ChemoCentryx (CCXI) CEO Thomas Schall on Q3 2018 Results - Earnings Call Transcript

|
About: ChemoCentryx (CCXI)
by: SA Transcripts

ChemoCentryx (NASDAQ:CCXI) Q3 2018 Earnings Conference Call November 8, 2018 5:00 PM ET

Executives

Bill Slattery - Investor Relations, Burns McClellan Inc.

Thomas Schall - Chairman, President and Chief Executive Officer

Susan Kanaya - Executive Vice President, Chief Financial and Administrative Officer and Secretary

Analysts

Michelle Gilson - Canaccord Genuity

Edward White - Wainwright & Co.

Steven Seedhouse - Raymond James & Associates, Inc

Jon Helander - JMP Securities LLC

Tessa Romero - JPMorgan Securities Inc.

Operator

Good afternoon, and welcome to the ChemoCentryx Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call will be recorded.

I would now like to turn the call over to Bill Slattery of Burns McClellan. Mr. Slattery, please go ahead.

Bill Slattery

Thank you. Good morning, and welcome to the ChemoCentryx third quarter 2018 financial results conference call.

Earlier this afternoon, the company issued a press release providing an overview of its financial results for the third quarter ending September 30, 2018. This press release, along with a few slides that you may find helpful while you listen to this call, are available on the Investor Relations section of the company’s website at www.chemocentryx.com.

Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will review the company’s recent business and clinical progress. Following his comments, Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer of ChemoCentryx, will provide an overview of the company’s financial highlights for the third quarter before turning the call back over to Tom for closing remarks.

During today’s call, we will be making certain forward-looking statements, which those of you following the slides can see on Slide 2. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in the company’s filings made with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K filed on March 12, 2018. You are cautioned not to place undue reliance on these forward-looking statements and ChemoCentryx disclaims any obligation to update such statements.

In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 8, 2018. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call.

I will now turn the call over to Tom Schall.

Thomas Schall

Thank you, Bill, and good afternoon to everyone listening. Thank you for joining us on our third quarter 2018 conference call. Today, I will highlight three points, all of which illustrate and substantiate an overriding theme, as you can see from Slide 3. That is, we are moving inexorably forward to our goal of advancing our clinical programs toward its regulatory submissions for marketing approval.

Accordingly, today, first, I will talk about our clinical trials of our unique asset avacopan in two orphan kidney diseases and how we are now expanding the footprint of avacopan into dermatological disease. I will outline for you how this is lining up for a beautiful choreography of releasing three key sets of top line data in quick succession starting in the coming year.

Second, I will address our second lead asset, CCX140, whose unique mechanism of action we believe holds the key to benefit another orphan kidney disease. Finally, I’ll refer to the strength of our financial position before turning the call over to Susan for financial highlights of last quarter.

Our value creation journey from scientific discovery to setting new standards of care in modern medicine is taking a huge and next step forward. Let me start with avacopan and the treatment of anti-neutrophil cytoplasmic auto-antibody-associated, or ANCA-associated vasculitis, an orphan disease that is characterized by a wide spectrum of burden for patients summarized on Slide 4.

As I reported on our last call, we completed our ADVOCATE Phase III pivotal trial enrollment in July. With more than 300 patients enrolled, we believe that the ADVOCATE trial is the largest, randomized controlled clinical trial of a novel drug candidate ever conducted in ANCA-associated vasculitis. And made no mistake, our aim is nothing short of a new standard of care one which bear patients from the scourge of all therapies such as chronic high doses of glucocorticosteroids that date back several decades.

Based on the data to date, we believe that the ADVOCATE Phase III clinical trial will continue to provide strong clinical evidence of avacopan’s ability to halt in vasculitis to halt it rapidly and durably, while also freeing patients from the noxious side effects of chronic high-dose steroids, which can include deaths, as well as longer-term disabilities and liberating ANCA patients from the greatly diminished quality of life associated with current standard therapy, including chronic steroids.

The ADVOCATE trial will assess the durability of avacopan’s impact on safety and efficacy over a sustained one year of treatment. We are confident that we’ll be able to share top line data from this trial in the fourth quarter of this coming year 2019. With these data, we expect to submit a U.S. new drug application, or NDA, during the first-half of 2020.

I’ll remind you that data from the randomized controlled Phase II trials were compelling. Avacopan rapidly alleviated the signs and symptoms of ANCA-associated vasculitis. Avacopan also made people feel better as reported by validated quality of life outcomes instruments, and avacopan therapy significantly reduced the toxicity that occurs with the chronic use of steroids.

In other words in Phase II, avacopan not only reduced the burden associated with the traditional standard of care, it also independently improved clinical outcomes for patients. The data to date suggests that avacopan can make improvement across the total burden of ANCA disease.

We designed the Phase III ADVOCATE trial with this knowledge and accordingly are optimistic about the results. While the enrollment of ADVOCATE is complete, the hard work definitely continues. We are now focused on completing the trial with high-quality data sets and then preparing for our submission to the FDA, so that we can file as rapidly as possible.

Meanwhile, we are working in parallel to fundamentally understand the market opportunities and dynamics and to formulate our commercial strategy. The ADVOCATE trial itself is big news for our company and more importantly, for the patients. But this is only the first in a cadence of successes readouts of top line data involving our uniquely differentiated molecule, which I will remind you, has the added benefit of being orally administered.

Our second trial involving avacopan, which you can see on Slide 5, is for the treatment of C3 Glomerulopathy, or C3G. C3G is a rare disease that attacks the young and frequently requires a kidney transplant from a parent with relapse after the transplant all too tragically common.

Based on emerging science and on expert investigator feedback, and with the aim of having the most comprehensive and controlled trial ever attempted in C3G, we have expanded our clinical study to 88 individuals in this randomized controlled trial. Half of the C3G patients will be on the empirically-derived standard of care and half will have avacopan therapy.

Avacopan’s performance will be assessed using a validated renal histology index at six months of therapy. The trial is not only blinded, but quite large relative to the C3G orphan patient population. To stress this point, our goal here is to have a definitive result. Can avacopan be the new standard of care in C3G? By successfully engaging the expert clinical community, we have 95% of our planned clinical sites activated and the investigators are enrolling patients at an excellent pace.

Given the rapid enrollment so far in this trial, we hope the C3G trial will be fully enrolled in 2019. And given the fact that avacopan’s performance will be evaluated after six months of treatment, we therefore expect that top line data from this trial could come one to two quarters after the data from the aforementioned ADVOCATE trial. Given the rarity of this disease, C3G, and the fact that there are no approved therapies, strong data could potentially support a registration application.

The third trial I will touch on today is also for avacopan, but this time to treat patients in a different disease area with profound unmet medical need, as you can see from Slide 6. Hidradenitis Suppurativa, or HS, is a damaging and disfiguring skin disorder. Remarkably, the only registered therapy as sales totaling about $1 billion worldwide, despite being widely regarded as being only moderately effective.

There is evidence from a proof-of-concept study that C5a is driving this disease, which is also known to be neutrophil-driven, so not unlike ANCA-associated vasculitis. Hence, the potential role for orally-administered avacopan.

We recently attended the International HS Symposium in Toronto, and we were impressed by the widespread desire in both the patient and clinical communities for new approaches to this disease, particularly those with the convenience of an oral medication, such as avacopan.

We’ve had discussions with the FDA and are now ready before the end of this year to launch our clinical trial of avacopan in HS at multiple centers. This trial will be a large, definitive, three-armed randomized controlled trial with over 350 patients suffering from modest – moderate to severe HS. The trial will compare avacopan’s placebo and use the HS clinical response core instrument, which has been previously validated by the FDA as a primary endpoint.

Importantly, since this primary endpoint will be assessed after 12 weeks of treatment, although, we will, of course, follow patients for longer, we expect that we can provide top line results within a reasonably short timeframe after the C3G readout.

To summarize, I will draw your attention to the three ways to win with avacopan, as you can see on Slide 7. We are planning for a cadence of top line data, that would start in the fourth quarter of 2019 with ADVOCATE data from ANCA vasculitis and will be followed one to two quarters later by data and C3 Glomerulopathy and then by the HS data soon thereafter.

With three potential indications across two different disease areas of avacopan is a pipeline in a drug. Avacopan with its ability to precisely target the C5a receptor is unique in the world, and it enables us to advance avacopan in a number of important diseases, where C5a and the C5a receptor play an important role in pathogenesis. These diseases are characterized by high unmet need and likely significant commercial potential.

I would remind you that avacopan’s targeting of the C5a receptor is so precise that it does not impact the protective actions of a second C5a response of pathway known as C5L2. A growing body of recent literature, a test to the fact that C5a going to a second receptor, C5L2, has the important biological benefits.

With avacopan, we leave C5L2 in intact by design, not serendipity. We knew that in the complement system, absolute precision should be the highest goal. And that through absolute precision, we could develop much more targeted medicines for better health.

Let me now turn briefly to our second asset, CCX140. We were delighted in the third quarter that the FDA granted CCX140 orphan drug designation for Focal Segmental Glomerulosclerosis, or FSGS. As shown on Slide 8, FSGS is another debilitating orphan kidney condition that lacks an approved therapy.

Our clinical trials involve two subpopulations of patients with primary FSGS. One, with so-called nephrotic syndrome and one in the sub-nephrotic population. These two trials are now proceeding in parallel and actively enrolling patients.

At the meeting of the American Society of Nephrology last month, we presented new data on the novel mechanism of action that truly differentiates CCX140, a selective inhibitor of the chemokine receptor known as CCR2 from any other new molecules attempting to tackle FSGS.

We now know that CCR2 has a direct role in the glomerulus in FSGS kidneys. We presented data at ASN that showed that the CCR2 inhibitor CCX140 may have a direct beneficial effect on podocytes in the glomerulus, i.e, those specialized filtration cells in the kidney. [indiscernible] explaining the rapid and durable benefit of reducing proteinuria that we have seen in both animal models and in humans.

It was in that prior successful human trial, our Phase II trial of CCX140 in diabetic nephropathy that we also established a favorable safety profile over one year of continuous dosing of CCX140, while primary – while meeting the primary endpoint of a sustained and significant reduction in proteinuria. Proteinuria reduction is important since in, at least, one form of FSGS. This endpoint is likely to be the key endpoint through regulatory approval.

Before I turn the call over to Susan, let me say a word about our financial strength. With clinical momentum growing ever stronger, our robust financial position allows us to conduct and complete all of the trials that we discussed today, while we simultaneously plan for commercialization of our first medication.

As you recall, ChemoCentryx possesses all rights entirely for avacopan and CCX140 in the United States. For the international commercial rights for avacopan and CCX140, we have licensed those to our world-class partner, Vifor Pharma, who will pay us tiered royalties between the teens and the mid-20s on any aggregate net sales in their territories. I will say more about our preparations for commercialization in the United States on a future call.

Susan?

Susan Kanaya

Thank you, Tom. Our third quarter 2018 financial results were included in our press release today and are summarized on Slide 9.

Revenue was $9 million for the third quarter, consistent with the same period in 2017. Revenue recognized represents amortization of the upfront license fees, milestone payments and collaboration funding from Vifor Pharma.

Research and development expenses were $15.1 million for the third quarter, compared to $12.3 million in the same quarter in 2017. The increase in 2017 to 2018 was primarily attributable to the avacopan ADVOCATE Phase III pivotal trial, which completed enrollment in July 2018.

General and administrative expenses were $5.4 million for the third quarter, compared to $3.6 million in the same period in 2017. The increase was primarily due to higher employee-related expenses, including those associated with our avacopan commercialization planning effort and increased professional fees.

We recorded a net loss for the third quarter of $10.9 million, compared to $6.6 million in the third quarter of 2017. Total shares outstanding at September 30, 2018 were approximately 50.4 million shares.

Finally, we ended the quarter with approximately $186 million in cash, cash equivalents and investments. Excluding cash receipts from milestone and upfront payments and credit facility advances, we used cash and investments of approximately $40.7 million for the first nine months of 2018, and we expect to end 2018 with approximately $170 million.

Tom?

Thomas Schall

Thank you, Susan. To summarize, as you can see again on our last slide, Slide 10. Our relentless pursuit of advancing clinical development has led us to the threshold of an exciting future. We are completing the ADVOCATE trial and preparing to share top line data in the fourth quarter of this coming year.

Pivotal data from ADVOCATE and ANCA vasculitis will only be the first-of-a-series of three key data readouts of avacopan. As we then expect to report on our current C3G study shortly after the avacopan – ADVOCATE result, and thereafter on the large of avacopan HS trial.

As to the second orphan disease drug assets, CCX140, as we conduct our clinical trials of CCX140 and FSGS, the FDA has recognized its potential on this disorder this past quarter by awarding CCX140 orphan drug status. Moreover, the new mechanism data that we presented at ASN last month underlines the promise of the unique CCX140 asset as well.

Our financial strength enables us to push forward in multiple clinical programs simultaneously, while we prepare to commercialize avacopan in the United States.

With that, I will now turn the call back over to the operator and look forward to your questions. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Michelle Gilson with Canaccord Genuity. Your line is now open.

Michelle Gilson

Hi, Susan. Hi, Tom, thanks for taking my questions. I just wanted to ask you about now that you’ve enrolled the Phase III study. Can you talk a little bit about the baseline characteristics of the patients in the study, especially given the entry criteria for ADVOCATE allowed for somewhat sicker patients versus CLEAR? And then can you also remind us on the data in that subset of the CLEAR population what that looks like? Did you see eGFR stabilization BVAS reductions in that segment of the population?

Thomas Schall

Thank you, Michelle. That’s a very good question. So by and large, the patients in Phase III very closely matched the patient population in disposition that we have in the Phase II studies, both CLEAR and CLASSIC studies.

You’re right, we’ve allowed a little bit more liberal inclusion criteria when it comes to eGFR, and that is because we learned in the Phase II study that probably we are going to have a pretty good chance of arresting the advance of kidney decline or at least being able to opine on that based on what we saw in Phase II. And there were a couple of exceptional cases in Phase II, where we did allow somewhat lower eGFR into the study. So we do have some data on that.

I would say that overall, the patient populations in the ADVOCATE trial are very similar to the patient population we saw in the Phase II CLEAR trial, they’ve just scaled obviously for greater end. So I think that we are very sanguine about the possibility that the Phase III data should be fundamentally informed by what we saw on Phase II.

Michelle Gilson

Okay. And then can you also remind us on the data that make you so confident in the long-term effect of avacopan and seeing the remission rates at 26 and 53?

Thomas Schall

Yes, that’s a great question. Thanks for asking. So fundamentally, it is probably valuable to recall the mechanism of action of avacopan, which is quite unlike any of the other therapies right now out there. We are arresting the ability of neutrophil to be activated through C5a receptor by C5a. That is fundamentally the damage-inducing step in systemic vasculitis and ANCA vasculitis.

If we remove the ability of those neutrophil to be activated, both human clinical data, as well as extensive animal pharmacology suggest that, that fundamental terminal damage effector pathway is shutdown. And we’ve shown that, again, both in preclinical models, we and others with an otherwise lethal brand of anti-myeloperoxidase antibody, which is one of the human handcarts [ph], a lethal anti-myeloperoxidase antibody glomerulonephritis model, which those animals are completely protected and quite healthy when you block C5a receptor with avacopan, those are published data, or if you genetically delete C5a receptor, no matter what else is going on in the animal system, including still having very high levels of ANCA antibody as long as you get rid of the neutrophils that could be activated by C5a receptor, you eliminate the disease.

And how that reads to the human situation is, since folks will be taking avacopan chronically and durably in the case of the ADVOCATE study for continuously for 52 weeks, we believe fundamentally that we will have simply short circuited the terminal damage effector pathway of this disease, and therefore, response from remission should be quite durable.

Moreover, we’ve eliminated one of the very noxious parts of the standard of care, which is the chronic high dose steroids, which itself causes other kinds of damage not related to vasculitis. The reason that steroids are such a problem is also the reason in clinical practice they have to be tapered. And so as folks come off of those steroids, they tend to start having and this would be relevant to the control group, they tend to have a relapse of their symptomatology for ANCA vasculitis.

So fundamentally, we believe that there is a – based on our models and based on the data to date, over the course of 26 weeks and then 52 weeks, the standard of care group should have more relapses by this loss of remission, whereas folks on our experimental drug should stay in remission since they’re taking it in a chronic fashion.

And so that’s how the study has been set up. And again, it really does reveal the inadequacy of the current standard of care. People simply cannot stay on standard of care chronically, because it’s too toxic frankly, and that really illuminates part of the unmet need.

Michelle Gilson

Great. Thank you.

Thomas Schall

Thank you.

Operator

Thank you. And our next question comes from Ed White with H.C. Wainwright. Your line is now open.

Edward White

Hi, guys, thanks for taking my question. So as always, Tom and Susan, you had a very clear and concise presentation. So I just have one question for you. I think, Tom, when you discussed HS, maybe I heard you wrong, but I thought you said 350 patients. Is it 350, or 390, or is it approximately 390?

Thomas Schall

So, Ed, thank you for that question. To clarify, I think, I said in excess of 350. Right now, we’re modeling or targeting 390. We’ll have three groups in a controlled fashion of 130 each. And then, as I said, it’s a blinded controlled trial, so it’ll be a one to one to one randomization.

Edward White

Okay, great. Thanks for clarifying that, Tom. And then the only other question I have was just, with the – are you going to release internal data from the HS study, or give us at least enrollment update similar to what you did with ADVOCATE in the C3G trial?

Thomas Schall

Well, certainly, intending to give enrollment update, Ed, and then we won’t be giving any interim data releases, however, other than, of course, the variety of which we discussed progress of enrollment, et cetera.

We’d love to – while we intend to entirely protect the integrity of that data set in HS, because it’ll come as no surprise just by looking at the scale of that study that it’s power to be a registration rate study. And for this orphan disease, a well-controlled study of that size, if the data are sufficiently strong, may well constitute the basis of an interesting registration discussion, particularly as it relates to the maturity of the asset in other areas. So it’s one of the reasons we set up the study the way we did.

Edward White

Okay, great. Thanks, Tom. Thanks for taking my questions.

Thomas Schall

Thank you, sir.

Operator

Thank you. And our next question comes from Steven Seedhouse with Raymond James. Your line is now open.

Steven Seedhouse

Thank you for taking my questions. Tom, just a follow-up on the HS trial. Could you just clarify what, in addition to placebo, what the other two arms are? What are your assumptions, I guess, for the effect size that inform those trail numbers? Are you assuming similar or better response rates than you have?

Thomas Schall

That’s a great question, Steve. So what we have in the other two arms the ones who are not placebo are the two doses that we’ve got great experience with in Phase II. We’ve got the 30 mg twice-a-day dose and a 10 mg twice-a-day dose. It’s intended and again, we’re covering the constellation of possibilities of both biological and clinical effect. So we want to be comprehensive about that.

The assumption is as a minimum working assumption that we ought to be able to detect the same delta that you might had over background therapies quite handily with this size of study. So that would be the baseline assumption.

Steven Seedhouse

Okay, great. And is this – are you plan on enrolling this trial at centers that have experience with infrared [ph] is C5a antibody and just given that trial completed enrollment, I just think it would give us a sense of sort of your cadence of enrollment would be similar?

Thomas Schall

There is no question there will be some overlap and there’ll be other sites that are probably not experienced in that particular trial. But we will avail ourselves of all of the experienced sites that we can. And I haven’t talked about the number of sites we’re targeting, but it’s a greater number than our friends at infrared. So we’ll have even more sites than they did.

Steven Seedhouse

Okay, I appreciate that. And just last question, so can you just update us on the status of their conditional marketing authorization application in Europe? Just – what the CHMPs date 120 questions mentioned in your 10-Q and recent prospectus pertain to? It sounds like they comprised clinical, non-clinical and quality of these questions, things that would need to be addressed for your eventual full filing, or are they specific to the conditional application just based on not having completed Phase III?

Thomas Schall

Yes. Thank you, Steve. We – the day 120 questions for us really didn’t constitute any real surprises qualitatively. They were very thorough and extensive. You’ll recall the conditional marketing authorization application is based on the 12-week Phase II data. So inevitably, there were questions related and specific to CMA, given the length of the data experience that we had to date. And so none of the questions were surprising.

I think, we – one can look at the standard calendar for the EMA, and I can – it’s easy to deduce that we have responded by this time and we quite thoroughly responded to all their questions, whether they were in the CMC space, the off-clinical programs or even questions on clinical issues.

So we will just have to see how that goes. We’re not again just using standard EMA timelines. We would not anticipate a full opinion to be rendered until sometime in the spring leaves us with the interesting conundrum of what we might do with the 12-week license, even if it were approved at that time given the fact that our full 52-week data is only a couple of quarters away from that.

So some interesting logistical questions there. But to answer your question in brief, yes, we had a slate of questions, again, none of which were qualitatively surprising to us. We answered them and that package is still under review at this time.

Steven Seedhouse

Great. Okay, very clear. Thanks very much for taking the questions.

Thomas Schall

Thank you.

Operator

Thank you. And our next question comes from Konstantinos Aprilakis with JMP Securities. Your line is now open.

Jon Helander

Hey, guys, this is Jon Helander for Konstantinos. Thanks for taking my questions. So on the last call, you indicated you might get the full Japan enrollment by the end of this quarter…

Thomas Schall

Yes.

Jon Helander

…and time with your full data release. So are you seeing sufficient numbers there?

Thomas Schall

Yes. Thank you. That’s a very good question. It’s a bit of a nuance in the subtlety. But yes, Japan enrollment is also fully complete. And so we have all of the global enrollment now in hand. Again, without going into too many details, the total number of folks enrolled around the world there for us is 331.

The original design of the study was not to include Japan under the original concept. So you’ve seen a number of 316 as our full enrolment from the previous calls and the previous disclosures. But yes, Japan is done. And so that, that too is now rolling along. The Japan cohort will not necessarily hold up the evaluation of the previous full Phase III enrollment cohort. But the details will be worked out as we go along and see how the database cleaning and database lock dates will look as we go forward.

Jon Helander

All right, thanks. That’s clear. And then do you plan on releasing any kind of interim data perhaps around that 26-week mark for the ADVOCATE trial?

Thomas Schall

Also a very good question. And the short answer is, no. And the reason is the way we’ve set up the trial is that, we will collect all of the data on 52 weeks before we start analyzing any of the data. And then when we analyze the data from 26 weeks, then subsequently 52, which is part of the primary endpoint, we’ll do it in a hierarchical fashion. And the reason for that is, we didn’t want to spend any alpha as we analyze this data.

And so we thought it was a very and continue to think it’s a very clever and important design. So we won’t see any week 26 – we won’t see any week 26 data. We’ll let last patient come out and then we’ll do all of the analysis once we have the full 52-week data sets, but statistically we’ll do in a hierarchical way.

Jon Helander

All right, and that make sense. Last question, if I can. Could you also discuss how you guys view implications between non-inferiority versus superiority of the final readout?

Thomas Schall

Yes, that a very good question. And again, it’s one of these subtle, but important points that can be easily misunderstood. But let me try to clarify it. In this indication, which is an orphan disease, Non-inferiority in week 26 is the sole regulatory precedent certainly at the level of statistical analysis. And that was evidenced by the previous trial called RAVE, where rituximab was offered as an alternative to cyclophosphamide, both of those, however, in combination with high doses of chronic steroids.

So it provides something of a precedent. And there, the null hypothesis statistically was the statistical non-inferiority of RAVE versus [indiscernible] standard of care, which was of rituximab plus steroids rather versus the [indiscernible] standard of care of cyclophosphamide plus steroids. And so that was fulfilled.

Now non-inferiority sounds so lackluster in plain English. But in point of fact, it’s a defined statistical term, which is really the only test one can use it in indications such as this, where the new agent is thought to have an advantage over the incumbent. So at very least, you only want to be no worse at the specified endpoint, in this case, Birmingham Vasculitis Activity Score, because the new agents is thought to have other advantages as well, which are measured outside of the primary endpoint also.

In addition, superiority endpoints statistically even when numerical superiority is achieved, may be limited by the number and/or patient population you can get into the trial in an orphan indication. So all of those are just some background notes. And again, our 26-week endpoint is perfectly consistent with the single Phase III regulatory precedent that we have, which is extracted from the RAVE trial.

We think that – we’re confident after discussions with regulatory agents – agencies rather that, that same 26-week endpoint will provide sufficient impetus, at least, in Europe, if we’re successful to gain license for ANCA vasculitis. We are, in addition, however, we were highly desirous of looking at durable or sustained remission, which is why we built in the 52-week endpoint in this study, because after all this is a chronic disease with relapsing remitting and we wanted to know whether we could not just induce a remission, but sustain it.

So we built in a 52-week endpoint, where again, we will first ask the question, are we statistically non-inferior to the standard of care, that is, is avacopan without chronic high-dose steroid, at least, as good than the standard of care, which originally have in chronic high-dose steroid in terms of durable remission with 52-week.

If we achieve that endpoint statistically, we’ll then ask the subsequent question, are we actually statistically superior at week 52? And we think there is a reasonable chance that we will be superior at week 52, because the standard of care group will A, be liable to have more relapses during that time and perhaps they’ll also have more dropouts during the period of the one-year dosing.

So we’re very sanguine about the possibility of not just sitting non-inferiority at week 26 and week 52, but the possibility that we might actually convert also to having superiority at week 52. But I will stress in terms of regulatory precedent, there’s only one precedent, which is non-inferiority at weeks 26.

We’re convinced in the EMA that gets us a license if it’s both non-inferiority at week 26 and 52, we believe we have a license, as I mentioned in Europe and possibly in the U.S., and if we’re superior at week 52, clearly, we have a very, very good case to make here in the U.S. for a license as well.

Both agencies just to sum up and give you the fuller picture around the data are very keen though to see all of the analyses that were pre-specified, because all of those relate to the total burden of disease, as I alluded to on the slide, I believe it was Slide 4 in the deck, and that’s really important now in the modern era ANCA vasculitis.

So the BVAS endpoint only refers to one of the four categories of the total burden of disease in both FDA and EMA have said, please bring us all of the data and if it scales the way it did in Phase II with avacopan, that will be a very powerful discussion with those agencies.

Jon Helander

Great. That was extremely informative. Thanks for taking my question.

Thomas Schall

Sure. Thanks.

Operator

Thank you. And our next question comes from Anupam Rama with JPMorgan. Your line is now open.

Tessa Romero

Hi, all, thanks for taking the question and for the updates on the quarter. This is Tessa filing in for Anupam this evening. Maybe one from last one competitive question. Based on the data to date, how might avacopan be differentiated to some of the other complement-based approaches, specifically in HS?

And then maybe one on CCX140, if I could. How we should be thinking about first enrollment and then timelines to data for the SGS2 2 trials? And I think you said it was somewhere in the 2020 timeframe. Thanks so much, guys.

Thomas Schall

Great. Both excellent questions, Tessa. Thank you for those questions. So avacopan in some fundamental ways couldn’t be more different than other approaches and complement intervention even right down to HS. For example, if we use the HS example, the other approach that I know of is an antibody against C5a. Avacopan is a orally active small molecule against the C5aR, C5a receptor.

The antibody has to be dosed at – currently, as far as I can tell, once a week by infusion, our drug is taken by mouth daily. The antibody is a chimeric antibody, that is to say, it was made in a mouse. So it’s mouse anti-human, at least, partially mouse. That means, it’s liable to have immunogenicity over time, which could lead to a loss of efficacy.

The antibody does not bind the receptor, binds the ligand. There maybe significant challenges just by way of, what we call, mass action, since we don’t know the concentration of ligand in the local environment, but we know that in some local environments, it can be actually huge, getting the antibody to the site of action and sufficient quantity is something that remains to be demonstrated clinically, and it’s very difficult, if not impossible, to demonstrate experimentally.

By contrast, our small molecule binds up the receptor, making the receptors simply unavailable to ligand, irrespective of how much quantity of ligand you have in the environment. We’ve shown that in model systems. In vivo, we’ve shown it experimentally. In vitro and we’ve shown it by extrapolation in human subjects very, very clearly. The receptor is pharmacologically inert, doesn’t matter how much C5a is throw into the system.

Then finally and importantly, Tessa, by binding up C5a as with an antibody, there may be untoward consequences biologically, because as I alluded to in my remarks, there is a second pathway, where C5a binds to another molecule, another receptor called C5L2. And C5L2 is well documented to have a biological benefit in the complement system. I could cite a handful of papers, which basically have in the title anti-inflammatory functions for complement C5L2 binding protein, disruption of compliments C5L2 exaggerates inflammation, et cetera, C5L2 is the second C5a receptor suppresses acute lung injury, that is when it’s functioning. And so we could go on and on.

So if given a choice, and I have a choice and we engineered this into our molecules some years ago, I would love and think it’s imperative to leave C5L5 in tact to perform its good functions, while eliminating only the functions of C5aR, which is what avacopan targets.

So that’s the differentiation with other approaches. There is other complement intervention strategies for other diseases. Most of them are upstream in the complement cascade, and I think those could be more difficult to manage in the long-term for chronic care. So I won’t really go into any of those in detail now that we’ve covered the HS landscape.

CCX140 and FSGS, very good question. FSGS, again, these trials are launched now. We’re actively recruiting in two forms of primary FSGS and again, looking at the ability of CCX140 to reduce proteinuria in this patient population as we have shown it do in a previous successful large Phase II study in diabetic chronic kidney disease, where CCX140 continuously dosed for 52 weeks, lowered – durably lowered proteinuria above and beyond the background medications that it was added to. And that was a double-blinded trial. So it’s a very nice study.

I would love to be able to tell you exactly when we’re going to have these enrolled. The first trial is in patients with nephrotic syndrome levels of proteinuria. These are very, very ill patients that have greater than 3.5 grams of protein in their urine relative to the ratio of creatinine in their serum. And these people progress extremely rapidly to end-stage renal disease and dialysis and even worse.

Everyone thinks that by reducing the proteinuria to sub-nephrotic levels or even substantially reducing it, some of these folks who come into the clinic with 10 or 20 grams of protein in their urine, even substantially reducing it on a percentage basis, we’ll definitely help with the delay of progression to end-stage renal disease since the protein itself becomes an insulting agent to the kidney and its tubules, for example.

So that’s a small study. The first cohort we’re going to look at is about six or seven people. But even getting data on 12 or 13 people could begin to constitute an interesting discussion with FDA should protein lowering the significant in those small handful of primary nephrotic FSGS patients about how to license that drug in that indication for that limited population.

We hope by the end of this coming year to have sufficient data from that study with the nephrotic syndrome patients to be able to start entertaining the discussion with agents – agencies or at least knowing what we need to do in the next step to bring home a definitive answer in nephrotic FSGS. So and I’ll have more to say that – about that in 2019.

Similarly, with the parallel study in the sub-nephrotic population, that’s a program, which is running as a four-arm study with the placebo control, where CCX140 is added on top of the protocolized empirically-derived standard of care. There are no FDA approved therapies, by the way, as you probably know.

And we hope to have that four-arm cohort enrolled by the end of 2019, which will look at a 12-week reduction in proteinuria and see if we have a significant reduction in any or all of the three arms relative to the control and then what we will do there is decide, which dose should we expand versus control, again, to try to increase and have a discussion with the FDA about how to register the drug ultimately in sub-nephrotic FSGS.

So it’s early days yet, but I’m hopeful that through 2019, we’ll make significant progress such that in 2020, I’ll have some clinical readouts in FSGS as well. But we’ll firm up that picture as we get into 2020 and we’ll have more to say about that in detail.

Tessa Romero

Great. Thank you very much, Tom, for all the color. I appreciate it.

Thomas Schall

You’re welcome. Thank you for the questions.

Operator

Thank you. And I’m showing no further questions in the queue at this time. I’d like to turn the call back over to Thomas Schall for any closing remarks.

Thomas Schall

Well, thank you very much, Jimmy, and thank you everyone for joining our conference call today. It’s been a very exciting conference call with great questions. I wish you all a very pleasant evening and look forward to talking to you next quarter. Thanks, again.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude your program, and you may all disconnect. Everyone, have a great day.