Earnings Call Transcript - TRVI Q2 2022

Operator, Operator

Good afternoon, and welcome to the Trevi Therapeutics Second Quarter 2022 Earnings Conference Call. Please note, this event is being recorded. Various remarks that management makes during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's most recent quarterly report on Form 10-Q, which the company filed with the SEC this afternoon. In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so even if its views change. I would now like to turn the conference over to Jennifer Good, Trevi's President and CEO. Please go ahead.

Jennifer Good, CEO

Good afternoon. And thank you for joining our second quarter earnings call and business update. Joining me today on this call are Lisa Delfini, Trevi's Chief Financial Officer; and Dr. Bill Forbes, Trevi's Chief Development Officer. Lisa and I have some prepared remarks, then the three of us will be available for questions at the end. This has been an exciting year for Trevi and the second quarter was no exception. After reporting positive interim data in the first quarter, in the second quarter we read out our prurigo nodularis trial, or PN, which was also statistically significant. We believe this was an important validation of the unique mechanism of Haduvio, which works both centrally and peripherally and is important in the conditions we have targeted. Cough and idiopathic pulmonary fibrosis, or IPF, and pruritus and PN represent some of the most severe aspects of these diseases. We believe there is a potential opportunity to affect the underlying disease in both of these conditions. For example, we were able to show the healing of the excoriations on the PN trial with 55% of Haduvio subjects showing at least a one-category improvement in the five-point Prurigo Activity Scale versus 38% on placebo with a p-value of 0.006 at week 14. Let me now provide you with an update on both development programs. Beginning with chronic cough and IPF, we are very excited to be moving forward in this indication. Haduvio is the lead therapy in development for cough and IPF and is the only one to have shown positive results in a blinded study. Cough represents a significant unmet need for IPF patients as the majority of these patients report cough as one of their most bothersome aspects of their disease. In the next study, we also plan to assess other elements of the underlying disease to see if cough reduction has an impact on health outcomes. As I mentioned, we reported highly statistically significant results in the first quarter in the interim analysis of this trial. Since proof-of-concept was established, we worked with our sites to close enrollment early and finish the study. At the interim analysis, we reported data on the 26 subjects who had completed at least treatment period 1, the full analysis set; and 18 subjects who had completed the full crossover of both treatment periods in the trial. For the complete trial, we ended up with 38 subjects enrolled. We are waiting for the full data set on all subjects in the trial as well as the unblinded safety results and expect to announce results on the full set of subjects this quarter. We will also be presenting data from both the interim and full data set for cough at medical meetings this fall, beginning with the European Respiratory Society meeting in Barcelona in September, where our interim data was selected for oral presentation. We have also been actively planning and preparing for the next study in cough. We have engaged our CRO partner, are identifying countries and sites, and are working on a protocol that we intend to discuss with the FDA at a meeting scheduled this quarter. We will keep you informed when the study design is finalized and provide guidance on timing for the trial and results. Our other target indication is for the treatment of prurigo nodularis, which is a serious and debilitating disease characterized by papules and nodules on the skin as well as incessant and severe itching. We believe that PN, due to the refractory nature of the disease, is neurologically mediated and potentially aligns well with the neuronal mechanism of Haduvio. Most of these patients have already tried and failed topical treatments. We believe future patients will be eligible for an oral therapy like Haduvio before turning to biologics. As previously mentioned, we reported positive data at the end of the second quarter in the Phase 2b/3 PRISM trial in PN. The trial achieved statistical significance on the primary and all key secondary endpoints. At the time we reported the topline data, we did not yet have the final key secondary endpoint, which was the PROMIS sleep scale. We are pleased to report that the PROMIS sleep scale also supported the overall positive results, with Haduvio subjects experiencing significantly greater improvements in the PROMIS scale versus placebo with a p-value of 0.0002 at week 14. The first assessment of PROMIS was made at week 6 of the trial, which also showed a statistically significant improvement. We are pleased that the primary and all the key secondary endpoints were positive and that Haduvio demonstrated an early response. This data has been accepted for oral presentation at the European Academy of Dermatology and Venereology in September, which I plan to attend if any of you will be there. The next steps for the PN program include completing the one-year open-label extension study. The last patient is scheduled to complete one year in January of 2023. In parallel, we will continue analyzing the blinded data and preparing a request for an end of Phase 2 meeting with the FDA. It has been a busy year at Trevi. The trial data has positioned us well for potential growth in these two important indications along with other potential life cycle management opportunities. As a reminder, this quarter, we will have the full CANAL data for cough and IPF, FDA meeting on cough and IPF, and an R&D Day later in the quarter to outline the going forward strategy and development plans. I will now ask Lisa to review our financial results and then we will open it up for questions.

Lisa Delfini, CFO

Thank you, Jennifer. And good afternoon, everyone. As a reminder, the full financial results for the three and six months ended June 30, 2022, can be found in our press release issued ahead of this call and in our 10-Q, which was filed with the SEC today after the market closed. In the second quarter of 2022, we reported a net loss of $8.1 million compared to a net loss of $9.8 million for the same quarter of 2021. R&D expenses were $5.1 million during the second quarter of 2022 compared to $6.5 million in the same period of 2021. The decrease was primarily due to reduced purchases of clinical trial supplies and clinical trial subject recruitment costs, a reduction in our use of consulting services, and the nonrecurrence of professional recruiting fees related to hiring in the prior year period. G&A expenses were $2.7 million during the second quarter of 2022, which was flat compared to the same period of 2021. As I discussed on last quarter's call, in early April we raised approximately $55 million through the sale of common stock and prefunded warrants. The offering was priced at the market with no warrant coverage. With more cash on hand and interest rates rising, we are now investing our cash in a portfolio of high credit quality marketable securities to provide interest income. We also received proceeds of $5.9 million in the second quarter related to the exercise of warrants that were originally issued in our October 2021 private placement. Our cash, cash equivalents, and marketable securities balance at the end of June was $78.9 million. We received another $4.1 million in proceeds also from the exercise of warrants that were issued in our October 2021 private placement in July. So we end July with cash, cash equivalents, and marketable securities balance of approximately $79.8 million. This gives us cash runway into Q4 of 2023 to fund our ongoing operations, including completing the open-label extension of the PRISM trial, as Jennifer referred to, preparing for the end of Phase 2 meeting with the FDA, and planning for and conducting our next trial for chronic cough in IPF. In addition, we currently have approximately 11 million warrants still outstanding, which can provide us up to $15 million in proceeds if exercised. With the $55 million raise in April, our cap table has gotten a little more complicated, so I wanted to lay it out for you. As of today, we have 42.8 million shares outstanding. In the April private placement, we also issued 24.4 million prefunded warrants. They are called prefunded warrants because substantially all of the strike prices are paid at the time they are issued. So while they're not legally outstanding, they're required to be included in our calculation of weighted average shares outstanding and basic and diluted loss per share. Also, as I mentioned before, we have approximately 11 million warrants outstanding from our October 2021 private placement and 4.1 million stock options outstanding. So our fully diluted shares outstanding is a little over 82 million. We continue to pay down our term loan, and the principal balance is now under $11 million. In closing, we're excited about the recently reported data in PN and the strength of our balance sheet to continue executing our plan. This concludes our prepared remarks. I will now turn the call back over to the operator for Q&A.

Operator, Operator

Thank you. We will now begin the question-and-answer session. Our first question comes from Annabel Samimy from Stifel. Please go ahead.

Annabel Samimy, Analyst

Thanks for taking my questions. So I was just curious if you had any ideas, I realize it's a little too early. You still have to report out the final data for the chronic cough. But do you have any idea of what a Phase 3 might look like, based on what others have done in, say, idiopathic or refractory chronic cough and how large it might have to be? And then with regard to the PROMIS scale, can you just remind us what's in the PROMIS scale just to get a sense of the meaningfulness of that endpoint? And then finally for PN, so I guess there's now a couple of additional targeted antibodies that have read out. Obviously, Dupixent has filed and they're awaiting a PDUFA for PN. Then Galderma has no – sorry, I've forgotten the name suddenly but their program is in the second Phase 3 trial. And I realize that you're in oral and you might come ahead. But what's your suspicion as to how that development landscape or competitive landscape might shape out? Could it raise awareness for PN? Or could it hinder your opportunity in PN? So I just want to get a sense of how you're thinking about it as it's starting to heat up in this space. Thanks.

Jennifer Good, CEO

Thank you, Annabel. Bill, do you want to take the first two on trial design and the PROMIS scale and then I can talk about the competitive landscape?

Bill Forbes, Chief Development Officer

Yes. Sure. Hi, Annabel. Thanks for the question. I'm going to start with the PROMIS scale. Just to back up a little, we had three key secondary endpoints in PRISM. The ItchyQoL and the Prurigo Activity Scale were read out previously as Jennifer noted. So now we've got the PROMIS, which is the sleep disturbance. That was the short form that we use. So there are eight questions in it. This questionnaire was developed as a general tool for assessing sleep in controlled clinical trials. So we utilized it here. Essentially, as I said, there are eight open-ended statements with five options, ranging from very poor to very good or not at all to very much. The questions are really around sleep and sleep quality. Hopefully, that helps you a little with the PROMIS side. Of course, it was statistically significant at months one, two and three of fixed dose. We were very happy to read those out. Regarding CANAL, we have some data coming out still. Given the strength of the data that we have, we're not expecting to see much difference, although we will be able to read out some new data. We'll take a look at the 24-hour data as well as the data that we've reported earlier. You can expect about a 50% increase in the amount of data that we'll have in that new readout. Going forward, what we've conveyed to the FDA in anticipation of a meeting coming up is that we would like to do a six-month study with three treatment groups. Right now we're looking at the primary endpoint using the digital cost monitor at weeks two, four and then monthly after that over the six months. We'll probably set the primary endpoint early at one month. The onset of effect using nalbuphine is very rapid, so the goal of the six months is to collect important safety information that we believe will benefit the understanding of how nalbuphine may affect these patients. You can imagine things like FVC and hospitalization for respiratory causes are things that we're interested in. This will allow us to go out six months with two active doses, which will give us about 100 patient exposure years, enabling us to accumulate enough safety data in this population to have a firm understanding of the safety and, of course, the efficacy. Hopefully, that helps you, Annabel.

Annabel Samimy, Analyst

Yes. That was very helpful. Thank you.

Jennifer Good, CEO

Yes. No, happy to discuss the competitive landscape. Annabel, you've followed us long enough to know we came to a fork in the road around UP or PN. We chose largely because of the biologics in the space and what we felt they would help develop the market. Also, the pricing would be set at a good level to reflect the disease state. We have always known they would be there. If you talk to dermatologists, there's a treatment paradigm they follow: topical to oral to biologics. Not everyone will necessarily follow that, but there's a big unmet need for that oral systemic piece of this whole equation. Overall, I think it's positive. We obviously knew they were there, both dupi and nemolizumab. It's not that I think it helps overall in the market. If you look at the dupi data sort of the week three months, which is where we’re at, we’re in the same swim lane on delta. They reported out a six-month trial that gets a lot bigger. For this disease, you're trying to break that itch-scratch cycle. Overall, nodules heal, which you're seeing already in three months, and over time, there’s really an exponential effect. As Bill opens up the open-label extension data, hopefully we can share more about the impact of that longer term.

Annabel Samimy, Analyst

Perfect, thank you.

Lisa Delfini, CFO

Yes, thank you.

Operator, Operator

Our next question comes from Serge Belanger from Needham & Company. Please go ahead.

Serge Belanger, Analyst

Hi, good afternoon. Just a couple of questions for us. I guess first on the cough indication, just curious what your current thinking is about exploring indications beyond IPF cough and if that's something you plan on discussing with the agency at the upcoming meeting. And then on PN, I think, you have another FDA meeting for that indication. Just curious what the goal will be for that specific agency meeting. Thanks.

Jennifer Good, CEO

Yes. So as far as cough, we are looking at other indications beyond IPF. That's not something we'll discuss with the agency in our meeting. We're really going to stay focused on that program, lock down, and get agreement there. We are having some discussions internally over the summer. I mentioned in my comments, we will have an R&D Day probably in the latter half of September where we can clearly lay out the development strategy around the indications, timelines, and trial guidance, etc. So Serge, look to that where we will be clear beyond IPF if we're going to pick up any other life cycle management opportunities. As for PN, you're right, we still have our end of Phase 2 meeting ahead of us. We'll take advantage of that. That's a major meeting. We'll take in the data, go over it with them, and talk about what we hope is our last pivotal trial to be able to get approval. It's been a while since we've checked in with the agency regarding that program, but I think a lot of that has gelled with the other competitors in the space.

Serge Belanger, Analyst

And at this point, for the PN program, do you still expect only one additional Phase 3 trial would be needed, correct?

Jennifer Good, CEO

Yes. I mean Bill, do you want to answer that?

Bill Forbes, Chief Development Officer

Yes. No, that's the expectation. We always like to be opportunistic. But I think guiding everybody to one more trial is the most appropriate thing to do here. I think everybody has had a chance to look at the data. It's strong. There's a lot of quality data in there. But I think for this indication, doing another study makes sense.

Serge Belanger, Analyst

Okay, thank you.

Jennifer Good, CEO

Thank you, Serge.

Operator, Operator

Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Leland Gershell, Analyst

Hi, good afternoon. Thanks for taking my questions. Just wanted to ask in terms of timing expectations. I know it's a bit early, and we'll try to be patient for the latter September R&D Day. But any sense of kind of timing on the start of the next studies in both indications as we get into 2023? Thanks.

Jennifer Good, CEO

Yes. So Leland, on IPF-cough, which we've been hustling on and getting things done, we're looking to try to start that in the first half of next year. For PN, we're still accumulating all the data and have to request our FDA meeting, and we’re doing that in parallel. We don’t have enough visibility on that one yet to provide good guidance. But IPF-cough, we are moving towards trying to start that in the first half of next year or earlier.

Leland Gershell, Analyst

Okay, great. And then one more question. Just as we think strategically about the high-class problem you have with these two indications available for Haduvio, anything that you can share in terms of your thought evolution about prioritization of one over the other? Or do you really see the two marching forward kind of alongside each other as you head into steps for approval? Thanks.

Jennifer Good, CEO

Yes, it's a good question, something we always have to be mindful of. There will be a little bit of a cadence that has to go on. For instance in PN, this is a space we know well. We've been doing trials here, with protocols mapped out. Our CRO partners are in place. So that should move along. Our Clin Ops team is on that. IPF-cough has jumped ahead a bit due to the interim data. We’ll schedule things out and find our way, but they should be able to move along roughly in parallel.

Bill Forbes, Chief Development Officer

Yes. I think that's going to be the trick—it’s trying to keep things going in parallel.

Leland Gershell, Analyst

Great. Thanks very much for taking the questions.

Lisa Delfini, CFO

Yes, thank you, Leland.

Operator, Operator

The next question comes from Nathan Weinstein from Aegis. Please go ahead.

Nathan Weinstein, Analyst

Hi Jennifer, Lisa and Bill thank you for taking my questions. I had two questions. One was a follow-up on PROMIS with regards to sleep. Can you just help us think about this from the perspective of patients and feedback you've heard from doctors? How do the patients manage sleep? Do they have trouble with sleep in the PN indication? That's the first question.

Jennifer Good, CEO

Hey Bill, do you want to take that or you want me to take it?

Bill Forbes, Chief Development Officer

Yes. No, I've had some conversations with some of the investigators on this one. As you can imagine with something that has a severe itch with it, sleep disturbance is extremely high on the list of things they want to handle. You can imagine how anxiety-ridden these poor patients are, having to itch all day long and then, of course, not being able to sleep. We're excited about the sleep component of it. I think to move the scales in the way we've been able to do shows that it's a clinically meaningful improvement, we believe, at this point with the PROMIS. We're still talking to some of the investigators and the thought leaders but we're happy with it.

Nathan Weinstein, Analyst

Great, thank you. It makes sense. And then just one follow-up and that's on the CRO partner engaged for the next cough trial. Just a reminder for me if you don't mind. Is it the same CRO you've been working with? And then on the trial sets, will there be significant overlap with where you've enrolled historically?

Jennifer Good, CEO

Yes. So CRO partnering, we're under CDA so I can't disclose it, but it is a partner we worked with in the last round of the trial. They have been terrific. That makes it kind of an easy start. As for sites in PN, there will definitely be overlap with the sites we ran before. In cough, we will go back to the UK as one of our countries. Recall, we only ran that in the UK, so we’ll have to now broaden out into the U.S., and we're looking into other country opportunities as well.

Nathan Weinstein, Analyst

Got it. Thanks. And congrats on a very strong first half to the year. We're looking forward to the back half.

Jennifer Good, CEO

Thank you, Nathan.

Operator, Operator

I'm not showing any further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to Jennifer Good for closing remarks.

Jennifer Good, CEO

We would like to thank everybody for participating in today's call. I hope you all enjoy the rest of your summer. Thank you.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.