scores for this trial is a little bit higher. Then PIVENS and the GOLDEN trials, somewhat comparable I guess maybe on the higher end over here with FLINT. Fibrosis stages, though they were certainly more fibrosis here and certainly more bridging fibrosis, which is really one step away from cirrhosis.

And again, the very exciting to be able to say that you can take normally the paradigm in clinical practices by the time you get to bridging fibrosis the ship has sailed. Left untreated all these patients will progress to cirrhosis. And that you can actually get a one stage improvement. And hopefully at the AASLD we will be able to show a lot of that data in much more granular detail than I can share right now. And then half the patients were diabetic and as you know again, diabetic patients are the ones who are at greatest risk for outcomes.

It was very well tolerated, this is slide number 19. And you can see that it's quite comparable between placebo and the drug, but there's really no signatures here a little bit of fatigue and diarrhea, but really not much help over here.

And so, topline efficacy data over here that you see is that improvement in fibrosis by one stage and without worsening of scare of hepatitis, it's about 20% versus 10%, but some of you may say that's not a huge number, but it's really got to remember that in the history of medicine to show improvement in fibrosis at one year if this is pretty remarkable.

Even just to put it in context. If you look at hepatitis B studies with Entecavir or Tenofovir at one year the fibrosis improvement was marginal if anything this is way more than that. It's only at year three or so that their line started really separating. Even after bariatric surgery at the year one the fibrosis difference is very, very modest. It is only when you get out to year two that fibrosis starts to really showing changes.

So, I think this along with the proof-of-concept data that is reduction in IL-06 CRP and fibrinogen provide proof-of-concept that if you hit this interface of inflammation in fibrosis it was purely a decrease in inflammation and a fibrotic read out, anti-fibrotic read out in the liver which we hope the year to date will confirm, will continued to accept for the lines to separate and slowdown the progression of cirrhosis.

So, in my view it really sort of sets the stage now to start thinking about the next confirmatory Phase 3 development. I think I’ll stop here.

Laurent Fischer

Thank you, Arun and clearly NASH is an emerging health crisis and as I would mention this is now the most rapidly growing cause of both liver cancer and liver transplants, particularly in young adults and there are no approved therapies to treat NASH. And knowing that most of these patients are not systematic and will potentially be requiring therapy we are very pleased by the outcome of the CENTAUR study showing that cenicriviroc provides a clinically meaningful effect without worsening of cirrhosis or hepatitis and a safety profile that appears to be safe and well tolerated, based on what Arun was reviewing including the slide presented at the liver forum and the SLD and the design of the ongoing Phase 3 trial there is now great clarity about the two potentially approval surrogate endpoints suitable for marketing authorization.

And so looking to the future, we will meet with regulators in the fourth quarter to discuss the Phase 3 set design and around the same time plan to present comprehensive data set from CENTAUR. We obviously are focusing our clinical and operations to start the Phase 3 study in the first half of 2017. And given the data in CENTAUR we’re planning to initiate the PBN safety combining cenicriviroc with Evogliptin our proprietary BPB4 inhibitor later this year. This combination makes a lot of sense given that, Evogliptin targets more metabolic pathways.

Additionally we’re on track to report data from our Phase 2a study in primary sclerosing cholangitis especially during 2017 and we plan to initiate a Phase 2 combination of CVC and EVO in NASH patients with fibrosis.

With that summary of the milestones and the catalysts ahead, I'd like to thank everyone for joining us today on the call. If anybody has a question you would like to ask we'd be happy to take questions at this time. Operator, any questions in the queue?

Question-and-Answer Session


Thank you. [Operator Instructions] And our first question comes from Joseph Schwartz from Leerink Partners. Your line is now open.

Laurent Fischer

Hi Joe.

Brett Larson

Thank you. Good afternoon everyone. This is Brett Larson actually dialling in for Joe. I appreciate the detailed update on the landscape for NASH. Initially a few just quick questions and then I wanted two more thoughtful looking ones. What generated the licensing and collaboration rather than this quarter and how much revenue do you expect to realize in the second half of this year?

Laurent Fischer

Well, I'll let Chris take that.

Christopher Peetz

Hey Brett, thanks for the question. And there's really two contributors to that licensing revenue in the second quarter. We had as you know we entered into a collaboration agreement or license agreement with Dong-A for the license of evogliptin and that also we entered into a license agreement for South Korea for CVC. So from that we had a $0.5 million revenue recognized. The remainder is from the collaboration agreement with Novartis working on preclinical studies.

In terms of how that rolls out going forward, this is fairly regular and how it would play into the future, the license payments from Dong-A is a onetime payment and the collaboration with Novartis is certainly a short term focus.

Brett Larson

Okay great. That's helpful. And your websites continue to highlight that there are Phase 3 enabling studies that are ongoing, can one of you give a little bit of color on what those studies are and how they plan to preparing for Phase 3?

Laurent Fischer

Sure Brett, so our goal is to be able to initiate Phase 3 study as swiftly as possible given the fact that we have designed a very robust Phase 2b study that was conducted with a regular pivotal trial and so we did a number of drug interactions say that will allow us to move quickly with most of the medications that are currently used for these patients that have multiple medications including statins and others. So we wanted to make sure we could actually allow most of these medications and to also that's just a part of being efficient that is starting the Phase 3 planning.

Brett Larson

Okay, so then is there anything beyond meeting with and gaining alignment with the FDA on that Phase 3 designs that we should be aware of that that may act as a rate limiting structure Phase 3 trial initiation at this point?

Laurent Fischer

So we, as I mentioned on the call we already have scheduled a meeting with the FDA in the fourth quarter and back to also meet with European regulators and we think that the design of the Phase 3 trial will be fairly straightforward and that should be the only thing we essentially had of being able to finalized this and initiate a Phase 3 trial next year.

Brett Larson

Okay, great and thank you, but this is my last question and most likely for you Dr. Sanyal. I am looking back at slide 18 on the key baseline population differences between CENTAUR and some of the other studies and I'm curious to hear your or anyone else thoughts on what does it say about the patients enrolled in CENTAUR versus these other trials, but there appears to be a decoupling of NAS scores and stage 3 fibrosis in CENTAUR relative to the other studies? In other words, we see comparable baseline NAS scores across PIVENS patients continued studies, but yet there were list of that same average score we saw significantly higher or a number of patients with higher fibrosis. What if anything does that say to you about these patients?

Arun Sanyal

Well, if you believe, that's actually a good point, good question to ask. If you believe that the metabolic change drives inflammation which then drives fibrosis. So the disease activity the NAS reflects disease activity and the fibrosis reflects disease stage. So a simple analogy is that the NAS is like the engine of a car and it tells you how many RPMs the engine is turning over, while fibrosis tells you how far the car has actually traveled.

So what it tells us is that in CENTAUR the patients probably had this degree of inflammatory activity for a longer period of time which is why they have more – I mean at least the ones who had more fibrosis. Presumably they have had this degree of activity. Now another possibility is that there may be a subset of people within CENTAUR who are more rapid progressive if you would that so either they had the disease longer, or they are somehow with the same degree of activity more aggressive fibrosis. So those are the two possible explanations. We will eventually get to the bottom of it once we get to the genetic data et cetera we just don’t have access to that data yet.

Brett Larson

Okay, that's really helpful to hear. Quickly one last question for you, you are the doctor of the team. What do you feel is the appropriate time point for a primary analysis and CDC in a Phase 3 trial, where and you have comparisons against with these other studies in some cases replicated the time point moving in the Phase 2 study, that is one way that we've been looking at it, but the other you say is that you may need to start up to a longer time. Do you have any early impressions of whether at one year is the appropriate time point for a Phase 3 study or is it what you said most of the longer time points for that primary net of a standpoint?

Laurent Fischer

Sure, that's a very good question and obviously as you know the study continues blinded for another year. So a year from now we'll learn a lot more about how much more improvement in fibrosis you can see over time which says we know of the disease. Given the fact that this is the first study that needs a preplanned analysis an approval endpoint with one year, we anticipate that the regulators will consider that having met that approval so that endpoint at one year should enable to be attractive followup a larger Phase 3 study may be roughly twice the size of the CENTAUR to actually meet that endpoint a year one.

So we will have these discussions obviously with regulators, but having met the hardest approval endpoints, the one that correlates most without only at year one is certainly something that was unexpected and we are very pleased with that and we will plan to meet with regulators to discuss that shortly.

Brett Larson

Fantastic, well thank you all for taking my collection of questions, I greatly appreciate it.

Laurent Fischer

Thank you.

Arun Sanyal

Thanks Brett.


Thank you. And our next question comes from Ritu Baral from Cowen. Your line is now open.

Ritu Baral

Hi everyone. Hi Dr. Sanyal. Thanks for taking my questions. Hi, actually Dr. Sanyal, the first couple of questions are for you. We've spoken a little bit on biopsy variability in the past in relation to other studies. How should we think about biopsy variability in terms of the CENTAUR data produced to date, just given is it different between the populations given the more advanced population of CENTAUR?

Arun Sanyal

No, not really. If anything you know the biopsies actually tend to be more homogenous as you get further down the pipe. Even the inter pathology concordance always starts getting better with more advanced fibrosis. And if you look at the different NASH related parameters on the - on histology the two things that are - have the best intra and inter observer concordance is steatosis and fibrosis. And so, particularly with the more advanced fibrosis read outs there is greater confidence that the findings are real.

I also want to point out that you know there was a incredible amount of rigor put into this trial in terms of how the pathologists actually reviewed the histology besides being a globally renowned pathologist, he was blinded to a lot of the other data and really read the biopsies completely in a blinded manner, and he had a lot of quality metrics. I can tell you as someone who had a number of patients not included in the study. Therefore we all complained about that the pathologist was really tough on all of us, but that was for a reason.

And then I think – between the study the poster, the studies on slide 18, I would say all four of these studies probably met the highest standards in pathology reading. Actually, the issue was not necessarily for the GOLDEN trial as we have talked about previously, it was the criteria that were used and for the other three studies the criteria were very similar in terms of the NAS steatohepatitis and the type of fibrosis reading.

And so we are very confident that fibrosis readout is there is no question is real. The - what we are really very eagerly waiting to see a year from now is whether the line separate even more.

Ritu Baral

And actually that was one of my other questions. What would you expect to see a year from now? Would you see, would you expect to see sort of continued separation, would maintaining this level of separation be a win? Is there a chance we could see improvements in inflammation two years out that we don’t at one year out?

Arun Sanyal

Yes, yes the short answer is all of the above. The long answer is more complicated as you might imagine. So yes, we would anticipate that you may see a greater number of people beginning to lose their fibrosis. Remember that fibrosis is a very - when you lay down a lot of collagen, some of that collagen is very easy to mobilize and some of it is sort of very hard to mobilize.

So it is not all in one pool and so you may have seen the people with a easily mobilizable collagen move first, but we are hoping that with continued decrease in inflammation that we will not only stop laying down more collagen, but start allowing the normal resortic [ph] processes begin to kick in.

Remember in all other diseases, whether you are talking about hepatitis C, hepatitis B, bariatric surgery, it is only after a year of taking away the etiology of the disease or the inflammatory component of the disease that between year two is when you start seeing the lines really beginning to diverge.

So for all those reasons, I think there is at least a very sound theoretical rationale for believing that we will see the lines diverge even more and at year two. Also with continued decrease in inflammation we are hopeful that we will see some improvement in insulin resistant in steatosis also by year two. But that is a little bit more than the fibrotic readout.

Ritu Baral

Understood and last question, as we look forward to the, hopefully the AASLD presentation and full data set, what secondary endpoints, further secondary endpoints and biomarkers would be most important to you for proof of mechanism? And also as you parse the data on this endpoint, what is the I guess for this population this minimal clinical important difference that a trial would have to show for you on this fibrosis with no progression of NASH endpoint?

Arun Sanyal

I think the improvement in fibrosis stands alone. You have corroborated evidence with the CRP. You are showing that inflammation is being decreased and you're actually getting a decrease in the fibrosis. In the long-term more studies will eventually be done to get a better handle on the mechanism at a more molecular level whether it is laying down collagen or increasing turnover of collagen and whether the macrophages come in and you know you get a macrophage switch.

While we know a lot about the biology of how collagen is laid down, our understanding of how collagen is reabsorbed is not quite as developed, but it is developing. So I think that all of that will come out, but none of those things will detract from the fact that you have less fibrosis when you already have your final – those kind of things are more important in a Phase 2a proof of mechanism kind of thing. You would like to see whether in –if you prepare for monocyte and give them an agonist, whether you could block a physiologic readout if they had been exposed for this drug or something. But over here, you already got the readout.

Ritu Baral

So you don’t need any other mechanistic markers to support the integrity of the data that is topline, is that correct?

Arun Sanyal

I think we – the critical pieces are here. Obviously we will get additional biomarkers of fibrosis scores, et cetera, like the [indiscernible] and the so and so forth down the road and markers of fibrogenesis, et cetera. But in terms of the readout, none of those really alter the interpretation of the change in fibrosis. A big question is that year two, whether that 20% will become 40% or not.

Ritu Baral

And what's the minimum that's important, like is the placebo adjusted 10% really sort of the bottom of…?

Arun Sanyal

You know in terms of ultimately you have to show reduced progression to cirrhosis and even if you can reduce the progression to cirrhosis in a very small number of patients, it is clinically significant.

Ritu Baral

Understood, thank you for taking all the questions.

Arun Sanyal

I will remind you for hepatitis B, but we started with interferon. We were pretty happy with the 15% SVR. So we have come a long way and I think these are very early days for NASH compared to how far we have come in Hep C.

Laurent Fischer

And I will just add, obviously we are very pleased to have met the highest bar which is improving fibrosis which directly correlates with outcome. [Indiscernible] that and we believe that this field will be combination therapy and we've licensed a second proprietary drug to actually take into combination that does focus on the metabolic pathway. And we have also early collaboration that look at additional combinations. So we think this is a robust data set that puts us in a position to have that cornerstone of therapy and showing that [indiscernible] early is very meaningful because it is the one thing that will predict you are on your way to developing liver cirrhosis and before liver transplant.

Arun Sanyal

Yes, it seems I think the general feeling most of my colleagues who work in this area is that to get to 60%, 70% 80% reduction in cirrhosis you are going to need combination therapy.

Laurent Fischer


Arun Sanyal

Yes, but these are incredibly important first steps. We have already shown with OCA and with Elafibranor that you can sort of reduce the front end changes with steatosis inflammation ballooning, maybe even with a little bit of fibrosis readout, here we get a very robust fibrosis readout. So these are all very important lead studies in the field.

Ritu Baral

Great, thanks for taking the questions.

Laurent Fischer

Thank you, Ritu.


Thank you. And our next question comes from [indiscernible] Partners. Your line is open.

Unidentified Analyst

Thank you very much. I had a two part question for Dr. Sanyal. The first one I think is relatively easy, but just to frame a second question, if you had a choice between a drug for NASH, one that improve the NASH score by 2 points and that was a benefit versus one that was not able to show versus placebo a 2 point improvement, but did result I more than one stage improvement in fibrosis which drug would you prefer for your patients?

And the second part of the question is given the action of CBC on Kupffer cells and stellate cells and the fact that in the CENTAUR study, I think 67% of the patients were F2, F3. If you have and correct me if I am wrong, a progression from fibrosis to cirrhosis it was my understanding that the mono steatosis initially decreases and I was just wondering how the cellular activity could maybe explain the reason why there wasn't a 2 point improvement in NASH score where in fact we could have been seeing benefits. But if patients were progressing to cirrhosis on placebo does the process score which is, should be 3 of the points but actually have declined? Thank you, very much.

Arun Sanyal

So, that's a really cool question. I love it.

Unidentified Analyst

Oh, that is because you've tried me so much over the years.

Arun Sanyal

No, no, no, I am not mocking you. I am actually, really I think that's a very cool question. If I heard it correctly, so I will restate the question just to make sure I am getting it correctly. What you are suggesting is that a decrease in steatosis and inflammation in the placebo arm could be reflective of disease progression. And therefore you didn’t really see, there was a decrease in disease activity in both groups.

Well, theoretically I think that is absolutely correct, except that usually you have to get to cirrhosis before you start seeing a decrease in steatosis and inflammation. And to my knowledge and Laurent correct me over here if I am wrong, to my knowledge we didn’t – at one year there was no progression to cirrhosis in any significant numbers of people.

Laurent Fischer

Not significant number of patients and yes.

Arun Sanyal

There was no difference essentially. So that probably is not the explanation. We think the explanation has more to do with the mechanism of action of the drug rather than – with respect to your first part of your question ultimately the goal is to we're not – only pathologists are interested in treating steatosis inflammation and fibrosis.

Our goal as clinicians is to prevent death and that is more closely linked to fibrosis than any of the other features. So for that reason as a clinician I would pick fibrosis, although the answer is more complicated than that obviously.

Unidentified Analyst

Great, thank you sir very much.

Laurent Fischer

Thank you, Lao [ph].


Thank you. And our next question comes from Ed Arce from H.C. Wainwright and Company. Your line is now open.

Ed Arce

Great, thanks guys for taking my questions. Hello Dr. Sanyal.

Arun Sanyal


Ed Arce

So, I was very intrigued by this description that you had earlier in your prepared remarks around the intermediate surrogate endpoints. As you pointed out the fibrosis stage is a very important marker of progression to cirrhosis which in turn is directly related to some of its complications like encephalopathy and others that obviously are hard outcomes from the perspective of the regulatory agencies.

I was just wondering if you could further elaborates on how you see that unfolding perspectives play out in terms of other trials in similar populations of advanced mass with fibrosis and in particular with the CENTAUR study?

Arun Sanyal

Right, so I think, well my first caveat here is while I would like to believe I am influential I am also humble enough to know that my opinion is only my opinion and the FDA will slap me silly if I ever attempted to speak on their behalf. So with that disclaimer, where we hope the field is going to move towards is that when we talk about the early reasonably accepted surrogate endpoints there will be a menu of endpoints which will be linked to the primary mechanism of action of the drug.

So if the drug is primarily hitting fat and inflammation you would get resolution of steatohepatitis. Again if it is primarily a metabolic drug, it would be a decrease in activities course. And then if it is more in the inflammation fibrosis area, then you would expect to see an improvement in fibrosis. The current regulatory landscape already divides NASH into two buckets, those who have cirrhosis and then the pre-cirrhotic stages of NASH.

So for those who have cirrhosis, already the sub part age short-term histologic endpoint is the endpoint for approval which is a reduction in one stage fibrosis. And this is already it is in our paper that we published in hepatology last year and this has been certainly part of the discussion which is in the public domain with some of the other compounds in Phase 2b for anti-fibrotic trials.

So I have to tell you, even as one of the people involved in the design of this CENTAUR trial and as one of the investigators that if you had asked me a year ago I would not have said we are going to see fibrosis which is approvable endpoint that we would see it a year, because is a very high bar. And so we were as the investigators pretty delighted with the results when we did see them. And the fact that you did not see a big drop in the NAS [ph], again I think it makes biological sense based on mechanism of action.

Ed Arce

Okay, thanks and I guess I'll take another try at a previous question and that is, you mentioned how the mechanism of action is probably related to how there was a lack of significant activity with regards to the inflammation and the ballooning and just wanted to get your specific thoughts and perspectives. What do you think in particular about the [indiscernible] is it that's affecting that?

Arun Sanyal

You know, so this particular chemokine receptor that set that interface of Kupffer cells and stellate cells activation. And so I think once we are able to get into the data in more depth, because right now we've only had access to the topline data, once we have access to the data in more depth we will be – we will have a more granular picture whether severe - baseline severity of inflammation and ballooning versus the response to placebo versus drug.

I just don’t have the data to give you a very detailed answer to that right now. But we hope to show that at AFL [ph] Day. But the data showing that there is a decrease in IL-6 ERP and fibrinogen which were the three markers of systemic inflammation that were looked at and the fact that all three improved significantly suggests that there is at least a systemic anti-inflammatory effect.

And the ballooning of course is driven by metabolic, the ballooning drive inflammation and then these both in turn drive fibrogenesis. So if the underlying metabolic perturbation, if you don't stop putting metabolic substrate to stress your cells those things will take – even though you have hit the downstream inflammation, those things may take longer to or may never shut down, which is again – sets the stage for talking about combination therapeutic.

Ed Arce

Okay, thanks for that explanation Dr. Sanyal. One perhaps last question for you Laurent, is as you described earlier, your thinking as you head into this end of Phase 2 meeting with the FDA is around potentially one year endpoint and potentially the size of it approximates double with [indiscernible]. I am wondering if you could further elaborate on the timeline that you would hope to seek with the agency? Thanks

Laurent Fischer

Thank you, Ed. It is obviously these assumptions are all subject to meeting with regulators. We have already scheduled a meeting and obviously we feel that we are in a good position with the data we have and obviously the agency is very data driven, so we'll be – they will be reviewing the data and confirming what we assume based on duration and then size of the trial. And our goal has been to be ready to initiate the Phase 3 study as soon as possible. So that's why we've done all this basically. Enabling study is already before starting the CENTAUR study they studied in cirrhotic patients where we saw the drug was well tolerated. So we feel that we are in a very good position to initiate that Phase 3 study as soon as possible and then the first half of 2017.

Ed Arce

Great, thanks everyone, I appreciate it.

Laurent Fischer

Thanks Ed.


Thank you. And our next question comes from Elemer Piros from Cantor. Your line is now open.

Elemer Piros

Thanks very much, but my questions have been answered.

Laurent Fischer

Thanks Elemer.


Thank you, and this does conclude our question-and-answer session. I would now like to turn the call back over to Ian Clements for any further remarks.

Ian Clements

Thanks everybody for joining us today. I hope you find it interesting and informative and we appreciate your continued interest in Tobira. We look forward to providing future updates and the progress we are making at upcoming conferences and on future calls. If you'd like to discuss any portion of these results today, you can call me at 650-351-5013. Thanks very much indeed.


Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.

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