Corbus Pharmaceuticals Holdings, Inc. Q4 FY2020 Earnings Call

Hello, and welcome to the Corbus Pharmaceuticals Fourth Quarter and Year-End 2020 Earnings Conference Call. As a brief reminder, all participants are currently in a listen-only mode. Following the presentation, there will be a question-and-answer session. Note that this conference call is being recorded at the company's request and will be made available on the company's website following the end of the call. I would now like to turn the conference over to your host, Ted Jenkins, Senior Director, Investor Relations and Corporate Communications. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining us today. At this time, I'd like to remind our listeners that remarks made during this call state management's intentions, hopes, beliefs, expectations, or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements are based on Corbus' current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Corbus files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Joining me on the call today are Dr. Yuval Cohen, our Chief Executive Officer; Dr. Barbara White, our Chief Medical Officer and Head of Research; Sean Moran, our Chief Financial Officer; and Craig Millian, our Chief Commercial Officer. With that, it's now my pleasure to turn the call over to Yuval.

Thank you, Ted. Good morning, and thank you to all of you joining us this morning. Since we reported clinical data last year, we have made progress on executing our strategic plan I laid out on the last quarter's call. First, we continue to work to maximize the value of lenabasum; second, we are working to move our internal pipeline into clinical testing in 2022; third, we are actively engaging with potential partners to expand our pipeline. Analyses of preclinical and clinical data show lenabasum is an active compound. As such, we believe our Phase 3 study in dermatomyositis represents a potentially significant inflection point in the coming months. We have executed our previously announced plan to move the primary endpoint from week 52 to week 28. All patients in the studies have now completed the week 28 visit. Topline data remains on track for the second quarter of this year. The data from this study will shape our path forward on lenabasum. We continue to advance and prioritize our in-house endocannabinoid system targeting assets, which Barbara will discuss today. We remain in a unique position being on the forefront of research and development of molecules that target this biology that has applicability across many potential indications. This pipeline encompasses drug candidates for metabolic disorders, fibrotic diseases, and cancer. We anticipate that lead compounds from these internal programs will start clinical studies in 2022. The third element of our strategy is to expand our pipeline through acquisitions of external assets. We are focusing on biology beyond the endocannabinoid system and new indications that will leverage our expertise and capabilities within immunology.

Thank you, Yuval. The Phase 3 DETERMINE study, which is testing safety and efficacy of lenabasum in adult patients with dermatomyositis, is progressing on schedule. As Yuval said, we amended the protocol to change the timing of the primary efficacy endpoint from week 52 to week 28. As a reminder, the primary efficacy endpoint is the composite ACR EULAR total improvement score comparing lenabasum 20 milligrams twice daily and placebo groups. In this study, lenabasum and placebo are added on to stable doses of standard treatments for dermatomyositis, including immunosuppressive therapies. All subjects in the DETERMINE study have completed their week 28 visits, and most have completed a 28-day safety follow-up visit off study drug. Topline results are expected in the second quarter of this year. The outcome of the DETERMINE study will inform our decision about next steps in our systemic sclerosis program. Forced vital capacity is being measured in these dermatomyositis subjects over the course of the study. We note with interest that Roche’s Actemra was approved by the FDA for the treatment of interstitial lung disease in systemic sclerosis recently, despite failing to meet the primary efficacy endpoint in both the Phase 2 and Phase 3 study. The approval appeared to be based on findings of less decline in forced vital capacity and post-hoc analysis of subgroups of the systemic sclerosis subjects. We are considering potential implications for the lenabasum program, in which less decline in forced vital capacity was also observed in a subgroup of subjects in that study. Currently, we are not considering additional studies of lenabasum in cystic fibrosis. We are working with investigators on post-hoc analysis of the data to better understand pulmonary exacerbations in people with cystic fibrosis who are at high-risk for these medically significant events. We want to take this opportunity to reiterate our gratitude to the leadership of the cystic fibrosis foundation, staff at the Cystic Fibrosis Foundation Therapeutics Incorporated, all our investigators, and especially, all the patients who participated in these studies for their support throughout our two Phase 2 studies in cystic fibrosis. This is an incredible community.

Thank you, Barbara. I will now provide an update regarding our financial position. Corbus has significantly strengthened its balance sheet. We expect the cash on hand of approximately $127 million as of March 15, 2021, to fund operations into the first quarter of 2024 based on our current budget. This should allow us to complete our dermatomyositis study, move our two internal programs into the clinic next year, and pursue complementary external opportunities without a financing overhang. In closing, we continue to believe that the endocannabinoid system is a key target for the development of therapeutics for the treatment of inflammatory fibrotic and metabolic diseases as well as cancer. We are excited for the completion of our Phase 3 clinical trials in dermatomyositis this year. We also look forward to data from the study of lenabasum in lupus. We are actively advancing our pipeline to focus on those programs that we can deliver at the earliest data inflection point. We have the resources and are committed to bringing in external assets that complement our existing pipeline and expertise. We look forward to updating you on those initiatives in the very near future.

Our first question today is from Brian Abrams of RBC Capital Markets.

This is David Szeto on for Brian. I just have a couple of questions here. So first one, I was just wondering if you could elaborate maybe a little more on how comfortable you're getting towards selecting candidates for both the CB1 and CB2 programs? I know that you mentioned you'll go into more details at a future R&D Day. But I guess just given the economy of sciences data they presented, it does look like you're starting to clearly differentiate some of the profiles, and I guess I'm just curious if you can provide any more color on how comfortable you are reaching a profile that's desirable? And then my second question is just on cash runway. So it looks like the $127 million that you mentioned just now should last potentially 12 or so quarters through 1Q 2024, which maybe a flat run rate of just around $10 million for OpEx per quarter. I guess could you remind us how that comes down from the $21 million last quarter? And if this takes into account anything for entering the clinic with additional molecules in 2022 and beyond?

Okay. I'll take the first question, which was about our level of comfort that we'll be able to reach candidate selection with the CB1 inverse agonist and the CB2 agonist. Let me start with the CB1 inverse agonist. For us, I think there's just so much data that shows the metabolic effects of these compounds in animals and in humans. And we've been able to confirm that with some of our candidates as well. So I suspect that the ability to show desired metabolic activity is not going to be an issue. The real question is to do our very best to minimize the levels of CB1 receptor occupancy in the brain with the compounds. We have spent a lot of time testing a lot of compounds and redesigning compounds in order to be able to do that. And at this point, based on data that we have with some chronic dosing, 28-day dosing, in mice, we really have several promising compounds. So while those tests are ongoing, and we need to get into them in even more detail, at this point, I'm actually quite confident that we're going to get there, and we intend to get there by the end of the year, perhaps before the very end of the year. So things are progressing nicely in terms of our ability to understand the pharmacokinetics of these compounds in the brain as well as to move forward with the metabolic studies.

So regarding cash, we just completed two pivotal studies that were very expensive in CF and SSC. Those costs were reflected in last year's burn rates, and DM has just finished up. The other thing to keep in mind is we went through a reduction in workforce that significantly reduced our personnel costs. Therefore, we project about a $10 million burn on average going forward, and that will support the development of our compounds into Phase 1 studies as well.

The next question is from Maury Raycroft of Jefferies.

So first question is on the dermatomyositis study. Just wondering if you could say how many patients have gone on to the open-label extension and are still on drug and if you can talk about the discontinuation rate in the study too? And potentially, anything that you're seeing in the open-label extension study that you can comment on at this point?

Sure, Maury. This is Barbara. Thanks for the question. Some numbers. We have had a discontinuation rate of around 8% from the study, which was a bit lower than we had anticipated. We have had, I think, 166 patients complete the week 28 visit, which is now the primary efficacy endpoint. We anticipate having, perhaps about 100 patients, give or take a few, complete the visit 10 by the time the study is actually shut down. And we have had, of those that are eligible, 90% of the subjects who have been eligible so far have enrolled in the open-label extension. Does that help? Any other numbers?

Yes, that's helpful. And then the other question was just based on Actemra approval and you commented a little bit about it on the call, but just wondering if you can provide more on what next specific steps are and potentially even a little bit more on timeline. I guess, what else do you need to do in order to see if your SSC data could be sufficient to approach the FDA? And is it contingent on what you see in the dermatomyositis study?

I think it’s important to highlight that we found the approval of Actemra for treating interstitial lung disease in systemic sclerosis particularly noteworthy, especially since that drug had previously failed two studies, one Phase 2 and one Phase 3, without achieving the main goals. However, there was promising data in forced vital capacity. We understand that the FDA may have requested that data, although we cannot confirm this. It appears they also focused on a subset that wasn't part of the secondary analysis in the initial Phase 2 study. The approval under these circumstances emphasizes the need for more treatments for this serious autoimmune disease. This leads us to carefully re-examine our own data multiple times, as we observed a lesser decline in forced vital capacity among patients who were on stable immunosuppressants. Additionally, it’s noteworthy that the patients in the Actemra study were not receiving what is considered standard care, being on no or low doses of corticosteroids, which is not typical for treating interstitial lung disease. In contrast, our patients were on standard treatment, and we also observed improvements in those on stable doses established for several years. Although our patient numbers are smaller, we are looking for additional supportive data, potentially from open-label expansions or patients who switch to placebo, to see if improvements are maintained over time. Furthermore, in our dermatomyositis study, we are measuring forced vital capacity where a smaller percentage, around 38%, have interstitial lung disease. We are keen to evaluate the changes in forced vital capacity between lenabasum and placebo for those patients who have been on stable immunosuppressants. The timelines for this analysis will follow the results from the dermatomyositis data, after which we will determine if it’s worth pursuing further. It remains uncertain whether the FDA’s decision was an isolated instance or if it indicates a shift in the agency’s openness to consider subset analyses when approving drugs for this rare disease.

Got it. That's really helpful perspective. So it sounds like potentially the next update on this potential path would be in the second half of this year?

I think that's fair, by the time we get the DM data and look through everything else because getting the DM data is going to be our first priority right now.

Thank you. We have reached the end of our question-and-answer session. Ladies and gentlemen, that concludes today's teleconference and webcast. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.