Achieve Life Sciences, Inc. (NASDAQ:ACHV) Q4 2018 Results Earnings Conference Call March 14, 2019 4:30 PM ET
Jaime Xinos - EVP, Commercial
Richard Stewart - Chairman and CEO
John Bencich - EVP, CFO and Operating Officer
Cindy Jacobs - EVP and Chief Medical Officer
Anthony Clarke - Chief Scientific Officer
Conference Call Participants
John Vandermosten - SCR
Good day ladies and gentlemen, and welcome to the Achieve Life Sciences Fourth Quarter and Year End 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference, Jaime Xinos, Executive Vice President of Commercial at Achieve.
Thank you, Jason [ph], and thanks everyone for joining us today. With me here today from Achieve are Rick Stewart, Chief Executive Officer; Dr. Anthony Clarke, Chief Scientific Officer; Dr. Cindy Jacobs, Chief Medical Officer; and John Bencich, Chief Financial and Operating Officer.
Before we begin, I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to Achieve documents filed with the SEC concerning factors that could affect the company, copies of which are available on the website.
I'll now turn the call over to Rick.
Thank you, Jaime. On today’s call we’ll cover three key areas. Firstly, we’ll provide an update on progress in 2018 on the cytisine development program. Secondly, John will discuss our fourth quarter and year end 2018 financial results. And finally, we’ll also discuss our upcoming key milestones in 2019 that we believe have a potential to create significant near term shareholder value.
2018 was a year of executing on the development plan for cytisinicline as a treatment for nicotine addiction and as an aid to smoking cessation. To put this context, smoking and nicotine addiction is a third hardest addiction to treat after heroin and cocaine, which is why these are so challenging for smokers to quit.
Although great progress has been made in reducing the number of cigarette smokers in the U.S. to around 35 million; the challenge remains, but quit rates are low and recidivism is high. In addition, a whole new generation of youth are rapidly getting addicted to nicotine through the vaping epidemic.
Even with the great progress made approximately 500,000 Americans are dying annually from smoking-related diseases. Since we have created Achieve four years ago, over 2 million Americans died unnecessarily from cancer, cardiovascular and respiratory diseases amongst others. That is why the continuing development of cytisinicline is so important.
We’re pleased to discuss with you today our recently accomplished clinical development milestones which are the full enrollment in the ORCA-1 Phase 2b trial and the final data from our repeat-dose PK/PD study.
We’ve recently announced positive data from our repeat-dose PK/PD trial at the Society for Research on Nicotine and Tobacco Annual Meeting. This study evaluated the effects of 1.5 milligram and 3 milligram cytisinicline in 26 healthy volunteers smokers when administered over the standard 25-day declining titration schedule.
The trial demonstrated that all participants had a significant and immediate reduction in cigarette smoked within two days of initiating cytisinicline treatment. Participants reduce cigarette consumption by 75% within 48-hour, which is remarkable given that the subjects were not required to commit smoking cessation to be enrolled in this trial.
By day 26 or in the treatment subject have reduce the number of cigarettes smoked by an average of 80% and nearly half of the participants had stopped smoking completely. Importantly, abstinence from smoking with biochemically verified by expired carbon monoxide which was also reduced by 82%.
These data strongly reinforce the safety and efficacy results seen in previously published clinical studies unveiled on extensive clinical evidence for cytisinicline. A signal was detected, the higher dose of cytisinicline maybe more efficacious. 54% of subjects in the 3 milligram arm were abstinence of the end of treatment versus 39% in the 1.5 milligram group.
These are impressive quit rates given that the study was not conducted with smoking cessation as the primary goal. Although too few subjects were treated to make specific conclusions about the higher dose efficacy; this highlights the importance of ORCA-1 which will evaluate more subjects per arm and compare to matched placebo.
The PK results indicated expected increases in plasma concentration between the standard 1.5 milligram and higher 3 milligram doses of cytisinicline with no evidence of drug accumulation. And finally cytisinicline was well-tolerated with only transient mild to moderate headache as a most common adverse events, which was not treatment limiting. These data provide us with further confidence that cytisinicline is a safe and effective potential treatment option for smoking cessation.
Additionally, in February, we announced full enrollment in the ORCA-1 trial with 254 subjects, approximately five weeks ahead of schedule which is impressive. Importantly, this is the first cytisinicline trial in the U.S. and it has being conducted across eight centers.
This trial was carefully planned to take advantage of New Year’s resolutions to quit smoking and recruited the majority of it subjects in approximately seven weeks. We believe the speed of enrollment clearly highlights two things; firstly, the desperate need for new treatment options to help millions of smokers in the U.S. who desire to quit.
The newest prescription treatment for smoking cessation was approved well over 10 years ago and has side effects that can limit benefit to patients. And secondly, Achieve’s clinical development expertise and its ability to execute on personal design, regulatory approval requirements and careful site selection with enrollment completed ahead of plan, all of which will become increasingly important as we progress towards Phase 3 studies.
The ORCA-1 trial compares placebo versus cytisinicline and both 1.5 milligram and 3 milligram doses on a declining titration schedule, as well as three times daily dosing both treated over 25-day period. Participants have been monitored for four weeks post cytisinicline treatment and provided with face-to-face behavioral support during the full course of the study.
Historically, commercially available cytisinicline has been dosed at 1.5 milligram on a declining titration schedule over 25 days. Based to our previous dialogue with the FDA and experience in the repeat-dose study we believe that it prudent to explore a higher 3 milligram dose, as well as three times daily treatment to ensure optimum dosing.
To refresh your memory, the primary efficacy end point of ORCA-1 is reduction in the number of cigarettes smoked during treatment with secondary analyses to be conducted on smoking cessation rates, safety and compliance. Given the number of participants, this study is not designed to show statistically significant difference in quit rates.
We believe the results which are expected in mid 2019 will help us finalize future development plans including Phase 3 clinical trials. The phase 3 clinical trial study designs which have already been agreed in principal with the FDA will be refined subject to the outcome of ORCA-1.
Key elements to be confirmed include trial execution, statistical powering and optimal dosing. We expect that the Phase 3 program will initiate in the second half of 2019 following results of the ORCA-1 trial and final agreement with the FDA. These trials will be subject to additional financing but this is not immediately required.
Our interactions with the FDA were extensive and constructive in 2018, in addition to the discussions regarding the Phase 3 development program, the FDA confirmed that they are in agreement with our initial pediatric study plan, specifically we will not be required to evaluate cytisinicline in the pediatric population in future trials.
The reasons were based on the low numbers of children smoking under the age of 12 and the logistical difficulties of recruiting treatment seeking smokers in the adolescent age group. The agreed pediatric study plan will be included as part of our future application for marketing approval of cytisinicline.
While another requirement to the FDA we remain interested in exploring ways that cytisinicline can be helpful in assisting the youth population especially as a result of a growing vaping crisis. Also based on feedback from the FDA we recently initiated a trial to assess the maximum tolerated or MTD of cytisinicline.
This study is being performed in smokers who receive one single dose of cytisinicline. The dosage will start at 6 milligrams and will be increased in 3 milligram increments in separate groups of subjects until the occurrence of dose limiting adverse events. We expect data to be available by the end of the third quarter.
Finally, we continue to partner with and I’m greatly appreciative of the National Institutes of Health or NIH who are being tremendously supportive of Achieve and advancing the nonclinical program for cytisinicline.
So in summary, we made tremendous progress in driving forward this critically important therapy for smoking cessation and nicotine addiction. That includes our clinical development update.
I’ll now turn the call over to John to discuss our financial results.
Thanks, Rick. I’d like to start with an update on our cash balance, as of year-end 2018 and also our operating expenses for this prior year. As of December 31, 2018 the company's cash, cash equivalents and short-term investments were $14.7 million, this is an increase of $9.1 million over where we ended fiscal year 2017 and as a direct result of the public offerings we completed in 2018 along with associated warrant exercises that provided us with net cash of approximately $19.8 million.
Our year in cash balance put us in an excellent position to execute on our near-term development plan including the completion of the ORCA-1 trial in the middle of 2019. Total operating expenses for the fourth quarter and year ended December 31, 2018 were $3.7 million and $12.8 million respectively.
Total net loss for the fourth quarter and year ended December 31, 2018 was $3.6 million and $12.7 million respectively. We anticipate our operating expenses to remain elevated over the next two quarters as we continue to execute on the ORCA-1 trial as well conducting the maximum tolerated dose study.
That concludes the summary of our financial results. I would now like to turn the call back over to Rick.
Thank you, John. Looking to the future, we continue to execute on our development plans as recommended by the FDA. The ORCA-1 results expected mid-year will inform the Phase 3 trial designs and also provide robust clinical data that will be critical to strategic discussions with potential commercial partners in the U.S. and the rest of the world.
We believe that the U.S. smoking cessation market represents roughly 75% of the global market for cytisinicline. Our goal is to identify a commercialization partner with capabilities in the primary care arena and also in other smoking-related specialties such as oncology, cardiovascular and respiratory diseases.
In conclusion, we’re extremely pleased with our recent accomplishments specific data results demonstrating impressive smoking cessation rates for cytisinicline treated subjects and the PK/PD repeat-dose study and the completion of enrollment in our ORCA-1 trial.
We look forward to maintaining our momentum and providing you with continued update on our clinical developed progress in the future. Thank you again for your continued interest in Achieve. We will now open the line for questions.
Thank you, sir. [Operator Instructions] Our first question is going to be from John Vandermosten from SCR. Your line is not open.
Good afternoon, guys.
Want to start with a question on the MTD study. And does this the data from that and also from – the final data from the ORCA-1 trial look good, I mean, might you change the dosing in the Phase 3 trial? Might you tighten -- up a bit to take advantage of higher efficacy. What’s the outlook on that potentially depending how the data turns out?
I’ll hand that one over to Cindy.
That’s the reason why we are running both of these trials as to look at how high we can go as well as then what would be the risk of going higher as well as the benefit. And for both of trials we will have better information and to then refine those Phase 3 protocol.
Okay. Yes. That would be great to see higher efficacy and then the outcome that would be more beneficial. On the pediatric side, is there any potential in the future that you might be able to obtain pediatric exclusivity from any future study there?
Yes. This is Tony Clarke. Yes, it’s possible that we could. The initial pediatric plan that was submitted to FDA, they agreed with us. It’s not a requirement for the NDA that we have to do studies in the pediatric or in an adolescent population. However, as Rick mentioned, with the innovating epidemic that is so it's hitting us in the tidal wave right now.
It’s not unlikely that in Phase 4 setting we could take a look at this. And my personal view is that – look at adolescent and betting could the increasingly important to me well from the basis of something we could do in a Phase 4 setting and therefore that should give us some pediatric exclusivity.
Okay. And last question on that roller trial that’s being done in New Zealand. I haven’t heard anything on that. I wasn't quite sure if there is suppose to be any updates on that, but I wanted to check with you to see if you heard anything about when there might be another update on that -- on the head-to-head trial between cytisinicline and varenicline?
Yes. I think we’re expecting an update on this soon. You’ll be aware this is an investigator-led study, its not one that we're sponsoring. We help by supplying the blinded drug and placebo supplies to help the study to go ahead, but it's not something we have -- we don't have direct hand in running the study. So we are expected again they coming too soon and obviously we’ll happy to share that with people in future.
All right. Thank you.
Thank you. Our next question comes from Michael Higgins from Ladenburg Thalmann. Your line is now open.
Thank you. Congrats guys on the continued successful development of cytisinicline. We were looking for an update from you on the MTD trial. Can you provide some evidence of the design? And it looks like you started this with results coming up Q3. Looking for little bit more if you could. It sounded like you’re starting at 6 milligram. I may not have that right in opting 3 milligram, so you hit max tolerated dose. So, if you can just clarify what those steps are and what you suspect maybe that dose limiting adverse event? Thanks.
Sure. This is Cindy. So yes, you’re correct, we are starting at 6 milligrams in the single dose and then we do incremental 3 milligram addition, so it goes up to nine, 12 and up to then 21 milligram as a single dose. It is then looked at what are the adverse events and what would be called the dose limiting toxicity. Of course any serious adverse event alone would be a dose limiting toxicity as well as two subjects having very severe – not serious but severe adverse events. We do have an independent data safety monitoring committee that are evaluating the adverse events and with those guidelines we’ll be call what would be a maximum tolerated dose.
What you think maybe that the adverse events were severe but not serious adverse events as -- you talk to speculates or is there something like which you’re looking for?
We know that point was very interesting and we’re talking with FDA is because we really don’t know what’s the dose limiting toxicity is with cytisinicline, because it is just safe. So it will be interesting to then define what those are and how high a single-dose go So this – it was actually an important study in that play. We haven’t starting now and will be completed before the Phase 3, so we can better define that to Phase 3.
Okay. Very helpfully. Yes, we were kind of scratching our heads prior to the call. Should what that would be either. So glad to know we’re in good company there. Turning our attention to Europe, what might be a reasonable time frame for filing in the Western if that is going forward? Any updates on that progress?
Yes. We’re currently evaluating exactly what a data package might look like. With the prior investigator-led studies is a body of data there which could be supportive of an MAA submission. So I think at the moment what we’re doing is evaluating what need to be done, but our resources are really focused on the ORCA-1 study and then moving into the Phase 3 clinical trail program. So I think we should be able to give you some visibility in terms of the strategy for Europe towards the end of the year beginning of next. I think given the critical nature of ORCA-1 and then dialogue with the FDA and into the Phase 3. And the fact that 75% of the global market for cytisinicline is the U.S., our resource is the best place in that field.
Okay. That’s helpful. Thanks. And then one last one from me is, just to be sure we’ve got a good view what’s remaining here besides ORCA [ph] and the pivotal. We’ve done renal impairment study, cardiac safety, nonclinical chronic talks possibly a person to general to the any other [Indiscernible] here?
I think that pretty cover the test.
Okay. Appreciate it. Thanks for the feedback.
Thank you. Our next question comes from Jason McCarthy from Maxim Group. Your line is now open.
Hi, there. This is Joanne Lee [ph] calling in for Jason McCarthy. Thanks for taking the question and congratulations on the positive clinical outcome. My first question regarding cytisine is how selective is it to the alpha4beta2 nicotinic receptor. Is any significant risk of surpassing activity in other receptors in the dopaminergic system? Or is that not a huge concern because of cytisine high selectivity?
I think it’s more or less it’s not a concern because of the selectivity. This is a tricky area. If you look at the in vitro studies you can come to one conclusion about the selectivity of drugs in this area. I don’t mean just cytisinicline, I mean, looking at other drugs in the area too. On the other hand you also have to take into consideration the rate of uptake of these various drugs in to brain and parts of the brain that they can reach once they get there. So, if you look in vitro you can to one conclusion. If you look in vivo you can find that you can find that you get from paradoxical results.
But from what we've seen so far based on the clinical results that we've seen coming from investigator-led and other studies, it would appear that we've got good efficacy which therefore assumes that we get in the right concentration, so the right part of the brain hitting the alpha4beta2 receptors, but on the other hand we’re not seeing the kinds of side-effects that were associated with some other drug in this class, so, maybe we just not hitting those other receptors or if we are its sufficiently low concentrations that it’s not really clinically relevant.
All right. I appreciate the color on that. For my next question, could you explain how cytisine’s mechanism compares to other drugs such as Chantix which acts on the same receptor and what would differentiate cytisine from treatments currently available on the market?
Okay. Let’s deal with Chantix first of all over varenicline. You’ll be aware this is the prescription that it’s been around for over 10 years. It’s probably the market leader and probably is the drug that so far – it’s approved drug that probably has a best efficacy of everything. The maximum number of action for cytisinicline is exactly the same as varenicline or Chantix. However as we discussed a couple of minutes ago, even though we’re hitting the same receptor for efficacy we may see some differences because of the selectivity or the relative selectivity of cytisinicline for the alpha4beta2 compared with other receptors.
So, as an example and its complicated area, but as an example, we know that varenicline for example as oppose in 5-HT3 receptors, not explain why some subjects get nausea when they first start treatment with Chantix. On the other hand, we have very low selectivity for 5-HT3 receptors receptors and we don’t see nausea at the sort of doses that we’re using in our current clinical trials. As far other drugs it’s kind of difficult, so Zyban has been around for some time. You’ll appreciate this is a re-profile anti-depressant drug. And the headline efficacy in metro analysis and in head-to-heads Chantix seems to come up better than Zyban because we have the same mechanism and action as Chantix, we would expect our efficacy to be more like Chantix and less like Zyban, but clearly that we have to go ahead and run our Phase 3 before we can say that with any great conviction.
All right. Sounds great. Last one. Although cigarette use among teenagers has been on decline and recent years we’ve seen the rapid rise of nicotine based devices like Juul. It led to an overall increase in nicotine use among teenagers. How do you see this impacting the regulatory environment and market dynamics and the nicotine use disorder space?
Well, as you well know, the subject of vaping and Juul has been very much in the headlines recently. FDA is taking an increasingly restrictive view of the use of vaping devices. And I think some of the statistics really bad thinking about. I think the latest information is that the increase in youth using vaping devices has gone from about 3 million to 6 million in a year. And isn’t widely acknowledged that a Juul pod is the equivalent of 60 cigarette -- sorry, 20 cigarettes of nicotine. So it’s clearly a significant issue going forward in terms of nicotine addiction. And I think its one that is going to continue to be a public health issue and subject to potentially restrictions in terms of overall policy.
From our point of view we are not limited to cigarette smoking. As I said in my comments we’re increasingly looking at the potential for using cytisinicline as a treatment for all nicotine addictions not just smoking. So we view that longer term there is additional work to be done, we think there’s an opportunity for us to actually address part of that nicotine addiction issue.
Okay. Thanks guys and congratulations again on all the progress.
Thank you very much.
Thank you. I’m showing no further questions. I would now like to turn the call back to Rick Stewart for any further remarks.
Thank you, Jason. Once again thank you very much for you interest in Achieve and our progress on the program. We very much look forward to updating you further with the quarter one 2019 results. Thank you.
Thank you, ladies and gentlemen for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.