Obseva SA (OBSV) CEO Ernest Loumaye on Q3 2018 Results - Earnings Call Transcript

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About: ObsEva (OBSV)
by: SA Transcripts

Obseva SA (NASDAQ:OBSV) Q3 2018 Earnings Conference Call November 8, 2018 8:00 AM ET

Executives

Mario Corso – Senior Director-Investor Relations

Ernest Loumaye – Co-founder and Chief Executive Officer

Tim Adams – Chief Financial Officer

Wim Souverijns – Chief Commercial Officer

Jean-Pierre Gotteland – Chief Scientific Officer

Analysts

Ami Fadia – Leerink Partners

Keith Tapper – BMO Capital Markets

Liana Moussatos – Wedbush Securities

Eric Joseph – JPMorgan

Ram Selvaraju – H.C. Wainwright

Kennen MacKay – RBC Capital

John Martin Auster – Crédit Suisse

David Hoang – Jefferies

Operator

Good day, ladies and gentlemen, and welcome to the Quarter Three 2018 ObsEva SA Earnings Conference Call. All this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer session and instruction will follow at that time. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host for today’s conference. Mario Corso, Senior Director of Investor Relations.

Mario Corso

Thank you, operator. Good morning, everyone, and welcome to today’s call to review ObsEva’s third quarter 2018 results and business update. On this call, I’m joined by Ernest Loumaye, our Co-founder and Chief Executive Officer; Jean-Pierre Gotteland, our Chief Scientific Officer; and Tim Adams, our Chief Financial Officer.

During the call today, we will make forward-looking statements, and we remind you of our Safe Harbor language. We will make forward-looking statements, including, but not limited to, statements relating to financial results and trends; the process and timing of anticipated future development of ObsEva’s product candidates, our oxytocin receptor antagonist, nolasiban; or gonadotropin-releasing hormone; or generated receptor antagonist, linzagolix, formerly OBE2109; and our prostaglandin F2alpha receptor antagonist, OBE022, including clinical trial results and potential regulatory pathways towards gaining approval from our product candidates in the U.S., Europe and Asian countries, as well as the therapeutic and commercial potential of ObsEva’s product candidates.

These forward-looking statements are based on ObsEva’s current expectations and inherently involve significant risks and uncertainties. ObsEva’s actual results and timing of events could differ materially from those anticipated in such forward-looking statements, and as a result of those risks and uncertainties, which include, without limitation, risks related to ObsEva’s development programs; clinical trial time lines and results; the uncertain clinical development process, including adverse events; the success, cost and timing of all development activities and clinical trials; the market potential for ObsEva’s product candidates; the accuracy of ObsEva’s estimates regarding expenses, capital requirements and the need for financing; and other risks detailed in the risk factors and elsewhere in ObsEva’s U.S. Securities and Exchange Commission filings and reports, including its 20-F report filed on March 9, 2018.

ObsEva undertakes no duty or obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or changes in its expectations.

I will now turn the call over to Ernest Loumaye, our Chief Executive Officer.

Ernest Loumaye

Thank you, Mario. As you know, I always enjoy with this quarterly calls because it allows us all to review the recent accomplishments that have taken place, and this quarter, I’m particularly pleased to look back at the two major clinical development milestones that we reached.

The first, live birth rate result from the Phase 3 IMPLANT2 trial of our oral oxytocin receptor antagonist, nolasiban, for improving IVF outcome and the second, the 24 weeks data from the Phase 2b EDELWEISS trial of our GnRH receptor antagonist, linzagolix, for the treatment of endometriosis-associated pain.

In addition, just after the close of the third quarter, we announced regulatory feedback in Europe for nolasiban, which has placed ObsEva firmly in the realm of a pre-commercial planning for this exciting asset.

Finally, the IMPLANT2 trial result of nolasiban were presented at the Annual Meeting of the American Society for Reproductive Medicine, or ASRM, and was recognized with the 2018 Price Paper Award from the Society for Assisted Reproductive Technologies, or SART.

Starting with the first of our two lead compounds, nolasiban, we announced positive live birth rate results from the IMPLANT2 trial in early October, which we believe is the first randomized controlled trial to achieve this distinction with an oxytocin antagonist. For the combined endpoint of day three and day five embryo transfer, live birth rate was 34.8% for patient receiving the single 900 gram dose of nolasiban versus 27.7% for patients receiving placebo. And the absolute and the relative improvement of 7% and 25% represent the benefit that is both statistically and clinically significant.

For the 50% of patients that received a day five embryo transfer live birth rate was 44.8% versus 33.2%, and the absolute and relative increase of 12% and 35%, respectively, represent the terrific results. Importantly, the live birth rate results were very consistent, with the 10 weeks ongoing pregnancy result from the trial that we announced in February with only about 1% pregnancy loss in either of the active and placebo arm from pregnancy through delivery.

Live birth is such an important end point for patients because this achieves their ultimate goal of undergoing IVF, bringing home a baby. And from a clinical trial safety perspective, it shows that the pregnancy that are achieved with nolasiban are just as normal as those that are achieved with the typical embryo cycle.

Importantly, with regard to pregnancy loss or miscarriage, when we look at the combined rate for IMPLANT1 and 2 studies, we see that there is a lower rate of pregnancy loss from the time of the initial pregnancy test to live birth, 22% for nolasiban-treated patients versus 28% for placebo-treated patients. This suggest to us that not only is nolasiban improving the embryo implantation rate, but it may improve the quality of embryo implantation, hence, reducing the risk of miscarriage. I think it is fair to say that the overall improvement in pregnancy live birth rate and miscarriage rate is actually a better outcome than what we had expected.

In our continuing effort to bring nolasiban to couples suffering from infertility as soon as possible, we recently received regulatory feedback from authorities in both Europe and the U.S. on planning future registration requirement.

In Europe, we have gained clarity on what remains to be done before filling a Marketing Authorization Application, which we plan to do in late 2019, confirming our initial plan. In that context and with the recent feedback from the FDA that we will highlight in a few minutes, we have decided to decouple the EU development process from that of the U.S.

The Europe has the largest number of IVF procedure performed annually in the world, and this program is the first opportunity for ObsEva to make this novel therapy available to couples commercially. We are thus preparing to commence a Phase 3 IMPLANT4 trial prior to the end of 2018, which is expected to enroll approximately 800 patients, a doubling of day five embryo transfer, mainly in Europe, Canada and CIS or Russian centers.

The primary and secondary endpoint of this trial will be the same as IMPLANT2, with ongoing pregnancy 10 weeks post embryo transfer as primary endpoint and live birth rate and safety follow-up for 28 days neonatal 12-month infant as secondary endpoint. We continue to plan a Marketing Authorization filling in Europe in late 2019 with IMPLANT1 and 2 results as well as the 10 weeks ongoing pregnancy results from the IMPLANT4 trial.

As mentioned a moment ago, we recently received written feedback from the FDA. It did not provide clarity that we were hoping to see on the design of pivotal clinical trial to support an IVF indication in the U.S. We are working with the FDA to get agreement on certain element of this protocol, example, time of patient randomization, primary and secondary endpoints and potential certification by patient age. Upon agreement with the FDA, which we hope will be achieved in 2019, we are ready to pursue our clinical trial program in the United States. In the meantime, we anticipate not to incur any significant cost for the U.S. clinical program.

Commercial planning for nolasiban is upon us and our Chief Commercial Officer, Wim Souverijns, officially joined the company earlier this month. Wim has got to start assessing the ideal market, planning market access and the future sales organization. In a short period of time, he has already displayed tremendous knowledge of the key markets, an important strategic consideration.

Now turning to linzagolix. We achieved a critical milestone in the third quarter with our 24 weeks result from the phase 2b EDELWEISS trial. Most importantly, this data include the first linzagolix results on bone mineral density, or BMD, safety.

The BMD data from both the 75-milligram and 200-milligram once daily came in right where we had expected with a decline from baseline of 0.8% and 2.6%, respectively.

These levels provide us with confidence that the 75-milligram dose for partial estradiol suppression has potential to be an effective dosing regimen and will not require low-dose add-back therapy in order to prevent bone mineral density, while the 200-milligram of full estradiol suppression dose would require low-dose add-back therapy.

Notably, in terms of overall pain reductions, patient response rate for both the 75-milligram and 200-milligram dose increased from week 12 to week 24 at 71% versus 61% for 75-milligram; 77% versus 56% for the 200-milligram. We believe these results strongly support our strategy to offer patients dual dosing options with and without add-back therapy in order to address the needs of the large and diverse endometriosis patient population. Indeed, as you know, our goal is to significantly relieve symptoms in the majority of patients with partial estradiol suppression without add-back therapy, reserving the higher dose with add-back therapy for the remaining proportion of patients.

I would like to emphasize that the ability to effectively reduce pain results requiring add-back therapy in a large group of patient is likely a major benefit. As you are aware, even if the probability is relatively low, and it is unknown whether the findings apply to younger woman, add-back therapy comes with a black box warning in the U.S. for cardiovascular disorder risk, dementia and malignant neoplasm, including breast cancer. We believe that having the opportunity for physicians to effectively manage pain without exposing patient to these phase is of major importance.

We also believe that it is the treatment that can best address physician and patient preference and that linzagolix is needed to best accomplish this strategy. Next to linzagolix, a Phase 2 meeting is scheduled with the FDA prior to the end of 2018 and plan to subsequently come on Phase 3 endometriosis trial in early 2019.

I would now like to provide a brief update on the enrollment of our two ongoing Phase 3 trials for linzagolix, PRIMROSE 1 and PRIMROSE 2, for the treatment of heavy menstrual bleeding due to uterine fibroids.

The European-U. S. study, PRIMROSE 2, remain on track to complete planned enrollment of 500 patients by the end of this year 2018. For the U.S. study, PRIMROSE 1, we are pleased to see that our effort to improve U.S. enrollment have resulted in a significant increase in patient screening in recent months. Pending confirmation that current screening is translating to improved randomization over the coming months, we anticipate announcing 6-month primary endpoint result in second half of 2019 for both studies.

Now turning to our third pipeline compound, OBE022, the oral and selective prostaglandin F2 alpha receptor antagonist for the treatment of pre-term labor, or PTL. We are pleased to report that open-label Part A of the Phase 2a PROLONG study was completed in the third quarter, with seven out of eight patients achieving the goal of delayed delivery through the 7-day dosing period.

In addition, there were no tolerability or safety concern in the trial with OBE022. With Part A success, Part B enrollment has begun, which will randomize up to 120 patients to either atosiban and placebo or atosiban and OBE022.

Our goal has been to provide an initial interim efficacy on Part B in 30 patients, and we expect that this may take place in Q1 of 2019, dependent upon enrollment trends over the coming weeks.

Summing up, we have made very significant progress over the course of 2018, by achieving key milestone with all three components. Much work remains to be done, and we are committed to bringing first-in-class and best-in-class compound to patients that suffer from these life-altering conditions, infertility, uterine fibroid, endometriosis and pre-term labor.

I will now turn the call over to our CFO, Tim Adams, for a brief financial review. Tim?

Tim Adams

Thank you, Ernest. Good morning, or good afternoon, everyone. Thank you for joining us on the call today.

I will start by spending a few minutes discussing our financial results for Q3, 2018, beginning with the income statement. The net loss for the third quarter of 2018 was $18.6 million or $0.42 per basic and diluted share, which compares to a net loss of $17 million or $0.59 per basic and diluted share in the third quarter of 2017. There were two factors that contributed to the year-over-year changes in the net loss and net loss per share. The first is the increased investment in our R&D programs; and the second, a higher share count due to the capital offering that were completed in October of 2017 and June of 2018.

Research and development expenses were $15.9 million for the third quarter of 2018 compared to $13.9 million in the prior year quarter. This increase in investment is attributed to the clinical trial progress outlined by Ernest for all three of our development compounds.

G&A expense in the third quarter of this year was $3.1 million compared to $3 million in Q3 of last year. Our cash balance, as of September 30, 2018, was $156.4 million. This cash balance reflects a net reduction of $10.4 million during the third quarter.

Our cash used in operations was $14.8 million, which was partially offset by approximately $4 million of cash received from the greenshoe related to our June 2018 equity offering. The cash used in operations reflects spending in support of all three of our pipeline assets, which includes the patient follow-up of our Phase 2b EDELWEISS study in endometriosis, the ongoing Phase 3 enrollment of the PRIMROSE clinical trials for the treatment of uterine fibroids, the completion of live birth and neonatal follow-up in the Phase 3 IMPLANT2 clinical trial of nolasiban and the completion of Part A of the PROLONG study of OBE022 in pre-term labor.

We note that the current cash on-hand is expected to fund our operations into the first half of 2020. We believe that the third quarter results reflect our continued prudent use of cash as we invest in all three of our pipeline assets.

Moving forward, in the fourth quarter of 2018 and the full-year of 2019, we anticipate our use of cash will increase significantly from the third quarter and the year-to-date 2018 levels of $15 million and $46 million, respectively. This increased investment will be used to support our ongoing clinical trials and as Ernest outlined, our new Phase 3 trials of nolasiban in IVF and linzagolix in endometriosis.

As always, we appreciate your continued support, and I will now turn the call back to the operator to open up for Q&A.

Question-and-Answer Session

Operator

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

Ami Fadia

Hi, good morning. Thanks for the question. Could you elaborate a little bit on your discussions with the FDA on nolasiban? And you were expecting to get some clarity from the FDA, what’s sort of the point of discussion and maybe potential disagreements that may have delayed getting the full clarity from the FDA?

Ernest Loumaye

Yes. There is a list of technical point on the Phase 3 trial design that were addressed by the FDA. Among those, we have several that we would fully agree and support and implement, like for example, extension of follow-up of babies from six months to 12 months, for example. There’s another list of elements in the Phase 3 clinical trial design that would need clarification and understanding to make sure we understand fully what is the FDA is willing, and also to make sure we agree on those elements.

To illustrate, for example, it is we have proposed to randomize the patient in the morning of the embryo transfer, while the agency is proposing to randomize the patient prior to the ovarian stimulation process. We strongly believe that it is recommended to randomize before embryo transfer, but we need to discuss that and classify that with the agency. So a list of technical questions related to the protocol design. Does that address your question? Hello? Communication issue?

Tim Adams

Yes, operator, we’re ready for another question, please.

Operator

Okay, perfect. Thank you. And our next question does come from Do Kim with BMO Capital Markets. Your line is now open.

Keith Tapper

Hi, there, good morning. This is Keith Tapper calling in for Do. So I guess one the same lines, is there any color that you could add more in regard to the specific elements that they want to address in Phase 3 studies, which I guess would be different from IMPLANT2 or IMPLANT4? And if there’s any similarities between IMPLANT3 and IMPLANT4 as well? And then I guess, just a follow-up. Difference in requirements between the EU and the FDA that would kind of be the rationale for decoupling the two IMPLANT studies?

Ernest Loumaye

Yes. The first reason for our decoupling is that the process of interacting with the FDA will take several months, there is a process, we have to send question, briefing, answer, minutes and so forth. And the same time, we have full clarity on the regulatory path for Europe. And the third one, which is not negligible is that an IVF study in Europe costs about $12 million, it costs up to the 3x in United States. So we felt by starting IMPLANT4 that we could secure, pending positive results, the registration for the largest IVF market in the world within the next 15 months in term of submission, while having a relatively small spending and having a protocol which could further support the FDA process.

To answer your question also, we have implemented in this protocol in Europe a list of the elements requested by the FDA. So although we are not having exactly the protocol that they are requesting, we have many features which are very close, knowing also that we have not finalized, we are just starting the discussion with the FDA. Does that answer your question?

Keith Tapper

Absolutely. That’s very helpful. And then for nolasiban, just for modeling purposes, are we looking at like a six months delay in the EU and then maybe one to two years in the U.S.? Or could you give any color of the...

Ernest Loumaye

No delay – no, no, no, no delay, no delay in Europe, exactly, no delay. The study is already being organized and that means we confirm our intention. Pending positive result of IMPLANT4, we confirm our intention to file a Marketing Authorization, as initially planned, by end of 2019. For the FDA, I think we are more cautious because we are not 100% in control of usually of the process, and there is a procedure that we know may take months. So I think that as we progress, one, we will have a final recommendation, an agreement with the FDA, we will communicate that. So we are, I would say, less in a position to give definitive answer in terms of timeline in – for the FDA, hoping obviously to reach an agreement in 2019.

Tim Adams

Hey, this is Tim, I would just add to Ernest’s comments, the timeline with the EU is what we have always talked about. So we’ll file the MAA at the end of 2019. Let’s say, it takes roughlyone year for the process to run in Europe, and we would expect to be in the market in early 2021, if everything goes according to plan an approved. And as Ernest mentioned earlier on the call, we’ve hired our Chief Commercial Officer, who is here with us today, though he’s on board, so welcome Wim, we’re thrilled to have you. And he’s already starting to lay the groundwork, some of the pre-commercial work, certainly with a lot of emphasis on Europe. And as Ernest said, it is the largest IVF market that’s out there, and we’ve made very good progress with the regulatory authorities. So very, very positive on the European side and a little more work to do with the FDA.

Ernest Loumaye

Now one point for the FDA is that, I think most analysts and maybe yourself too, were planning in their model that we reach market some time in 2022 in the U.S. We cannot confirm that, but is as or not out of scope. So for the moment, we go through the process respectfully with the FDA, and we are going to move forward.

Keith Tapper

Okay. Thank you. That’s very helpful.

Operator

Thank you. And our next question comes from Liana Moussatos with Wedbush Securities. Your line is now open.

Liana Moussatos

Between now and year-end, you’re going to have an end of Phase 2 at the FDA also for linzagolix for endometriosis. Are there any issues or hurdles in that area?

Ernest Loumaye

No, I think the date is already agreed with the FDA so we are certain that we will have this meeting before year end. You remember that we had the pre-IND meeting a couple of years ago before starting EDELWEISS, so I think their mandate was pretty clear on specially the tools required to properly measure pain. We have done a significant effort to validate these tools. The results are coming very nicely. And a few months ago, our team went to visit the division of the FDA which is in-charge of patient report outcome tools, and have agreed on that tool. So we don’t foresee any major hurdles or difficulty, but clearly, we remain in the process with meeting them before year-end and then 30 days later to have that official minutes.

Liana Moussatos

Thank you.

Operator

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

Eric Joseph

Hey, guys. Congrats on the progress. And thanks for taking the questions. I just wanted to follow up on the discussions with the FDA and whether you have specific feedback or whether you received specific feedback on the timing of the procedure day? Is there agreement on the appropriateness of day five embryo transfer? Or is FDA interested in seeing any alternative day transfers?

Ernest Loumaye

No, no, no, I think there is no discussion about the fact that it will be single day five embryo transfer. Single day five blastocyst transfer. So that’s – there’s no discussion about that. They fully support that.

Eric Joseph

Got it. And in terms of commercialization in Europe, I know it’s very preliminary and early days right now, but do you have a sense of at least a preliminary sense of sales force and MSL sizing and some preliminary thoughts around pricing?

Ernest Loumaye

Yes, Wim, our Chief Commercial Officer.

Wim Souverijns

Given the fact that this market is very concentrated, we’re talking about 900 centers about in EU 5, this is a very interesting opportunity for us. This essential market allows you to commercialize with a very limited sales force. And on top of this, it’s not a traditional retail market. We’re talking about a business-to-business here. So we foresee very small organizations in the main countries to actually deliver on our forecast here, though we’re very confident that, that will be a very efficient and lean organization. The exact numbers around that there, for Europe, we’re talking probably around 50, 60 people in total. So it’s going to be a very small organization for a very profitable business.

Ernest Loumaye

And maybe one point also to keep in mind. There is no competition. We are the only oxytocin antagonist on this indication and which is also highly active. So that will concur to the efficiency, I would say, that our lean organization.

Tim Adams

Eric, it’s Tim. You can tell by the enthusiasm from Win that this is clearly a great market opportunity and one that is in reach for ObsEva moving from the development company now transitioning to a commercial company, it’s a reasonable size investment that Wim is still working on to outline, but one that is within our reach and one we’re very excited about. So we can take this to the market ourselves is the plan.

Eric Joseph

Got it, that’s helpful. If I could just follow up with another question on linzagolix in uterine fibroids. I’m looking at a 24-week EDELWEISS data, the 100-milligrams dose might suggest potential bone impact, kind of, crossing the confidence interval, crossing the threshold of 2.2%. I’m just wondering if there is any relevant read-through there to PRIMROSE and sort of how the protocol handles patients that might experience that threshold level of bone loss, is there potential dose reduction or add-back employed?

Ernest Loumaye

Yes, Eric. First, we select based on Japanese data, the 100-milligrams dose as another back option for fibroids, because as you know, in fibroids the objective is to hold total heavy menstrual bleeding, and we know by experience, that you need an best antidote and I’ll actually otherwise confirm that. But in order to reduce bleeding and put patient in amenorrhea, you need a slightly more heavy suppression, I would say. Now, where we – I think, I disagree with your comments is that, the 100 milligram dose. We report the 100 milligrams dose has confident interval, which was 2.1%, I believe, at the lowest limit. And you remember that the cut off for significant bone loss is considered to be a lower limit of minus 2.2%.

So we are not far, you’re right that we have more pronounced suppression, but we have – we are still within the range. Now to confirm obviously, during pinholes, as we measure bone mineral density, and as so in PRIMROSE, I think what we are going to be able to do is to say, look, x percent of the population is well treated, has no adverse impact on the bone with the 100-milligram, and there may be a subset, which say, well, she has good response, but she is over suppressed, let’s go for add-back therapy, so based on EDELWEISS, clearly, the 100 milligram maybe a viable option for [indiscernible] finding obviously, confirmation in the PRIMROSE study. Do you want to add something Jean-Pierre.

Jean-Pierre Gotteland

I’d like to add that we’re not addressing the exact same population in uterine fibroid and in endometriosis, the lady are slightly older and has body mass index, body weight higher, so that also could compensate on some excessive bone mineral density loss.

Ernest Loumaye

Correct. You know that higher is the weight or BMI, lower is the risk of bone mineral density loss, yes.

Eric Joseph

I appreciate that. That’s very helpful. Thanks for taking the questions.

Operator

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

Ram Selvaraju

Hi, thanks very much for taking the questions. Let me ask a couple on nolasiban first and let you answer those before shifting to linzagolix. So one question is on the commercial aspect, which maybe Wim might be better suited to address, which is, if we look purely on a percentage basis in terms of overall revenue generated in the IVF space, what percentage of that is likely to be represented by the European market versus the U.S. market? And pursuant to this, can you perhaps comment on pricing paradigms for a drug like nolasiban within the European context and whether you expect any significant differences commercially?

And then the second question on nolasiban, Ernest, I was curious to know, if you have ever heard of something called reciprocal effortless in vitro fertilization, including the use of a device called the INVOcell? And whether you think this might potentially have implications for the future development of nolasiban, especially, in the states. I don’t know where this has ever been tried in Europe, but just to summarize, it’s effectively a device in which the fertilized embryo is incubated within the body of a woman before being transferred for implantation to the individual who is actually going to gestate the fetus. So I just wanted to know if you’ve heard of this? If you think that has potential issue going forward?

Ernest Loumaye

Yes, I am aware of this device. I think that it is not easy to demonstrate that it is effective and as you know that even if it was the case, which is not yet the case to the best of my knowledge, that means that at the end of the incubation, you still retrieve the embryo in the lab and then you replace it. So I think that it’s probably not relevant for nolasiban in that sense. If we want to speculate, but a pure speculation, having a small device in the uterus can only irritate and give contractions, so it can be even better for nolasiban, but that’s pure speculation. So in short, we don’t think it will have an impact on nolasiban market and potential. Maybe we know about – Wim?

Wim Souverijns

Yes. Maybe your first question around market size, what we see strategically for nolasiban is three top markets for us. EU is actually the first one and given the large number of procedures that are available in Europe. China and U.S. actually are at par. So typically, in Pharma, you will see that the U.S. declined predominance, it’s 70/30 rule, that’s very different in this market, as it stands today. So when we can penetrate a market like Europe, that’s where we have the significant share of our forecast. In terms of the pricing, for me, price needs to be driven by value proposition. And I personally, when I joined the company – the reason that I joined this company is that when I saw the data for nolasiban, I got really excited about its potential. We are effectively reducing the cost per healthy baby significantly.

And I think historically, we’ve looked at comparative references from a price perspective, which might not be as relevant in my mind, so our job as a company and my team’s job is to really demonstrate what the real value proposition for nolasiban, it effects the cost per baby. It has a huge impact on reducing multiple pregnancies, which as you probably know, come with high cost as well. And its addresses a huge societal need, when we look at the developing markets, fertility is a real issue, and I think this product addresses that in a very safe – very safe way. There is no trade off here. You use this drug and you have no side effects. So from my perspective, there’s a lot of room, I think, to really define that and to come with a price that justifies the value that we bring to patients and to couples.

Ram Selvaraju

That’s very helpful.

Wim Souverijns

Does that answer your question?

Ram Selvaraju

Yes, very helpful indeed. And Just a couple of quick things on linzagolix please. Firstly, Ernest and maybe Jean-Pierre, could you perhaps comment on the viability and the potential attractiveness of developing a co-formulation of linzagolix with add-back therapy to simplify convenience and potentially improve compliance?

Ernest Loumaye

I think it’s almost a commercial question. I think technically there is no reason why we could not do that. And we got some of the feedback that you shared with us and I think it’s very interesting. It’s clear that our – I would say baseline thinking is that, providing the physician the choice of giving add-back or not and if giving add-back to select its dose, although, we are going to document it with a standard one, but you know for example Activella, there is a standard dose everybody use and then there is a low dose of Activella. This has been developed for postmenopausal women and it has been registered and developed, is because some women need for that and order.

So our first reaction is to say, to fix the combo is not our preferred option. Nevertheless, we don’t want to discard this ID, which can be complementary especially for those who are going to be well, I would say, stabilized with high dose linzagolix plus add-back therapy and where it will become useful or easier or more convenient to have a single pin. So we see that, I would say, for the moment, as lifecycle management of the product, but we keep certainly that on the top of the list for further consideration.

Ram Selvaraju

Okay, and then just one final question, this is a qualitative one, I’m afraid. But I think some have remarks that especially, when looking at the data from the EDELWEISS study and among the higher doses of linzagolix, that it seems that you are getting equivalent levels of estradiol signal, without necessarily having the same impact on bone mineral density or the same putative impact on bone mineral density has historically been seen when for example, looking at the higher doses of Elagolix. So the question would be, if hypothetically that is indeed the case, what – to what would you attribute that you could get similar impact on estradiol levels without having the same impact on bone mineral density that has historically been seen with other GnRH receptor antagonist.

Ernest Loumaye

You know GnRH antagonist, we don’t think and there’s no evidence that it has a direct effect on bone. So the effects on bone is really mitigated by the estradiol level. Where is the room for discussion or investigation is that, when we measure estradiol, we have a spot value every month one time. And that means we do not assess at all, the need time of this variation, the day-to-day variation of estradiol. And we know that we have different PK profile.

So I would not exclude that for two generation antagonist having apparently the same spot value at week 4, week 8, week 12. We may sometime end up with variability, a variation of difference, if indeed – we may sometime end up with variability, variation of difference. If indeed, I would say, the full integrate profile of estradiol is not the same. But that’s speculative at this stage. We have no evidence for that. But I think that it is collated to estradiol if there is any differences.

Ram Selvaraju

Great. Thank you very much. It’s very helpful and once again congratulations on all the progress.

Operator

Thank you. And our next question comes from Kennen MacKay with RBC Capital. Your line is now open.

Kennen MacKay

Hi, thanks for squeezing me in. Ernest, another question on nolasiban and the FDA interactions as well as some of the EMA or EMEA interactions that you have with the FDA, obviously, there’s still some moving parts here, but I am going to focus on sort of the past forward here, and previously you’d given some scenarios for U.S. aftermarket including, whether or not the FDA would accept IMPLANT2 as a supportive trial. Just wondering, sort of what the feedback was there? And thinking about the U.S. opportunity, if we should be thinking about needing just one U.S. based trial or potentially two trials, if the FDA doesn’t accept IMPLANT2 as supportive?

And then relating to the European opportunity, we previously talked a little bit about the national delegation of the EMEA giving some independent opinions here, but each country is a little bit different as it comes to IVF. I was wondering, how I should be thinking about a European launch here? Should we sort of be thinking primarily about sort of one or two country initial launch? And then sort of gradual growth in other countries that maybe are quite as in line with the EMEA on IVF or how should we think about?

Ernest Loumaye

Yes, let me answer first question, and then I will ask, Wim, to answer your question about launching in Europe. So it is in discussion, but I think that IMPLANT2 maybe figured as supportive but not pivotal. So we are in a process where we would need two pivotal study for registration in the U.S. It doesn’t mean these two pivotal studies IMPLANT3 and 4 for example, must be 100% United States, and that’s subject for discussion and is not clear, we need clarification about that. But I can tell you that the scenario where a single study will support the registration is now obsolete.

Now, of your question about launching, just the regulatory contact. Mostly actually we will have a centralized procedure. That means that we will have a single market authorization as one step to be authorized to market it in the 27 European countries. Now what you – so all – everybody will have same authorization, same indication. Now what is still a national process is the pricing and reimbursement and that’s where you may have variation in term of timing, sequence and reimbursement, and when you can elaborate on that, which means that we’ll probably not launch the same morning in 27 countries, but...

Wim Souverijns

Now, indeed Ernest, there are very large differences between markets where you have immediate free launch in Germany versus countries where there can be pretty protracted negotiations. However, I must say there – it’s important for us that we start repairing that base early on. In many of these countries, these reimbursement authorizations kick in when you get your label, but there’s a lot upfront work that we can do, a, to understand the requirements by country, the different needs by countries, in some countries this is a self funding market, in others, it’s fully reimbursed. So every country has its own idiosyncrasies and what we want to do in the next 1.5 years before we launch it, really understand these markets and start negotiating, start working with the different relevant bodies to prepare optimal reimbursement conditions for our product. And then, by the time we get our approval, there will be kind of a cascade typically across the different European countries like for any other medicine in Europe.

Kennen MacKay

Got you. That’s really helpful. And obviously as you mentioned, just a much, much larger market than the U.S. Ernest, just to clarify on what you mentioned on the FDA interaction? So should I be thinking about sort of two additional trials then primarily based or exclusively based in the U.S. to access – in U.S. market like including sort of IMPLANT4 or with some of the Canadian patients going into – I’m sorry, IMPLANT – theoretical IMPLANT5 or would some of the Canadian patients going in IMPLANT4, potentially serve as maybe one of those pivotal study. Should I think about two and sort of new studies?

Ernest Loumaye

No I think it’s premature Kennen. No, no it is premature I think. We are indeed going to address that, discuss that, and indeed IMPLANT4 allow us to move forward in Europe again the largest market, but we include Canadian center. And by the way, we’re including also Russian center, because Russia now in the European continent, not the European community. It is the second largest IVF market, with close to 100,000 IVF, so almost half of the United States in this country, which is about one-third of the population.

So your question is the right one, we cannot answer. Our objective is to get IMPLANT3 and 4 as pivotal trial, but it’s too early to comment. We need to discuss and see what is doable. As I mentioned during the previous question from one of your colleague, we have implemented in IMPLANT4, a list of elements, which were suggested by the FDA. And that we felt was doable in this protocol to be as close as possible, but there is also, I say, there are still some questions which are unsolved and therefore we cannot necessarily implement them in the IMPLANT4. So, yes, that’s our objective to defend these two trials.

Kennen MacKay

Thanks Ernest. I think you mean one of my competitors?

Ernest Loumaye

I’m sorry?

Tim Adams

Yes, Kennen, that’s probably how you think about it.

Ernest Loumaye

All right, all right. You know between doctors, we always say colleagues, but we compete.

Kennen MacKay

On the endometriosis front, there was some sort of survey work done by one of the competitors in the space that had suggested, one of the sort of primary sort of therapeutic effect physicians are looking for in an endometriosis treatment is really sort of predictable efficacy, and now it’s before the data that you had released it in endometriosis. I was wondering, if you could maybe just talk a little bit about sort of how the predictability of efficacy, sort of, compares between agents that are out there now in the endometriosis field and sort of what your conversations with physicians or any sort of real-world survey that you’ve done indicates is sort of the most important to physicians or to patients and that differently?

Ernest Loumaye

Yes, we ran a survey with endometriosis patients in the context of validating tools for measuring pain. And we have the patients with proven endometriosis to rank what where the most bothering symptoms for them in their day-to-day real life. The first one is the abdominal pain during menstruation uterine fibroids. The second one is dyspareunia and the third one is dyschezia, pain during defecation. So I think that is very important that the drug address this panorama, this different form of pain and a complain of the patients.

I’m not sure I understand 100% your saying about predictability, what I can tell you now is that with the 24 weeks data in EDELWEISS, the 75-milligram leads to three out of four patients, 71% close to 75%, a significant improvement in pain. So if predictability is that what is the chance that when I prescribe Ms. Smith, when I see her in six months, she will say, oh, I will feel much better. I think in three out of four currently. So I don’t know if that addressed your question about predictability or do you want to give more information around that?

Kennen MacKay

No, I think I thought I have the same amount of information as to what predictability, means, I only seeing – sort of seeing the – chart put up by, again, our cost competitors here. So I think that completely addresses the question.

Operator

Thank you. And our next question comes from John Martin Auster with Crédit Suisse. Your line is now open.

John Martin Auster

Hey guys, it’s Martin Auster. Thanks for taking the question. I think most of my questions have already been answered from my colleagues or as Kennan calls them my competitors. Maybe if you guys could just comment on – even R&D day coming up in December, I was wondering, maybe you want to highlight kind of a couple of key features that I assume there will be maybe some more insight into planning and the execution of the Phase 3 endometriosis study and maybe some more insights into the market, but I was curious, if you want to kind of give us a preview of that event?

Ernest Loumaye

On the market for nolasiban definitely, we will have some additional information and more visibility. I think we will discuss some aspect of the Phase 3 trial for endometriosis, knowing nevertheless that we will not have had the FDA meeting by December 7. We know exactly the date is going to be after December 7. So we cannot give you in – feedback on that. But we can certainly and we will certainly report on how we are seeing the design of this trial. Yes.

John Martin Auster

For the Phase 3? Yes.

Ernest Loumaye

Endometriosis, yes,

Tim Adams

Martin, it’s Tim. So It would be a good opportunity for analysts and investors, you get to see Ernest and myself a lot, but to introduce you to others on the management team Jean-Pierre Gotteland, who’s here; Wim, who’s here and some others, just you get a sense of the depth of the team that we have as well.

John Martin Auster

We’re looking forward to it. Thanks.

Operator

Thank you. And our next question comes from Biren Amin with Jefferies. Your line is now open.

David Hoang

Hi, guys. This is David Hoang on for Biren. I think just two questions for me. The first, ahead of the end of phase 2 meeting with FDA on linzagolix, you guys have any thoughts on what the agency could be looking for in terms of end points for the Phase 3 trial in endometriosis? And for example can we look at AbbVie’s Phase 3 trials of Elagolix as a potential proxy in that regard?

Ernest Loumaye

Absolutely, absolutely. I think that there is no secret on what the FDA expects. It’s a go primary endpoint of responder rate and analysis for the vendor physicians tools that we were inspired by the Elagolix experience, nevertheless, and it was very clear with the FDA product in the R&D meeting. If we had to revalidate these tools for ourselves and we have some small modification following the validation and as I mentioned, I will have consultation with the FDA on the outcome of this validation.

And then also, there is an additional level of complexity, but we are all aware and we are all validation. And that also, there is an additional level of complexity that we are all aware and we are all dealing with that, is the fact that, in order to define a responder, what is the level of reduction of pain that you need to achieve to say, this is a responder. You actually have to look for in your actual data, the relationship between the reduction of pain and the improvement that the patient feels about it, well-being, daily activities, impression of improvement.

So there is the subjective part of the patient and that’s well defined and I’m not giving you the exact word, but the – it’s well defined that you need to look for this relationship and that will allow you to define what – the reduction of expression of pain is indeed translating to a patient well-being improvement. So I think this is very well, I would say, qualifying with the FDA. We had followed their advise, we have already consult them, but clearly, we need a final validation during December Phase 2 meeting. There should be no surprise obviously pending the outcome of the meeting.

David Hoang

Great. And then just second question. In the Phase 2 trial the preterm labor agent 022, you have the Part B top line coming up in early 2019. What should we be thinking about and looking forward in terms of a good signal of efficacy that is suggestive of the compound going to further development?

Ernest Loumaye

Yes, I mean obviously, the primary is going to be the safety to tolerance. And in term of efficacy is what is the proportion of patient reaching day seven. So the patient will receive daily – twice-daily OBE022 for seven days, how many patients would not have delivered by that time. Now, why seven days is because it’s the optimal time to allow therapeutic intervention to prepare the new born in case of premature delivery i.e. lung maturation and brain damage protection, okay?

Now based on – you remember that we are using standard of care in Europe, which is atosiban, the infusion oxytocin antagonist, which is given for 48 hours and we are topping that with the placebo or with our drug. Based on meta analysis, we expect that about two-third of patients will not deliver with atosiban within seven days, and up to maybe 85% or 90% will not deliver with the combination. So to answer your question, any trend towards a difference in non-delivery at day seven between atosiban plus OBE022 versus atosiban plus placebo would be supportive of further development.

David Hoang

Great. Thanks. It’s very helpful.

Operator

And that does conclude today’s question-and-answer session. I would now like to turn the call back to Ernest Loumaye, CEO for any further remarks.

Ernest Loumaye

So as we end this call, I would like to thank everyone for taking the time to join ObsEva Third Quarter 2018 update. For serving patient in need within the field of womens health and fertility continues to be the driving force behind ObsEva’s strategy, and we look forward to sharing more insight into clinical plans and commercial potential of our development compounds at our already mentioned R&D Day in New York on December 17. Thank you all again and have a good day. Bye.

Operator

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