Hi. Good morning, everyone. My name is Edward Nash. I am a Senior Analyst here at Canaccord Genuity on the biotech research team. I have the pleasure of welcoming the management team of Cardiol Therapeutics with us today. Joining us from the company is Andrew Hamer, who is the Chief Medical Officer, and we will be shortly joined by the CEO and President, David Elsley. We actively cover Cardiol, and the company is really focused on the immunology/cardiology space with their lead drug targeting recurrent pericarditis. I want to thank you, Andrew, for joining us. Maybe to start off, could you just give us a background for our audience and give us some color on the company itself and your clinical programs?
Thank you. Yes. Cardiol Therapeutics developed a formulation for cannabidiol that is fully synthetic and pharmaceutically manufactured. The reason for that is the intriguing information that was coming forward about its anti-inflammatory characteristics, especially in cardiovascular diseases. Our programs have moved through development, and now our lead program is in recurrent pericarditis, where we are in a pivotal phase III trial. It is a very important time for the company, also very exciting. We are really in that phase of preparing for an NDA, so it is a great time to talk.
Thanks very much. I wanted to maybe jump right in on recurrent pericarditis, since we are really at the event horizon of getting that phase III data readout. The MAVERIC trial is enrolling patients who are scheduled to be coming off of the IL-1 trap rilonacept. Why was this patient population and the trial design chosen?
Well, in discussions with the FDA and all the experts, everybody understands that the indication we are seeking is for prevention of pericarditis recurrence. We know that the pathophysiology of recurrent pericarditis is the same no matter where you are in the spectrum of the disease. There are numerous unmet needs in the population with recurrent pericarditis. But the most homogeneous population that is the easiest to study, and also is an unmet need, is patients that are seeking to come off their immunosuppressants, particularly rilonacept patients who have been on rilonacept for more than one year. They always trial off rilonacept because pericarditis is a time-limited disease and should disappear naturally over three to five years. So they trial off their rilonacept, and nothing has been shown to help them get off immunosuppression.
CardiolRx is an oral and non-immunosuppressive drug that has shown in our preclinical data and in our phase II trial to have very pleasing results in pericarditis patients. For phase III, this is the best population to be able to have a known very high recurrence rate in the patients that come into the trial. We know our placebo arm is going to have a high recurrence rate, 75% recurrence within two to three months. Then we have a very nice population to be able to prove benefit of CardiolRx in preventing those recurrences.
Great. Thank you. We are joined by David Elsley, the President, CEO. Thank you, David, for joining us.
Yes.
The open-label phase II study focused on pain as the primary endpoint. Does this increase the risk of the phase III readout since the endpoint is different?
We wanted to show that it was safe and apparent effectiveness in patients having an acute episode of pericarditis, because that is when people most often start a medication. But really importantly was during the extension phase of the phase III trial, we were monitoring to see how many patients could come right off all other medications, be on monotherapy with CardiolRx, and not have any recurrences. We had 71% recurrence-free over that period. We then compared that back to before they started treatment with CardiolRx, and they were having 5.8 events per year, and then they transformed into monotherapy on CardiolRx to 0.9 events per year. These patients had been on other medications prior to even starting on CardiolRx. So they went from other medications, 5.8 events per year, down to monotherapy CardiolRx, 0.9 events per year.
Obviously, we are looking at historical control there. Of course, in a phase III trial, we are looking at a placebo arm to show proof of benefit.
Could you remind us of the powering assumptions for the phase III MAVERIC trial, and what data is out there that gives you confidence that it can be successful based on these assumptions?
Well, 5.8 to 0.9 is obviously a substantial reduction. We have been more conservative in our powering for the MAVERIC phase III trial. We have powered for a 40% relative risk reduction. Say placebo arm gets a 75% event rate, then 40% reduction is that in the active arm, you get a 45% recurrence rate. The pilot would suggest we will get a much lower event rate than that, but that event rate would still be seen as very clinically meaningful, so we have powered for that event rate.
If approved, what are you looking for as far as how the label will look? This is something we get asked a lot by clients. Based on what the phase III design is, that is one of the questions we get is would that be the limitation of what the label would show for RP? Just wanted to get your thoughts on what you would be looking to get on the label.
Yeah. I think an important point to make is really the biology of recurrence is the same. Whether it's coming off an IL-1 blocker, whether it's a first episode of recurrent pericarditis, or whether it's non-response to any other therapeutic regimen. As Andrew mentioned, we're really just enriching for the event rates, and based on all our dialogue and discussions with regulators, we fully anticipate that subject outcomes of the phase III trial and it meeting its objectives, we would see a label of prevention of recurrence. Same label as IL-1 blockers are today.
Okay. Because also leading into this next question is based on that label is, your discussion with KOLs. This is another question we get asked a lot. Probably this is the second of the two most high priority questions we get asked by investors is what are physicians thinking and when they would actually use CardiolRx in the treatment of RP? Because obviously it's oral, you have a lot of advantages with that alone, so how are they seeing that in the treatment paradigm of RP?
Our discussions with KOLs have been very reassuring. They're really looking for a new treatment option to intervene post first-line therapy is ultimately a replacement for steroids. Essentially we see this therapy, it's more accessible. It can be dispensed at more points of care. It's non-immune suppressing, it's oral, so there's a convenience factor there. So we ultimately see this therapy as the treatment that for those who are either intolerant or non-responsive to either NSAIDs or the generic colchicine, they'd be trialed on our drug first prior to moving on to the more hard-hitting biologics.
That's one of the questions I was going to ask is, moving up in the line of therapy, we now know that the IL-2 blockers, for the ACC guidelines, is now second-line therapy, which kind of displaced steroids. When we're looking now at CardiolRx, one of the questions we asked Dr. Cremer, who we just had a call with, to talk about this, a KOL, one of the questions we asked him, he said, "Trials still need to be done, but what about the potential of seeing CardiolRx actually replacing colchicine and NSAIDs and maybe being used as a first-line therapy?" Do you think that's a possibility, or are we going to still see physicians just naturally gravitating just because it's historically always been the case where you would use colchicine and NSAIDs as first line?
I think it is a possibility because a very large percentage of patients don't tolerate colchicine. For many, many patients, it makes you unwell. I think the fact that this is an oral therapy, it can be dispensed at a specialty pharmacies, it's more accessible. It would be a logical treatment to trial if patients have a history of GI intolerance, for example. They're going to be perhaps more challenged on colchicine, and they may wish to go to a more tolerated oral therapy.
We had the opportunity to talk a little bit about this after the data came out, but just for our audience, Novo Nordisk recently reported their phase III ZEUS results, from the IL-6 antibody in atherosclerotic cardiovascular disease. The study didn't show a clinical benefit in preventing MACE, but showed the expected reductions in free IL-6 and high sensitivity C-reactive protein. Do you believe that these results have any impact or read-through at all on your approach in treating RP?
No, because what we know is recurrent pericarditis, that colchicine is a weak inflammasome inhibitor. We seem to have significantly more effect on the inflammasome than colchicine, and IL-1 blockers have been shown clearly to reduce pericarditis. Pericarditis is a very well-known pathophysiology that is very much based around IL-1. IL-6 was looked at for atherosclerosis because when they did the CANTOS trial with canakinumab, which is an IL-1 beta inhibitor, that showed benefit in reducing cardiovascular outcomes, but it was thought that it was a secondary effect on IL-6 that was the actual effect that it had on atherosclerosis because of genetics, Mendelian randomization, and also that it was the most close association in that trial, the reduction in IL-6 with the reduction in cardiovascular events. It does look like that hypothesis may be incorrect.
It may be proven wrong by the ZEUS trial, that actually an IL-1 beta inhibitor did actually work in CANTOS, but an IL-6 inhibitor did not work in the same population. Unfortunate for Novo Nordisk and the investigators and the patients involved, but doesn't change how we approach pericarditis.
I also think some of the other observations from that study are a reminder of the downside of immuno suppression therapy, because severe infection was a major observation from that study. To the extent that you can offer a non-immune suppressing drug that has a more multifactorial mechanism or mechanism of action, I think that's going to be the pathway. More of an immune modulatory approach to heart disease versus an immuno suppression approach to heart disease.
This is obvious. We think that any increase in serious infection is bad across the board for anything. Specifically, can you talk a little bit about how that's definitely a big negative for any type of inflammatory cardiac condition or indication?
Well, yes, for any indication. For instance, we have a subcutaneous formulation, CRD-38, that we have declared we are looking at heart failure with preserved ejection fraction. There is the HERMES trial ongoing with the IL-6 blocker with Novo Nordisk. We're a little unsure about giving immunosuppression to patients with heart failure, especially seeing heart failure patients most often come into hospital with a chest infection that decompensates their heart failure, or they go into bad heart failure and get a chest infection. Those are really the two things that happen that lead to the patient's death. We think it's really important that we look towards drugs that don't have an immunosuppression effect in heart failure patients.
I think that's really going to cast a spotlight on our next stage asset, the SUBQ formulation of the lead molecule, because we'll be reporting the pivotal phase III data, which will be the definitive assessment of efficacy of the molecule in a classical inflammatory cardiac indication. We'll have a potential once-monthly version of that is also a non-immune suppressant, going into the heart failure space right around the same time that we believe there's going to be a lot more interest in immunomodulatory approaches to that indication.
I think it's fair to say that one of the advantages of your drug development program right now with MAVERIC, with CardiolRx, is the fact that we have an approved drug out there for recurrent pericarditis.
What was needed from a clinical trial standpoint to get approved, and then what the FDA is clearly familiar with the space and the area, because they have now approved a drug. That has given you a nice roadmap here. Maybe could you talk a little bit, we have touched on some of these points already, but could you talk about the MAVERIC phase III trial design, and how that compares to the phase III of the approved drug that is out there now, the RHAPSODY trial for rilonacept?
Well, you may remember in the RHAPSODY trial, they took patients that were having an episode of recurrence, and they put all the patients on rilonacept. Then they got to the point where they were settled down, and then they randomized those patients in a blinded manner to come off rilonacept onto placebo. Everybody had been on three months of treatment, or continue on rilonacept, and that is where they showed the benefit. In our situation, we have waited longer on stable doses of rilonacept right out to past a year, which most people think is important to try and get total control of the patient's pericarditis. But we know that it does not matter how long you are on rilonacept, when you stop it, you have a recurrence rate of 75% at three months. But effectively, we are doing the same thing as what they did.
We are saying, as the placebo arm of RHAPSODY is, we are saying stop the rilonacept. You will be on either placebo or CardiolRx, and our primary endpoint is recurrence of pericarditis during the six months. We have an overlap so that you are on your rilonacept for at least 10 - 16 days while you have initiated your CardiolRx or placebo.
Yeah. So essentially, we are mirroring the run-in phase of RHAPSODY.
Yeah.
You talk a lot about this being in a rich patient population, so it does really seem that this is the ideal trial design. I know you guys have spent a lot of time with your SAB in an advisory group to figure out how to design the best trial to give you the result you want to see. I guess at the end of the day, because of the way this design is so robust, that if it works, we're going to see that, right? If it doesn't work, there's not going to be really ambiguity here. Would you agree?
Yes, because the patients who have been on rilonacept for more than a year have all failed colchicine in the past and are not on NSAIDs, and no one wants them to go back on corticosteroids. When they come into our trial, they're just on rilonacept, and then they drop off rilonacept to only on CardiolRx or placebo for the treatment of their pericarditis. So it's a very clean population. There's no confounding factors with other medications.
It's really putting our drug to the ultimate test--
Oh, yeah.
--because these are the more advanced patients.
Yeah.
I think the cardiology community and patients are going to be reassured with a positive outcome because we've shown the effects in the more severe patient population, which we believe will allow the drug to migrate into the more moderate disease population because of its convenience, oral administration, and non-immune suppressing profile.
Got it. Your thoughts on pricing have really seemed to have evolved, and I know you've done more additional market research here. We're one of those situations where we have no drug out there. We know what the price of that drug is. We just wanted to maybe understand a little bit or have you talk a bit about the pricing, where that could land, and the rationale behind that as it relates to trying to maximize your target market, but also trying to obviously avoid the scrutiny of payers.
We have not set the price--
Mm-hmm.
--at this point.
Yeah.
We will await the final data from the phase III trial and the outcomes to further that work. We have conducted extensive pricing studies with payers, and they are more optimistic than we are with respect to the pricing levels that we anticipated for the drug. They could be as high as 60% o f that, of the incumbent medication, rilonacept, which will be a very profitable franchise for Cardiol, especially if you consider it in the second-line category and potentially an off-ramp for long-term IL-1 suppression users. To your point, to the extent its convenience allows it to migrate into first line.
Given that we are about seven months out from the top-line data readout, this is usually about the time we start to hear companies start talking more about on the details of their commercialization approach in the space. Can you give us, talk to us a little bit about the commercial infrastructure, what that would look like for CardiolRx on a potential approval?
I think there are, again, as an oral drug, this lends itself to multiple distribution platforms. Specialty pharmacies would probably be the go-to strategy for this because pericarditis, it is important to note that in MAVERIC, we have really the largest pericardial practices throughout the United States involved in this study, and they are typically the first prescribers of a medication. We can use specialty pharmacies to distribute to those points of care for dispensing of the medication. This would lend itself to either other orphan-focused companies, tactical sales force, could be a direct-to-market strategy because the points of care are so distinct.
I think it is important to note that our primary focus now is the continued execution and completion of MAVERIC, and during the lead up to that data, we will be intensifying discussions with potential commercial partners as well as exploring all possible options to make sure this drug is available to patients in need.
I assume once we get the data from MAVERIC, what we should expect then, you guys to start talking a lot more about the commercial opportunity in regards to what you need to do from an infrastructure standpoint to be successful with the drug. Would that?
Absolutely. I think with IL-1 blocker therapies now generating or being forecasted to exceed CAD 1 billion in revenues, I think that is just reaffirming this market is growing. The availability of a drug with a label for the disease has identified the patient population. It is clearly large. It is clearly high demand. From all the specialists and patients that we have interacted with, there is a need for an oral option.
Do you feel that a company the size of Cardiol has the ability to be able to successfully market a drug in the RP space?
I think first and foremost.
I would expect you're going to say no, but.
You want me to say no?
No.
All things are possible. We are a drug discovery and development company. That's our area of expertise. We've shown that we can execute orphan drug trials on or ahead of schedule very efficiently in complex geographies around the world. You'll recall the ARCHER trial was five countries, four major jurisdictions around the world, and it was executed ahead of schedule in a trial very similar in size and scope to that of MAVERIC. ARCHER was 109 patients. Target patient population for MAVERIC is 110. They're almost identical in size. However, MAVERIC is U.S.-centric. It's focused on the U.S., which is obviously a jurisdiction that we have high confidence in executing on schedule.
Got it. Then payer assist program, is that really central? Is that a really important part of the commercialization process for a drug in RP?
I believe it will be. I think that's why you're going to need a label. That's why you're going to need a script for this because to make this medicine accessible. But I think the upside that is not well appreciated is based on the mechanism of CardiolRx. There is the hope that this is a disease-modifying drug. From a payer perspective right now, when they start a patient on the more expensive biologics, they are faced with potential multi-year reimbursement, and the reimbursement needs to be recertified annually, typically. We have the possibility of being a bridge off of therapy entirely. I think that increases market penetration and increases the attractiveness of the drug option for payers. They're going to step up much faster for a more affordable medicine that potentially patients can taper off of faster than being dependent on it for long term.
With the time we have left, the minute we have left, I know we spent most of the time here on MAVERIC and recurrent pericarditis because that's the most imminent part of the story coming forward. But could you just maybe just end by just talking a little bit about how we should be thinking about acute myocarditis and then especially heart failure because the size of that market potentially?
I think the key read through from ARCHER is it's the first biological impact ever observed in myocarditis, and that's coming from the Les Cooper of the world, one of the most prominent experts in that who's studied that disease for over 30 years. Importantly, the impact on LV mass has read through to heart failure because myocarditis can present as heart failure just in a younger population. It is highly consistent with all of our pre-clinical research that was published in the Journal of the American College of Cardiology. Really, myocarditis provided a proxy for the potential impact of our SUBQ formulation on heart failure, which is probably one of the largest, if not the largest medical challenges facing medicine today.
Well, I think with the valuation of the company versus the only other company that's in the space with the approved drug, there's definitely a massive disconnect here in the story. Definitely think this is exciting times for the company, especially with the MAVERIC trial reading out soon. I wanted to thank you very much for taking the time to talk to us today.
Thanks very much.
Thank you.