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Edited Transcript of CBAY earnings conference call or presentation 8-May-19 8:30pm GMT

Q1 2019 Cymabay Therapeutics Inc Earnings Call

NEWARK May 17, 2019 (Thomson StreetEvents) -- Edited Transcript of CymaBay Therapeutics Inc earnings conference call or presentation Wednesday, May 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Charles A. McWherter

CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer

* Daniel Menold

CymaBay Therapeutics, Inc. - VP of Finance

* Pol F. Boudes

CymaBay Therapeutics, Inc. - Chief Medical Officer

* Sujal A. Shah

CymaBay Therapeutics, Inc. - President, CEO & Director

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Conference Call Participants

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* Antonio Eduardo Arce

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Eliana Rachel Merle

Cantor Fitzgerald & Co., Research Division - Research Analyst

* Fang-Ke Huang

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Jay Olson

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Jeffrey Tan

* Michael Holden Kratky

SVB Leerink LLC, Research Division - Associate

* Steven James Seedhouse

Raymond James & Associates, Inc., Research Division - Research Analyst

* Yasmeen Rahimi

Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research

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Presentation

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Operator [1]

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Good day, ladies and gentlemen. Welcome to CymaBay's First Quarter 2019 Financial Results Conference Call. (Operator Instructions) Please be advised that the call will be recorded at the company's request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com.

Now I'd like to turn the call over to your host, Mr. Dan Menold, Vice President of Finance at CymaBay. Mr. Menold, you may begin.

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Daniel Menold, CymaBay Therapeutics, Inc. - VP of Finance [2]

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Thank you, operator, and good afternoon, everyone. I hope you've had a chance to review the press release we issued announcing our first quarter 2019 financial results and business update. You can access that release on our website under the Investors tab.

Joining me on the call today are Sujal Shah, Chief Executive Officer; Dr. Pol Boudes, Chief Medical Officer; and Dr. Chuck McWherter, Chief Scientific Officer. Sujal will provide an update on our financial position and clinical program and review upcoming milestones before we open up the call for Q&A.

Before we begin, I'd like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay's expected future performance, business prospects, events or plans including clinical plans and timing, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasts due to the impact of many factors.

The company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Participants are directed to the cautionary statements set forth in today's press release as well as the risk factors set forth in CymaBay's quarterly and annual reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

This conference call is the property of CymaBay, and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. At this time, I'd like to turn the call over to Sujal.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [3]

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Good afternoon, everyone, and thank you for joining us today. We have continued to build upon our recent accomplishments as we advance the development of seladelpar in multiple inflammatory liver diseases with high unmet medical need. The progress in the first few months of 2019 positions us well to deliver on our plan for the rest of this year and beyond.

We continue to generate important clinical results at an accelerated pace, and one of our most important objectives this year is to complete enrollment in ENHANCE, our global Phase III registration study for seladelpar in PBC. We are also driving towards completion of our ongoing open-label Phase II study in PBC in the second half of this year for which we have been regularly reporting updated clinical results at major medical meetings, including at EASL's International Liver Congress just last month.

In February, we were delighted to announce that the FDA has granted Breakthrough Therapy designation to seladelpar for treatment of early-stage PBC. Also in February, we were gratified to announce the completion of enrollment of our Phase IIb study of seladelpar for patients with biopsy-confirmed NASH, well ahead of our original plan and we now expect to announce top line data before the end of the second quarter.

Finally, in March, we completed a follow-on equity offering, raising approximately $108 million in net proceeds, a portion of which will fund a Phase II dose-ranging proof-of-concept study evaluating seladelpar in primary sclerosing cholangitis or PSC, an orphan chronic cholestatic liver disease characterized by inflammation and fibrosis of the intrahepatic and extrahepatic bile duct for which there is currently no approved therapy.

Beginning with seladelpar in PBC, we continue to enroll patients in ENHANCE, as I mentioned, our global Phase III registration study. This is a double-blind randomized placebo-controlled 52-week study evaluating the safety and efficacy of 5 milligrams and 10 milligrams of seladelpar versus placebo in patients with PBC who have had an inadequate response or are intolerant to first-line treatment with ursodeoxycholic acid or UDCA. The primary endpoint is the responder rate after 52 weeks in which responders are patients achieving an alkaline phosphatase or AP level of less than 1.67x the upper limit of normal with at least a 15% decrease from baseline in AP and a normal level of total bilirubin. We remain focused on completing enrollment by year-end 2019. This would put us in a position to have patients through the 52-week treatment period by year-end 2020 and announce top line data in early 2021.

Our objective in ENHANCE is to confirm seladelpar's competitive profile observed thus far in Phase II in order to obtain regulatory approval in the U.S., Europe and other markets. We believe that the ongoing Phase III study has been substantially derisked by the 52-week Phase II data supporting the potential of seladelpar to provide improved efficacy and better tolerability as a second-line treatment for patients with PBC.

In an interim analysis of patients reaching 52 weeks of treatment in the ongoing Phase II study, seladelpar 10 milligrams resulted in an over 70% response on the composite responder rate, which is the primary endpoint in the ongoing ENHANCE study. Importantly, seladelpar at 5 and 10 milligrams also produced greater than 30% decreases in transaminase levels from baseline, which were sustained through 52 weeks of treatment. Thus, seladelpar has been found to not only address the cholestatic markers reflected in the composite endpoint but also have effects on lowering transaminases, supporting an anti-inflammatory action that's an important aspect of PBC.

The potential importance of seladelpar in PBC has also been recognized by the regulatory authorities. During the first quarter, the FDA granted Breakthrough Therapy designation for seladelpar for the treatment of early-stage PBC in combination with UDCA in adult patients with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. In 2018, seladelpar also received the corresponding Prime designation by the European Medicines Agency. We believe that both these designations reflect the significance of the seladelpar clinical data and the potential for seladelpar to be a significantly improved treatment alternative for patients with PBC.

Seladelpar was featured in a number of presentations at the International Liver Congress in Vienna in April. Dr. Marlene Mayo, Associate Professor at the University of Texas Southwestern Medical Center in Dallas, delivered an oral presentation with results from a cohort of compensated cirrhotic patients from our Phase II PBC study. In an interim analysis of data at 52 weeks, the mean relative decreases in AP in this patient group were minus 36% and minus 43% in the 5- to 10-milligram and 10-milligram group, respectively.

Treatment with seladelpar also demonstrated the anti-inflammatory activity with a decrease in ALP that was comparable to that observed in the noncirrhotic cohort in this study. Importantly, seladelpar continues to demonstrate a favorable safety profile with no transaminase safety signal and no liver decompensation event. In addition, seladelpar treatment was not associated with drug-induced pruritus or hepatotoxicity in these patients.

Turning to NASH, we announced in February that enrollment of the Phase IIb study of seladelpar in NASH patients was completed approximately 1 quarter ahead of schedule. This double-blind randomized placebo-controlled study enrolled 181 patients with biopsy-confirmed NASH and to treatment arms with seladelpar of 10, 20 or 50 milligrams or with placebo for a planned treatment duration of 52 weeks. The primary endpoint is the change in hepatic fat content from baseline to 12 weeks as measured by magnetic resonance imaging using the proton density fat fraction method or MRI-PDFF.

Effective seladelpar treatment on ALT, a marker of inflammation and hepatocellular stress and injury as well as on LDL cholesterol and triglycerides will also be important indicators of early disease activity that will be assessed at 12 weeks. Thereafter, the study will continue blinded to treatment and culminate with a week 52 biopsy to examine histological improvement in NASH and fibrosis as determined by blinded expert pathologists using NASH DRM scoring. Importantly, the liver biopsy evaluation will permit us to assess histologic endpoints comparable to those used in recent Phase III study.

The baseline characteristics of patients in this study revealed significant features of advanced non-cirrhotic NASH, including an average liver fat content of 21.5%, a mean NAFLD activity score of 5.2, and 83% of patients with F2 or F3-stage fibrosis. Also, the mean ALT and AFT levels were 62 and 46 units per liter respectively, which is above the upper limit of normal. About half of patients enrolled were diabetic and the randomization was stratified on this criterion. Taken together, we believe that this NASH population represents an ideal one in which to evaluate the activity of seladelpar in this disease setting.

Importantly, we believe the population to be optimized for making decisions on Phase III development, including selection of doses. We expect to have top line results on the primary endpoint of hepatic fat by the end of the second quarter of this year and would expect to report histology results sometime in mid-2020.

It's worth further highlighting the many additional assessments built into the study, including additional MRI-PDFF measurement at weeks 26 and 52, magnetic resonance elastography for liver stiffness at baseline and week 52, and liver multiscans to assess liver inflammation at several time points. In addition, the imaging assessments are supplemented by multiple serum biomarkers evaluating fibrosis, inflammation and seladelpar's mechanism of action. Our goal with this study is to be able to fully profile seladelpar's activity in NASH to enable a well-informed decision regarding its development in this indication. If successful, we believe that this would significantly derisk the development of seladelpar in NASH.

As mentioned earlier, an important use of proceeds from our March financing will be to expand clinical development of seladelpar into a new indication, PSC. PSC is a chronic cholestatic disease of the liver in which chronic progressive degeneration of bile ducts can lead to end-stage liver disease. It is characterized by progressive inflammation and fibrosis with consequent obstructions of intrahepatic and extrahepatic bile ducts. Patients are also at a high risk of developing cholangiocarcinoma. Although PSC is an inflammatory cholestatic disease like PBC, it has its own set of unique characteristics, including being accompanied by a significant degree of comorbidity with inflammatory bowel diseases and challenges related to the obstruction of the large biliary tract.

PSC is an orphan indication affecting approximately 40,000 patients in the U.S. Currently, the only effective treatment is liver transplant. We have had positive discussions with the FDA regarding our plans to conduct a Phase II dose-ranging proof-of-concept study of seladelpar for patients with PSC. We are currently finalizing details of the study design with the intent to initiate the study in the second half of 2019. We will provide further details in the near future as our plans are finalized.

Turning briefly to our financials. Our cash, cash equivalents and marketable securities were approximately $265 million at March 31. Based on current projections, our existing cash is expected to fund the current operating plan into 2021. For a detailed overview of our operating results for the 3-month period ending March 31, I will refer you to the press release and to our 10-Q filed with the SEC today.

I'd now like to open the call to questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Yasmeen Rahimi with Roth Capital Partners.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [2]

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Congrats on the continued progress. The question for you, Sujal. So maybe you can give us a little bit color as you're speaking with physicians who are involved in the current NASH studies in regards to data expectations. So I guess, most investors are really excited to see the MRI-PDFF data as well as ALT and AFT. So when you speak to physicians, what matters most to them when they look at a proof-of-concept study in NASH? Is it the fat reduction measured by MRI-PDFF or is it ALT, AFT? What do they care more about and what is more linked to histological improvement? And then I have one follow-up question.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [3]

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I think it's really important first to just make sure that I have an opportunity to point out that this study, in fact, is a paired biopsy study. We'll have the opportunity in this space to reevaluate histological improvement at week 52. And this, of course, as you know well, is the Phase III criteria on which to evaluate assets and compounds in the study of NASH. The study also has a rich set of markers at 12 weeks and even beyond looking at effects of seladelpar on bile acid, on markers of inflammation as well as fibrosis, both wet biomarkers as well as noninvasive imaging. So it really is a very rich study not just with respect to the early indicators of disease activity at 12 weeks but even beyond.

Now importantly, as you pointed out at 12 weeks, we'll have an opportunity to look at the effects of seladelpar, in particular, at top line on changes in liver fat as well as effects, importantly, on transaminases and lipid parameters. So let me just dissect a few of these and I'll ask Chuck and Pol to chime in as well.

First of all, we've had an opportunity to really gather input from a wide range of thought leaders in the NASH field. In fact, at EASL had conducted a NASH advisory board panel meeting where this was one of those topics that had been discussed. And given seladelpar really has pleiotropic effects, we believe, in the study of NASH. Potentially, in fact, one of the most exciting targets as a highly selective and potent PPAR-delta agonist, we believe, being studied in the entire field in NASH today. We expect to see improvement across each of these parameters that will observe at the 12-week time point.

Liver fat, of course, is an important metabolic component of NASH. It comes with important consequences, including insulin resistance and lipotoxic-driven inflammation and fibrosis. We know that seladelpar, PPAR delta in particular, drives fatty acid oxidation not just in the liver here but we think one differentiator is that seladelpar, in fact, has its effect in peripheral tissue. And this may be a key element of what we see with respect to the early read on changes in hepatic fat at 12 weeks.

We also know that PPAR delta inhibits bile acid synthesis. So when you look at the hepatoprotective nature of a delta agonist in seladelpar, it includes not only reductions in bile acid, motion of fatty acid oxidation and reduction in lipotoxic lipid, also reductions in pre-cholesterol, which are pro-inflammatory. So a variety of effects that we'll see not only in reductions in hepatic fat but also potentially in many of these other markers.

I'll also point out that in the study of PBC, of course, we've seen very robust decreases in transaminase. PBC patients have portal inflammation although the inflammation can be different in PBC versus in NASH. We have, in fact, seen what we would expect, given the expression of PPAR delta in Kupffer cells and circulating macrophages as to a potential anti-inflammatory benefit by way of reductions in transaminases. And of course, as you know, we've studied seladelpar in obese patients with mixed dyslipidemia where we've seen some meaningful effects on LDL cholesterol as well as triglycerides.

So across this spectrum, really, the input we've received from thought leaders as well as our own understanding of seladelpar highlights both, in fact, both changes in hepatic fat as well as transaminases as being really key indicators of early activity in the study of NASH. I think independently, each of these parameters, as is supported in published literature, has been associated with improvement in NASH histology above specific threshold. So we'll be looking at really, I think, each of these 2 key parameters, liver fat changes as well as transaminase as an early read on what we might see as we approach biopsy at 52 weeks.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [4]

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So, yes, I mean, the only thing else I would add, I think, is a little characterize it well is just that in our view, liver fat reduction is really the hallmark of one of the positive factors of histological change or continued drive. So it's the lipotoxic fat reduction and general fat reduction (inaudible) accompanying the lipotoxic fat reduction. Whereas transaminase is really a reflection of liver injury, ongoing liver injury, both cell death and the regenerative response. So both of those are 2 different views into the histological change in the liver. And that's the feedback that's been seen from publication, for example, by Rohit Loomba in terms of both fat reduction and transaminase reduction providing histological change.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [5]

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And then, Pol, a quick question for you is congrats on the continued progress on fast enrollment. So competitors are sort of struggling with getting this trial enrolled for PBC. Can you tell us what your secret sauce is? Or is it just what existing data set that you show? What is so exciting or at least from the physician's view that are involved and we're incredibly impressed? We want to understand the physician's perception of seladelpar to get started -- to be in the trial.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [6]

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It's Pol. Are you reference to NASH or to PBC?

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [7]

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To the PBC Phase III study because as you said, we need to (inaudible) target [for] a year.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [8]

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Yes, I would mention one factor, which I think is very important and then I'll let Chuck and Sujal chime in. I mean, for us, the data we have collected so far in the Phase II and particularly with the 52-week data were very important because I mean, it's basically here for investigators that the drug works well, the safety profile is good. So we are very excited because they can offer something to the operation. They know that the drug works well. So it's for them, it's really the key factor. We have to introduce what we're seeing in the Phase II but the risk/benefit profile so far of the drug is very positive.

I have to add also that the profile of the drug with regard to pruritus is very advantageous when we speak to investigators. The fact that the drug is not -- there is no drug-induced pruritus is viewed very positively. And I think people are also extremely interested to figure out what will be the impact of placebo-controlled trials on pruritus. So I think the data is really the key factor.

Then the other thing I have to mention is that we are very close to what's going on with the investigator, so we develop a very close relationship with the site but that's more subjective criteria. Chuck, Sujal, you want to chime in?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [9]

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No, I think that was it. Go ahead, Chuck.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [10]

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I'll just add, I think Pol is being a little bit modest. There's a little bit more to the secret sauce, which really relates to the incredible operations team. This is a study that has mobilized and scratched through upon a prior experience and a very successful and large 119 patient Phase II study but then expanded out to more than 20 countries, 5 continents. It's on-the-ground logistics with experience. And as Pol has said, it's really leveraging a lot of relationships and making sure that the data is in front of and available to investigators with great access for the investigators and especially the site coordinators to understand what's needed in terms of implementing the protocol. So I think we need to give a lot of credit to Pol and his team here.

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Operator [11]

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Our next question comes from Ellie Merle with Cantor Fitzgerald.

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Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [12]

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Congrats on all the progress. Just sort of on the biology of fat reduction because it's obviously an incredible focus into the data in NASH. I know you mentioned sort of the peripheral benefits on fat reduction with PPAR delta. But I guess, in the context of fat reduction in the liver in particular, could you elaborate on what you would expect based on the biology of the differences between PPAR alpha and PPAR delta just seen between the various mechanisms like what you would expect to see on fat reduction from just the PPAR alpha versus what you'd expect to see on fat reduction for adjusted PPAR delta?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [13]

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Maybe I'll start and thank you, Ellie, for that question. I think a key point to be made is it's not only the difference in PPAR alpha type, but it's also the potency of seladelpar that really needs the -- remain in the forefront of how we think about it. I think the scientific rationale for studying seladelpar in NASH was really influenced by, first of all, pretty substantial literature on the role of delta both in the liver and the periphery. And then second of all are the [bulk] of our results into diabetic obese mouse models of NASH.

Now specifically for your question in the liver with respect to PPAR alpha and PPAR delta, we know that PPAR delta drives fatty acid oxidation in hepatocytes, has effect on shuttling of fat in the fat (inaudible) in the periphery in hepatocytes. And in addition, the effects are supplemented by attraction in Kupffer cells and macrophage that are recruited lymphocytes for liver injury and subsequently with effects on the inflammatory fibrosis that those secondary for that. So we see strong reductions in fibrosis and collagen content at least in mouse models.

I think it's important to reflect on -- I know people are trying to understand how delta and seladelpar is differentiated from other mechanisms that are accessing alpha. And I think here, I would just point to, first of all, the potency of PBC that you mentioned but also the potential for peripheral effect. Other agents in NASH currently in development that have the alpha are restricted to liver as well as type 1 (inaudible) data cells is also restricted to liver. PPAR delta has effect on fatty acid oxidation in muscle and adipose; has effects on glycolytic activity, which is responsible for the mobilization of fat as it moves through the periphery of the liver. Here, we believe that seladelpar may have an additional effect that may be important from differentiating, and this is an action that's not expected with PPAR alpha.

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Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [14]

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Got it, that's very helpful. And then just one quick one on PSC. I know that you mentioned that the discussions of the study design are ongoing. But just curious if you can share any sort of initial thoughts on what endpoints you might be able to study in PSC. And what would be viewed as clinically meaningful (inaudible) beyond the regulatory path is a little bit more complicated versus PBC? So just curious, any sort of initial thoughts there?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [15]

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Yes, Ellie. Maybe I can jump in here first. Yes, I think it is a very important question and a couple of things to highlight here. We're involved with a consortium of other sponsors, regulatory agency and thought leaders and a group called the PSC forum, where this is very much active dialogue around endpoints to be evaluated in the setting of PSC. And so this is a bit fluid here internally, but we'll be looking to finalize what will be effectively a dose-ranging proof-of-concept study of seladelpar in this setting. It will be important for us to, of course, this is a cholestatic disease, so assessing the impact of seladelpar on AlPhos, as we've done in the setting of PBC, will be a key endpoint that we'll measure. I think in addition, recognizing that patients with PSC can have a greater degree of inflammation and even fibrosis. There's some additional elements of the disease pathology that differ from PBC as well in terms of implication of not just the small bile duct but, of course, the large extrahepatic bile duct as well.

So we'll look at, in a similar way that we're doing in the studying of NASH, noninvasive as well as wet biomarkers of inflammation, fibrosis, liver stiffness. I think these are each elements that can give us some guide around the potential for seladelpar to not only improve cholestasis but really improve overall liver health in the setting of PSC where today, there are really no drugs that are approved in this setting. And so we think it's a very significant opportunity, and we'll design a Phase II study, really, to give us as many measures to read and understand the impacts of seladelpar for patients with PSC, as we've done in the NASH Phase IIb.

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Operator [16]

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Our next question comes from Pasha Sarraf with SVB Leerink.

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Michael Holden Kratky, SVB Leerink LLC, Research Division - Associate [17]

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This is Mike on for Pasha. So obviously, with this upcoming 12-week interim data, this is just a first readout. We're getting into the NASH side of things. So how much importance are you placing internally on this interim readout versus the full 52-week study which, as you mentioned, is really going to be the gate to ultimately entering that Phase III study?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [18]

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I'll start off and then I'll ask Chuck at the conclusion to chime in as well with some perspective as well as Pol, if there's some things that I don't cover. I think you really highlighted it. Of course, we recognize as even the FDA guidance and even the EMA guidance suggests that to do really late-stage proper Phase II development in the setting of NASH really needs to evaluate histology. And so the design of our Phase IIb study, without question, while the primary endpoint is a 12-week read on hepatic fat reduction, is really anchored on our ability to be able to evaluate histology.

So that really will be the key driver. It'll be the key driver in selecting doses and selecting, really, the clinical development strategy for seladelpar's monotherapy and potentially even in combination as we look to advance development, all be anchored on really histology. I think what the 12-week read on change in hepatic fat and effects on transaminase provide us the ability to be able to potentially think through advancing and perhaps, with some success, think about front-loading our preparation for a strategy to move forward beyond this Phase IIb study in the setting of NASH.

So I think for many of the reasons Chuck already highlighted with respect to the pathophysiology and expectation that if you can remove, in particular, lipotoxic lipids, which are pro-inflammatory and can instigate the fibrotic process, if you can demonstrate that an agent like seladelpar has really a strong anti-inflammatory benefit by way of reductions in transaminase, I think these early indicators can further encourage us as we have patients progress from the 12-week time point all the way to 52 weeks. Chuck, is there anything that you think I've left out? Mike, I think I have (inaudible)

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [19]

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Technical questions, but yes, no, I think you've covered it well. Thank you.

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Michael Holden Kratky, SVB Leerink LLC, Research Division - Associate [20]

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That's super helpful. And just in terms of a quick follow-up. Obviously, you've mentioned a lot about why, certainly, you could generate a lot of confidence or at least enthusiasm going into the interim readout. My question is and it might be a little early on, but are you thinking about any thresholds in terms of MRI-PDFF reductions based on currently available in terms of what a win might look like?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [21]

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I think this is a much tougher question. And primarily because we know that seladelpar, in particular, as I mentioned PPAR delta has pleiotropic effect. Like FXR, we know that we inhibit bile acid synthesis. That's a key component of the pathophysiology in the setting of NASH. Like THR beta and even PPAR alpha, as Chuck mentioned, we know that we drive fatty acid oxidation. Here, of course, we know that we do this in the liver as well as externally.

I think the fact that PPAR delta is expressed in the liver in Kupffer cells as well as circulating macrophages, I think, supports the hypothesis that we may see a more direct anti-inflammatory benefit with this agent as you've seen versus other targets. And here, again, the fact that delta is also expressed in stellate cells as a suggestion for seeing a direct antifibrotic effect. We've, of course, seen this in mouse models of NASH.

And given all of these different activities of seladelpar, I think it's important for us to really collectively look at all of these various effects on hepatic fat reduction, transaminase, bile acid in totality to form the right picture around what we consider to be real success. I think you can have varying impacts across all of these parameters and still see successful biology with respect to changes in histology or improvements in histology. So we've got to keep an open mind, I think, across what we may see here early on in the study, given the impact of this target. Again, I think seladelpar is unique to many of the other targets being studied in NASH, given the benefits across a variety of these different parameters.

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Operator [22]

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Our next question comes from Steve Seedhouse with Raymond James.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [23]

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A couple of quick questions on the recent data presentations at EASL. First one, you had some preclinical data combining seladelpar with GLP-1 and ASK1 mechanisms. Can you maybe just talk to any next steps there? It looked like the liraglutide combo worked quite well, so is that something you would contemplate just running a clinical study with by just purchasing commercially available GLP-1?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [24]

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I think that data is, in fact, very exciting. From our perspective, I think we, like others in the field, believe that probably a way to be potentially treating NASH will be to combine various targets. And one of the compelling things for us is some of the known effects of GLP-1 on glucose regulation, of course, on weight loss, we think, make it a fairly compelling target to potentially combine with seladelpar. And I'm going to ask Chuck to give a little bit of an overview of what we learned there that may inform us around the potential clinical strategy.

But I think you really nailed it there where I think some of the work that's been done in Chuck's group forms the basis for clinical development strategy beyond just thinking about seladelpar as a single agent. And, of course, we're ardent believers that the data should support our clinical development strategy. So as we have not just this 12-week data but ultimately biopsy in this study, I think those will be, of course, key inputs in thinking about not only monotherapy but also combination. But that is the type of strategy that we would potentially look to advance should we see positive data out of this Phase IIb. Chuck, can I ask you maybe to frame some of that work as well in the context of this question?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [25]

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Sure, happy to. And for those of you listening on the call, you can see a lot of the details from the work that we presented is available in a poster format on our website. As Steve had alluded to, we had been conducting an exploration of the scientific rationale for combining PPAR delta with a variety of agents and we began with agents that are either metabolic inflammatory or anti-inflammatory, antifibrotic.

And one that emerged from the first set of work was really liraglutide and we selected it because there was good precedence clinically. The main study was published where it showed, in a small set of patients, a fairly good effect on resolution of NASH pathology. Not as much an impact on fibrosis and this is possibly driven in part by its effect on weight loss. That was recapitulated in the study. This was a biopsy-confirmed mouse NASH model where we saw that both liraglutide and seladelpar, when dosed for 12 weeks at the end of a year study, both reduced liver fat, improved NAFLD cavity score including reductions in ballooning. But where they differed was really the fact that seladelpar maintained a strong antifibrotic effect both alone and in combination with liraglutide.

So here, I think you have 2 agents that complement and reinforce one another on the metabolic side of the equation, if you will, where seladelpar stepped in and the inflammation in fibrotic side to really add additional benefit. I think with what's going on with Ozempic as well as with oral semaglutide coming forward, I think there's a strong rationale to think about combination with GLP-1 receptor agonist, especially the long-acting one, and as well Trulicity is doing very well, as I mentioned as well.

We have additional work that's ongoing, looking at other agents in combination. And I think just to kind of wrap it up, completing this work along with confirming the single-agent activity of seladelpar will really position us very soon to make decisions that Steve has alluded to, the potential to doing some small Phase II work in combination to evaluate the rationale for this combination in the clinical setting to confirm what we've seen pre-clinically.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [26]

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Okay. The other data point for me and all I want to ask about was, the study, where you look at 26- and 52-week treatment with seladelpar on the predicted transplant-free survival. So it looked like the effect of 26 weeks treatment was robust -- as robust as 52 weeks treatment. Is that the correct interpretation? What does that suggest about even needing chronic dosing if you get sort of maximum predicted transplant-free survival outcome benefit after just 26 weeks of treatment?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [27]

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So Steve, maybe I'll start off and then Pol, if you could add some color as well. I think partially looking at the GLOBE score, the difference between 26 and 52 is largely just driven by the biomarkers and the levels of those biomarkers that we observed at each of those time points. I think in the end, you still need chronic dosing because in order to sustain those anticholestatic and anti-inflammatory sites, largely the effects on cholestasis with respect to AlPhos and bilirubin. In order to sustain those levels, we ultimately need to, in fact, dose chronically. So really, the analysis is just looking at the levels of those reductions and the levels of AlPhos and bilirubin, to give you some guide, that if they remain there over long-term dosing, what those impacts would then be on overall transplant-free survival. Pol?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [28]

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No. I think you're making a very good point, Sujal. So this is the chronic dosing. And then PBC is a very long-term study so you need chronic dosing and follow up patient over a long period of time to figure out the impact on clinical events including transplantation.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [29]

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Okay. The last question I had was just on MRI-PDFF, do you get a sense that investors are maybe too focused on MRI-PDFF just based on the pleiotrophins that you've been highlighting? Because I think it was the last call, you mentioned like a 20% and 30% placebo-adjusted reduction as a reasonable expectation. Obviously, there's a few data sets like NGM and Viking, in particular, that get closer to 50%. So are you confident that the Street will look at the 2 digits you report for liver fat reduction and look beyond it to assess the efficacy here?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [30]

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Yes, I think it's a good question. Obviously, this is a parameter that has an association with the progression of a disease, so it's, of course, important. It's not the only parameter, of course, and I think the important thing for us here internally as well as both externally to be able to evaluate, of course, the effects of seladelpar across a variety of different parameters.

You highlighted a couple of agents and their reductions in hepatic fat as well as we know the results of MRI-PDFF were a variety of other targets as well, be it ACP inhibitors, other CHR data that are being evaluated. Some of the data exist for other targets not yet mentioned as well. And so I think there really is a spectrum. There's a range. Certainly, 20% to 30% relative reduction in hepatic fat at 12 weeks could improve as you see patients continue as we've seen with other agents improve over longer terms of dosing well correlated with seeing some effects on overall histology.

In particular, in fact, when you just think about the proportion of patients, for example, with at least a 30% relative reduction, I think these are numbers early on that are providing positivity and encouragement around what we ultimately will see with respect to histology. So I think the framework around various other targets being studied have pluses and minuses in many cases. And I think our case will be the same if you think about the various impacts on different parameters holistically in the setting of the entire patient population.

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Operator [31]

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Our next question comes from Jay Olson with Oppenheimer.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [32]

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I wanted to follow up on some other data at EASL. You spoke earlier about the relative strength of PPAR delta versus PPAR alpha in NASH. And I'd like to ask about some PPAR alpha data in PBC that was at delta -- that was at EASL. And specifically, there was data for PPAR alpha where it did not show ALT reductions in PBC patients. And I was wondering if you thought that would provide a competitive advantage for a PPAR alpha agonist -- sorry, PPAR delta agonist specifically versus PPAR alpha.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [33]

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Yes, I'll start off. I don't think there's any question at all. I mean, PBC, in fact, is an inflammatory autoimmune liver disease. And of course, while reductions in alkaline phosphatase and normalization of bilirubin have been correlated towards transplant-free survival and are really the key elements -- the 2 only elements in the primary endpoint for registration. Patients, in fact, do have inflammation. As you saw in our Phase IIb -- in our Phase II study, patients at 10 milligrams means baseline is actually above the upper limits of normal. And having an agent that actually can reduce inflammation and lower transaminase, we think there's no question that this is a preferred profile for, of course, patients and even the way, I think, physicians will think about treatment alternatives in this setting. Pol, do you want to add some additional color?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [34]

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Well, what I can add is that the transaminase inflammation is part of the PBC disease if you want. It just goes to show that the inflammation goes from the total space and invade the overall portion of the liver. So having the decrease in transaminase, particularly in patients with elevated transaminase at baseline that can normalize this parameter, I think, is very important and also if you wanted some clinical translation of the anti-inflammatory effect of seladelpar.

So I think for us, it's an important part of the efficacy of the drug. Of course, then, you have the safety side of the equation. And I have to say that the data presented at EASL for elafibranor that, that was a lengthy set of data, of course. But there was also a huge variation in the transaminase and there was -- you might remember that there was one patient that was actually more on the autoimmune hepatitis side of things, which means, in fact, that there was some elevation in transaminase. And there's a lot of patients with PBC transaminase elevation. So it's really part of the disease and taming the inflammation that you see with transaminase is totally a positive pattern.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [35]

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Great. And I also, if I may, wanted to ask about the efficacy signal you've seen for seladelpar in PBC patients with cirrhosis. Is there any read across to cirrhotic patients with other causes of cirrhosis outside of PBC? And specifically, would you expect to see efficacy for seladelpar in NASH cirrhotic patients?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [36]

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Yes. Pol, perhaps maybe you can address Jay's question here.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [37]

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Yes, I think you have to progress step by step here. What you want to see is first you start with PBC and you want to see whether the drug is safe and whether the drug works in cirrhotic patients. And you need to answer this question with data. So the data we have -- we presented at the EASL were important at that time in patients with composite cirrhosis. It seems that the response is very much patients that do not have cirrhosis and the safety profile was good also, which is really important.

Now, I give you this kind of information, you can potentially translate that. So as we said, we're going to learn -- we're going to study PSC. PSC is another cholestatic disease, so this data that we have in PBC are certainly encouraging for the PSC side of things. Now, if you go to NASH, we also -- that's also an important question because we want to study the efficacy and use safety in patients with NASH cirrhosis. So the information in PBC patients is certainly important also for NASH. You have also to remember that this is not exactly the same type of cirrhosis, but fibrosis do not start exactly the same place in the liver. In the end, of course, the cirrhotic patient have (inaudible) with cirrhotic patient and the etiology is a little bit less important. But this data in PBC cirrhotic patients are very encouraging. So, of course, we -- we will have more data and we'll continue to activate data. But that's also important for the liver disease that we want to evaluate.

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Operator [38]

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Our next question comes from Ed Arce with H.C. Wainwright.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [39]

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Just wanted to offer my congratulations also as well for all the recent progress, including your Breakthrough Designation. So I wanted to ask about what appears to be the continuingly evolving expanding profile of seladelpar in PBC, which, of course, remains your lead program, the first one you'll go to market with. The study in particular at last month at EASL that showed the comparable effect in both noncirrhotic as well as early cirrhotic HLQA gives you comfort in that area of PBC patients. And I know that as well we've discussed how your previous data showing significant numbers of patients that actually normalized ALP gives you the opportunity to look beyond the 1.67x upper limit of normal as well. And so as you look at sort of the expanding patient -- overall patient population of PBC, perhaps you could discuss how that is informing the ultimate commercial approach with the 2 or 3 others that would be approaching the market around the same time.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [40]

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Yes, I'm happy to address that, Ed. We're doing a fair bit of work, in fact, closely with the global PBC study group. Bettina Hansen, in particular, and as well as Gideon Hirschfield. As we look at historical data and better understand the impacts of reducing AlPhos and bilirubin and threshold, in fact, each of these markers across PBC progression and how they related to transplant-free survival. And we're going to continue to do this work in order to better evaluate the potential for patients really that may benefit from seladelpar treatment. And, of course, our prime focus in ENHANCE, there's a second-line treatment patients that remain at high risk of disease progression despite being on UDCA.

I think here, the data initially demonstrates that there's really a log-linear relationship between AlPhos and transplant-free survival. And so the lower you can bring AlPhos, the closer you can bring it into the normal range, of course, is a benefit for patients. And part of what will be important for us is really just to be able to identify the ability for seladelpar, which has the potential not only to be efficacious, as you mentioned, even with the significant number of patients getting into the normal range but also very well tolerated and with the potential, in fact, as we're looking to confirm and enhance the potential to even improve on key clinical symptoms of the disease. So elements of quality of life for patients that in the end in many ways could be considered an outcome, I think, will be very important parameters to be able to set the ability to really expand the overall patient population. So this is ongoing work that's largely driven by both the efficacy as well as the tolerability profile of seladelpar that may allow us to really continue to expand the overall patient population.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [41]

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Great, that's helpful. And the other question I had was just around PSC. It's intriguing to me that clearly, with the success you're seeing with ENHANCE and with the rapid enrollment that you have now at your NASH study, it would lead us to believe that you can leverage a lot of those experiences, relationship sites and so forth with a closely related cholestatic disease like PSC. And so I'm wondering other than the endpoints, which as you mentioned is still a little bit fluid, how does all of this help inform your timelines and move forward with this third indication?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [42]

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Sure, yes. So we'll be able to provide more specifics around the timelines with respect to the PSC study when we finalize the plans to move forward. But you've really captured the essence of it here internally. And with our most recent financing completed in March, we've really accelerated internal activities here to get ourselves prepared to initiate this Phase II study in the second half of the year.

The data set in the setting of PBC, as we eventually have some of the data, early data in NASH, each of these things can be key drivers in our ability to really move forward quickly in this study. Additionally, we have team members, Steve Rossi is our VP of Early Clinical Development, has had a tremendous amount of experience in hepatology and most recently, running a PSD study himself at his prior company, really has given us an opportunity to be in front of all the key individuals, many of which we already have relationships as we've developed seladelpar in the setting of PBC. So we're going to have an opportunity to move quite quickly. It's a really key unmet need in that patient population. And so what we've seen thus far with respect to seladelpar, I think, really fuels our ability to move efficiently into PSC. And so we'll give you some updates here again as they're finalized, really, in the coming probably weeks to months here.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [43]

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Okay, great. And then perhaps if I may, one last question around one of the posters you just announced today to be presented at DBW, the work being done in collaboration with other groups around pruritus and PBC. How does that work continue to help with ultimate discussions with regulators and labeling?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [44]

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Sure. Pol, do you want to start on Ed's question and I can add some color in the end?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [45]

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Sorry, can you repeat the question?

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [46]

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Yes. I just wanted to see if you could have some details around how you're thinking, with more data coming forward on pruritus in PBC from other groups, including the poster you're presenting at DBW and how that informs your going forward?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [47]

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Yes. So the poster we are presenting at DBW actually is interesting because it's a collaboration with patient organizations. And it goes to show the really important feature of pruritus for patients. So what we did was to try to evaluate the impact of pruritus on patients and also to try to evaluate what we see best way to measure pruritus for these patients. So it was very good to have a mass effect, that collaboration for this exercise.

So we also tried to better understand what is significant for them in terms of change in pruritus, so that's also important information. And this topic of pruritus is important because potentially, it can also inform, coming back to the question about expansion of seladelpar, that could be also very important aspect. But you have to realize, is that some patients that are itching and have a problem with itch, with PBC actually, do not have elevated outcome in phosphatase, so there is very limited elevation in alkaline phosphatase. So while in general, there is a correlation between pruritus and the severity of PBC, it's not always the case. So we were very happy to be able to work with patients and to see the interest there in the study.

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Operator [48]

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Our next question comes from Mayank Mamtani with B. Riley.

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Jeffrey Tan, [49]

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This is Jeffrey Tan dialing in for Mayank. First, could you point to any reference point comparing seladelpar to prior generations of PPAR delta agonists such as Glaxosmith's inclined GW501516? Was there any liver fat reduction data ever put in the molecule? I realized the same MRI-PDFF modality might not have been available back in the day but any color would be helpful.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [50]

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Yes. I think, unfortunately, there really isn't data that allows us to really compare on this element. GSK has conducted a very small study, only 6 patients. In fact, there were patients that didn't have exactly elevated liver fat, only in the 5% to 7% liver fat percent range, so quite a different profile of patients where they did see 20% reduction in 2 weeks. But I think very important for me to point out that it's a very few small number of patients and those in particular that didn't really have elevated liver fat.

I think more meaningful when we think about the potential of seladelpar in this parameter, in fact, is the fundamentals of the mechanism itself. Seladelpar is really very similar in terms of overall potency and selectivity to that GSK compound. And so as Chuck has mentioned at various points on this call, the key driver around promoting fatty acid oxidation in the liver as well as in peripheral tissue, I think, are what really encourage us around seeing some real key benefits on this particular endpoint.

And of course, marries well with some of the work that we've done albeit in mice but in mouse models of NASH where we've also seen some meaningful reductions in hepatic fat with seladelpar. I think those are really the things I'd anchor on more than looking for comparative data with GSK because it is, in fact, very limited and again, a different population of patients.

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Jeffrey Tan, [51]

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Great. And I have one follow-up question. So how are you guys preparing as an organization for the 2 watershed data readouts in 2020, namely the Phase II histology readout in NASH, Phase III pivotal readout in PBC? Do you think you would need some sort of partner along the way?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [52]

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That's a good question. In the setting of PBC, we've really built a team here internally that can help us not only execute the Phase III study, file the NDA and start to prepare us for being able to really launch in the setting of PBC on our own. When you think a little bit about the requirement there and the profile of seladelpar overall, we feel very confident that we have the ability to take seladelpar all the way to the hands of patients in the setting of PBC.

The Phase IIb data this year as well as next year in NASH, I think, will further inform us of our ability to then carry forward in clinical development. Here, we'll be pragmatic. I think we certainly have a team and the capabilities to continue advancing development of seladelpar beyond Phase II in the setting of Nash. But we are always thoughtful around strategies to expand clinical development in every setting and NASH is really no exception.

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Operator [53]

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Our next question comes from Edward Nash with Robinson Humphrey.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [54]

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Congrats to the team and for the progress for the quarter and this is Fang-Ke Huang for Edward. Thank you for taking our questions. Just a quick one for the PBC and for the ENHANCE Phase III study, I realizing that while the study exclusion criteria is basically, technical real subject will be inadequate response to OCA or intolerant to OCA. Just wondering whether you have any data point you can point to in terms of what percent of patients are currently not on OCA and what percent of patients who are on OCA but willing to switch to enroll the trial and maybe don't have data for the ENHANCE III enrollment. Maybe other data points can point to that percentage will be rather helpful.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [55]

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Let me first clarify. ENHANCE is enrolling patients that are inadequate responders or otherwise intolerant to UDCA, ursodeoxycholic acid or urso. That's the basis for the population and the basis for second-line treatment effectively. We can have patients that come into the study who have been on OCA in the past. Of course, they need to wash off OCA treatment. We've had some of those patients in Phase II, very small subset. We expect to see some in ENHANCE as well. But I still believe that the vast majority, certainly particularly outside the U.S., of patients that we have -- are likely to see come into ENHANCE, in fact, will have only been on UDCA and have not yet tried a better cholic acid. So hard for me to give you any specific numbers but I want to make sure and clarify that the real enrollment criteria in ENHANCE is to bring in patients that are either inadequate responders to UDCA or intolerant to UDCA.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [56]

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And actually, I realizing in the chart that you mentioned the OCA must be discontinued 30 days prior to treatment. So yes, I forgot you mentioned that part.

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Operator [57]

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Ladies and gentlemen, we reached the end of the question-and-answer session. At this time, I'd like to turn the call back to Sujal Shah for closing comments.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [58]

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Thank you, operator. I'd like to thank you all once again for joining us on today's call. We've had a busy year thus far already and are excited about new data this quarter, our first patient data for seladelpar in the setting of NASH and, of course, the start of PSC in the second half of this year. And we believe seladelpar really is one of the most promising compounds in active development for inflammatory liver diseases, including PBC as well as NASH and, of course, are excited now to expand into PSC.

We look forward to continuing our pioneering work in these indications, and I think it's important for me to make sure and point out that this work is only made possible by tremendous efforts of everyone here at CymaBay and, of course, by the generosity of our patients, their families and their caregivers. And we look forward to providing you with updates once again here very soon. Thank you.

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Operator [59]

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This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.