Chimerix - Q1 2023

Transcript

Operator (participant)

Good morning, ladies and gentlemen, welcome to the Chimerix Q1 2023 Earnings Conference Call. I would now like to introduce you to your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

Michelle LaSpaluto (VP of Strategic Planning and Investor Relations)

Thank you. Good morning, everyone, and welcome to the Chimerix Q1 2023 financial and operating results conference call. This morning, we issued a press release related to our Q1 operating update. You can access the press release in our investor section of the website. With me on today's call are Chief Medical Officer, Allen Melemed, Chief Financial and Business Officer, Mike Andriole, and Chief Technology Officer, Josh Allen. Before we begin, I would like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties and other factors. These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements.

Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties. At this time, I would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Mike Sherman (President and CEO)

Good morning, everyone, and thanks for joining. 2023 is definitely off to an execution standpoint. We continue to open ACTION study sites and now have regulatory approval for the protocol in nine countries. The latest approval was received a few weeks ago from the European Union, and we're activating sites there now. We remain on schedule for our first efficacy analysis in early 2025, which includes an initial overall survival assessment. We are pleased in the meantime to have a strong showing at the American Association for Cancer Research annual meeting this year with more than a dozen presentations related to the imipridone platform. Those were presented by the company and our collaborators at Brown University and the University of Michigan. The presentation by Dr. Sung Choi from the University of Michigan was the highlight.

He presented clinical evidence of ONC201's ability to reverse H3K27 trimethyl loss. We've described previously the relationship between ONC201's molecular targets and the H3K27M target population. This goes a step further. This is the first known example of any therapy reversing H3K27 trimethyl loss. This is a characteristic which you may know has been linked to tumor growth and poor prognosis. On top of the durable tumor responses observed in the Phase II dataset, the overall survival advantage reported by multiple non-randomized analyses of patients treated with ONC201 compared to all others, this provides additional confidence in the outcome of the ACTION trial. I'll let Josh dig a little bit deeper into the science and why it matters in a moment. We also continue to progress ONC206 in the dose escalation studies.

We expect the open label dose escalation to run into the first half of 2024. That will both inform the dosing strategy and create the opportunity to identify other signals of activity. As you recall, last quarter, we reported an investigator-assessed response in a recurrent glioblastoma patient without the H3K27M mutation who received ONC206 at one of the lower doses. This signals the potential for this drug in much larger patient populations compared to the H3K27M glioma indication. With that, I'll turn the call over to Josh for a deeper review on ONC201's ability to reverse this trimethyl loss and ONC206 development.

Josh Allen (CTO)

Thanks, Mike. I'd first like to expand on one of the novel findings from AACR that Mike alluded to, as it bolsters our confidence in the probability of success of ONC201 for the treatment of H3K27M-mutant glioma patients in our ongoing Phase III ACTION study. These findings suggest both in lab models and in patients' tumors that ONC201 reverses what is thought to be the H3K27M mutation's pathogenic hallmark. To put this into context, the H3K27M mutation directly causes sequestration of the PRC2 enzyme that normally carries out trimethylation of Histone H3 at position K27 as a repressive epigenetic mark to tamp down gene expression. Said another way, the H3K27M mutation found in tumors causes global loss of H3K27 trimethylation to drive oncogenic gene expression.

Turning back to the effects of ONC201, we already knew there were certain mechanistic vulnerabilities associated with H3K27M mutant glioma that rationalized hypersensitivity. This new finding demonstrates a reversal of the direct consequence of the mutation as a whole new mechanistic layer and gives us additional confidence in the potential utility of ONC201 in the ACTION study patient population. The reversal of the H3K27 trimethyl loss associated with ONC201 treatment was consistent, persistent, and pervasive across patients in their tumors. While we have documented glioblastoma activity in other patient populations. This new demonstration is particularly reassuring as it indicates consistent biological activity at the recommended Phase II dose in our targeted population. Recent literature demonstrates that removing the H3K27M mutation to increase H3K27 trimethyl in established tumor models corresponds with a significant antitumor effect and prolongation of overall survival.

All of this data indicates that ONC206 has a direct effect on H3K27M mutant glioma in patients. It also sparks a number of scientific offshoots that are being pursued, not the least of which are the implications for additional indications that exhibit loss of H3K27 trimethyl through several mechanisms other than the H3K27M mutation. We look forward to sharing more as the science unfolds. Turning quickly back to 206, this program remains on track to complete dose escalation by the first half of 2024. You will recall our prior announcement of a monotherapy objective response in a patient with non H3K27M recurrent glioblastoma who enrolled early in dose escalation. This has added to the enthusiasm for the program and further escalation is expected to target dosing on a twice per day, three days on, four days off schedule.

When possible, these studies are collecting archival tumor tissue to enable molecular response signature studies downstream that will be cross-informed by potential signs of clinical activity and parallel laboratory investigations that are expected to collectively inform a data-driven path forward. With that, I'll turn the call over to Mike Andriole for a financial update.

Mike Andriole (Chief Financial and Business Officer)

Thanks, Josh, good morning, everyone. I'll provide just a quick update on our financial performance for the quarter and our cash position. For the Q1 of 2023, we reported a net loss of $21.4 million compared with a net loss of $24.8 million for the Q1 of 2022. The majority of our expenses were related to research and development, which decreased to $18.8 million for the Q1 of 2023 compared to $19 million for the same period in 2022. A meaningful portion of our R&D spend recently has been on clinical pharmacology studies needed to support a potential future NDA filing. This investment and the associated clin pharm work we are finishing positions us well to prepare for a quick submission following the ACTION study.

Regarding general and administrative expenses, we continue to manage these tightly despite above average wage inflation over the past year. Those expenses increased slightly to $5.7 million for the Q1 of 2023 compared to $5.6 million for the same period in 2022. Looking forward, we expect the financial impact of our previously announced reduction in force to begin to take effect this quarter. Turning toward our cash position, we ended the Q1 of 2023 with approximately $246 million in cash and equivalents. Net burn in Q1 was at the high end of what we expect for the year, as Q1 included several non-recurring items, including severance expense, upfront CRO payments associated with ramping up the ACTION study, and expenses related to TEMBEXA, which we paid in Q1, but won't be reimbursed by Emergent until Q2.

Under our current operational plan, we continue to expect year-end cash of around $200 billion, which we expect will be sufficient to fund the organization into 2027, including through the primary endpoint readouts of the Phase III ACTION study, which are expected to occur beginning in early 2025. We also expect cash balances to be sufficient to fund the initiation of efficacy studies for ONC206, should they be pursued following the ongoing dose escalation work during this period. Importantly, we have not included any incremental non-dilutive capital arising from our TEMBEXA agreement with Emergent BioSolutions in this forecast. Any procurement exercises over this period by the US government would generate an additional $31 million milestone per full option exercise. We also have the potential to receive royalties from international shipments of TEMBEXA volumes during this period.

In summary, any proceeds from TEMBEXA demand in the US or internationally would be incremental to our capital plan. With that overview, I'll turn the call back to Mike for closing remarks. Mike?

Josh Allen (CTO)

Well, thanks, Mike. actually, we'll turn it to the operator, and let's just open it up for questions.

Operator (participant)

Thank you. At this time, I would like to remind everyone in order to ask a question, press star then 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Maury Raycroft from Jefferies. Maury, your line is now open.

Speaker 9

Hi, this is Kevin on for Maury. Thanks for taking my questions. Just had a quick couple on ONC206 to start. You said you expect the dose escalation to complete by the first half of next year. Are you giving any more color into where you're at with the escalation in terms of which cohort and whether you're able to amend the protocol to dose up to 3 weeks? Also just in terms of when we might see data, if we're gonna wait until the recommended Phase II dose is found or not.

Mike Andriole (Chief Financial and Business Officer)

Yeah. Maybe Josh or Allen can add to this, but

Mike Sherman (President and CEO)

The escalation has continued with the once a week dosing in parallel to preparing for the more intense dose. Expect that to happen, that to initiate shortly. In terms of data, it's an open label trial, so we'll be able to provide updates as we have it. We expected the therapeutic window would be in doses that we could initiate either late this year or early next year. I think the notion that having some insight both into the dosing schedule and how that's playing out, as well as potential signals on activity are likely to be into the first half of next year.

Speaker 9

Great. Thanks. For the ACTION Phase III, you reiterated the early 2025 timeline for initial data. Can you just give any color on how that, you know, enrollment is going? Any feedback from investigators so far? Any granularity on maybe regionally if, how the trial is enrolling, you know, in US or ex-U.S.?

Mike Sherman (President and CEO)

Yeah, you can imagine the US sites were active first, so that's really where most of the enrollment has occurred so far. I think the U.K. and Israel were the first sites outside of the US to follow with the sites in Western Europe opening here over the coming weeks. That will begin to ramp up there as well. The feedback has been really positive on the. As we've rolled this out and begun to activate sites, we've actually had more interest and participation than we anticipated initially. That may mean, you know, we have an opportunity to activate more sites than the original plan. We'll see how that goes.

You know, so far, the patient enrollment per site per month active has exceeded our expectations, and yet, you know, it's early. Yeah, I don't necessarily think you can count on that continuing, although that's certainly the right side of the equation to be on as we're early in the study.

Speaker 9

Okay, great. Thank you, Mike.

Mike Sherman (President and CEO)

Thanks, Kevin.

Operator (participant)

Your next question comes from the line of Noreen Quibria from Capital One Securities. Noreen, your line is now open.

Naureen Quibria (Director and Senior Research Analyst)

Thank you. Hi. Good morning. Thanks for taking my question. Just a quick one on ONC206 first, going back. Are you able to comment how many doses have been completed at the current regimen, you know, less frequent dosing regimen? I know that you're switching up to a more intense dosing.

Mike Sherman (President and CEO)

I don't know, I don't know what to add to the prior comment. Josh or, I don't know if you wanna chip in there.

Josh Allen (CTO)

Yeah. Not, not a lot of color to add, to be honest, other than, you know, where the study is moving. I think there was a prior question on if we're able to amend the protocol from where we are right now.

Naureen Quibria (Director and Senior Research Analyst)

Right.

Josh Allen (CTO)

That answer is yes. You know, we

Naureen Quibria (Director and Senior Research Analyst)

Okay.

Josh Allen (CTO)

previously commented the escalations continued well, and that responder, went up to a dose of 100 milligrams that we've reported previously.

Naureen Quibria (Director and Senior Research Analyst)

Right.

Josh Allen (CTO)

will be aimed at moving as quickly as possible to the increased dose schedule.

Naureen Quibria (Director and Senior Research Analyst)

Okay. Sure thing. On the update from AACR, where Dr. Koschmann presented on the mechanism of ONC201 on the reversal of the histone. I was just curious if you're able to sort of incorporate that new finding into the ACTION study in some way. You know, for instance, you know, maybe not, you might not be able to get tissue samples, but like, looking at ctDNA or CSF and looking indirectly at 2-HG levels at the increase or decrease or in some way incorporating the new finding.

Mike Sherman (President and CEO)

I'll let Allen and Josh speak to that. I'll say for starters, it has no impact on our protocols. We're not amending it in that way. Yet, I do think this is a metric that can be interesting, both as we think about the development of ONC201 and ONC206, but I don't know if Allen or Josh you wanna expand on that.

Allen Melemed (CMO)

Yeah. Noreen, this is Allen. I'll answer. One thing I'll add is that we are collecting tissue on all patients that we can. Unfortunately, at this point, we're having to save the tissue until we resolve the question of whether we need a CDX from FDA. Our hope is that a CDX will not be necessary, and we can use the tissue that we collect to do other additional studies that will, I think, help the field and our understanding of the disease as well along ONC201 better. More to come after we clarify the need for the CDX.

Naureen Quibria (Director and Senior Research Analyst)

Got it.

Josh Allen (CTO)

This is Josh.

Naureen Quibria (Director and Senior Research Analyst)

Oh, okay. Go ahead.

Josh Allen (CTO)

Sorry, Noreen. I was just gonna quickly add, you know, in addition to the tissue that Allen Melemed spoke about, we're also collecting blood samples as well. Like Mike mentioned, we don't expect this to change anything with the protocol. We have preserved optionality for additional molecular assays on tumor tissue, like Allen Melemed mentioned, and on blood samples as well. We'll have an opportunity to dig in a little more later in the study. Of course, just to highlight, I think that's what Mike was getting at there. There's a lot of implications outside of the ACTION trial as well as, you know, several other cancer types exhibit this trimethyl loss as well. We can be mindful of this as we contemplate future development, not just ONC201, but also ONC206.

Naureen Quibria (Director and Senior Research Analyst)

Sure. Just one more. With regards to your participation in the Canadian Neuro-Oncology Meeting, will there be any presentations from your collaborators there?

Mike Sherman (President and CEO)

Josh, you wanna highlight? I know we're sponsoring that, if you wanna comment. We'll have a team there. I don't think there's meaningful data expected to be presented there, but Josh can clarify if I'm wrong.

Josh Allen (CTO)

That's right. Our team is actively on the ground as we speak at that conference, sponsoring, engaging, and the real focus of that is standing up the trial in that particular geography. Wouldn't expect there to be specific presentations, but a lot of conversations ongoing to stand the ACTION trial up in Canada as quickly as possible.

Naureen Quibria (Director and Senior Research Analyst)

Okay, great. Thank you.

Josh Allen (CTO)

Thanks, Naureen.

Operator (participant)

Thank you. Your next question comes from the line of Ed White from H.C. Wainwright. Ed, your line is now open.

Ed White (Analyst)

Good morning. Thanks for taking my questions. Just going back to the ACTION study and the sites, congratulations with the European approval. How should we be thinking ultimately of the split between US and outside the US sites and patient enrollment? What are your goals there? I think you had said the initial goal was over 100 global sites, but you just said you might have some more interest. How should we be thinking about that in totality? Thanks.

Mike Sherman (President and CEO)

Yeah. Thank you. Broadly speaking, this isn't, this isn't precise, but we estimate most of our patients will come from the US or North America, say two-thirds. Yeah, obviously that there's some variability around that. Europe is opening a little bit more rapidly than we anticipated, so that could impact that. In terms of the total number of sites, you know, I think 120 sites is sort of well within our expectation and could potentially go slightly beyond that. As I mentioned before, I don't.

For this size trial, we don't necessarily need that many, but to the extent that these sites end up being productive in terms of enrolling patients, it can always accelerate the timelines and of course, the acceleration of timelines is among the best ways to preserve capital and preserve opportunity for other investments. We're always keen to look for ways to accelerate. Yeah, the short story is it could be north of 120, but not much.

Ed White (Analyst)

Hey, Ed.

Mike Sherman (President and CEO)

Okay, thanks.

Allen Melemed (CMO)

This is Alan. This is competitive enrollment. I can tell you when we did meet with our European sites at EANO, there was a lot of interest there. Having Europe open as quick as we could, we could definitely change that balance depending on the sites and the excitement.

Ed White (Analyst)

Great. Thanks, Allen. Just thinking about the timing of data, you had mentioned that, you know, the first OS assessment is expected in early 2025. Are you still expecting the PFS readout sometime after that but before the second OS assessment? Is the timing of that also in early 2025, or how should we be thinking about that?

Mike Sherman (President and CEO)

You can imagine there's some variability around that, Ed. We do expect the PFS to, and that's a final PFS, mind you, to read out just after the OS, initial OS assessment, still during 2025, probably not early 2025, but that's certainly a potential. That second OS would has the potential to also read out during later that year, with final analyses happening in 2026. I do think that I do think that PFS will be second to that initial overall survival assessment.

Ed White (Analyst)

Great. Thanks, Mike. The last question I wanna ask is just a big picture question. Regarding ONC206, based on your, you know, small amount of clinical data so far, but also on your preclinical data, where do you ultimately wanna take the drug? I just wanna get you to sort of compare what you're thinking as far as the ultimate markets for ONC206 versus ONC201, you know, including, you know, what can be probably termed niche opportunities.

Mike Sherman (President and CEO)

Yeah. I'll start with that and maybe expand from there. I'll say this trimethyl loss finding has sort of broadened our thinking there. The first comment is the fact that we've got demonstrated activity in a non H3K27M glioblastoma suggests there's a potential to access that segment, which is some 6 times the size of the patient population with the mutation. That's not to diminish the, you know, the 5,000 plus patients that have the mutation. It's an orphan indication, and yet, it's a significant opportunity in and of itself.

Going outside of that mutation, you know, you multiply that opportunity by about 6 in terms of the patients that you could reach. What becomes interesting though is preclinically we see broader potential for ONC206, and so are in parallel to this dose escalation, identifying opportunities both where we've seen activity in models and now expanding that to and focusing on indications where this Trimethyl losses is indicated as target opportunities. There's actually some overlap where that's been demonstrated, and we have preclinical data. I think more to come on where the focus will be in terms of indications beyond glioblastoma as we nail down the dosing strategy. You know, Allen and Josh, if you wanna expand on that.

Josh Allen (CTO)

Yeah. I think I agree. Just to say it a different way, Ed, I mean, I think we've seen clearly ONC206 has broader activity in the lab, clearly a number of expansion opportunities. Some data presented at AACR shows that, you know, I don't think 206 is gonna fit very well as a me too or a follow-on in the context of H3K27M mutant glioma. We've seen sequencing those therapies in the lab doesn't seem to make a lot of sense with the data. We've yet to generate in vivo data that shows adding 206 on top of 201 in the in vivo setting for, you know, H3K27M mutant glioma is the most logical.

Instead it seems like there's a number of other opportunities that do present themselves and would make more sense. Clearly within CNS, we've had published data on a number of non-H3K27M mutant gliomas responding to the drug in lab models, and we've seen the first proof of concept kinda come through with that one responder in the trial. Like I mentioned, we'll have the privilege of letting the drug play out in the broad CNS tumor space, collect molecular tissues so that we can do signal refinement, you know, when we get those signals coming through in the trial. I think within CNS it'll clearly be, you know, activity or opportunities outside of K, 27 M distinct from that 201 that'll be the most logical.

Of course there's non-CNS activity as well with a bunch of lab studies that we'll look to refine throughout the course of the year as well that could be additional leads to opportunities. Alan, anything to add?

Mike Sherman (President and CEO)

No, nothing to add.

Josh Allen (CTO)

Okay. Thanks for taking my questions.

Mike Sherman (President and CEO)

Thanks, Ed.

Operator (participant)

Your next question comes from the line of Joseph Thome from TD Cowen. Your line is now open.

Joseph Thome (Managing Director and Senior Biotechnology Equity Research Analyst)

Hi there. Congrats on the progress and thanks for taking our questions. Just in terms of the future data updates around ONC206, can you offer any more color or granularity around your expectations for what you would like that first data set to include in terms of just like number of patients, dose levels, amount of follow-up, anything like that?

Mike Sherman (President and CEO)

I think we'll be able to. We've held off until we got into the actual dosing of this more intense to elucidate that strategy, but we'll be able to define that a little bit more in upcoming updates. I think the next thing will be essentially obviously the focus on those trials is always the safety and can you escalate safely and get into the anticipated therapeutic window. While to date, no real safety signals, that will be an important to update as we go. The efficacy signals are a little bit trickier to anticipate. We didn't expect to see a response at the dose that we saw in patients that we've previously reported.

That opens the window for activity to be seen from a response standpoint at any point. That having been said, it's less typical that you have a patient where you can reliably measure a tumor response because of prior therapies that confound measurements as we've discussed before. We've really only had a few patients where a response was potential and to see one in that setting is actually unexpected. There are other ways to measure activity via markers, and so there's the potential to do that. It's important to remember that the primary goal of these of this work is to define a dosing strategy and the safety profile.

Naureen Quibria (Director and Senior Research Analyst)

At the same time, you know, if you're fortunate, and we get the right patients, we may be able to provide additional safety signals. I'm sorry, efficacy signals. As I say, that will likely happen more into 2024, but we'll keep you abreast as that data unfolds.

Joseph Thome (Managing Director and Senior Biotechnology Equity Research Analyst)

All right. Great. Thanks for all the color.

Mike Sherman (President and CEO)

Thanks, Troy.

Operator (participant)

There are no further questions at this time. I turn the call back over to Mike Sherman.

Mike Sherman (President and CEO)

Great. Well, thanks again for joining us. Thanks to the Chimerix team and our collaborators for the good work that they're doing and strong execution so far, and look forward to providing you updates in the coming months. Thank you.

Operator (participant)

This concludes today's conference call. You may now disconnect.