Aptinyx Inc.'s (APTX) CEO Norbert Riedel on Q2 2019 Results - Earnings Call Transcript

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About: Aptinyx Inc. (APTX)
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Earning Call Audio

Aptinyx Inc. (NASDAQ:APTX) Q2 2019 Results Earnings Conference Call August 12, 2019 8:00 AM ET

Company Participants

Nick Smith - Senior Director, Corporate Development and Investor Relations

Norbert Riedel - President & CEO

Ashish Khanna - CFO & Chief Business Officer

Andy Kidd - COO

Conference Call Participants

Ritu Baral - Cowen

Gary Nachman - BMO Capital Markets

Marc Goodman - SVB Leerink

Jessica Fye - JPMorgan

Operator

Good morning and welcome to the Aptinyx Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call for your questions. Please be advised, the call is being recorded at the Company's request.

At this time, I'd like to turn the call over to Nick Smith, Senior Director of Corporate Development and Investor Relations at Aptinyx. Nick, please proceed.

Nick Smith

Thank you, operator. Good morning everyone and welcome to Aptinyx's second quarter 2019 financial and operating results conference call. This morning, we issued a press release with our second quarter 2019 financial results along with business updates and upcoming milestones. The release is available on our website under the Investors and Media section.

Today on our call, Norbert Riedel, our President and Chief Executive Officer will review recent business and clinical highlights and then Ashish Khanna, our Chief Financial Officer and Chief Business Officer will review the financial results. In addition, Andy Kidd, our Chief Operating Officer is with us for the Q&A portion of the call.

Before we begin, I'd like to remind everyone that the statements made during this conference call will include forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially.

Forward-looking statements speak only as of the date they are made, as the underlying facts and circumstances may change. Except as required by law, Aptinyx disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances. Please see the forward-looking statements disclaimer in our financial results release issued this morning and the risk factors in the Company's current and subsequent filings with the SEC.

It's now my pleasure to turn the call over to Norbert.

Norbert Riedel

Thank you, Nick and good morning everyone. We appreciate you taking the time to join our quarterly call today. We continue to make significant progress across our programs with a particular focus on advancing our various clinical studies.

During the past quarter, important clinical data have provided further confirmation of the infinity [ph] of our lead compound NYX-2925. These data reinforced our confidence in the therapeutic potential of our proprietary NMDA receptor modulators for the treatment of serious brain and nervous system disorders. We continue to advance our pipeline across three distinct indication areas; chronic pain, posttraumatic stress disorder, and cognitive impairment.

We have now demonstrated in the clinic that our compounds have favorable safety and tolerable profile including at very high doses, have very linear and predictable pharmacokinetic profile, which is ideal for drug development. We have crossed the blood-brain barrier to achieve desired CNS exposure level, something that is critical in CNS drug development and often challenging, yet all our compounds do this readily. And as we have shown with NYX-2925 across three Phase 1 and two Phase 2 studies, this compound is present in the brain and CNS and active on NMDA receptors there.

This activity on NMDA receptors positively alters the processing of centralized chronic pain as measured by validated biomarkers and we have compelling evidence that this activity resulted elevation of pain and other patient reported symptoms in both fibromyalgia and advanced DPN patients.

Having greatly advanced our understanding of this unique mechanism and its activity, we are now poised to a four Phase 2 studies ongoing by the end of this year across four different indications and three novel compounds including a followup validation study of NYX-2925, in painful DPN, a larger dose ranging and efficacy study of NYX-2925 in fibromyalgia, a first in-patient study of NYX-783 in PTSD, and a first in-patient study of NYX-458 in Parkinson’s disease cognitive impairment.

I will now spend a little time providing some details on each of our programs including a summary of the results we reported in our recently completed Phase 2 study of NYX-2925 in patients with fibromyalgia. With NYX-2925 our product candidate in development for chronic pain as I alluded to, we have now completed two Phase 2 studies, one in painful DPN and one in patients with fibromyalgia. The effects of NYX-2925 observed in both studies are very consistent with the compound's central mechanism of action and points to its potential in addressing the centrally mediated pain that is persistent across chronic pain conditions.

In the recently completed Phase 2 fibromyalgia study, as we reported in June, NYX-2925 demonstrated statistically significant effects on the primary endpoints neuroimaging biomarkers known to be associated with centralized pain processing. We also evaluated a number of secondary endpoints including patient reported pain and other patient reported symptoms and saw significant improvement in those as well.

Recall that this was a 23-patient study that evaluated patients across sequential two-week daily dosing periods of placebo, then 20 mg of NYX-2925, then 200 mg of NYX-2925. This sequential design was necessary to compare within each patient the readings that were obtained functional [ph] MRI and spectroscopy scan at the end of each dosing period. With both 20 mg and 200 mg of NYX-2925 statistically significant effects were observed on the imaging endpoints in the pre-specified range region that we had evaluated due to their [indiscernible] in chronic pain processing.

These NYX-2925 results were in line with both teams which were gathering in a separate higher study conducted by the same investigators. On the patient reported symptoms scale which was typically used at registration [ph] endpoint with fibromyalgia, administration of NYX-2925 resulted in statistically significant improvement at week-six, compared to placebo at week-two on average daily pain, worst daily pain, total FIQR a scale measuring the overall impact of fibromyalgia on daily functioning, the [indiscernible] fatigue profile which measures the extent and impact of the fatigue that is often a major symptom of fibromyalgia, as well as other exploratory endpoint.

Lastly, and very importantly, we saw that these changes observed on the objective imaging method were correlated with the reductions in pain scores, demonstrating that the activity is very relevant in leading to symptoms alleviation. We are very encouraged by these results. We have confirmation of NYX-2925 activity on centralized pain processing and the therapeutic potential basically fibromyalgia.

These results also nicely reinforce the findings from our study of NYX-2925 in painful DPN completed earlier this year. In that DPN study we saw that the efficacy of NYX-2925 was progressively greater as we looked at patients who had had DPN for a longer period of time and where the centrally mediated pain had become more predominant. So we have conclusive activity of NYX-2925 on biomarkers of pain processing coupled with the statistical and significant effect on the pain in other studies and experienced by both in fibromyalgia patients and advanced DPN patients.

Taken together, these results inform our confidence in the potential of NYX-2925 to address chronic pain and they both inform and derisk our next steps in development which will seek to confirm the patient reported efficacy of NYX-2925 in chronic pain patients. We look forward to initiating two larger Phase 2 studies in the second half of this year, one in painful DPN and one in fibromyalgia.

For the painful DPN study we plan to enroll about 200 patients. We will evaluate patients who have had a longer duration of pain DPN focusing on patients that have had DPN for at least four years. We will evaluate 50 mg of NYX-2925 versus placebo in a parallel design. The study will have 12-week endpoint. The primary endpoint will evaluate patients with chronic pain and secondary endpoints will evaluate additional symptoms. Based on our past enrollment experience we expect a readout in late 2020 or early in 2021.

For the fibromyalgia study, we plan to enroll approximately 300 patients. We plan to evaluate two doses 50 mg and 100 mg of NYX-2925 versus placebo in a parallel design. This study will also have a 12-week endpoint. The primary endpoint will evaluate patients reported pain and we will assess a number of other symptoms of fibromyalgia across secondary endpoints. We expect a readout of this study in the first half of 2021.

We will turn now to NYX-783 which is a development as a therapy for posttraumatic stress disorder or PTSD. Enrollment of our first in-patient Phase 2 study is ongoing and we remain on track to report data from this study in 2020. The study is evaluating NYX-783 versus placebo in approximately 150 patients with PTSD. The primary endpoint is the clinician administered PTSD scale for DSM-5 cause CAPS-5. It assesses multiple symptomatic domains of PTSD or call it CAPS [ph] scale so the study should characterize the efficacy signal with NYX-783 and inform how best to design the next step in clinical development.

Importantly, as we continuously consider additional indications for our product candidate, we were very excited to present some very intriguing data on NYX-783 at the Research Society on Alcoholism meeting in June. The preclinical data we presented at the meeting demonstrated that NYX-783 has potential as a treatment for alcohol-abuse which is a major societal issue and it is also highly comorbid with PTSD.

In two different preclinical models for alcohol use disorder NYX-783 showed statistically significant reductions in both alcohol-seeking behavior and relapse like behavior. The data are really promising and we are actively evaluating how and when best to advance NYX-783 further in this area.

We will move now to NYX-458 which is in development for the treatment of cognitive impairment. We are finalizing the design of our first Phase 2 study and plan to start this study in patients with mild cognitive impairments associated with Parkinson’s disease by the end of this year. This is a patient population that today has very limited options for treating their cognitive symptoms. We have very compelling preclinical data in various models of cognitive impairments and these specially striking results showing marked reversal of cognitive deficits in a highly translatable non-human primate model of Parkinson’s cognitive impairment which we presented at the AD/PD conference and in Lisbon, Portugal earlier this year. Based on this data we are eager to evaluate NYX-458 in patients and characterize the therapeutic benefits it could bring.

With that, I will now turn the call over to Ashish to cover our second quarter financial results.

Ashish Khanna

Thank you, Norbert. In today’s press release we reported cash and cash equivalents of $124.9 million at June 30, 2019. This compares to $150.6 million at December 31, 2018. As we have previously guided, this cash balance remains sufficient to fund our operations into 2021.

Revenues for the quarter ended June 30, 2019 were $0.9 million as compared to $2.1 million in the same period in 2018. As a reminder, our revenues have primarily been earned from government grants and from our ongoing research collaboration with Allergan. We do not rely on these revenues to fund our operations.

The decrease in these revenues was primarily driven by the fee we received from Allergan in 2018 in connection with its exercise of adoption to acquire one of the compounds from our platform AGN-241751. R&D expenses were $9.5 million for the quarter ended June 30, 2019 compared to $13.7 million for the same period in 2018. The decrease in these costs was primarily due to the timing of study completions and initiations and we expect the upcoming Phase 2 studies will be reflected by an increase in our future R&D expenses.

G&A expenses were $4.2 million for the second quarter of 2019, this compares to $2 million for the same period in 2018. The increase in G&A expenses was primarily driven by increased costs related to employee compensation of which $0.9 million was non-cash stock-based compensation expenses as well as professional fees and insurance costs to support our ongoing business operations and compliance with obligations associated with being a publicly traded company.

Finally, our net loss was $12.1 million for the second quarter of 2019 compared to a net loss of $13.3 million for the same period in 2018.

With that, I will turn the call back over to Norbert.

Norbert Riedel

Thank you, Ashish. Before we open up for Q&A, I would like to summarize where we are in advancing our pipeline of novel CNS product candidates. With NYX-2925 the data yielded to date by the two Phase 2 studies we have completed, give us confirmation of the activity of the compounds. Our results critically inform and derisk the design of the next Phase 2 studies in chronic pain which we will initiate before the end of this year.

With NYX-783 we remain on track to report data from the ongoing Phase 2 PTSD study in 2020. In addition to the data supporting NYX-783's ability to address the underlying dysfunction in extinction learning processes that are essential to PTSD, we continue to generate data that provide insights as to how it might address other common comorbidities, like alcohol abuse. For NYX-458 we are eager to get this product candidate into patients with mild cognitive impairment in Parkinson's especially given our theraphic preclinical data demonstrating the compounds that have potential.

We intend to initiate the first in-patient Phase 2 study of NYX-458 by the end of the year. By year end 2019 we expect to have four Phase 2 studies ongoing providing multiple clinical readouts across our pipeline over the next 12 to 24 months.

Operator, we are now ready for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Ritu Baral with Cowen. Your line is now open.

Ritu Baral

Thanks for taking the question. My question is on the secondary endpoint of which you trialed or you outlined for NYX-2925 DPN study and especially the fibromyalgia study? And sort of add on to that, have you had discussions with FDA around these trial designs and what secondary endpoints are most important to FDA what might factor into a potential pivotal especially since we haven’t see a recent DPN trial or fibromyalgia trial?

Norbert Riedel

Terrific, thank you, Ritu. I am going to have Andy address that question because he is sitting right next to me here and hand it over to him okay?

Andy Kidd

Yes, thanks Ritu. Yes, great questions. So for the next study we will be using very similar measures to be what we used in the first DPN study for DPN, so focusing on patient reported average daily pain with range of other endpoints looking at for instance worse pain, pain on walking, and then some other kind of key measures of overall patient function and improvement. We have obviously corresponded with FDA on these protocols, but we've not conducted an additional face to face meeting.

So I think, the prior regulatory guidance on chronic pain and the precedents with other compounds has been relatively clear. We do know that the agency is rethinking some aspects of the guidance in chronic pain, but so far there's no sense if that's to do with different endpoints more to do with the way to achieve label language for certain indications.

With fibromyalgia it will be a similar story, so looking at patient reported average pain and then some of the endpoints that obviously we reported in the most recent study that all showed very nice significant effect, particularly the fibromyalgia impact questionnaire and other measures of symptoms beyond pain.

And again, in Fibromyalgia, we know from prior regulatory precedents that patient reports of pain is a critical endpoint, but also that the -- the time referred to as the FIQ had not been revised, but that the FIQR endpoint is viewed as a very important endpoint from a regulatory perspective. If you remember, measures not only pretty holistically the symptoms of fibromyalgia but also functional improvement, which is why we were so pleased to see statistically significant improvement on that endpoint in our study.

Ritu Baral

Great. And then just a quick followup on your PTSD study for 783, can you comment on how enrollment is going per your expectations and I guess should background pathology, I mean, like, the PTSD triggering event should – is that something to keep an eye on as this trial enrolls? Is that something to stratify for, is that something that could impact outcome in any way?

Norbert Riedel

Yes, thanks Ritu, great questions. So we have discussed previously with you how we actually designed the study and what kind of patient profiles we are looking for. We can pretty clearly state that, but to answer your question, as to enrollment, enrollment is going as planned. And that's why I reiterated on the written comments that we remain on track to have redevelop of that study in 2020, the middle of 2020. So, so far, everything is going as planned. Let me ask with that is sufficient [indiscernible] we should briefly restate the overall and sort of like inclusion-exclusion criteria that we selected for this population.

Ritu Baral

Yes, I do remember our previous discussion, but it might be helpful for other callers.

Andy Kidd

Yes, obviously that's in line with the strategy of the study being a first in-patient study to characterize the effect of the drug in PTSD. So we are looking at a range of different trauma types, other than excluding more complex traumatic triggers which may result in a different pattern of disease in. In terms of single traumatic triggers, we are including both military and nonmilitary patients in a range of different types of trauma. We're also looking at a range of different durations in trauma. And as I think we've already covered, a range of different secondary endpoints in addition to the CAPS, and the CAPS portion is an endpoint covers multiple different symptoms, sub domains.

So we really view this study as a fairly broad study, both in terms of the population, the inclusion-exclusion criteria and the endpoints, that's very well suited to characterize what the effect of the drug is in these patients.

Ritu Baral

Okay, thanks for taking the questions.

Operator

Thank you. And our following question comes from the line of Gary Nachman with BMO Capital Markets. Your line is open.

Gary Nachman

Hi, good morning. On 2925, the Phase 2 for DPN and fibro, it seems they'll be sized pretty well. But any possibility of doing an interim assessment maybe just to ensure they're powered appropriately? And I know it's early, but if just one of those Phase 2 is successful, would you likely still be able to proceed to Phase 3 with that specific indication? I just want to get a sense if we should be comfortable that there is optionality there, and then I have a couple of follow-ups.

Norbert Riedel

Terrific. Thanks, Gary. So the first answer is, we believe that based on the results that we have seen in the previous Phase 2 study, how we now power this the study gives us a high level of confidence that we should see a clinically meaningful difference between drug - active drug and placebo. And we have no plans at this time to do an interim analysis, mostly because the logistics of that as well as the statistical penalty don't seem to really justify going that extra step.

As it relates to – will we actually continue in this indication? Clearly, as you know, we have selected DPN as well as fibromyalgia as two among many indications that define chronic pain and our goal is to be into Phase 3 in both DPN, as well as fibromyalgia. But to also will we have the ultimate goal is to make sure that this compound reaches patients with chronic pain of various other sources. And so, I look at these as, call it, gateway indication to the border label of chronic persistent pain that patients suffer from.

Gary Nachman

Okay, that's helpful. And then on 783, how important is the alcohol abuse data informing you about that compound mechanistically? Anything that it tells you about PTSD specifically? And then with the Abbey Allergan deal, do you have any idea yet if they'll keep your partnership in place? Do you have any rights to potentially plow that back in the event of a takeover? Thanks.

Norbert Riedel

Great. So in 783, the reason that we are really excited about the alcohol study that I briefly mentioned here, is that as we mentioned for PTSD, the underlying mechanistic approach we are taking here is not to treat the symptoms of PTSD, like the two approved therapies do that are antidepressants, looking at depression as a symptom as PTSD that is treated.

We have as an underlying mechanistic approach the extinction of the conditioning of fear that these patients suffer from. And our preclinical data show very elegantly that extinction learning, and it is extinction learning in the case of trauma that led us into PTSD. But it is also the extinction learning in alcohol abuse, both the alcohol seeking as well as the relapse changes that we see that clearly show extinction learning in that preclinical paradigm as well.

So far, it's a great confirmation from a mechanistic point of view and it also without any conflict purely for the - into a comorbidity of PTSD, that I believe we can capture as we basically look at this population going forward.

Related to your question on Allergan, the research collaboration we have with Allergan continues to be very productive and it goes very well. You recall that the relationship is a 5-year research collaboration we have, which will actually run is course into the middle of 2020 to complete those 5-years. At this point we have no changes in the relationship or the dynamics of the relationship.

Also keep in mind that it will take a while for the FD [ph] acquisition of Allergan to close, which is not, I believe going to happen until past the second quarter of next year. So it hasn’t and may not actually going forward impact the relationship we have with Allergan, which is going very well.

Gary Nachman

Okay, great. Thank you.

Norbert Riedel

Yes.

Operator

Thank you. And our next question comes from Marc Goodman with SVB Leerink. Your line is open.

Marc Goodman

Good morning. So just to confirm on 783, the idea is not to go after some indication specifically to help alcoholism, right, just to make sure, or are you planning on starting some studies that work on that? And then second of all - go ahead, if you want to answer that for me.

Norbert Riedel

No, no. No, Marc, please finish. I'm going to get back to listening.

Marc Goodman

The second one is on 458. You talked about how there's been some failures in the past with respect to cognitive impairment associated with Parkinson's. Can you talk about like what type of molecules failed, how yours is different, what your strategy is and the rationale for why you think yours is going to work better than what's failed in the past? Thanks.

Norbert Riedel

Yes, great questions. I'm going to address the first one and then Andy can address the second. So we just literally reported these results on alcohol abuse or substance abuse, and with NYX-783. And as we have mentioned on previous calls, we are of course interested in expanding our indications for our various compounds, because we have a number of preclinical models that guide us in these compounds being quite effective across a range of preclinical behavioral disease paradigm.

At this point, we are evaluating what we want to do with these findings and how they might punch back into a clinical study, too early to tell. But at least for now, we are encouraged by the fact that as it relates to PTSD, it confirms mechanistically that one of those comorbidity being alcohol or substance abuse is likely going to benefit from the 783 mechanism of action. And beyond that, I think we will see and share our thoughts with you further.

And we have Andy to give you a sense of why we are very encouraged and bullish about 458 in cognitive impairment in Parkinson’s.

Andy Kidd

Yes, thanks Marc. It's interesting because over recent couple of decades I think in Parkinson's disease, the prominence of dementia and cognitive impairment and the importance to patients has become more and more clear. So in some ways it has been overlooked perhaps in the past. I think also a lot of the mechanisms that have been tested are mechanisms that were primarily developed for Alzheimer's disease. So possibly cholinergic drugs that were looking more amnesic type of memory symptoms that are typical of Alzheimer's disease, but not so much of Parkinson's cognitive impairment.

And so I think the reason that we are particularly excited about 458 is obviously it is a novel mechanism of action in positively modulating NMDA receptors. We know that that has particular effects on attention and working memory and executive functions. And while firstly, we think that those effects are broad across a range of different cognitive impairment indications, so that's the first point. I think we look at Parkinson's disease as a first step into a broader domain.

It's nonetheless the case that those particular domains are the ones that are particularly impaired in Parkinson's disease cognitive impairment. So there's a very good fit between our mechanism of action and the types of domains that we expect to influence and those that are impaired in Parkinson's disease. And in the study, and we'll talk more about this as we move to initiate the study, but then the study will be measuring specifically those kinds of projects of domains we think very targeted tech (ph). So I think it'll be a great population for us to characterize those cognitive defects.

Norbert Riedel

The only added comment I would make is that we have in this particular case a really terrific set of data coming from a nonhuman primate model of cognitive impairment in Parkinson's that the vendor we work with knows it's highly conflatable [ph] to the human disease paradigm. So in addition to what Andy just mentioned mechanistically, I think the preclinical data we have in this case in nonhuman primate is particularly strong and powerful in what we observed when we administered 458 for these cognitively impaired macaque-rhesus [ph] studies.

Does that answer your question, Marc?

Marc Goodman

Thank you.

Norbert Riedel

Thank you.

Operator

Thank you. Our last question comes from the line of Jessica Fye with JPMorgan. Your line is open.

Jessica Fye

Hey there, good morning. Thanks for taking my question. Wanted to followup on the recent fibromyalgia data you reported, where I think you saw significant reductions in Glx and dorsal anterior cingulate cortex and posterior insular cortex. Did you evaluate Glx in other maybe adjacent brain areas and if so, can you share what you saw there?

Andy Kidd

Yes, Jess, it's Andy. Great question. So we did evaluate Glx within some other brain areas, which were included for various different reasons unlike the two you mentioned, which were the two that were called out specifically in our primary endpoint. Some of those other brain regions were included more for exploratory analysis.

In the top line dataset, which is what we have so far, we don't have yet a very granular and complete analysis of the effect on Glx in all of the different brain regions. That analysis is still ongoing. So I would say that's the sort of further characterization of any activity of the drug in a range of broader brain areas is something that we'll have down the line. But, yes, you're right, we did measure a few other areas in addition to those.

Jessica Fye

Got it, thank you.

Operator

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Norbert, for any closing comments.

Norbert Riedel

Thank you, operator. And thank you, all for your questions and for taking the time to join us this morning. I'm hopeful this call today has given you a sense of the methodical approach we are taking to drug development and the positive results we have seen so far. We look forward to keeping you updated as we continue along the path of bringing novel therapies to those in need. Thanks again and please enjoy the rest of your day.

Operator

Thank you for joining us today. You may now disconnect.