Auris Medical Holding (NASDAQ:EARS) Q2 2017 Results Earnings Conference Call August 10, 2017 8:00 AM ET
Cindy McGee - Head Investor Relations and Corporate Communications
Thomas Meyer - Chief Executive Officer
Thomas Jung - Chief Development Officer
Hernan Levett - Chief Financial Officer
Good day and welcome to Auris Second Quarter 2017 Financial Results and Business Update. Today’s conference is being recorded. At this time, I would like to turn the conference over to Cindy McGee. Please go ahead.
Thank you, operator. And thanks to everyone on the call for joining. I’m Cindy McGee, Head of Investor Relations and Corporate Communications at Auris Medical.
With me are Thomas Meyer, Auris Medical’s Chairman and Chief Executive Officer, Thomas Jung, Chief Development Officer and Hernan Levett, Chief Financial Officer.
Earlier today, we provided a business update and announced our financial results for the second quarter 2017. The news release is available on our website at aurismedical.com and has been filed with the SEC.
In addition, we have posted the slides for this call in the Investors section of our website under Events.
During today’s call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial or business performance or our strategies or expectations. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual risks, developments and business decisions to differ materially from those contemplated by these statements.
These risks and uncertainties include, but are not limited to, the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approvals, our intellectual property position and our financial position, as well as those described in the risk factors section in our annual report on Form 20-F and future filings with the Securities and Exchange Commission.
In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.
With that, I hand the call over to Thomas.
Thank you, Cindi. Good morning to our listeners in the US and good afternoon to our European listeners. On today’s call, we are pleased to provide a business update and discuss our second quarter 2017 financial results.
Overall, we continue to make great progress with our clinical stage pipeline. And I will begin today's presentation with a brief overview of some recent highlights. Early last month, we were pleased to complete the enrolment of our AM-111 HEALOS trial, with 256 patients enrolled HEALOS is the largest placebo controlled trial that has ever been conducted in sudden deafness. With positive results from the trial, AM-111 have the potential to become the first in class treatment for acute inner ear hearing loss.
In our Keyzilen program we continued enrolment into the extended TACTT and key safety data from the TACTT2 trial were published in one of the top peer reviews Otolaryngology journals.
In addition data from the AMPACT 1 and AMPACT 2 open label follow on studies demonstrated the long-term safety of Keyzilen. AMPACT provided further support for our therapeutic approach of treating tinnitus early and suggested potential benefits of repeating treatment cycles.
Furthermore, we recently announced further progress in the ramp up of our AM-125 program with intranasal betahistine for many years disease and other vestibular disorders. We closed the acquisition of preclinical, clinical and IP assets from home Otifex Therapeutics and managed to obtain access to further relevant data from an undisclosed third party.
We also advanced in our preparation for the second Phase 1 trial and discussions with regulatory agencies. AM-125 is quickly shaping up as a promising third pillar in our clinical development pipeline.
During the recent IFOS ENT World Congress in Paris we received a lot of positive feedback on our three clinical development programs and got further confirmation of the strong unmet medical needs that we are addressing.
Our scientific symposium, recent advances in the treatment of acute hearing loss, featured several experts in the field of hearing loss research and was very well attended.
The IFOS ENT World Congress is the largest international ENT Congress and is held only every third year. This year it brought together more than 8000 ENT specialists from more than 100 countries.
Looking ahead, we will continue to be busy over the coming months as we work to reach our next milestone. Between now and the end of this year, we plan to complete enrolment of the Keyzilen Phase 3 TACTT3 trial in acute inner ear tinnitus, initiate the second Phase 1 trial for AM-125 and announced top line Phase 3 results from the HEALOS trial.
Thomas Jung, our Chief Development Officer will not provide further update on our development programs and Hernan Levett, our Chief Financial Officer will continue the presentation by reviewing the financial results.
With that, let me pass over the call to Thomas.
Thanks, Thomas. Today I will provide an overview of our two Phase 3 efforts AM-111 and Keyzilen and the newest addition to our pipeline AM-125. AM-111 our most advanced program from a data readout perspective. There is a high unmet medical need for an otoprotective treatment and AM-111 has the potential to become the first therapeutic indicated specifically acute inner ear hearing loss.
We consider AM-111 to offer several interesting product features. It is administered as a single dose treatment, provides rapid and substantial recovery of hearing and may help eliminate the tinnitus that frequently accompanies acute hearing loss.
Two Phase 3 trial evaluating AM-111 are ongoing, both trials the HEALOS and ASSENT are recruiting patients with severe to profound hearing loss. HEALOS, our study running in Europe and Asia completed enrollment early last month with 256 patients.
With a three month period we expect the last patient, last study visitatthe beginning of October I'm planning to announce topline results later in the fourth quarter of this year. At our investor and analyst meeting in June, we outlined the HEALOS clinical trial design. This presentation is available on our website for your reference.
Our second trial ASSENT was initiated in North America last summer and in South Korea earlier this year. Over the coming months additional sites will activated in Europe. Most of these additional sites also participated in HEALOS.
In summary, we are proud to have pioneered the development AM-111 and look forward to the upcoming results from the HEALOS trial.
Now turning Keyzilen, our small molecule NMDA receptor antagonist for the treatment of acute inner ear tinnitus, enrollment to the extended Phase III TACTT3 trial is progressing and we plan to complete enrollment this quarter. With the timeline, we expect topline results to be available in early 2018.
In addition, we are pleased to share that safety data from the Phase III TACTT2 trial were recently published in Otolaryngology-Head and Neck Surgery. The publication outlined the TACTT2 clinical trial design, hence concludes that repeated intratympanic injections of Keyzilen over 3 to 5 day period appear to be safe and well tolerated.
Moving to AM-125, and building on Thomas opening remarks. We are pleased to have efficiently assembled the package of relevant data to support the development of intranasal betahistine. In addition, we have established a scientific advisory board and performed pharmacokinetic modeling studies that delivered further insight into the superior bioavailability provided by the intranasal administration route. We believe this program has the potential to deliver substantial clinical benefits to patients with vestibular disorders.
Next, we plan to discuss the development strategy with US and European regulator agencies initiate the second Phase 1 trial of AM-125 in the fourth quarter. This trial is plan to evaluating single, multiple ascending doses in healthy subjects. The study will determine the maximum tolerated dose, following intranasal administration and assess pharmacokinetics in plasma.
In a previous Phase 1 trial, intranasal betahistine demonstrated good tolerance and significantly higher plasma concentrations when compared to data reported with oral betahistine. Furthermore, a 14 day study in beagle dogs demonstrated that intranasal delivery was well tolerated with repeated dosing. We are pleased with the progress we are making with our clinical stage pipeline and look forward to executing on our upcoming milestones.
With that, I will now turn over the call to Hernan, our Chief Financial Officer for a financial update.
Thank you, Thomas. Before reviewing our financial results for the second quarter of 2017, I would like to note that the financial statements are presented in Swiss francs. The net loss decreased from CHF 8.4 million or CHF 0.25 per share in the second quarter of 2016 to CHF 5.4 million or CHF 0.12 per share in the second quarter of 2017.
Our research and development expenses decreased from CHF 7.3 million in the second quarter of 2016 to CHF 4.7 million in the second quarter of 2017. The reduction in research and development expenses was mainly driven by the completion of several of our Keyzilen trials.
General and administrative expenses decrease from CHF 1.7 million in the second quarter of 2016 to CHF 1.2 million in the second quarter 2017. The decrease was due to lower administration costs.
In addition to our operating expenses, the net loss for the second quarter of 2017 includes interest expense of 410,000 under the loan agreement with Hercules, a net foreign currency exchange loss of 593,000 and a revaluation gain from derivative financial instruments of CHF 1.5 million. This is related to the decrease in the value of the warrants issued in connection with the Hercules loan and the February 2017 public offering.
Going forward for the revaluation gain or losses from the derivative financial instruments may have to be recorded due to fluctuations in the value of the outstanding warrants. Under International Financial Reporting Standards, the warrants are recognized as liabilities and we therefore have to determine their fair value regularly. The magnitude and direction of such fluctuations will depend on the share price, the share price volatility and the level of the risk free interest rate.
Before I turn the call back to Thomas, I would like to highlight that for the first six months of the year our net loss decreased from CHF 17.3 million last year to CHF 13.8 this year. This is in line with our plan and in June 2017 with CHF 26.2 million in cash and cash equivalents. Therefore we continue to expect our expenses for the year to be in the range of CHF 28 million to CHF 32 million and our cash runway to extend into the first quarter of 2013.
With that, I will like to turn the call back to Thomas.
Thank you, Hernan. Next month we will continue our productive year with the following events. We will host the scientific symposium titled, Targeting Histamine Receptors for Vertigo Therapy at the American Academy of Otolaryngology-Head and Neck Surgery meeting in Chicago and we will participate in the LEERINK Partners Rare Disease Roundtable Series in New York City.
We also look forward to the following milestones for our development stage programs. So this quarter we expect to complete enrollment of the Phase III Keyzilen and TACTT3 trial. Next quarter we expect to announce topline results for HEALOS and initiate the second Phase 1 trial with AM-125 and early next year we expect to announce topline results from TACTT3 and the AM-125 Phase I trial.
Thank you for joining us today. We look forward to executing on our upcoming milestones and delivering meaningful results for patients.
I would now like to turn the call back to the operator, who will open the line for questions.
Certainly. [Operator Instructions] We now take our first question from Michael Higgins from ROTH Capital Partners. Please go ahead. Your line is open.
Good morning everyone. Thanks for taking my call. This is actually Lou in for Michael. And can everyone hear me?
Okay. Great. So I have a few questions about AM-111. I was wondering if your EU marketing plan will be to partner with someone or do you plan to build an internal sales force?
Okay. The plan, the global plan that we have here for all of our programs is actually to retain rights for the US and to partner selectively in Europe and partner the rest of the world. So for Europe the plan is actually to cover certain markets ourselves and partner with other companies for the remainder.
Okay. Thank you. And then another question about AM-111, just a clarification. So there's two trials HEALOS and ASSENT and HEALOS will support submission an MAA in Europe and for the FDA you will need both HEALOS and ASSENT data is that correct?
Well, by standard rules two Phase 3 trials are required. Now we have here an orphan drug product and as we know in case of robust to solid to data and with a clear unmet medical need there are different options or maybe available here with those agencies that we will seek a discussion to map out the path forward.
So we have two clinical trials. Now what we'll do once we'll have the data in from HEALOS we'll talk with both agencies and see how the regulatory path looks like.
Now we assume that in the case of positive data there are quite a few reasons here to support filing based on HEALOS with some follow up data then adding to the data from the program with ASSENT. For the US we may have a slightly different situation, but that will be up for discussion with the FDA. As a reminder, AM-111 has obtained fast track designation in the US. I think in the end a lot will be driven by the actual data that we’ll generate.
Okay. Okay. Thank you. And then moving on to Keyzilen I had a question about the results - how the results from AMPACT 2 trial might impact the TACTT3 trial? So in AMPACT 2 you showed that Keyzilen is more effective about - twice as effective in the first - when it's given in the first three months compared to the subsequent three months and the Stratum B as TACTT3 is patients that are receiving the drugs in that timeframe, no later 3 months.
Do you think that the results you’ve got from AMPACT 2 will impact, do you think that maybe the Stratum B will not reach its end point. And if so does that affect the trial as a whole?
Well, the Stratum A that is the confirmatory part of the trial, so we are seeking to confirm data for the acute stage that is Stratum A. Stratum B has always been the exploratory part. So we will see what comes out here. I mean, we have data from various sources suggesting that this three month time window may not be the end, may not be the limit. So that AM-111, Keyzilen could actually work beyond the three months. But that's why we are doing this Stratum B to generate additional data on this.
But the focus here is in the first place on Stratum A. Now we feel confident that Stratum B will also provide interesting results. But this is a different setting.
Okay. Okay. Thank you. And just a final question about AM-125. I was wondering if the data that you have from Otifex and other data that you might have acquired in the meantime will that be publicly available at some point. Do you plan a publication or conference presentation maybe?
Well, we definitely plan to show more data, especially on the pharmacokinetics. I think the right time to do so will be once we’ll have additional data from the second Phase 1 trial.
Okay. All right. Thank you very much.
Okay. Thank you.
Thank you again. [Operator Instructions] As we have no further questions in the queue. I'll turn the call back over to you for any additional or closing remarks.
Okay. Thank you very much, operator. And thanks to everyone for joining today's call and your continued interest in Auris Medical. I wish you a great day and please remember always take care of your ears. Thank you very much.
Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.