Chelsea Therapeutics' CEO Presents FDA Advisory Committee Update - Conference Call (Transcript)

| About: Chelsea Therapeutics (CHTP)

Chelsea Therapeutics International Ltd. (NASDAQ:CHTP)

Special Call

February 23, 2012 5:30 pm ET

Executives

Kathryn McNeil – Head-Investor & Media Relations

Simon Pedder – President & Chief Executive Officer

William D. Schwieterman – Chief Medical Officer

William B. White – Chief, Hypertension and Clinical Pharmacology Division & Professor, Department of Medicine, University of Connecticut Health Center

Analysts

Robyn Karnauskas – Analyst, Deutsche Bank Securities, Inc.

Jonathan M. Eckard – Analyst, Leerink Swann LLC

Liana Moussatos – Analyst, Wedbush Securities, Inc.

Juan F. Sanchez – Analyst, Ladenburg Thalmann Securities

David S. Moskowitz – Analyst, ROTH Capital Partners LLC

Martin Shkreli – General Partner, MSMB Capital Management LLC

Operator

Good day, ladies and gentlemen, and welcome to Chelsea Therapeutics’ FDA Advisory Committee Update Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call may be being recorded.

I would now like to hand the conference over to Ms. Kate McNeil. Ma’am, you may begin.

Kathryn McNeil

Thank you. Good afternoon, everyone, and thank you for joining us to discuss today’s meeting of the Cardiovascular and Renal Drugs Advisory Committee regarding NORTHERA NDA. Joining me from Chelsea is Dr. Simon Pedder, President and Chief Executive Officer; Dr. Bill Schwieterman, our Chief Medical Officer; Dr. Art Hewitt, our Chief Scientific Officer; and Joe Oliveto, our Chief Operating Officer.

We’re also joined today by Dr. Mark Stacy, Professor of Neurology at Duke Institute for Brain Sciences and Dr. William White, Chief of the Hypertension and Clinical Pharmacology Division at the University of Connecticut Health Center.

Before I turn the call over to Dr. Pedder, let me note that some of the remarks you’ll hear today may contain forward-looking statements about the company’s performance. Actual future results might differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in our SEC filings and periodic reports under the Securities and Exchange Act of 1934 as amended, copies of which, of course, are available on our website or may be requested directly from the company.

And with that said, I’m going to turn the call over to Dr. Pedder. Go ahead, Pedder.

Simon Pedder

Thanks, Kate, and thanks to everybody for joining the call today. As we announced earlier today, the FDA’s Cardiovascular and Renal Drugs Advisory Committee voted 7-4 with 1 abstain and 1 non-voting to recommend approval of NORTHERA, also known as droxidopa, for the treatment of symptomatic neurogenic orthostatic hypotension in patients with primary autonomic failure, a group of diseases that include Parkinson’s disease, multiple systems atrophy and pure autonomic failure.

All pivotal studies showed that NORTHERA improved a broad range of Neurogenic OH symptoms, including dizziness, standing systolic blood pressure, and ability to perform activities of daily living. And clinical studies have shown that NORTHERA is safe and well tolerated in this chronically ill population.

So, we were pleased to have this discussion with the FDA. We believe we had a thoughtful, fruitful discussion on key issues. For those who could not attend or listen to the meeting, we had a good discussion on endpoints to characterize the treatment effect. We appreciated the type and scope of the questions from the panel, especially how to capture symptomatic benefit in this patient population.

Certainly, we have a lot to learn in accepting symptomatic benefit in these patients. The panel was similarly interested in understanding the clinical benefits seen in our clinical trials. The unmet medical need weighed heavily on their discussions as did the lack of effective treatment alternatives and severity of the underlying condition. All of you can appreciate the challenges going into this meeting given the emphasis placed on safety concerns in the FDA briefing document.

We are particularly proud of Bill and the clinical team along with Dr. White, Dr, Stacy, Dr. Factor and Dr. Kaufmann. They did a great job on the specific safety concerns raised by the Agency. The panelists were clearly interested in understanding the potential risks of wide use.

We also appreciate the input of doctors Temple, Unger and Stockbridge whose input was key on a number of issues. We certainly look forward to working with the Agency as we move forward. All in all, we felt it was a very good discussion.

The committee’s recommendation will be considered by the FDA in its assessment of NORTHERA NDA. A PDUFA action date for NORTHERA NDA has been scheduled for March 28, 2012.

I’d like to acknowledge and thank the patients, especially the particular ones who came today, and the investigators for their participation in NORTHERA trial and for their unwavering support for NORTHERA and Chelsea Therapeutics over the years. Chelsea is excited by the opportunity to play a role in changing the everyday life of these patients. We look forward to continue interaction with the FDA over the coming weeks as it completes its review of NORTHERA.

We will now open up the line for questions. Operator?

Questions-and-Answers Session

Operator: Thank you. (Operator Instruction) Our first question comes from Robyn Karnauskas from Deutsche Bank.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

Thanks for taking my question. I know it’s been a very long day for you. I guess the first thing that comes to mind is that the panel sort of unanimously suggested that you should do another trial to support approval and comments on maybe looking at longer duration of therapy, and given that if you were to still use that endpoint, 306 trial really didn’t work if you used the OHQ endpoint in the specific way you looked at it and the specific patient population. So what do you think – when you go to the FDA, what kind of trial might you suggest to support approval? Is it the fall trial that you are doing or are there other options on the table?

And then second, I guess my question is around the feedback from the FDA, their tone didn’t seem to be very supportive of the SPA and they asked for a lot of other information like durability. And I was wondering if you thought the FDA’s tone was any different than in your pre-NDA or your Phase II, Phase III meetings? Thanks.

Simon Pedder

Well, first let me say that, I don’t think everybody said that we needed another trial. I think everybody mentioned that they would like to see more data. And we’re certainly interested in doing additional trials obviously through a post-marketing commitment. I find it a bit surprising, your comment, because we found the input of Dr. Stockbridge, Dr. Unger and Dr. Temple to be very helpful, especially in the discussions about why one clinical trial would, in fact, be appropriate in this indication.

Regarding the OHQ, I think we took the viewpoint that we agreed with the Agency that it certainly is not a perfect scale. I don’t think there is any perfect scale. That being said, the overwhelming evidence supported by the largest trial that’s ever been done in this patient population showed a statistical significance both when it came to the OHQ composite score and when it came to the one item of the OHQ which they said was ambiguous when it came to its importance in studying this patient population, which was dizziness. And of course, that had a P value of less than 0.001.

So I think that, although the comments were appropriate, I think there was a very good discussion, I think it was a lively discussion. I think the leadership of the FDA that sat at the table entered into that discussion. And I think in the end we got the outcome we were looking for.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

So am I understanding you correctly that you do not expect to have to do, post-marketing, a confirmatory trial?

Simon Pedder

Well, we’ll obviously have to talk to the Agency and discuss with what’s the way forward. On the basis of the discussions, on the basis of the vote, we think we got a very clear signal that, on the basis of the existing data, which obviously is the existing file, the majority of the advisory panel would recommend approval.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

Okay. And on the color on the tone, you believe that the FDA was similar today to what they were in previous discussions.

Simon Pedder

Very much, very much so I mean they don’t agree with all of our comments or all of our discussion points, but certainly when it came to the interactive nature of the Agency, we’ve always had very fruitful discussions with them and I think that will continue. But I’m also going to pass it to Bill because he knows those gentlemen a little bit better than me.

William Schwieterman

Yeah, thank you, Simon. No, I agree with your comments. I didn’t feel like the tone of the FDA was any different than it’s ever been with us. This is of course an Advisory Committee venue and the tone is appropriate for that. But what Simon said is right; they didn’t agree with us on all things, but there were certainly a number of things that they did agree with us on, and actually I thought it was a good discussion, a fair discussion. And in any number of the places during that discussion FDA provided their opinion and I like said, not all agreed, but many of them did. So, we were pleased by that.

Simon Pedder

We were certainly pleased by the direction of Dr. Temple’s several comments.

William Schwieterman

Yeah, Dr. Temple in particular had several comments to the meeting that I thought helped and formed the discussion and I was pleased about that. The FDA policy and SPAs and so forth, there was a lot I think really constructive discussion that he brought to the table on any number of issues, five length of trials all that sort of thing.

Simon Pedder

Yeah, I mean I remember the time when we brought up back the – when people were talking about what was the size of the benefit that was meaningful, he in fact instructed for the 301 slide to be put up that looked at the OHQ and dizziness and showed the – that the large number of patients in fact have one unit when you look at two, three, four and even in fact more, you do see a pretty strong benefit of NORTHERA and he was instrumental on making sure that slide got back in front of the Advisory Committee members.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

Great. That’s very helpful. And thanks again for taking or doing this call tonight.

Simon Pedder

Thanks.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

It’s very helpful for us.

Operator

Thank you. Our next question comes from Jonathan Eckard from Leerink Swann.

Jonathan Eckard – Leerink Swann LLC

Congratulations guys. You are doing great job Bill, what a performance. So anyway, I just wanted to ask a couple of questions. One was about Dr. Temple’s participation I don’t believe he was on the roster. Were you aware that he was going to participate in this panel?

Simon Pedder

We were not aware, we were very happy that he did participate. Dr. Temple’s been involved obviously with many of the major decisions, not just of the droxidopa program, but also of the midodrine program. Obviously, Dr. Temple is known as an expert when it comes to clinical trial designs. He was involved in previous discussions we had with the agency and we think that he was really showing his interest by attending this meeting.

Jonathan Eckard – Leerink Swann LLC

Yeah. And then, one thing I noticed is there seemed to be a lot of confusion, except for maybe one or two panelists, about the potential number of patients that could benefit from NORTHERA with many people calling non-responders, the people who didn’t meet the screening criteria for blood pressure. Did you, I don’t know if I saw it, did you guys present that data during your presentation?

Simon Pedder

I think Bill did do a question about why did the patients not respond, and in fact, Bill shows that the large number of patients did in fact have a symptomatic benefit. It was really just a few patients that were identified as non-responders through symptoms. It really excluded patients due to blood pressure, which I think Bill and his team did an admiral job of showing you can’t look at blood pressure to identify symptomatic response in this patient population.

William Schwieterman

Yeah. Just to add to that, I think it was just a matter of the committee getting their heads around all the data, which we kept coming back to regarding the overall design. Dr. Temple also made a point during the meeting about how he actually encouraged enrichment designs in certain areas too. So, there is a lot of back and forth and a lot of different issues on that, Jon.

Jonathan Eckard – Leerink Swann LLC

Yeah. And then do you think that this is a topic that you’re planning on, when meeting with the FDA in the coming weeks or whatever, about the appropriate screening? I mean, do you think that because the trials, trials use blood pressure even though symptoms is the focus, do you think that there’s going to be topic discussion of how to properly kind of identify patients who benefit?

Simon Pedder

Well, we’ve always said that this drug is not going to have every patient respond to it robustly. And I think it was brought up by a number of the advisory committee that the way that we titrated patients on drug maybe similar how the drug is out there and some patients are not going to respond to this therapy. We understand that and we agree that those patients should be taken off.

But we know from the titration that the great majority of patients in our open-label titration did in fact have a nice symptomatic benefit. We were excluding them because they weren’t having a blood pressure benefit and we probably didn’t really enrich the population that way, because we now know that blood pressure really is an indication, and the way we take blood pressure just one snapshot in a day.

I think the 305 data, that Bill showed, show clearly that there is a significant effect on blood pressure, less so in the night more so in the day, but I think the 305 data really drove that home and it was very important to show in a room mostly of cardiologists. But I’d like to get Dr. William White, who is with us to comment on what he thought of that.

William B. White

Can you hear me all right? I’m sort of at end of the room.

Jonathan Eckard – Leerink Swann LLC

Yep.

William B. White

All right. So, I think that this is always going to be a challenge in research versus practice. We’re not going to throw blood pressure out of the window. It’s just impossible. We have to use that as somewhat of a biomarker in these patients. But the study, if you only went up 9 millimeters numerically, you didn’t get to go on. And probably in hindsight, that was maybe not the right thing to do, as more patients could have gotten into the study if we were a little lighter on that. So, I think there is, actually in the real world, a much larger population of people who will be able to take the drug compared to what was actually weeded out during the clinical trial program.

Jonathan Eckard – Leerink Swann LLC

That’s very helpful, thanks. And then the last question, and then I’ll get back in queue, is regarding 306b. It seems like – some of the concerns raised about longer safety as well as kind of the clinical importance of some of the endpoints would – could be addressed by 306b. Yet, I don’t think that either side, FDA or Chelsea, made any notion that this trial was ongoing. Could you talk about, one, what you think the utility of 306b could be on its own if it was positive? And again, why maybe it wasn’t brought up at all, that this trial was ongoing?

Simon Pedder

Well, one area I think it would be really helpful for is truly from a safety viewpoint. The safety data, you don’t really query so much about what the indication is. If it’s in a patient population, you define it by the patient population, you say in this study, we treated Parkinson’s disease patients with significant NOH. And here is what the safety looks like, in that specific population.

But the population we are talking about this indication is a mixed indication. It’s Parkinson’s disease patients, but it’s also MSA patients, it’s PAF patients, which is a much younger population kind of more into the mid-50s to mid-60s compared with the PD population. It’s going to be more likely in their – the mid-70s. So, clearly, it’s going to be interest of safety, clearly it’ll be interest of advancing what we know about NOH and the benefits of droxidopa in a specific PD population. But it won’t be specifically – you can’t just take it and say, it’s the same as what Chelsea did in 301 and 302.

Jonathan Eckard – Leerink Swann LLC

Yeah, that’s very helpful. Thanks. I’ll get back in queue.

Operator

Thank you. And our next question comes from Liana Moussatos from Wedbush.

Liana Moussatos – Wedbush Securities, Inc.

And congratulations.

Simon Pedder

Hey, Liana.

Liana Moussatos – Wedbush Securities, Inc.

So what do you have left to do in your interactions with the FDA before the PDUFA? Are you just going to wait and they’re going to let you know their decision, or are there specific meetings and conference calls that you anticipate?

Simon Pedder

Well, we anticipate obviously having a follow-up discussion with them based on the discussion today and the vote today. [Rex Horton], our Regulatory Director, will be in discussions with the Project Manager talking about that – the path forward.

Bill, would you like to add anything specific that you think will happen?

William D. Schwieterman

Well, I’ll just give my own experience with FDA having been involved on the other end of these things. I mean typically there is a back and forth now and a productive discussion where the issues are discussed overall and then agreements are made on the path forward. And so I expect to have that continue here in short order in the next, actually, week or so.

Liana Moussatos – Wedbush Securities, Inc.

Okay. Thank you very much.

Simon Pedder

Thank you, Liana.

Operator

Thank you. Our next question comes from Juan Sanchez from Ladenburg.

Juan Sanchez – Ladenburg Thalmann Securities

Hi, guys. Congratulations. I have a question regarding the analysis that you’ve presented today on neuroleptic malignant syndrome and your analysis of the cardiovascular cases. Is that information already in the FDA’s hands, or are those analyses that you presented today the FDA doesn’t have with them?

Simon Pedder

Yeah, the neuroleptic malignant syndrome data is in their hands, although they got it relatively recently. They specifically asked for any information we had on NMS, and we obviously had to collect that data, get that data reviewed by [Dr. Factor] and submit it, so they do have that available.

When it comes to Dr. White’s interpretation, they didn’t specifically address concerns of cardiovascular, which – they didn’t identify key cardiovascular events and asked us to comment on them where we normally would develop a response.

So, the response that Dr. White provided was really based on what was in the briefing document. But Dr. White had done a full analysis because Bill had previously asked him to. Dr. White?

William B. White

Yes, so in preparing for the meeting today and also to make sure that we had all of our ducks in a row, I went through all of the clinical materials associated with all the serious adverse events and all the deaths and provided two appendixes if you will, for the briefing document based on the independent adjudication of those events. So, they – that was actually available to them whenever you sent in the information.

Juan Sanchez – Ladenburg Thalmann Securities

The second question, there were some manufacturing issues mentioned in the FDA documents and some (inaudible) toxicity issues. Where do you stand on that with the FDA?

Simon Pedder

That’s still ongoing discussions between us and the Agency. As you can appreciate, in a six-month review, you continuously get requests. And then, they’re still out, they’re doing their audits. But we think we’re in really good shape. But obviously, we’ll continue to get questions from the Agency and we’ll continue to give our responses.

Juan Sanchez – Ladenburg Thalmann Securities

Thank you very much and congratulations again.

Simon Pedder

Thanks, Juan.

Operator

Thank you. And our next question comes from David Moskowitz from ROTH Capital Partners.

David Moskowitz – ROTH Capital Partners LLC

Yes, hi, good afternoon. So, I was also present at the panel and don’t really have any questions after eight hours of commentary, but will say for the benefit of people on the call and in the chat rooms that seem to be negative, there is no question in my mind that the FDA representatives appeared favorably predisposed. Things like framing and I think standing behind the OHQ scale, despite its limitations, backing newer trial design program, I think Norm Stockbridge used the word spectacular, spectacular with respect to design of these types of trials, also being very clear that the short-term studies are appropriate for products with symptomatic benefit to patients.

And again, I think one of the big questions is the P value of the 301 trial. They didn’t come out and say it’s sufficient, but certainly gave us enough information with regard to its sufficiency with the secondary out point.

So, I do want to say congratulations to you guys publicly. And I think you guys in particular did a great job characterizing the unmet medical need in a very sick patient population with limited alternatives. And I have the vote count at seven positives before the vote came out and that’s because of the job and the message that you guys conveyed. So, congratulations.

Simon Pedder

Well, thanks, thanks for that. I will comment on one thing that doctor, I think it was Dr. Temple brought up, and that was not just about the P value, but all the supportive other symptoms and activities of daily living. And Dr. Mark Stacy is here from Duke who presented some of that data. So, clearly the fact that everything was going in the right direction I think is one of the comments one of the advisors mentioned was made him end up voting in the affirmative.

David Moskowitz – ROTH Capital Partners LLC

Absolutely. So, tallying the data. And it was a good lesson for all of us on the sell side and the buy side. So, appreciate it and congrats to the team.

Simon Pedder

Thanks, thanks a lot.

Operator

Thank you. And our next question comes from Martin Shkreli from MSMB Capital.

Martin Shkreli – MSMB Capital Management LLC

Hi, my question was answered, but thanks very much and congratulations as well.

Simon Pedder

Thanks, Martin.

Operator

Thank you. Our next question comes from Jonathan Eckard from Leerink Swann.

Jonathan Eckard – Leerink Swann LLC

Well, thanks for the follow-up. So just one thing, you might not be able to comment on it, but after the panel-and I had a very similar view to one of the previous speakers about the positive tone of the FDA-and I think Dr. Temple classified 301 as a clear win, if I’m not mistaken, those were his words.

But I’m still quite perplexed by the version in the review documents, and the sentiment that seemed to be at that table of the FDA. Is there any color on what the origin of these reviews were? I mean is the clinical reviewer, is she new to the story, or is it just that different opinions can come in these processes?

Simon Pedder

Well, this is the division of cardiovascular renals, so I’m going to pass this along to the one card-carrying cardiologist, Dr. White.

William B. White

Well, as a matter of fact, I share your opinion. When I first got the briefing document, I reviewed it extremely carefully a couple of weeks ago. I was quite taken aback by the anecdotal information in the briefing document, the interpretation of some of the data, and some of the highly personalized commentary. That was not something I’m used to seeing in these kinds of documents. They’re usually very scientific analyses, and this is not the way this one read. So, I would say that based on the way that was written, although it’s thorough, but based on the way it was written and based on the presentation today by that medical officer that she was very naive and this was probably one of the first times she’s ever done this. That would be my take.

Jonathan Eckard – Leerink Swann LLC

Yeah. It’s just, I mean, it came out with the comments of the panelists, but just seemed like the rigor of the kind of analyses that she did is certainly not to the level that anybody would hold to a sponsor. And it was almost kind of I guess most people just kind of dismissed most of the data. But it just seems kind of strange about the difference of opinion within the same division that there obviously is so clear.

Simon Pedder

Yeah, to be fair, I mean this is one of the, if there is a negative about getting expert review, is that they only have a limited amount of time to go through a tremendous amount of data and to come back to the sponsor with questions. And she was not the original reviewer on the program, and subsequent she had to learn a lot of data in the review cycle. And she was open and asked us a lot of the original information that we were able to give her some comfort to. But she is going to identify different issues as she goes through the review process.

Jonathan Eckard – Leerink Swann LLC

All right, well, thanks for your insight. And again, congratulations.

Simon Pedder

Thank you.

Operator

Thank you. This concludes our question-and-answer session. I would like to hand the conference over to Dr. Simon Pedder for closing remarks.

Simon Pedder

Well, first of all, I’d just like to thank you all who follow Chelsea. I certainly want to thank the Chelsea team who worked so hard in the preparation for this advisory committee, especially Bill and Art. And finally, I would like to point to the patients and the caregivers and the physicians who treat these patients who provided us the data by their involvement in our clinical program, especially those who attended today. I wish everybody a pleasant evening.

Operator

Thank you. Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program for today. You may all disconnect and have a wonderful day.

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