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Edited Transcript of APTX.OQ earnings conference call or presentation 12-Nov-19 10:00pm GMT

Q3 2019 Aptinyx Inc Earnings Call

EVANSTON Dec 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Aptinyx Inc earnings conference call or presentation Tuesday, November 12, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Kidd

Aptinyx Inc. - COO

* Ashish Khanna

Aptinyx Inc. - CFO & Chief Business Officer

* Nicholas C. Smith

Aptinyx Inc. - Director of Corporate Development

* Norbert G. Riedel

Aptinyx Inc. - President, CEO & Director

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Conference Call Participants

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* Laura Kathryn Chico

Wedbush Securities Inc., Research Division - SVP of Equity Research

* Lyla Youssef

Cowen and Company, LLC, Research Division - Research Associate

* Marc Harold Goodman

SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst

* Robert Fay

BMO Capital Markets Equity Research

* Yuko Oku

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the Aptinyx Third Quarter 2019 Financial Results Conference Call.

(Operator Instructions) Please be advised this call is being recorded at the company's request.

At this time, I'd like to turn the call over to Nick Smith, Senior Director of Corporate Development and Investor Relations of Aptinyx.

Nick, please proceed.

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Nicholas C. Smith, Aptinyx Inc. - Director of Corporate Development [2]

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Thank you, operator. Good afternoon, everyone, and welcome to Aptinyx' Third Quarter 2019 Financial and Operating Results Conference Call.

Before we dive in, I'd like to extend a warm welcome to the newest research analyst to initiate coverage on the company, Laura Chico from Wedbush Securities, who initiated coverage in the third quarter. We're glad to have you join us, Laura.

As you may have seen, this morning, we announced the initiation of 2 studies in chronic pain. And this afternoon, we issued a press release with our third quarter 2019 financial results, along with business highlights and upcoming milestones. Both of these releases are available on our website, under the Investors & Media section.

Today on our call, Norbert Riedel, our President and Chief Executive Officer, will review recent business and clinical highlights, including the study initiations we announced this morning; and then Ashish Khanna, our Chief Financial Officer and Chief Business Officer, will review the financial results. In addition, Andy Kidd, our Chief Operating Officer; and Kathryn King, our Senior Vice President of Clinical Development, are with us for the Q&A portion of the call.

Before we begin, I'd like to remind everyone that statements made during the conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements. Please see the forward-looking statements disclaimer in our financial results release issued today and the risk factors in the company's current and subsequent filings with the SEC.

It's now my pleasure to turn the call over to Norbert.

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [3]

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Thank you, Nick, and good afternoon, everyone. We appreciate you taking the time to join our call today.

I am proud of our achievements in the third quarter and the first few weeks of the fourth quarter. In particular, on the clinical front, we have accomplished a lot. With the study initiations announced in a press release we issued this morning, we now have 3 Phase II studies underway across the (inaudible) our pipeline, and we plan to start 1 more very soon. Once we initiate our Phase II study of NYX-458 in the coming weeks, we will have accomplished one of our major goals for the year, namely to have 4 Phase II studies ongoing by year-end, all in areas of significant patient needs. These studies are critically important to the advancement of our pipeline. I am very proud of the execution by our team to get us to this point.

On today's call, I will focus my remarks on the study initiations, and then Ashish will give the financial overview. Now let's jump into the details of the Phase II studies we announced earlier today.

In painful diabetic peripheral neuropathy, we initiated a 200-patient study. We are conducting this study across approximately 20 sites, all of them in the United States. Based on the data from our prior study showing robust effects in advanced DPN patients, we are enrolling patients who have had a longer duration of painful DPN. We are evaluating daily dosing of 50 milligrams of NYX-2925 versus placebo in a parallel design.

Importantly, we are not allowing patients to be taking a concomitant analgesic medication during the study as we saw greater separation from placebo in patients in the pilot study who were not on a concomitant medication. And we were able to readily recruit these patients, suggesting it will not be a hindrance on study enrollment.

The primary end point is the change from baseline in patient-reported average daily pain over a 12-week period using the 10-point numeric rating scale. And while this is a Phase II study, the primary end point is consistent with the typical end point in registration studies for neuropathic pain. So the data from this study should be highly informative for late-stage development. We are also evaluating other symptoms as secondary end points in the study.

Other than extending from 4 weeks to 12 weeks, focusing on patients with advanced disease and not allowing concomitant analgesics, this study is very similar in design to our previous study in this indication. Based on our past enrollment experience, we expect to read out in late 2020 or early 2021.

In fibromyalgia, we initiated a 300-patient study with a design that is comparable to the DPN study we just went through. We are using many of the same clinical study sites. The primary end point is the study -- in the study is the change from baseline in average daily pain over a 12-week period on the NRS. We are also looking at several other symptoms of fibromyalgia as secondary end points. We are not allowing use of concomitant analgesic medication. The primary difference in this study compared to the DPN study is that the fibromyalgia study has 3 arms rather than 2, and therefore, 100 additional patients. Given that our prior fibromyalgia study was designed to optimally evaluate neuroimaging biomarkers, we did not do robust dose ranging in that study. Therefore, in this follow-up fibromyalgia study, we are evaluating daily dosing across 2 dose levels: 50 milligrams and 100 milligrams of NYX-2925 compared to placebo. With enrolling more patients in this study, we expect to read out in the first half of 2021, a bit later than DPN.

Let's now briefly discuss NYX-783 which is in development as a therapy for post-traumatic stress disorder or PTSD. Enrollment of our first Phase II study in patients is ongoing and we project reporting data from this study in the second half of 2020. The study is evaluating NYX-783 versus placebo in approximately 150 patients with PTSD. The primary end point is the CAPS-5, which assesses multiple symptomatic domains of PTSD across its subscale. We are very interested in the effects in each of these symptomatic domains, which will help us characterize the efficacy [feature] with NYX-783 and inform the next steps in clinical development.

And now let's touch on NYX-458, which is in development for the treatment of cognitive impairment. We are on the cusp of initiating a Phase II study of NYX-458 that will evaluate its safety and efficacy in patients with mild cognitive impairment associated with Parkinson's disease. We are excited about each of our programs, and this one is no exception. Based on our outstanding preclinical data with this compound, we believe NYX-458 could represent a true paradigm shift in the treatment of cognitive impairment associated with Parkinson's disease. We look forwards to providing you further details on this study once it has been initiated.

In addition to the progress across our pipeline, I want to mention a few other important highlights since our last call. First, I am very pleased that Dr. Rachel Sherman joined our Board of Directors. Dr. Sherman served at the FDA for 30 years, most recently as Principal Deputy Commissioner, the agency's highest position not politically appointed. Second, we have multiple preclinical posters and publications that highlight the remarkable foundational times that underpins our platform. And I'm very proud of the work our team accomplished leading to these publications. Third, the positive results from our Phase II fibromyalgia study evaluating the effects of NYX-2925 on imaging biomarkers and patient-reported symptoms were accepted as a late-breaking presentation at the American College of Rheumatology Annual Meeting. The data was presented at the meeting in Atlanta today and is available on our website.

With that, I will now turn the call over to Ashish to cover our third quarter financial results.

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Ashish Khanna, Aptinyx Inc. - CFO & Chief Business Officer [4]

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Thank you, Norbert.

Starting with the balance sheet. We ended the third quarter with $114.2 million in cash and cash equivalents compared to $150.6 million at the end of 2018. We are in a strong financial position to execute on our pipeline programs, and we expect our cash balance to be sufficient to fund our anticipated operations into 2021. On our income statement, revenues for the third quarter were $0.9 million, unchanged relative to the same period in 2018. These revenues are related to our research collaboration agreement with Allergan. And importantly, we are not reliant on these revenues to fund our operations.

As we seek to advance our compounds in development for underserved CNS conditions, the bulk of our spend is directly attributed to research and development. R&D expenses were $11.8 million for the third quarter. This was in line with the $12 million in R&D expenses for the same period in 2018. We expect R&D expenses to increase over the next few quarters with the initiations of the 3 additional Phase II studies Norbert discussed. We reported G&A expenses of $4.5 million for the third quarter compared to $3.8 million for the same period in 2018. The increase was primarily driven by costs related to employee compensation and professional fees to support ongoing business operations.

Finally, we reported a net loss of $14.8 million for the third quarter compared to a net loss of $14.2 million for the same period in 2018.

With that, I will turn the call back over to Norbert.

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [5]

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Thanks, Ashish.

Before we open for Q&A, I would like to summarize where we are in advancing our pipeline of novel CNS product candidates. With NYX-2925, we now have 2 Phase II studies underway: one in painful DPN reading out in late 2020 or early 2021 and the other in fibromyalgia reading out in the first half of 2021. With NYX-783, we are on track to report data from the ongoing Phase II PTSD study in the second half of 2020. For NYX-458, the initiation of the Phase II study in patients with Parkinson's cognitive impairment is imminent. We are executing well across our programs. We'll very soon have 4 Phase II studies ongoing and expect to have data from these studies over the next 12 to 24 months.

Operator, we are now ready for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Marc Goodman with SVB Leerink.

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Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [2]

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Just a few questions about the DPN trial that you're getting going here. So first of all, you talked about advanced patients. Can you give us a sense of how advanced? I know in the past, you've talked about the data was pretty linear with respect to the longer you go, the better off the data was in the post hoc analysis. I'd be curious how long that was. And then you mentioned some secondary end points you'd be looking at, but could you just be a little more specific on which ones you're looking at? And then the third question is you're doing the 50-milligram dose. Can you just remind us why you're comfortable with the 50-milligram dose? Why not do a little dose ranging here just given the post hoc analysis was in small numbers of patients?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [3]

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Okay, terrific. Thanks, Marc. So we have shared with the audience before that in our analysis of the previous DPN study, as you mentioned, we saw a very linear progression in duration of disease and response to 458, which we believe mechanistically makes perfect sense in that, over time, a chronic disease stage -- state like DPN establishes a stronger and stronger central manifestation. And so consistent with that data, we will apply here that patients will have had 4 years or longer of duration of DPN. To your second question, end points. The primary end point is consistent with what FDA is looking for in these kinds of studies, namely average daily pain scores. We have secondary pain scores very much aligned with what we measured in the previous study. So those would be daily worst pain, pain on walking as the key measures of additional end points we are looking for. And then regarding those, just as a reminder, in our previous study, we looked at a 20-fold dose range. It was actually a dose-ranging study: 10 milligrams, 50 milligrams and 200 milligram. And consistent with our preclinical data, we observed that the 50-milligram dose was the most effective dose. It is, therefore, the dose that we selected to conduct this study as the most effective dose. And that, again, builds on the learnings from the previous study.

And maybe one additional point to mention again is that we are not allowing patients to take concomitant medications because based on our previous study, we also noticed that we see a better response in the absence of conmeds. And we know from that previous study that we can readily find and recruit those patients because about half of our 300 patients in the previous study were not on conmeds. So a very significant population. Marc, does that answer your question?

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Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [4]

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Thank you. Appreciate it.

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Operator [5]

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And our next question comes from the line of Gary Nachman with BMO Capital Markets.

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Robert Fay, BMO Capital Markets Equity Research [6]

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It's Rob Fay on for Gary. On fibromyalgia, can you provide any thoughts generally on what kind of clinical profile and improvement on the NRS you would need to demonstrate with 2925 to differentiate it from Lyrica?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [7]

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So I can share with you that for both the DPN study as well as the fibromyalgia study we have taken a conservative approach in how we powered these studies to find in the studies what we consider to be statistically significant and clinically as well as -- clinically meaningful as well as differentiated profiles for the compound in both indications. So -- and maybe to just add: The primary end point here, as I mentioned, is also average daily pain. But in fibromyalgia, we have a number of other measures that have to do with fatigue, that have to do with PROMIS and measures of overall quality of life of these patients. So a bit more comprehensive than the end point in DPN. And as you well know, we have established for both fibromyalgia and DPN that 2925 is very safe in both patient populations, with no serious adverse events reported and an overall AE profile very consistent with what we saw in the placebo book.

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Robert Fay, BMO Capital Markets Equity Research [8]

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Okay. And will there be any sort of interim analysis for either the advanced DPN or fibromyalgia trial? And then this one's for Ashish: How should we be thinking about the ramp in R&D expenses now with multiple trials running?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [9]

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Yes. So there will be no interim analysis in either one of these 2 studies.

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Ashish Khanna, Aptinyx Inc. - CFO & Chief Business Officer [10]

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And then with regard to R&D expenditures. So we expect that there should be a pickup in R&D expenditures over the next few quarters, consistent with the initiation expenses associated with initiating 3 Phase II studies, and then it should level off and support our guidance, consistent guidance, that our current cash should fund our anticipated operations and execution of these programs into 2021.

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Operator [11]

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And our next question comes from the line of Lyla Youssef with Cowen.

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Lyla Youssef, Cowen and Company, LLC, Research Division - Research Associate [12]

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Just a couple of questions on the Phase II fibromyalgia trial that you initiated. In terms of pace of enrollment, how long do you think it will take to finish enrolling that study? And you had mentioned that it will take place in most of the same sites as the DPN study, but how many sites overall? And will it also be exclusively done in the U.S.?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [13]

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Great. I'm glad you asked that because I omitted to mention that. Yes, the fibromyalgia study will also be exclusively conducted in the U.S. We offered a time line that says that we should be able to read out this study in the first half of 2021. That is our current projection. If during enrollment we noticed that, that is not consistent with our projected time line of today, we would, of course, make you aware of that in the course of the study. But for now, that is our working assumption based on all the parameters we have evaluated. And for DPN, I already mentioned to you it will be the end of 2020 or the beginning of 2021 because it is a smaller study but likewise a study exclusively done in the U.S.

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Operator [14]

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And our next question comes from Laura Chico with Wedbush Securities.

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Laura Kathryn Chico, Wedbush Securities Inc., Research Division - SVP of Equity Research [15]

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I have a couple on 783 in PTSD. And I might have missed it, so I apologize. I'm new here. But did you -- or could you give us an update on where you're at in terms of enrollment progress in 783? And just curious, I think you'd previously talked about perhaps that readout coming towards the earlier part of second half '20. Any updates on that front?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [16]

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So enrollment is going well and it is going as anticipated. And therefore, we are adhering to the time line that we offered of second half of 2020. At this time, I cannot give you or will not give you any sort of, like, further details as to when in that second half of 2020. Let's get through the study and then on follow-up calls we can probably give a little more color and precision. But at this point, that's the time frame that we believe is most applicable.

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Laura Kathryn Chico, Wedbush Securities Inc., Research Division - SVP of Equity Research [17]

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Okay, that's helpful. And then, I guess, just 2 more. So with data potentially arriving in mid-2020 -- or I'm sorry, second half 2020, could you just remind us on the powering assumptions in the study? I know you're using a rather unique design here that incorporates a re-randomization. But if we could just kind of revisit that criteria and how it impacts your interpretation.

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [18]

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Yes. So the study is actually a study that is largely a study for us to do some signal evaluation and signal finding. It's approximately 150 patients, as I mentioned. It has 2 doses of 783. It looks at CAPS score as well as subscales of the CAPS score to then really use those data points to inform and design the next study we plan to do. And so what else could I offer? Andy, anything else you want to add to that?

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Andrew Kidd, Aptinyx Inc. - COO [19]

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Yes, Norbert, I think, really, you're right, it's an exploratory study. We're looking at a range of different end points and sub scores as well as the total of CAPS-5. So I think to think of this study as being kind of a binary outcome with a particular powering is not the right way to look at it. I think we think it's adequately powered to provide a signal. I think we'll look at the totality of the data in examining that signal, not only what we find in the CAPS-5 and the sub scores but also safety and other data, and proceed accordingly given that this is obviously a first-in-human study for the molecule and the indication.

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Laura Kathryn Chico, Wedbush Securities Inc., Research Division - SVP of Equity Research [20]

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Very helpful. I guess, just wrapping up on PTSD. We were looking back at some of the literature and stumbled across a few publications that discussed seasonal influences on PTSD admissions. And one study from the VA actually indicated higher admissions during the spring and summer. So I guess, just kind of stepping back, how at all might seasonality impact the study? And just how do you possibly account for that?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [21]

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Andy, do you want to answer that, too?

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Andrew Kidd, Aptinyx Inc. - COO [22]

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Yes, certainly. Yes, so I think there's seasonality in quite a few different indications. It's there's seasonality to some degree in chronic pain as well. I think, with respect to this particular study, it is a 4-week evaluation period. So I think, with respect to the -- any individual patient, we wouldn't expect seasonality to make a difference with respect to whether or not symptoms fluctuate over the course of a year or so for the total population of patients. I don't think that really should have a significant impact on enrollment either. I mean this is really a chronic condition. And I think, given the population that we're studying, which is not just the military population but the broader civilian population as well, and the duration of the study, we don't see that as having a significant impact.

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Operator [23]

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And our next question comes from the line of Jessica Fye with JPMorgan.

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Yuko Oku, JP Morgan Chase & Co, Research Division - Analyst [24]

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This is Yuko on the call for Jessica. I know you touched this, touched on this a little bit in the prepared remarks, but could you walk us through the decision to evaluate the 2 doses that you're looking at in a Phase II fibromyalgia trial? And then following up on that, is there any reason to think that a different dose of 2925 will show benefit between DPN and fibro studies?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [25]

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Yes, good questions. So I answer it by going back to the DPN study. So the DPN study, as I mentioned, Yuko, looks at 10, 50 and 200. From our preclinical work, we anticipated that 200 would be a higher dose than necessary and would likely begin to show what we know to be an invert U-shaped dose response, meaning when the dose gets up to a higher dose, we actually see a less-pronounced treatment effect. That's how we actually evaluated the DPN study and how the 50 confirmed very much what we anticipated preclinically. In the fibromyalgia study, it was a short study with only 2 weeks of exposure. We studied 20 and 200. The 20-milligram dose was not sufficient to separate from placebo in the patients-reported outcomes. The 200 was. But when we look at the DPN study, we extrapolate to believe that 200 milligrams is a higher dose than we would want to administer over a 12- or 14-week period of time for this particular study. And so that's why we decided that 50 and 100 was the appropriate dose.

To your second question. In what is today approved therapies for DPN as well as fibromyalgia, the same dose is generally prescribed and used for these patients. So I do not make an assumption at this point that a different dosing regimen will be needed once we actually get to a commercial use of this molecule in these 2 indications. But TBD, of course, which is also why we do the study. But at this point, to answer your question specifically, we, I can only refer to existing therapies and there is no distinction between fibro and DPN as to dosing.

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Yuko Oku, JP Morgan Chase & Co, Research Division - Analyst [26]

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Okay. That was helpful. And then just one more question. In the prior imaging study in fibromyalgia, would you remind us if this study allowed subjects to be on concomitant meds?

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [27]

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Yes, we did allow concomitant medication in that study.

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Operator [28]

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And I'm showing no further questions at this time. I'd like to turn the call back over to Norbert for any closing remarks.

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Norbert G. Riedel, Aptinyx Inc. - President, CEO & Director [29]

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Thank you, operator. And thank you all for your questions and for taking the time to join us this afternoon.

I am hopeful this call today has given you a sense of our positive outlook for the company and insights into the meaningful catalysts that lie ahead of us. We look forwards to keeping you updated as we continue along the path of bringing novel therapies to patients in need.

Thank you again, and please enjoy the rest of your day.

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Operator [30]

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Thank you for joining us today. You may now disconnect.