Transcript
Welcome to the Savara conference call. At this time, all participants are in a listen-only mode. An audio webcast of this call will be available on the Investors section of Savara's website, at savarapharma.com. This call is subject to copyright and is the property of Savara. All recordings, reproduction, and transmission of this call without the expressed written consent of Savara are strictly prohibited. As a reminder, today’s call is being recorded. I would now like to turn the call over to Anne Erickson, Head Investor Relations and Corporate Communications at Savara.
Good afternoon and thank you for joining us today. A press release reporting our second quarter 2020 financial results was issued earlier today, August 6, 2020, and can be found in the Investors section of our website, at savarapharma.com. If you have not received this release or you would like to be added to the company’s distribution list, please email me at [email protected]. This call is also being webcast live, and one hour after the call a replay will be available on the company’s website, and will remain available for the next 30 days. A telephone replay will be available through August 13. Today’s conference call and webcast contain forward-looking statements within the meaning of federal securities laws, including statements regarding the company’s strategy, goals, product candidates, clinical studies, and financing matters. Such statements are subject to significant risks and uncertainties, including those described in our press release issued today, Thursday, August 6, 2020, and our recent SEC filings on Forms 8-K, 10-K, and 10-Q. Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements, which speak only as of today. We will take analysts’ questions at the end of the call; however, we encourage shareholders to submit questions via email to [email protected]. Time permitting, we will address these questions alongside any others received by our IR team. Joining me on the call today are Rob Neville, Chief Executive Officer; Badrul Chowdhury, Chief Medical Officer; Taneli Jouhikainen, President and Chief Business Officer; and Dave Lowrance, Chief Financial Officer. I will now turn the call over to Rob.
Thank you, Anne, and good afternoon, everybody. Let me start by saying that I’m pleased with the progress we are making across our top line. Most notably, the value program - we estimate that we now have finalized design for the Phase III IMPALA 2 clinical study. In a few minutes, Badrul will walk you through all the details. First, let me share that the technical team has been working diligently to get the operational aspects of the study in place and finalize everything, so that we can get the study up and running as soon as possible. One component of that work is taking prudent proactive steps to determine how to COVID-proof the study as best we can. While we hope there will be no major disruptions from the virus, we are putting proactive measures in place to preserve the continuity of the study in any geographies experiencing a resurgence. Examples of such measures include telemedicine visits where possible. Separately, our manufacturing and drug supply for IMPALA 2 is progressing as planned with no discernible impact from COVID. On the topic of COVID, you may recall in March, we announced that due to practical limitations caused by the virus, we stopped enrolling patients in the Phase III AVAIL study and exploratory ENCORE study. Fortunately, we were able to keep the majority of enrolled patients in both studies and through post collaboration with the research centers, the studies continued. Regarding AVAIL, enrollment numbers were smaller than originally expected with 133 enrolled out of the target of 150 in the primary analysis population, and that being younger patients between six and 21 years old. The older patient population completed 55 out of the targeted 50. By enrolling fewer patients than expected in our primary population, there will be a reduction in its count. Additionally, as we near the end of the study and think about the addressable nursing market, we have to consider the impacts of Trikafta, the newly approved CFTR modulator that has been transformative in the treatment of CF. While this possibility of AeroVanc could be effective when added to treatment with Trikafta, the AVAIL study does not assess that combination. Regardless, we remain optimistic that AeroVanc may play an important role in the treatment of Mercer infections by addressing the needs of specific patients within the CF community. And we look forward to announcing top-line results for the AVAIL study in early 2021. With regard to ENCORE, that study was about 50% enrolled with 14 patients out of the target of 50 when enrollment was halted. As a reminder, ENCORE is a non-controlled 48-week exploratory study evaluating alternatives to the treatment of nontuberculous mycobacterial or NTM lung infection. Upon this conclusion, we will determine next steps for the NTM program, which also includes the exploratory OPTIMA studies in non-CF patients, for which we announced applied results in March. Lastly, let's turn to our U.S. development programs. For those not familiar, Apulmiq is an inhaled formulation developed for the treatment of non-CF bronchitis. Our team is further analyzing the data from the previous studies, and working closely with bronchitis key opinion leaders worldwide on the design of a conservatory program for future discussions with the FDA. After similar deliberations and discussions with the agency, you will have a better sense of the necessary resources to advance Apulmiq in the U.S. Options for financing and Phase III conservatory programs include partnering and various forms of project financing. With three Phase III programs in our top-line, the remainder of 2020 will be a very busy time operationally. Importantly, we are confident about our ability to execute, as we believe we are sufficiently resourced through top-line results of AVAIL and IMPALA 2. With that, I will pass the call over to Badrul, who will tell you more about our progress for the IMPALA 2.
Thank you, Rob. And Hello, everyone. Last quarter, we outlined the expected design of the confirmatory IMPALA 2 study following our discussions with the FDA. As I noted, we are working through some additional details of the study. That has been done, and we now have a protocol that incorporates suggestions from the FDA and EMEA. New information is that the IMPALA 2 sample size will be 160 patients and we expect to start the study in the first quarter of 2021. It will be a double-blind, placebo-controlled study with efficacy endpoints assessed by week 24 for the primary analyses. However, the placebo control period will be 48 weeks to better assess the durability of treatment effect as well as the long-term safety of the drug, which is intended to be administered chronically. Patients will be randomized into one of two arms: more than 300 micrograms administered once daily or placebo administered once daily. At the end of the placebo control period, both treatment arms will roll over into a 48-week open-label follow-on period, in which all patients will receive the active drug administered once daily. While not requested by regulatory authorities, we believe the follow-on period will encourage patient enrollment, as it offers an incentive for patients to participate in the study. Additionally, it will provide useful information on the long-term safety of the drug. The primary endpoint of the IMPALA 2 study will be the lung function test of diffusing capacity for carbon monoxide or DLCO. Three secondary endpoints designed to measure direct patient benefit will be evaluated: those being St. George's Respiratory Questionnaire or SGRQ total score, SGRQ activity competence score, and exercise capacity using a treadmill test. With the sample size of 160 and 106 locations, IMPALA 2 is 90% powered to show a difference of 5.7% improvement in DLCO at week 24 with drug and placebo having a change from baseline. For the IMPALA 2 study to be considered a winning study by the FDA and EMEA, the statistical win on the primary endpoint of DLCO will need to be supported by evidence of efficacy across multiple clinically meaningful endpoints. While the statistical event on the secondary endpoints is not required, transmitting data across secondary and tertiary endpoints would be considered to assess efficacy. Let me now compare some key elements of the IMPALA 2 study with the first IMPALA study which completed in June of 2019. The primary endpoint for both studies is gas exchange measure – DLCO in IMPALA 2 and AA gradient in IMPALA. DLCO by the second relation in the IMPALA study showed a live separation between the drug regimen and placebo, due to treatment difference of 7.8% improvement over placebo at week 24. In the IMPALA 2 study, the DLCO is measured using a standardized testing procedure, and all testing sites will use the same equipment, which will not be the case in the IMPALA study. Therefore, we expect to have less variability in the DLCO data. This allows DLCO over AA gradient as the primary endpoint in IMPALA 2 for a variety of reasons, mainly to standardize lung function tests that are widely used in clinical practice. When taking measurements, the DLCO test can be repeated more times. Additionally, in the IMPALA study, the difference between the drug and placebo were more consistent for DLCO than the AA gradient, and given the standardized testing tool in IMPALA 2, we believe we can improve on the DLCO results. AA gradient could also be measured in IMPALA 2 but will be analyzed as an explanatory endpoint. I would like to acknowledge that the use of supplemental oxygen during blood measurement was the confounding factor in the IMPALA study that impacted the AA gradient calculation. The IMPALA study protocol allowed patients to remain on supplemental oxygen during blood sampling if they could not discontinue. The IMPALA 2 addresses the use of oxygen as a confounding factor by specifying that patients will need to come off supplemental oxygen and be tested for stabilized blood oxygenation before any gas exchange measurement. Situations in which patients are not able to come off supplemental oxygen, we will not conduct any gas exchange measurements under such conditions and data for such patients will be missing. The study has key criteria ensuring that enrolled patients can come off supplemental oxygen for a short time period. However, it is possible that during the study the patients can progress, particularly in the placebo arm, and may be unable to come off supplemental oxygen. Now let’s review the secondary endpoints. The SGRQ was used in the IMPALA study and is as I mentioned before, will be used in IMPALA 2 as well. The SGRQ has three components: symptoms, activity, and impact. The SGRQ total score will be a secondary endpoint in IMPALA 2, encompassing all the components. They showed a nice total separation between the daily dose regimen and placebo. In IMPALA 2, we will also separate activity as another secondary endpoint, as it is most applicable to aPAP and it also shows a good separation in IMPALA. As we mentioned, a function, the IMPALA 2 study will assess exercise capacity using a treadmill test as a secondary endpoint. The treadmill test is a standardized test for determining improvement in exercise capacity by gradually increasing the speed and slope until the patient reaches their limit. In contrast, the IMPALA study used the six-minute walk distance as a key secondary endpoint, which showed some trends but was not as clear. The exercise treadmill test is expected to be more discriminatory, as patients are pushed to their functional capacity. Whole lung lavage is an important aspect in the treatment of aPAP patients. The first IMPALA study measured whole lung lavage as a key secondary endpoint. The percentage of patients who had whole lung lavage in IMPALA was about 10%. In the IMPALA 2 study, we will record whole lung lavage as an exploratory endpoint, relevant during the double-blind treatment period. We expect to have more patients undergoing whole lung lavage to compare between the drug and placebo. The IMPALA 2 study will have a total of 150 patients divided into two treatment arms, with 80 patients in each. In contrast, the IMPALA study had a total of 138 patients in three treatment arms with about 48 patients in each. The IMPALA 2 study will only have one active treatment arm and one dosage regimen, as in theory, it should afford better treatment effects than an intermittent dosing regimen. Operationally, IMPALA 2 is conducted at approximately 50 sites across nearly 15 countries, including the U.S., Canada, Japan, South Korea, and select countries in Europe. We plan to try and open all study centers as close together as possible. In contrast, IMPALA was conducted at 32 sites across 18 countries. However, the study centers were not activated at once, which led to a gradual ramp-up of patient enrollment over time. Once all IMPALA study centers opened, including sites in the U.S. that were added later, the peak enrollment rate was approximately eight to ten patients per month. Given that we plan to open all IMPALA 2 study sites around the same time—20 of which will be in the U.S. and Canada—and given our experience and relationships with many centers that conducted the IMPALA study, we believe we can enroll IMPALA 2 with greater efficiency. We will not provide the timing for enrollment completion today; once all centers have initiated and started recruiting, we will be better positioned to answer questions in this regard. There are no approved treatments for aPAP in any country, and no other company clinical trials, which is favorable for IMPALA recruitment. Additionally, we are stalking the IMPALA-X study, the continuation of the IMPALA study where approximately 60 patients are treated with Molgradex 300 micrograms in an intermittent weekly regimen. Some patients from IMPALA-X may be eligible for the IMPALA 2 study. Over the last few months, we have had productive conversations with regulators in the U.S. and Europe, culminating in an IMPALA study design that we are confident in. Constructive discussions with the Japanese regulators are ongoing, and we will keep you updated on most matters in this regard. As I end my remarks, I want to mention that we are pleased to see that this rare disease is in the minds of the FDA as well. The agency, in partnership with the PAP foundation as a national organization for rare disorders, recently hosted a patient listening session focused on this disease. These sessions allow the agency to engage directly with patients or advocates about their experiences living with this rare disease, and to incorporate information from these sessions into their recommendations. Patients are at the heart of a lot of research. We are happy to hear that people living with aPAP could share powerful stories with regulators. It is these stories that continually motivate our drive to develop treatments for this serious disease. Thank you for your time today. I will hand over the call to Dave, who will provide you with a financial update.
Thanks, Badrul. And hello, everyone. Let me begin by updating you on our cash position. As of June 30, 2020, our cash, cash equivalents, and short-term investments were approximately 100 million, with 25 million of debt. Under our current operating plan, including the anticipated second tranche of approximately 46 million from our December financing, we believe we have sufficient capital to fund our planned operations. With respect to our second quarter results, Savara’s net loss attributable to common stockholders for the three months ended June 30, 2020, was 9.4 million or $0.16 per share, compared with a net loss of 21.9 million or $0.57 per share for the three months ending June 30, 2019. Research and development expenses decreased by 4.4 million or 42% to 6.1 million for the three months ended June 30, 2020, compared to 10.5 million for the three months ended June 30, 2019. The decrease was primarily due to 2.8 million in lower available study costs due to the wrap-up of enrollment and the transition to processing the last patient out along with database management lock and reduction in related CMC and clinical operations activities. Additionally, there was a decrease of approximately 1.6 million associated with our Molgradex for aPAP program as study activities associated with IMPALA and IMPALA X are wrapping up. General and administrative expenses decreased by 1.1 million, or 26% to 3.1 million for the three months ended June 30, 2020, down from 4.2 million for the three months ended June 30, 2019. This decrease was mainly due to reduced commercial activities for the three months ended June 30, 2020. I will conclude my remarks by reiterating that our cash position enables us to execute upon our strategy and continue to work on our study initiatives. Now I will hand the call back to Rob.
Thank you, Dave. And before we close the call today, I wanted to share my enthusiasm for the future, especially as it relates to our aPAP program. Let me just tell you a few reasons why. First, the FDA has described its breakthrough therapy designation for Molgradex in aPAP. In addition, the mechanism of action for the drug in aPAP is well understood, and the data from the IMPALA study demonstrate that the drug has beneficial effects. We are in a great position with this program; we believe in Molgradex and its potential for patients. Our investors on the capital side tell us they also believe in it, and importantly, our new CMO, Badrul, who ran the FDA division responsible for overseeing such therapies, shares our vision. With the ability to apply key learnings from the IMPALA 2 protocol, and incorporating input from the FDA and EMA into the study design, we believe IMPALA 2 has a high likelihood of success. We are strongly positioned to improve on the tasks and exceed expectations in the future. We are grateful for the loyalty, patience, and support of our current investors. Given what we have with IMPALA 2, a drug that is believed to work and a study that's about to start, and not to even mention our other phase III top-line programs, we feel the Savara investment thesis is strong and poised to grow stronger still. As always, we thank you for your support, and we look forward to keeping you updated as milestones are met. On that note, I would like to inform you that we will be transitioning away from quarterly calls such as this, and instead, hosting webcasts throughout the year as needed, with a frequency aligned with our news flow. We will continue to disclose our quarterly updates via press releases, and we will always alert you to any webcasts one week in advance so that you can plan accordingly. Now I will ask Jason to open up the call for analyst questions.
Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question is from Michael Higgins from Ladenburg Thalmann, Please go ahead.
Good afternoon, guys. This is [Edward] on behalf of Michael. I appreciate you taking the question and congrats on finalizing the design for IMPALA 2. I have just a couple of questions on the design. I'm wondering, you talked about 20 sites opening up in the U.S. and Canada; I heard that correctly? So I’m just wondering how many you expect to spread across the EU and Asia? In terms of the timing for the release of the data, or the data itself, I'm just curious whether the EMA or the FDA will require the full 24-week or the full 48-week data before you are allowed to start putting together something like an NDA.
Our sites in the U.S. and Canada will be approximately 20; the total number of sites is about 15. There will be about eight or nine countries in the EU, and also sites in Japan and Korea. The distribution will be fairly even across the EU and Japan and Korea, so it’s a global scale endeavor. Regarding your question on the 24 weeks versus 48 weeks for the submission of an application to the FDA or the EMA, the 48 weeks is the placebo-controlled time period, so the submission will happen based on the read-out of the 48-week data.
Okay. Thank you for clarifying. In terms of the aPAP asset, I'm wondering when you anticipate having those FDA discussions and whether they will be impacted by COVID. Do you anticipate running this trial in tandem with IMPALA 2, or would you prefer to wait until you get that data in?
Let me answer that one. This is Rob. So we haven't guided yet, but our internal goal is to have those discussions with the FDA as soon as feasible, hopefully this year or early next year. Regarding running the study in parallel, yes, we believe we will do those in parallel. Once that study is set up and we have done all the internal planning from a clinical operations standpoint, there will most likely be some overlap.
Okay, perfect. I appreciate all the detail, and thanks. Congrats again.
[Operator Instructions]. There are no more questions in the queue. I will now hand the call over to Anne Erickson to read any questions submitted through email.
One question submitted. So, one concern is involved with the positive impact whole lung lavage had on the AA gradient. Is that also the case with DLCO?
I'm going to take this question. We have said that whole lung lavage can still benefit a patient even after undergoing whole lung lavage. Contrary to the general belief that whole lung lavage improves gas transfer, such an effect was not shown in the IMPALA study. Perhaps it is due to the lack of disease severity in the enrolled patients in IMPALA 2 with similar disease severity to those in IMPALA. In IMPALA, there was a noted improvement in the lung function after whole lung lavage; however, the improvement was of limited duration, and the patients' disease progressed. We anticipate that will change in IMPALA 2.
Thank you, Jason. Are there any other questions?
No, there are no more questions in the queue.
Okay. Thank you, Jason. Thank you everybody for taking the time to join our call. I appreciate it. Take care.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.