Call Start: 10:20
Call End: 10:43
XenoPort, Inc. (NASDAQ:XNPT)
Life Sciences Management Access Conference Call
August 14, 2012 10:20 a.m. ET
William Harris – CFO
Christopher Marai – Wedbush Securities
Okay, good morning, thank you for joining us. My name is Chris Marai. I am an analyst here at Wedbush, I work with Greg Wade and David Nierengarten on the biotech team. This morning I would like to introduce XenoPort and Bill Harris their CFO. I’m going to leave it to Bill to describe some of the compelling opportunities ahead for XenoPort. Thank you.
Thank you Chris, and thank you Wedbush for the invitation this week here today. Before I get started I would just like to remind you I will be making forward-looking statements that involves risks and uncertainties, and for more information regarding the risks and uncertainties of our business, please refer to the risk factor section of our current SEC filing.
I would like to start by touching on highlights of our business. Gabapentin enacarbil known as Horizant in the US and Regnite in Japan is approved to treat moderate to severe primary Restless Legs Syndrome or RLS in both US and Japan and recently received approval for the management of postherpetic neuralgia in the US.
Our most advanced product candidate arbaclofen placarbil is currently in a phase III trial in MS patients with spasticity, we expect top line results from this study in the first quarter of next year and assuming a positive outcome we expect to file an NDA under 505(b)(2) in the second half of next year.
Behind that we have XP21279, an L-dopa prodrug that's completed phase II trials in Parkinson’s Disease, and based on a recent end of phase II meeting we had with the FDA we now believe that a 505(b)(2) NDA is possible with a single head to head study comparing 279 to Sinemet.
Finally, we have XP23829, a novel patented prodrug of monomethyl fumarate or MMF that has a potential treatment for relapsing-remitting multiple sclerosis as well as psoriasis just entered phase I.
This is our pipeline of products and product candidates, as you will note our pipeline now run for full spectrum of marketed products, phase III asset and phase II asset, and a phase I asset, all with the nice neuralgia products focus.
All of these compounds are protected by issued composition to matter patents and we own all rights to these compounds with the exception of gabapentin enacarbil in these two territories.
Moving on to gabapentin enacarbil and RLS, Astellas, our partner in Japan, received approval for Regnite in January of this year. In April they established pricing with the government about $2.45 a day cost of treatment. And they recently launched the product on July 10th. Astellas estimates there are about two million patients with RLS in Japan and they are promoting Regnite with about 1200 reps targeting sleep and neurology specialists.
In the first quarter this year we received a $10 million milestone payment on the approval of Regnite and we will receive a high teen royalty on net sales in Japan and we expect to receive and recognize those royalties one quarter in arrears so the fourth quarter this year we expect to receive our first royalty payment representing the net sales royalty of the third quarter.
Moving to the US, Horizant was approved last year and was launched by GSK just about a year ago. Unfortunately the Horizant RLS scripts have been lack luster which is truly been a disappointment to us, and at this point I don’t have any updates on our dispute in our ongoing litigation with GSK. More recently, however, Horizant received approval for the management of postherpetic neuralgia or PHN in adults in the U.S. and that triggered a $10 million milestone payment that we received from GSK in June of this year.
The Horizant prescribing information includes a simple three day titration to the recommended dose of 600 mg twice a day evidence of efficacy from a 12 week randomized double blind placebo-controlled study, and an adverse event profile for the 1200 dose that is not too dissimilar to placebo.
Moving on to arbaclofen placarbil and spasticity, AP is a prodrug of the R-isomer of baclofen, a racemic drug that was approved back in the 80s for the treatment of spasticity. Now, spasticity marks an interesting market with clear unmet medical need. Spasticity is defined as an abnormal increase in muscle tone that results from a variety of causes including multiple sclerosis, spinal cord injury, stroke, traumatic brain injury, and cerebral palsy.
So the sizeable market it’s largely been served predominantly by two oral foundational agents baclofen and tizanidine both of which are generic. There are about 10 million prescriptions for baclofen and tizanidine combined per year, and they are growing at about a rate of 10% to 15% despite no active promotion. Now, we estimate about 60% of the baclofen prescriptions and about 20% of the tizanidine prescriptions are for spasticity which would result in annual spasticity prescriptions for all users just a little under 4 million a year.
When we looked at spasticity in MS patients, baclofen is clearly the drug of choice here, and you see there is a whole host of other agents in low single digits that are typical add on agents, but baclofen is clearly a predominant drug of choice in this indication. We asked physicians how many of their patients failed first-line therapy. On the left hand side you can see about 46% of the patients feel all first line therapy for spasticity, and on the right hand side about 42% of the patients failed baclofen first line.
We then asked them how soon after treatment initiation do patients fail. You can see that approximately 80% failed within one to three months and all patients failed within six months of treatment initiation. These patients typically fail due to a combination of lack of efficacy and/or intolerability that are likely due to the narrow therapeutic windows of these current oral agents. Simply put as you start to escalate the dose and started achieving efficacy you knock the patient’s out seeing the side effects.
Moving on to our clinical experience with AP, we conducted a successful phase II study in spinal cord injury patients. In this study AP produced a robust dose dependent response and the maximum after score which was a primary end point in the study with the top two doses achieving statistical significance. AP was well tolerated in the study with low incidents of somnolence and dizziness. And importantly as you can see on the left hand side here we were seeing efficacy prior to the morning dose which suggests that the previous evening dose provided coverage throughout the night which is something that showed acting agents have a hard time doing.
So with this data in hand we want to talk to the agency about next steps in this program. We came to agreement with them that we could file an potential NDA under 505(b)(2) with a single phase III efficacy study in MS patients and a six month open-label roll over extension study. We also came to an agreement with them on the additional information that they would like to see in the application that we’ve listed here. And at this point all of this work has been completed.
Just one update for this program, on a quarterly call last week we indicated that we have now gained agreement with the FDA that we can enter patients directly into the open-label safety study for up to nine months to ensure that we get the agreed upon safety exposures of a 150 patients for six months and a 100 patients for nine months.
The phase III trial is a randomized double bind placebo developed trial that's being conducted pursuant to a special protocol assessment. We are testing three doses of AP against placebo with independent co-primary endpoints of [inaudible] and the physician global impression have changed. Again, as I indicated we expect top line results of this study in the first quarter of next year.
Moving on to 279 for Parkinson’s disease, Parkinson’s disease is a chronic neurodegenerative disease that affects possibly 1% of the population over the age of 60. Patients first diagnosed with Parkinson’s disease are started on either dopamine agonist or an L-dopa based therapy, but eventually all patients go on an L-dopa based therapy. There are about 4 million prescriptions written in the US in the last 12 months for L-dopa based therapies.
The future opportunities for improved Parkinson’s disease treatment include improvements in particular decreasing off-time, reduced incidence of dyskinesias, continuous dopaminergic stimulation from an oral agent and then reduced need for adjunctive therapies.
As I indicated L-dopa is the cornerstone of Parkinson’s treatment despite its suboptimal pharmacokinetics that requires multiple doses throughout the day and leads to significant fluctuations in blood level throughout the day. Overshooting a therapeutic window leads to dyskinesias, undershooting leads to wearing off or off time and lack of efficacy, and the natural progression of the disease is such that this therapeutic window narrows over time further exacerbating this problem. So it’s well understood that a extended more constant exposure to L-dopa blood level throughout the day would lead to better Parkinson’s disease therapy. So the goal of this program was to create an oral L-dopa program that produced a narrow peak-trough ratio that allowed optimal therapy throughout the course of the disease.
At the end of last year we reported our results of a phase II study in which we compared optimized doses of 279, dose three times a day, to optimized doses of Sinemet, dose four or five times day.
From a pharmacokinetic standpoint, the 279 carbidopa bilayer tablet produced the flatter PK profile that we are looking for. What I’m showing you here is the deviation around the average concentration over time which was improved compared to Sinemet. However, the primary end point of this study was a comparison of the reduction from baseline and off-time of the optimized doses of 279 compared to Sinemet at two weeks, and we did not reach statistical significance on that.
We reviewed this data with an advisory board of Parkinson’s disease experts who are encouraged by this PK profile, encouraged us to find a way to move this program forward. We also took note of some data presented at AAM this year from a phase III trial of an intraduodenal infusion pump of L-dopa.
Now this study was somewhat similar designed to what we had conducted in that they were comparing optimized doses of L-dopa delivered via an infusion pump to optimized doses of oral Sinemet. What was noteworthy to us, as you can see here in the blue which is the off-time that it was until they got out to 8, 10, and 12 weeks that they showed statistical separation from the Sinemet. Now, I’ll remind you our previous study was a two week study suggesting that a longer duration study is probably necessary.
So in June we sat down with the FDA at the end of phase II meeting to discuss this program and had some encouraging results. So, we – the FDA agreed that 279 could be potentially filed under 505(b)(2) regulatory pathway for the treatment of symptoms of advanced idiopathic Parkinson’s disease based on a single study comparing 279 to Sinemet, provided that this study was designed such that this comparison was appropriate and rigorous.
They also indicated that we do not need to conduct any additional pre-clinical work and that we had met the PK bridging requirement of the 505(b)(2) guidance. It suggest that we conduct a food effect study before initiating phase III, and importantly they indicated that an NDA with a single study, 279 compared to Sinemet, was potentially approvable, in addition we would need a six month open label safety study.
Based on this positive development in this program we now plan to initiate certain activities in preparation for phase III while we continue to engage in potential partnership discussions.
Moving on to 23829, is a prodrug of Monomethyl Fumarate or MMF, we have an issued composition-of-matter patent that runs through at least 2029. Now, Dimethyl Fumarate or DMF is also a prodrug of MMF, although it was not prospectively designed as such.
BG-12 from Biogen Idec is a formulation of DMF that have been shown to be effective in two phase III trials for the treatment of relapsing-remitting multiple sclerosis and is currently under review of the FDA. In addition, Fumaderm, which is a mixture of DMF and monoethyl fumarate salts is widely used oral treatment for psoriasis in Germany.
Notwithstanding the solid efficacy result in MS BG-12 associated with flushing and GI adverse events. Shown here are the flushing and adverse events from the two phase III trials and you can see focusing it on the BID dosing that the flushing runs in the 30ish percent and the various GI adverse events are in the range of 10% to 20%.
In addition the MMF blood levels produced from BG-12 appeared to be quite variable. Shown here is some data that was presented at AAN about two years ago showing the MMF blood levels produced from 240 mg of BG-12, dose three times a day. You’ll note that there is substantial arrow bar suggest that there is significant variability in these blood levels. So while the BG-12 is set at very high standard in terms of efficacy in MS, certainly provides opportunity for improvement.
We conduct a whole host of pre-clinical studies as we are preparing the IND in which we compared 829 to DMF. Here I'm highlighting some of the differences we’ve seen. In the case of 829 it has higher solubility with DMF, this may lead to ease in formulation and also more rapid absorption. Its higher permeability in the CaCo2 Cell Assay. It’s not active in the mouse contact sensitization assay.
I will remind you that DMF is a potent contact sensitizer and if put on the skin it will result in pretty serious rashes.
[Inaudible] gastric irritation after oral dosing of solutions in rats and monkeys, less localization in the gastric mucosa 24 hours after the oral dosing, and importantly we also saw that it was more effective in both the EAE mouse model of MS as well as a mouse model of psoriasis compared to DMF on the same models.
As we think about ways to potentially differentiate 829 from BG-12, in terms of efficacy there is a potential for improvement based on more consistent predictable PK and less variable PK. In terms of GI irritability, there is a potential improvement based on the intrinsic properties of 829 as well as the fact that 829 is one of the sustained release formulations we are testing is brought forward released over a longer length of the intestine.
In terms of flushing, there is the potential for managed flushing by blunting the Cmax or the flatter PK profile and there is the possibility to getting to once a day dosing. The conveniences that come along with once a day dosing, but importantly compliance which at a time when compliance is being recognized as being very important in MS therapy.
Last month we started a phase I study. This is a single dose formulation PK study, the goal of which is to assess the metabolism of 829 in humans as well as to compare the MMF pharmacokinetics of four different formulations in both the Fed and Fasted conditions. The formulations, we are looking at one immediate release formulation that may mimic the BG-12 PK as well as three extended release formulations with the possibility of achieving once a day dosing.
Now we hope to select up to two formulations for further clinical development and we expect results from this study in October of this year. The indications that we might consider, well, obviously based on the BG-12 experience MS is an obvious one. Based on the Fumaderm experience as well as the fact that Biogen Idec has conducted successful phase II and phase III studies of BG-12 and psoriasis has us interested obviously in that indication as well.
But more broadly this class of compounds may have utility in a host of neurodegenerate diseases including Parkinson’s disease. There is a growing body of literature suggesting that up regulation as a nerve two pathway can lead to delayed disease progression in Parkinson’s disease patients. In fact in June of this year we announced that we had received a grant from the Michael J. Fox Foundation to study 829 in animal model of Parkinson’s disease.
A brief financial overview. We ended the quarter with about $82 million in cash that does not include the approximately $43 million in net proceeds from a financing we completed in July. Our net cash burn guidance we provided at the end of the year was for a net cash burn of $45 million and $55 million. We have no debt, and we have 43 million shares outstanding as of July.
So what can you expect from us going forward, as I indicated we expect the first royalty payment from Regnite net sales in Japan in the fourth quarter. We expect the results from the 829 phase I trial also in the fourth quarter. We expect the top line results from the phase III AP spasticity trial in the first quarter of next year. Assuming a positive outcome there we expect to then file an NDA under 505(b)(2) in the second half of next year.
There is the potential for partnerships on a range of our compounds 829, 279, and potential regional deals for Gabapentin enacarbil. So I will stop there and thank you very much for your attention.
Okay. If there are any questions we would be happy to take them.
[Inaudible] have to done before we get into pivotal study?
Yeah, we would like to do that before the Phase III, or fourth I would say.
Okay. If there are no other questions. Thank you very much.