Auris Medical Holding Ltd. (EARS) Q2 2019 Results Earnings Conference Call August 15, 2019 8:00 AM ET
Thomas Meyer - CEO
Hernan Levett - CFO
Conference Call Participants
Good morning, and welcome to Auris Medical's Conference Call. On today's call, Thomas Meyer, Auris Medical's Chairman and Chief Executive Officer and Hernan Levett, Auris Medical's Chief Financial Officer will present the company's Financial Results for the First Half 2019 and provide a business update. The accompanying slides can be found on our website in the Investors section.
Earlier today, Auris Medical issued a news release with the first half 2019 financial results, as well as a business update. The release is available on the company's website aurismedical.com and filed with the SEC.
During today’s call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial, or business performance, or our strategies and expectations. Forward-looking statements are based on management’s current expectations and beliefs, and involve significant risks and uncertainties that could cause actual results, developments, and business decisions to differ materially from those contemplated by those statements.
The risks and uncertainties include, but are not limited to the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filing and approvals, our intellectual property position, and our financial position, as well as those described in the risk factors section in our annual report on the Form 20-F, and future filings with the Securities and Exchange Commission.
In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.
With that, I hand the conference over to Thomas Meyer.
Thank you, operator. Good morning to our listeners in the US and good afternoon to our listeners in Europe. Welcome to Auris Medicals first half of 2019 earnings and business update call. I would like to start the call today with a brief overview of the recent key developments at Auris Medical. Then I will go into more detail on the following slides.
During the first half of the year, we made significant progress with our intranasal betahistine clinical which comprises two proof-of-concept clinical trials with AM-125 and AM-201. The key highlights from these projects included enrolling the first patient in our TRAVERS Phase 2 trial with AM-125 and completing enrollment of the Phase 1b trial with [indiscernible] We look forward to reporting data from these trials in the coming months.
Moreover, we continued our ongoing effort to relaunch our late-stage Keyzilen tinnitus development program. Also it has had some setbacks, we believe this therapy offers a promising solution for individuals suffering from acute inner ear tinnitus. We continue to be encouraged by the feedback we receive from patients and physicians. This has further incited our effort to bring this important therapy to market. I would go into more detail on this.
Finally, we took additional steps to strengthen our balance sheet and corporate flexibility over the last few months, which included the relocation to Bermuda to reduce costs and better align with US capital market practices and the completion of a public offering of common shares pre-funded warrants. These steps have put us in a better position to grow the business and focus on creating shareholder value.
Moving to Slide 3 and 4. I will start the program update with AM-125 intranasal betahistine for treatment of acute vertigo. As a reminder, oral betahistine is standard of care treatment for vertigo in many countries around the world, but its therapeutic potential is limited due to its low bioavailability.
AM-125 is currently being assessed in our TRAVERS Phase 2 trial which is now ramping up. In July after securing approvals from the numerous regulatory authorities and ethics committees involved in the trial, we announced that the first patients have been randomized. We continue to open trial sites and expect to reach full enrollment capacity in a couple of weeks from now.
The trial is being conducted in several European countries and Canada, involving 16 sites. It will enroll 138 patients suffering from acute vertigo, following surgical removal of a vestibular schwannoma.
This is a slow growing tumor, growing behind the inner ear. You can see one example in the MRI scan on the slide. With certain types of this tumor, the surgery will result in immediate and complete loss of vestibular function on the operated side as the vestibular nerve gets cut is badly damaged. As a result, patients are often unable to walk or stand, and they have symptoms of acute vertigo, postural instability, nausea, or vomiting.
In the weeks and months thereafter, they usually recover at least part of their vestibular function through central vestibular compensation. This is a very good model to address a treatment for vertigo, such as AM-125, because the trigger for the vertigo is well known in this case and proper baseline measures can be established. The use of the vestibular schwannoma resection model for demonstrating proof of concept with intranasal betahistine in the treatment of acute vertigo was endorsed by the European Medicines Agency, EMA in the context of a scientific advice procedure.
One additional advantage of the model is that we are dealing with patients who are scheduled for surgery, which facilitates planning and trial conduct. The primary objective with the treatment is to improve and accelerate vestibular recovery, so that patients are back in control of their balance sooner and to improve patient’s quality of life. For this, we are using a battery of objective measures. You can see two of the balanced tests on the slide.
On to slide 5, the TRAVERS trial is being conducted in two parts, Part A and B. In Part A, which just started five ascending doses of AM-125 or placebo, administered three times daily over a total of four weeks, will be tested in a total of 50 patients.
In addition, oral betahistine 48 milligram will be tested in 16 patients under open-label conditions for reference. The primary efficacy endpoints will be the time standing on foam and the tandem Romberg test, which were pictured on the previous slide. Based on an interim analysis, which is expected for the fourth quarter 2019 or the first quarter of 2020 two doses will be selected and tested against placebo in an estimated 72 patients in Part B.
Now, I will move on to an update on the AM-201 program on slide 6. With AM-201, we’re seeking to prevent major side effects of second generation antipsychotics such as olanzapine, in particular weight gain and somnolence. These side effects arise from the antagonistic effect of the antipsychotic drugs at histamine 1 receptors in the brain. It is well known that histamine plays a key role in the brain's regulation of food intake and wakefulness. In July we completed enrolment in the Phase 1b proof of concept trial with AM-201. As per previous guidance, we expect to report data in the near term.
On Slide 7, we outline the trial design as a reminder. The trial is being conducted on a single trial site in Europe and enrolled 50 healthy volunteers who received either AM-201 or placebo concomitantly with olanzapine over four weeks. Doses ranging from 1 to 20 milligram of intranasal betahistine administered three times daily were tested.
The primary efficacy outcome for the study is the reduction in weight gain and the secondary outcome is the reduction in somnolence. We're seeking to determine the dose response curve for the whole study population, as well as separately for male and female trial participants. Enrollment was balanced for gender. We look forward to obtaining top line data from the first five cohorts in the next couple of weeks.
One recent development we would like to highlight is that based on the positive safety signals observed in the first five cohorts and subject to positive trial outcomes, as well as the receipt of the necessary approvals, we are planning to continue dose escalation after the initial readout, but also testing 30 and 40 milligrams.
As a reminder, we have already tested multiple dosing of intranasal betahistine up to 40 milligrams in the previous Phase 1 trial in healthy volunteers. Our prior Phase 1 trial was only for three days, while the present study is assessing doses over four weeks.
While it is a longer period of time, we are very encouraged that the doses capped 20 milligrams so far are all well tolerated. Through the plan trial extension we will have the option to cover a broader dose range. We expect to have the expanded data set in by early Q1 2020.
Moving to Slide 8. While betahistine has been used for several decades to treat vertigo, there are other potential therapeutic uses, histamine is known to play a key role in the regulation of a wide range of behavioral and physiological functions, including appetite, drinking, sleep, wakefulness, learning, attention and memory, with AM-201 we are already addressing antipsychotic induced weight gain.
To this end, we obtained rights to two US patents relating to treatment of two mental disorders with betahistine. We closed the purchase of two U.S. patents related to the use of betahistine for the treatment of depression and attention-deficit/hyperactivity disorder or ADHD. The Company acquired full ownership of the US patents with key claims directed towards the treatment of depression and ADHD, respectively.
We're very excited about the many potential therapeutic uses for intranasal betahistine, as we progress with our proof of concept trials we will map our strategy for maximizing the therapeutic and commercial utility of our intranasal betahistine platform.
With this, I will now turn to our other development programs. I will first provide a quick update on Sonsuvi or AM-111 on Slide 9. As previously announced, we are running a partnering process for Sonsuvi. This process is being supported by an international transaction advisory firm. We have been engaging in discussions with a number of interested parties and look forward to furthering these conversations in the coming months.
Finally, I will conclude my program update with Keyzilen or AM-101 on to Slide 10. Since the conclusion of our late stage trials for Keyzilen, we continue to receive positive feedback from patients and physicians. We’re encouraged by this response and further excited to bring this therapy to patients in need.
As a part of these efforts we developed a protocol for our Phase 2/3 trial with Keyzilen. The trial shall, in two stages, reaffirm the compound’s efficacy in the treatment of acute tinnitus following traumatic cochlear injury and then provide confirmatory efficacy data to support a filing for marketing authorization.
It will incorporate learnings from the four late-stage trials, TACTT2, TACTT3, AMPACT1 and AMPACT2, notably with regard to the collection of patient reported outcomes and certain elements of study conduct.
In addition, it will explore the use of a novel method for objective tinnitus diagnosis and measurement. The Company has solicited advice on the development plan and regulatory pathway from the FDA in the context of a Type C meeting and from the European Medicines Agency in the context of a Scientific Advice procedure. We expect to provide an update on these procedures shortly.
In addition, we are in the process of assembling a group of scientific and clinical tinnitus experts for an advisory board to support us, as we move forward with our tinnitus development programs. We expect to have a news on this initiative shortly as well.
As previously indicated, we aim to implement the further development of Keyzilen, as well as our early stage tinnitus programs with non-dilutive funding. The funding options which are under consideration include, strategic partnering, special purpose vehicle financing, grant funding or a combination thereof.
This brings me to the end of the program update and I will hand over the call to Hernan Levett for a financial update. Moving to Slide 11.
Thank you, Thomas. Before reviewing our financial results for the first half of 2019, I would like to note that the financial statements are presented in Swiss francs. To help you with interpreting the financials, please note that the U.S. dollar and the Swiss francs are trading essentially at a rate of 1 to 1. Also please note that this year we changed from quarterly to semi-annual financial reporting.
With this let's move to Slide number 12. The company's net loss decreased from CHF4.8 million or CHF16.36 per share in the first half of 2018 to CHF3.6 million or CHF1.66 per share in the first half of 2019.
Our research and development expenses decreased from CFF5 million in the first half of 2018 to CHF1.3 million in the first half of 2019. This reduction was mainly driven by the completion of our late stage trials AM-101 and AM-111, as well due to the capitalization of development expenses for AM-125 program. The capitalization in accordance with IAS38 amounted to CHF1.6 million in the first half of 2019.
In a like for like comparison, this translates into a reduction of research and development expenses from CHF5 million in the first half of 2018 to CHF2.9 million in the first half of 2019.
General and administrative expenses increased from CHF2.5 million in the first half of 2018 to CHF2.8 million in the first half of 2019. The increase was due to higher administration expense - expenses related to consultancy work in connection with the relocation to Bermuda.
Overall, over the past few quarters we have managed to reduce the level of operating expenses significantly and align our resources with our strategy of focusing the company on our Intranasal Betahistine project's. We reiterate that we expect our operating expenses in 2019 to be in the range of CHF10 million to CHF13 million.
Our cash and cash equivalents at the end of June 2019 amounted to CHF5.8 million. We raised approximately $7.6 million of fresh equity through a public offering of common shares and pre-funded warrants in May 2019.
Finally, I would briefly like to mention steps we took this year to further strengthen our balance sheet and increase our corporate flexibility. In January of this year we made an early repayment of our loan facility with Hercules Capital 12 months ahead of the original schedule. With the final payment, all covenants and collateral in favor of Hercules were lifted.
In March, we relocated the company's domicile to Bermuda in order to gain more corporate flexibility, achieve cost savings and operate under a jurisdiction that is more familiar to U.S. investors. And in May we regained compliance with Nasdaq minimum bid price requirement to a reverse stock split of twenty-for-one. We believe that these were important steps to position the company for future success.
With that, I would like to turn the call back to Thomas.
Thank you, Hernan. Concluding on Slide 14. We've had a very productive first half of the year and look forward to the important milestones ahead. In the next few months we anticipate reporting top line data from the first five cohorts in the Phase 1b trial with AM-201 in the coming weeks, reporting key outcomes from the interim analysis of the Phase 2 trial AM-125 in the fourth quarter of 2019, or Q1 of 2020, working with the FDA and EMA to move forward with the Phase 2, 3 trial with Keyzilen and continuing to explore funding options for this important program.
We also expect to have additional updates in 2019 from our programs with Sonsuvi and Keyzilen in acute inner ear hearing loss and acute inner ear tinnitus respectively and look forward to sharing this information.
In conclusion, we have a very significant clinical and regulatory inflection points in the coming months and quarters, which we believe will continue to drive Auris Medical’s value and bring us closer to our goal of bringing these important therapies to market.
With that, I would now like to turn the call back to the operator, who will open the line for questions.
Thank you. [Operator Instructions] Your first question today comes from the line of Max Jacobs. Please ask your question.
Hi, Thomas. Thanks for taking my question. Just want to know like how detailed will the data releases be for the AM-125 and AM-201 trial?
Hi, Max. Yes, well, we will release for 201 the primary and the secondary, so that is weight gain, we talked in the weight gain, we’ll provide information on the secondary that is reduction on daytime sleepiness, as measured by the Epworth Scale and while we – to provide also some information about the safety that we have observed.
Now for 201, that’s about the plan here, for 125 we are planning to release information about the two balance test that is the tandem Romberg and standing on foam, plus an addition some information about the safety as well. But as I mentioned, so far what we have seen here in the 201 trial that has been very positive in terms of safety trends, of course, detailed analysis remains to be done. At this point, we're still fully blinded also, but safety here has been clearly a very positive in our development.
Okay, great. That’s really all I have. Thanks for taking my question.
Thank you. There are no questions at this time. [Operator Instructions] It appears there are no further questions on the telephone lines at the moment.
Okay. If there are no further questions, then well I’d like to conclude. Thanking you operator and thanking everyone for joining the call today and your interest in Auris Medical. Have a great day and as always take care of your ears. Thank you. Good bye.