Earnings Call: H1 2020

Aug 28, 2020

Thank you very much, Otzi. Welcome to Overzymes' interim results call and webcast for the financial period ending June 30, 2020. I'm Anders Eshels, Chief Financial Officer of Oferzheim, and I'm joined on the call today by Kim Trassen, our Chief Executive Officer. The slides for the call are available on our website in the Investors section under Events and Presentations. Please note that the Q and A will take place at the end of the presentation via the conference call. If you would like to ask a question, please dial in using the details provided in our press release this morning. The next slide to the disclaimer. Before we begin, I would like to remind you that during the call, we will be making certain forward looking statements. Various remarks that we make during the call about the company's future expectations, plans and prospects constitute forward looking statements. Forward looking statements are subject to a number of risks, uncertainties and assumptions. New risk factors and uncertainties may emerge from time to time. And it is not possible to predict all risk factors and uncertainties nor can we assess the impact of all factors on our business or to the extent which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward looking statements. In light of these risks, uncertainties and assumptions, the forward looking events and circumstances may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward looking statements. In addition, any forward looking statements represent our view as of today and should not be relied upon as representing our view as of any subsequent date. While we may elect to update these forward looking statements in the future, we specifically disclaim any obligation to do so even if our view change. I'll now hand over the call to Kim to provide a business update before I return to you with more details on the financial results. Thanks, Anders. Hello, everybody. Thanks for joining us today, And we really look forward to showing you what we've been up to over the last 6 months. We think we've made significant progress on the kind of key priorities that we laid out to you at the beginning of the year. In terms of the pipeline, we continued to advance aramocumol in NPC and other indications. And in particular, in building out the commercial organization very much in anticipation of a potential approval and launch of aramoximol in NPC. Reported positive data from the open label extension study in NPC, and this has continued to show a sustained effect of aramoximol in reducing disease progression over the 2 year period. And we also announced the start of the early access program in the U. S, which is now making good progress. It has actually had some initial delays due to COVID. And but now we're actually taking on patients each week. So we've got 15 sites that have actually enrolled and 7 patients are now approved. It's been a major achievement for the entire team. As you can imagine, all of this has actually had to be set up remotely. Another great achievement for the team was also the submission of the rolling NDA to the FDA, and we completed this mid July. So we're now another step closer to potential approval in the new treatment option for patients with MPC. So based on this progress and in anticipation of the potential approval, we're now preparing for commercialization, first in the U. S. So we've really built there a highly specialized commercial sales organization team or go to market team. And we've tried to look for those people that have significant expertise in the rare and the ultra rare disease space. And I'll speak more later about how we're preparing for the commercial readiness. Now as many of you know, we see aramoclimal as essentially a pipeline in a product, and we're expanding its potential use beyond NPC. And with that in mind, we reported the Phase 2 data in the first half, demonstrating marked improvement in key clinical markers in patients with Gaucher disease. So this is the second of our studies to show a positive clinical effect of aramoclimal in lysosomal storage diseases and gives us further confidence in aramoclonal as potential treatment for patients with lysosomal storage and neurodegenerative diseases. We were really pleased to receive the fast track designation for in the U. S. For aramoximol in amyotrophic lateral sclerosis or ALS. And as a reminder, we have the registrational trials ongoing both in ALS and also in sporadic inclusion body myositis. And we expect the top line results for both of these studies during the first half of twenty twenty one. We continue to remain focused on exploring the potential of heat shock proteins and lysosomal biology beyond MPC, and we were really proud to join the Michael J. Fox Foundation Parkinson's Disease Research Tools Consortium. It's a group of industry leaders and disease experts, and we can share our expertise and build on our commitment to finding a potential solution for this devastating disease. And last but by no means least, we successfully strengthened our balance sheet earlier on in the year with the directed share issue and private placement raising approximately DKK745 1,000,000 or USD 110,000,000 and also expanding our shareholder base. So next slide, if you go to Slide 5, aramoctamol, so for the potential treatment of orphan neurodegenerative diseases. So let me take a moment to remind you of our product, Teramoximol. And I believe this could be a potential game changer for neurodegenerative diseases. It's a 1st in class or has the potential to be the 1st in class heat shock protein amplifier. As you know, heat shock proteins are part of the heat shock response. It's the body's natural normal defense to acute stress within the cell. It's a small molecule and it crosses the blood brain barrier, and this is important for us to really address the neurodegenerative diseases. It comes in a convenient capsule form. It's easy to open and to take. And this is really important. A lot of our patients actually have difficulties with swallowing. So being able to add the granules to food or to put down a nasogastric tube is really important. And so far, we've had more than 500 individuals exposed to aramol and it has an acceptable safety profile. In Slide 6, you'll see the pipeline in the product potential here. And I won't spend a lot of time here, but I do want to draw your attention to this pipeline in product potential and where we are in development. So as you can see, we're in obviously, the NDA has been submitted in the U. S, and we're still on track to submit the MAA for Europe in the second half of this year. And we're also, as I've already mentioned, online to have the top line results for AS and IBM in the first half of next year. And we've now got orphan drug and fast track designation for all three of the lead programs. So this also gives us we've now got orphan drug and Fast Track designation for all three of the lead programs. So this also gives us more optionality with what to do with the rare pediatric disease voucher. In terms of Slide 7, the product in the pipeline potential here, you see the first indication and I've showed you this slide before, really starting off with the first indication of ultra orphan MPC. There are approximately about 1800 patients in the U. S. And Europe. So this is really focus for now is to get aramoctamol onto the market and to find as many patients as we possibly can. But lining up after that for the next horizon, you see that we've got about 100,000 patients when you combine ALS, IBM and MPC. So again, really looking there at the next horizon and across to Gaucher and Gaucher Parkinson's disease or GK's deficient Parkinson's disease where you then move to yet another horizon and magnitude for patient potential. So as I said, our focus for today is really MPC, that's the lead indication. And if you go to Slide 8, just a couple of moments, it really is a devastating disease, particularly if your child is actually diagnosed with MPC at a young age. They usually have a very poor outlook. They don't usually make their 20s and it's usually progresses very quickly. For those with a less aggressive phenotype, those patients will make it into their adults and about half the patients are children, half adults. And no approved treatment in the U. S. Today. Miglustat, as you know, is used off label in the U. S. For majority of the patients. And in Europe, it's the vast majority of patients that are actually on omidlistat. And yet, there is still a really high unmet medical need for these new medicines. And we believe that aramoclimal has potential to address this unmet medical need. So again, I talked about the numbers of patients in the U. S. And EU, approximately 1800, of which we know that about 1100 are diagnosed. And these patients are mostly managed in these highly specialized centers, both in the U. S, but also definitely across Europe. So in terms of enabling the patient access in the U. S, if you go to the next slide, you'll see there our kind of key focus there behind market readiness, making sure that the organization is ready, making sure that we're doing the relevant stakeholder education, but also working on patient access and patient support initiatives. It's absolutely key for these very rare conditions. And not to say too much on each point, but I think in market readiness, now that we have the NDA submitted, now it's really all about the kind of payer research, the payer value communications and messaging that we're working on, but also making sure that we've got the right partnerships with specialty pharmacy because this is absolutely key product. All of our stakeholder medical education proceeds, albeit virtually, but all of our advisory groups and steering committees all progress as planned. The team is almost fully recruited. I think we've just made the last offer to the last MSL coming on board. So again, a really highly experienced team there. And as I mentioned, a lot of the efforts now really on the early access program. As I've already mentioned, about 15 sites on board, 7 patients to date. And now that a lot of the sites are actually reopening, we're getting more and more patients being booked in each week. So this is absolutely critical for these patients. In terms of the EU and rest of world, our focus now from a regulatory point of view is really to get that MAA submission submitted for the second half in the second half of this year. And now it's really about, again, developing the market access plan specifically for Germany, again, really focusing on the lead markets there. And likewise, with advisory boards, we have our first European advisory board next week, where we're conducting payer panels as well to understand how to approach this in Europe, the pricing in Europe. We're defining the supply chain. And likewise, we're really exploring the EAPs. I think as I've mentioned to you before, we are very much we've submitted a protocol to the ANSM in France, and that will be the lead EAP there. Likewise, we're also looking at EAPs in Germany and also in Italy. So an awful lot happening for across both the U. S. And also the European footprint there. So with that, I'm going to hand back over to you, Anders, to talk about the financial results. Thank you, Kim. Looking at Slide 12, you can see the summary of our financial position at the end of June 2020. As you would expect, our cost has increased compared to the same period in 2019 due to investments in our ongoing later stage clinical trial program and preparation to support potential launches in MPC if approved. Operating loss increased to DKK246 1,000,000 the first half of this year compared to DKK 165,000,000 in the first half of last year. There are 2 key components in the operating costs, R and D and G and A. R and D spend was $167,000,000 for the 1st 6 months of this year, up $25,300,000 compared to the same period last year. This increase was mainly due to the initiation of preclinical pharmacology registrational trials in the first half of twenty twenty and an increase in employee costs as a number of full time employees in R and D rose from 60 in the prior period to 77 at the end of June. General and administrative expenses were 78,600,000 for the 1st 6 months of 2020, up DKK 55,300,000 compared to the same period of 2019. G and A consists of 2 main cost centers: prelaunch activities and administrative activities. Prelaunch expenses represented $40,400,000 of these and were mainly due to the escalation of our commercial launch readiness activities, including the strengthening of our U. S. And Switzerland based commercial team of 12 additional FTEs and an increase in medical affairs activities, particularly in MPC, as we further engaged in communication and education programs. Administrative expenses of $14,900,000 represented the remaining amount and were due to the cost associated with legal, investor relation, external assistance and share based payment expenses, plus the addition of 10 additional administrative finance and legal full time employees to support our growing organization. Net loss widened from 251,000,000 in the first half of this year compared to DKK 164,000,000 in the first half of twenty nineteen. Net loss per share was DKK9.88 per share compared to DKK8.20 per share in the first half of twenty nineteen. We finished the first half with cash of DKK 610,000,000, which is approximately equivalent to DKK 92,000,000 compared to DKK 124 1,000,000 at the end of last year. This increase was due to the share offering completed earlier this year, which raised approximately DKK 745,000,000 or equivalent to USD 110,000,000 in gross proceeds. We then go to Slide 13. That's the outlook. In terms of outlook for the rest of the year, we maintain our anticipated guidance as published at the time of our annual report late February this year and expect an operating loss in the range of DKK 500,000,000 to DKK 550,000,000 and to have a cash position of more than DKK 300,000,000 or approximately USD 45,000,000 at the end of 2020. This takes into account the increasing spend on launch preparation activities in the second half of twenty twenty and costs associated with the ongoing clinical development activities. And that concludes the financial section. And with that, I'll hand over to Kim to wrap up. Thanks, Anders. Okay. So just a couple of concluding remarks from myself. So I think you can see that we've had a really busy start to the year, But I think what you can also see is it's going to be a continuingly very busy kind of next 12 months ahead of us to lots of really important milestones and landmarks for the company. And as I said recently, we've just completed the rolling NDA submission for aramocumal. We're waiting for the 60 day feedback. We remain on track to submit the MAA in Europe for MPC in the second half of this year, and we are absolutely continuing to execute the ongoing studies and really putting a lot of focus behind ALS and IBM to keep them on track and to have that top line data readout in the first half of next year. And the kind of final kind of recap for today, if I go to Slide 16, Sarah, is that absolutely on track to realize the potential near term approval and launch of aramoclimole in MPC. The on track to for the 2 trial readouts in ALS and IBM in the first half of next year, continuing to really build up and make sure that we're launch ready in both U. S. And market access ready, particularly in EU, keeping that kind of deep scientific expertise in our research group and making sure that we carry on with a strong financial position as we did in February, but also going forward. So with that, thank you so much for joining us. And I believe, Dulce, I can hand back to you for potential questions. And the first question comes from the line of Thomas Bowers from Danske Bank. Your line is open. Please ask your question. Yes, great. Thank you very much. A couple of questions here from me. So just on, you could say, the planned or potential ADS testing. So you did raise money earlier this year to cover NPC filing and launch and also the IBM and ALICE studies. So I'm just wondering if this could imply some accelerated plans for Parkinson and or potentially also the Gaucher indications. Then my second question sort of well, those 2 indications sort of leads me to ask on what are you seeing here? That's also, of course, some IP questions here with the core patent and all that. So if you decide to go after Parkinson and negotiate at some point in time here, I think would that be with the IMOCCLAMO? Or should we maybe be looking at some of the NMEs you also have the pipeline? And then third question, just on the QT prolongation. Can you just add some color on, 1st of all, the preclinical signals in relations to anything you may see in the ongoing NTC trial? And then anything that we should be focusing on in regards to the fact that you're using higher doses in IBM and NERs? So any color you can provide here, that would be helpful. And then just taking a small question here. Just on the NPC, have you started any interactions with private payers or Medicaids? So any color on pricing discussions compared to what you also have communicated in regards to your proposed price level for super open ultra open drug? Thank you. Okay. Thomas, I hope I've got the list there. So you'll correct me. Maybe I kick off Anders and then I hand over to you from the financing question. But I think if I tackle maybe the Gaucher Parkinson's topic as a whole, so we were really encouraged by the positive clinical endpoints that we saw in the Phase 2 study, specifically around the reduction in size of both liver and spleen. And with that now, we've got a series of calls with various kind of key opinion leaders. We've had some. We've got we are progressing with others to really understand what is the where is the unmet medical need, which we know is around that kind of neurological Gaucher umbrella. Where is the high unmet medical need and how best to approach it from a kind of pivotal and registrational point of view. And that's kind of where we are. So as you know, there is an overlap between the kind of Gaucher and Parkinson's. There are Gaucher Parkinson's patients. So but it's really trying to understand what's the best way forward for Gaucher at this stage. So still work in progress, Thomas. And when we have a kind of a clearer pathway, we'll lay that out for you. In terms of the high doses of ALS and IBM, really, it was encouraged to us when we were putting the trial and when we were having discussions with the agencies to go up to the 400, 3 times a day. And so that will and we know from the Gaucher Phase II as well that, that also indicated a higher efficacy with the than to than to say we'll see what happens. We've got obviously NPC, which is 203 times a day weight adjusted. So we'll be able to kind of see and compare when we've got both the results out. And then the other question around the, NPC payer pricing discussions, they're really progressing well, lots of insights. They appreciate that NPC is an ultra orphan disease. They appreciate that when we go after the pricing, we're looking at pricing of NPC, just purely NPC until we have any other indications or we potentially have as a first indication on the table is NPC. They appreciate these patients are very rare. They appreciate that these patients are very sick. We've actually showed them the outline of aramoclimal in terms of the product and the messages and the results. They like the profile of aramoximol in this. They like the fact they really like the fact that it's oral, really low burden to the treatment, but also in terms of knock on costs also to the health system. Now with that, I think you had a financing question right at the beginning. So maybe I hand over to Anders for you to answer that to Thomas. Thank you, Kim. Yes. So Thomas, as previously disclosed, we have confidential filed a registration statement to the SEC for potential U. S. IPO to list American Depositary Shares. We cannot comment any further at this point. We'll get back to you at the appropriate time. But this is just as a buyer to come in, we need to have all options, and this is one of those. And this one needed to be disclosed when we are And now it has been communicated. We are in the planning phase, but nothing has been decided yet. Okay, great. And maybe just to follow on the dosing and between the higher dosing and NPE DC dosing. What I was thinking was primarily in regards to the QT prolongation. I remember you I think you said that you had a signal in preclinical in the preclinical data. And of course, you're now doing the QT prolongation also with the PK data, which you are supposed to submit in connection with the mid cycle review. So I was just curious on if you've seen anything in the higher dose and anything that we should be aware of, any concerns, of course? Thomas, nothing that stood out for us. But obviously, it's probably too early to speculate. We've got the QTC study that's ongoing, but nothing that we've sort of seen from any of the reported adverse events. And you had that same information prior to starting the 400 milligram? We sorry, say that again, Thomas. We had that You had all the preclinical data and signals for the lower dose and also were well aware of any potential issues before you started thinking about the 4 100 milligram? Exactly. That was all shared with the agencies and agreed with both the lead investigators and the agencies that took to go to the 400, absolutely. Okay, perfect. Great. Okay, great. Thank you very much. Thanks, Thomas. And your next question comes from the line of Anders Hedlund from Redeye. Your line is open. Please ask your question. Hello, Kim. Hello, Anders. Thank you for taking my call. Can you hear me? Yes, Anders, we can hear you. Thanks. Thanks. So just can you just give a sort of a recap, Kim? In Gosher and potentially PD, what efforts are you undertaking currently? You said you're engaging with key opinion leaders and sort of regulatory interactions as well? Or No regulatory actions at the moment, Anas. Just for the moment, it's purely working with the key opinion leaders with the results from the Phase 2 and really deciding what is the best pathway forward here. Right. Yes. And then another pipeline question. Can you remind us, is there a strategy in MPC ex U. S. And EU? Thank you. So yes, as you know, once you have a U. S. Marketing approval and also EU marketing approval, you can leverage those approvals in other geographies around the world. So that's really what we're looking at, at the moment. It's very much looking at that footprint in the rest of the world and deciding what the priorities are. We're also, as you can imagine, Anders, we're a small company. We have limited resources. So we also have to make sure and our team are working super, super hard to deliver the priorities. So it is a balancing act of potential opportunities rest of world, but also our ability to do it and also to maintain our current milestones and promises. Yes. Thank you. And then I guess the last question sort of on corporate level. Can you just confirm that the rollout of the commercial organization, is that overall on track, would you say, with regards to the circumstances in the world? Yes. I mean, it's incredible that we've been able to hire the U. S. Organization. Some of it was done pre COVID. Some of it has definitely been done after COVID. And we've still been able to get all of the team together, and the team is on track. And we really wanted to be launch ready by we targeted the end of the year to try to make sure that everything was aligned. And in fact, next week, we do a first kind of launch readiness challenge with external experts, so to really start to make sure that we are aware of any gaps and or where the gaps are and make sure that we've got robust plans to make sure that everything is in order over the coming months. So the U. S. Is really making good progress. And as I mentioned earlier, all of the key aspects in terms of supply and also working with specialty pharmacies as you need to in ultra rare, really understanding the payer landscape, which is absolutely, absolutely key. And really trying to make sure, because it's not just about getting that prescription, it's really about getting the approval and it's really about taking the burden of the physicians and of the patients in terms of access to the product. It's a really big thing in ultra orphan. Yes, right. And I see and then in Europe, if I just say, we have our French GM. We needed a French GM in there now because of the sorting through the ATU protocol. They've got patients, about half a dozen patients actually lined up in France that really want to take part in an early access program. So that's key. And then, of course, we've got the German and the other European GMs joining either at the end of the year or beginning of next year. So they're all lined up. Okay, right. Thank you, guys. There are no further questions at this time. Please continue. Okay. Delphi, if there are no further questions, I think that I just want to take one moment to just say to the Orthozyme team to thank them for all of their hard work and commitment. I mean, it really has been a really kind of strong 1st year, but tough in terms of workload. And as always, any investors on the line, thank you so much for your continuing support. We really, really appreciate it. We don't take it for granted. Thanks also for moderating today. And thanks to you all again for joining us. Please do take care, and we speak to you soon. Bye now.