Chimerix - Q3 2022

Transcript

Speaker 0

Good morning, ladies and gentlemen, and welcome to the Chimerix Third Quarter 2022 Earnings Conference Call. I would now like to introduce you to your host for today's call, Michelle Los Peluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

Speaker 1

Thank you. Good morning, everyone, And welcome to this morning, we issued a press release on our Q3 operating update. You can access this press release in our Investors section of the website. With me on today's call are President and Chief Executive Officer, Mike Sherman Chief Medical Officer, Alan Melamed Chief Financial and Business Officer, Mike Andreeault Chief Science Officer, Randall Lanier and our Chief Technology Officer of Omniprodone, Josh Allen. Before we begin, I'd like to remind you that the statements made on today's call include forward looking statements within the meaning of the Private Securities and Form 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'd like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Speaker 2

Good morning, everyone, and thanks for joining the call. The Q3 was really a watershed period for Chimerix. We recorded the company's first product revenues, secured substantial non dilutive funding for our oncology development and gain clarity with the FDA on the design of our ONC201 Phase 3 action study. Together, these milestones position Chimerix As an oncology focused company with the financial resources to complete our late stage program, while progressing our pipeline of promising early stage assets. This is precisely where this management team has deep expertise and a track record of creating value for both patients and shareholders.

Let me begin with a brief recap of our sale of Temvexa to Emergent BioSolutions. As a result of some nimble and late stage negotiations with BARDA, we were able to improve contract terms and increase the aggregate size of the contract and our upfront Payment. Chimerix benefits from having a sizable upfront payment while removing the downside risk that BARDA against public health threats through the execution of government procurement. So they're really the ideal partner to maximize the future potential of TEMBEXA. Importantly, Chimerix will continue to benefit through milestones or double digit royalties should BARDA exercise future procurement options or additional international sales are recorded.

I'll focus the rest of my comments on ONP-two zero one. With the alignment from the FDA on our planned study design, we're excited to be launching the Phase 3 action study at the Annual Society For Neuro Oncology or SNO conference taking place later this month in Tampa, Florida. This is an ideal form to enhance engagement in this study with an audience You are already aware of MOCK201 and its potential and already creating momentum for the study's launch. We collaborated with many of these physicians to design a trial with a high probability of success and multiple paths to We view the probability of success for the ACTTION trial as higher than that of other Phase 3 neuro oncology trials. Our Phase 2 data demonstrated single agent Durable responses in the relapse setting, which strictly followed FDA's guidance for patient selection.

That approach To patient selection allowed for the isolation of single agent activity, it undoubtedly made this an even more challenging treatment setting to generate responses. In that context, the durability of these responses is even more compelling. Among responders, median time of 8 months to declaration of tumor response plus an additional median of 11 months included consistent and strong association with other clinical endpoints, including overall survival. To be specific, among responders, No patients died within 24 months. Among non responders, none survived that long.

Again, this is in a setting where median survival is less than 6 months following relapse. As long as this Phase 2 data is, there are a number of aspects to the Phase 3 trial that we believe will actually enhance our ability to see a positive efficacy signal. Typically, there is an increase in heterogeneity among patients as you move to a larger trial. For the This is controlled through the selection of the genetically defined target population. Separately, we observed in the Phase 2 relapse setting, The response rate was actually the highest among those patients whose disease was relatively less advanced, meaning their tumor burden tended to be lower and their performance status tended to be better when their recurrence was declared.

In an earlier setting, our Phase 3 will focus on this very population, providing more time for the drug to have effect. The safety profile of ONC-two zero has also opened the door for the inclusion of a more frequent dosing arm in the Phase 3 trial providing another opportunity for enhanced effect. At the same time, addressing the principles of the FDA's Project Optimus. While we launched this important Phase 3 study will continue to work closely with the FDA to determine if there is a potential accelerated regulatory path based on these strong Phase 2 results. We have a meeting scheduled with the FDA for this discussion.

And in the event we pursue that path and are successful, we'll use the action study as our post marketing confirmatory study in that filing. We've been watching recent ODAC meetings closely as I'm Sure many of you have, noting the concerns FDA has highlighted with other drugs in the context of We believe we're well positioned to address each of them. Specifically, the FDA concerns expressed to others include first, clarity of unmet need. In this case, H3K27m mutant glioma is considered Grade 4 by WHO And all post radiation therapies are considered palliative. Post relapse survival is less than 6 months.

2nd, drug safety issues. In our case, ON-two zero one is very well tolerated. The 211 patient safety Analysis was new information for the FDA and was included in our briefing document for this meeting. 3rd, the FDA observed with other programs the need to isolate single agent activity unconfounded by Combination drugs or insufficient washout periods. For ONC201, the FDA specifically defined our inclusion criteria to ensure washouts And we confirmed responses to ONC201 monotherapy through blinded independent central assessment.

4th, they expressed Uncertainty around dose optimization work of other programs. In our case, in addition to Phase 1 work, our inclusion of a second dose provides dose optimization in the Phase 3 study. And finally, they cited poor enrollment in Phase 3 for other programs. And in our case, we expect to have the action trial well underway and enrolling outside the U. S.

During potential review period. While each of these points speak to our positioning for accelerated approval, they also provide evidence for why we have more Confidence in Phase 3 success relative to other programs. With all of that said, we know the FDA has raised the bar for accelerated approval and So that's why we're seeking additional clarity on their position now that they have more visibility into ONC201 safety And we're aligned on the Phase 3 plan. We'll determine our regulatory path following that meeting and share that with you before year end. Whether we rely on the action trial for first approval or have an opportunity for an accelerated path, we see tremendous value for patients and shareholders.

With that, I'll turn the call over to Mike Andriole for a review of our financial results. Mike?

Speaker 3

Thanks, Mike, and good morning, everyone. As Mike mentioned earlier, we successfully product sales and monetized Tembexa during the Q3, resulting in $270,000,000 of non dilutive capital to the organization and an ending cash balance at September 30 of $285,000,000 Our primary As such, any acceleration of investment in those early programs will follow promising data. In the meantime, We remain disciplined with spend across the organization as we complete the transition of TEMBEXA support to EMERGN. While the company is focusing its Development pipeline on oncology may also be opportunities to capture value from our legacy antiviral library using external funding. As part of the ongoing collaboration with the rapidly emerging antiviral drug development or Rede at the University of North Carolina Chapel Hill.

Rede and Chimerix were recent co recipients of a $2,000,000 grant from the state of North Carolina to fund preclinical development of CMX-five twenty one as a potential treatment for SARS CoV-two and or other novel coronaviruses. This funding is sufficient to support development of the program to its next value inflection. Let me now turn to the financial results The Q3 ending September 30, 2022. Cimerix recorded net income of $241,400,000 and we'll utilize our net operating losses to offset federal tax liability associated with this income. This net income equates to earnings per Share, both basic and diluted of $2.75 for the Q3 of 2022.

In comparison, we recorded a net loss for the Q3 of 2021 of $18,600,000 or a loss of $0.21 per basic and diluted share. Research and development expenses increased to $15,300,000 for the Q3 of 2022 compared to $13,800,000 for the same period in The main driver of this increase is the ongoing development related to ONC201. General and administrative expenses increased $5,300,000 for the Q3 of 2022 compared to $4,900,000 for the same period in 2021. The sale of Tembexta to Emergent was an approximate $230,000,000 gain on sale. As mentioned earlier, we expect to utilize NOLs to offset any federal tax liability and will incur nominal state tax.

In closing, we are in the strongest financial position Chimerix has been in for years. We'll continue to invest in our clinical development programs with financial discipline and are confident that such investment will maximize value for both patients and our shareholders. With that overview, I'll turn the call back to Mike Sherman for closing remarks. Mike?

Speaker 2

Thanks, Mike. What we've described here is really a unique risk reward opportunity. It starts with the Durable single agent objective responses in a deadly disease in a very challenging relapse setting. A Phase 3 trial that further derisks The clinical outcomes are far lower commercial risk profile than most oncology programs have and without a financing overhang. As important, this is a management team that's delivered on this same formula before, and that was to the great benefit of both patients and investors.

With that operator, we'll open the call to questions.

Speaker 0

Your first question comes from the line of Maury Raycroft with Jefferies. Your line is open.

Speaker 4

Hi, good morning. This is Kevin on for Maury. Thanks for taking our questions. Just first question on the meeting with FDA this quarter. Could you just talk about what's new since that you'll discuss with them since your last meeting?

You mentioned new safety analyses, Progress on the Phase 3, are there do you have any expectations on what the FDA might want in terms of Historical data or comparator data as well?

Speaker 2

Sure. I'll start that and then I And have Alan and Josh add. Recall that we had received some previous feedback just highlighting the risks accelerated approval process and we reported that back in May. What was interesting at that point is we really hadn't shared, we hadn't We did the analysis of the 211 patient safety data set. So it was really premature for any conclusions to be drawn about risk benefit.

And so what's the other thing that was not In hand at that point really was a Phase 3 design that was agreed upon with the FDA. So those are really the 2 Primary elements of new information that comprise This is the first briefing document that we put together essentially to make the case for accelerated approval. And maybe I can Hand it over to Alan to highlight a little bit of that safety data, which I think is really important context for How they'll make that risk benefit trade off?

Speaker 5

Yes. Thank you, Mike. This is Alan Melamed. One of the data that we have sent previously to the FDA was more high level SAE data. We wanted to have more of a thorough evaluation of All adverse events and that was included including dose discontinuation, dose modification.

And you can See the data that we shared, it is also part of the investigational brochure that dose modification and dose reductions And discontinuations are really rare, so safety is really not an issue with ON-two zero one. Furthermore, FDA did ask us to do numerous PK studies in order to be supportive of a Phase NDA submission. And part of this will be an update of Progress we have made with these trials to show that we will be ready for an FDA submission of

Speaker 2

Good point, Alan. A lot of what you hear In these ODAC meetings is a replay of the FDA sort of asking for Things are making commentary that sometimes sponsors don't respond to. And in our case, Starting with the notion that it was the FDA that defined for us the way we look at responses In this efficacy analysis that we've provided, and then as Alan said, numerous preclinical Experiments that have been ongoing over the last year and a half, which are responsive to some of the early meetings we had Just after acquiring the product, the company, and so being able to show them essentially that we're doing everything that They've asked us to do as part of that dialogue.

Speaker 4

Thank you, Mike. And just as a follow-up for the Phase 3, do you have alignment with the FDA on how many

Speaker 2

The protocol includes both pediatric Adults, we don't have specific parameters for what's required For each, similarly we have pediatric and adult data in the data set that we have now from the Phase 2 trial, but again, there's not a specific requirement. They're working with the FDA incidentally as everyone is On the sort of diversity objectives for all clinical trials, but that's I think differentiated from the pediatric Adult split. I would expect that trial to be predominantly adult, but include a meaningful portion of pediatrics

Speaker 5

Hey, Mike, if I can add, one of the reasons we expect this more to be predominant is that We are specifically excluding a population called DIPG or diffuse intrinsic point angiomyomas, which is the predominant form in Pediatric space. That is they are excluded for several reasons. One of them or 2 of them is that there are several ongoing trials with DIPT right And therefore, we didn't want to be in competition with those trials that are going on with several groups.

Speaker 4

Great. Thank you. And hop back in the queue.

Speaker 0

Your next question comes from the line of Naureen Quibria with Capital One. Your line is open.

Speaker 6

Thanks. Hi, good morning. So sticking to ONTO-one in the Phase 3 action study, I was just wondering, can you remind us, are you also including patients who have the mutation outside the midline? Alan,

Speaker 2

I'll go

Speaker 5

ahead. Yes. We are allowing patients with the mutation. The real, the main criteria to be is they need to have a mutation, they need to have received radiation therapy And they need to be randomized 2 to 6 weeks from the stop of the radiation. So pretty open.

Some of the exclusion criteria include, As I mentioned before, patients with DIPG as well as left to mandrel disease.

Speaker 0

Got it.

Speaker 6

And Mike mentioned this in the earlier comments about the heterogeneity of the patient in the earlier setting. So can you gauge who might be responders in this earlier setting or not yet?

Speaker 2

Yes. I'll let Can

Speaker 0

you clarify the question?

Speaker 2

I think the question is go ahead.

Speaker 6

I was just wondering if you're able to gauge who which patients might actually be the responders, Yes. Especially in the data

Speaker 2

Right. Now the data suggests from our Phase 2 Trial that it is those patients who have better performance status, have less Disease burden, maybe fewer tumors, smaller tumors, all of those things characteristic of what you'd expect to see In the population that we're enrolling, I think there were we allowed performance status below 70 on the scale that we used and there were 7 patients in the 50 of the Phase 2 data set. None of those patients Responded as to the lowest performance status. That performance status is not included in the Phase 3 trial. And frankly, that's not going to limit necessarily the enrollment much because for the earlier setting, you would expect the performance status to be higher Anyway, so in any event, we do believe that going to that earlier line, which essentially during the watch Wait period following radiation gives the best opportunity for ONP-two zero one activity.

And as I say, we saw that translate to responses which led to both survival

Speaker 5

And can I add, Mike, Sure? In this population, we are going to be doing a central review before they come on We will evaluate this in a randomized setting. One of the challenges of looking at the responses in a single arm study is these are so close to radiation, It's hard to identify specifically the results received due to the drug itself, radiation or a combination. And therefore, the criteria we utilized in the Phase 2 study for our IAP-fifty group was very strict I see the effect of this. In a randomized setting though, you can see did you have an additional effect due to the drug

Speaker 6

That's helpful. And just one more. I was just wondering, you've mentioned in the past that This mutation is routinely tested for here in the U. S. Would you say that also holds true ex Would you assume there may be bottlenecks in terms of patient recruitment if it's not?

Speaker 2

It is widely true.

Speaker 5

Hi, Katy.

Speaker 2

Yes, go ahead. It's true in Europe Well, but, Alan, maybe speak to the enrollment window and how we expect that to play out.

Speaker 5

Yes. So one of the advantage The trial designs that we have, we've actually met with several numerous doctors at the IANO, the European Neurology Meeting is Since we're allowing a time to start screening patients upon their initial start of radiation therapy, we have a long time to get the testing back. So most patients are almost all patients are routinely tested. It's the speed of when you get the test back. And if we had done the trial where you randomized immediately at the after biopsy and prior to radiation, we probably would have lost a lot Patients because they wouldn't have got essential tissue back and results back.

But since we have a longer window to randomize, Everyone feel that this is going to be very easy to do because testing this population in the countries that we're going is standard.

Speaker 2

Okay, It also will allow for a more referral Component of the enrollment, in other words, patients who might start at a community center where they can easily administer the radiation, Following radiation, then those physicians will more likely refer them on to A clinical trial anyway, and they were able to oversee their initial treatment. That will, I think, support enrollment as

Speaker 0

Your next question comes from the line of Ed White with H. C. Wainwright. Your line is open.

Speaker 7

Good morning. Thanks for taking my questions. On the ACTION trial, you mentioned that there's going to be In term readouts, I'm curious as to if these readouts would be made public and But the readouts assess the 2 different doses and perhaps discontinue one dose for faster results?

Speaker 2

I'll speak to the disclosures and then Alan maybe you can speak to the nature of The stopping points versus others, but we will only Be unblinded to data when it is final. So for interim or early assessment of our overall survival, Obviously, there'll be nothing to report. I think that as it relates to progression free survival, that could actually be the basis if Don't get accelerated approval based on the Phase 2 data that is incorporated into the Phase 3 design as an early endpoint for that readout. So that data will be a single readout and will be final when completed and be the basis for submission. Whether we report that out publicly, probably wouldn't, but would report out the high level endpoint and our intention to move Forward with the regulators to review that.

Speaker 5

Thanks, Mike. I'll address the question around stopping. So we specifically have built in safety Analysis that if there is an issue and the only way I'd expect it would be the higher dose is not tolerable that we could stop that arm if It is appropriate according to guidelines we'll get into the DMC, independent DMC. Regarding the powering, Each arm so we have 6 25 day 1, day 2, 6 25 day 1 and then the control. Each arm is independently powered against the control arm.

So you actually have multiple shots on goal. So you have The first two interim analyses for survival, which if positive, we will claim significance of this. We also have a full Analysis for progression of survival, which is one final, which is also independently powered for each arm.

Speaker 7

Okay. Thanks, Alan. And just a question on the Tembecza, There's $136,500,000 of potential milestones. I'm just wondering if you can discuss What potentially triggers these milestones?

Speaker 2

Sure. Mike Andrille, you want to respond to that one?

Speaker 3

Sure. There are 4 milestones of $31,000,000 each, Ed, that are individually triggered by Options in the procurement agreement between BARDA and Emergent. So should BARDA trigger the next Option or additional procurement that would trigger a $31,000,000 milestone payment from Emergent Two chimericks. Really at the time of the option regardless of when that product is actually delivered into the stockpile, That payment would be triggered. So that gets to $124,000,000 and then the remaining $12,500,000 are

Speaker 7

Okay. Thanks, Mike. Those are all the questions I had.

Speaker 0

Sure. Your next question comes from the line of Joseph Thome with Cowen. Your line is open.

Speaker 8

Good morning and thank you for taking my questions. Maybe the first one just on if I know accelerated approval is the upside scenario here, In the deck, it looks like you're guiding to an H-two twenty three regulatory submission, if that is possible. So, I guess what will be needed outside of the green light from the FDA to This package, is it the PK information that Ella mentioned or is there anything else outstanding that would take some time?

Speaker 2

Yes, there's We had mentioned this before some of the But a CMC work ongoing that would wrap up in the first half of the year. I think one of the just to give an example, I think Long QT analysis is one of the final steps in that, clin pharma that is required. These were all requirements that we identified and documented in our initial meetings. I guess it was a year or more little bit more than a year ago with the FDA and have been doing that work ever since. All of those all of that analysis has Very well so far, including and not the least of which was the healthy volunteer dose escalation where we were Able to.

It's pretty rare that you can do a healthy volunteer oncology safety assessment. And in that case, only saw Grade 1 Emerge, so that work we expect to wrap up in the first half of the year and that essentially gating to submission. We would expect if the conversation goes well with the FDA Here in this near term meeting, then we would have a more specific pre NDA meeting, where we would just Finalize all of the elements that they expect to see in the NDA that would happen in the first half of

Speaker 8

Sure. Perfect. And then maybe now that you have the cash from Tembecza, obviously it's great to fund the ONC201 trial, but are you thinking about doing any Opportunistic BD to kind of expand your footprint in oncology or how are you thinking about the pipeline?

Speaker 2

I want to make sure to respond to that.

Speaker 3

Yes. Hey, Joe. Our first priority is to make sure we've got cash and capitalization through All the clinical endpoints for the action study, we feel good about that. And then potentially through approval, Commercialization and in some scenarios profitability of the company. There likely could be opportunities to invest further in the pipeline and we'll evaluate any opportunity to enhance shareholder value, whether that's internal or external.

But our priority right now is making We've got 201 fully funded and we'll evaluate other opportunities as they arise.

Speaker 8

Perfect. Thank you very much.

Speaker 0

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

Speaker 2

Thanks, Angela, and thanks everyone for your time today. We look forward to providing additional updates