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Edited Transcript of CBAY earnings conference call or presentation 28-Feb-19 9:30pm GMT

Q4 2018 Cymabay Therapeutics Inc Earnings Call

NEWARK Mar 6, 2019 (Thomson StreetEvents) -- Edited Transcript of CymaBay Therapeutics Inc earnings conference call or presentation Thursday, February 28, 2019 at 9:30:00pm 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

* Mayank Mamtani

B. Riley FBR, Inc., Research Division - Research Analyst

* Michael Holden Kratky

SVB Leerink LLC, Research Division - Associate

* Patrick Edward Dolezal

LifeSci Capital, LLC, Research Division - Senior Analyst

* Steven James Seedhouse

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

* Tyler Martin Van Buren

Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst

* Yasmeen Rahimi

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to CymaBay's Fourth Quarter and Year End 2018 Financial Results Conference Call. (Operator Instructions) Please be advised that the call will be recorded at the company's request. It's also being webcast live on the Investors section at the CymaBay website at www.cymabay.com.

Now I would like to turn the call over to Mr. Dan Menold, Vice President of Finance at CymaBay. Mr. Menold, you may proceed.

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

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Thank you, operator, and good afternoon, everyone. Hopefully by now, you will have had a chance to review the press release we issued announcing our year-end 2018 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. They 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, 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 forecast due to 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. It's already been a busy start to the year for us at CymaBay. During the call today, we will focus on our most significant accomplishments and importantly, on key upcoming milestones that have the potential to meaningfully increase future value and to establish CymaBay as a leader in addressing the unmet needs for patients with liver disease.

As I spend time speaking with investors, I sometimes hear that CymaBay is under the radar or underappreciated given the derisked profile of seladelpar and its potential to provide an improved treatment alternative for patients with inflammatory liver disease. The advances we made in 2018 and thus far, in the first few months of 2019, have positioned us to transform that sentiment into one where the promise and opportunity of CymaBay will be more widely appreciated.

We ended 2018 with 2 major achievements in the development of seladelpar for patients with primary biliary cholangitis, or PBC. We initiated our first ever Phase III registration study, and for the third consecutive year, we made a late-breaking presentation of Phase II data at the AASLD's Liver Meeting. Earlier this month, we announced 2 additional significant accomplishments: First, we announced the FDA-granted seladelpar breakthrough therapy designation for treating patients with PBC. And second, we completed enrollment of a Phase IIb proof-of-concept study of seladelpar in patients with nonalcoholic steatohepatitis, or NASH, 1 quarter ahead of schedule.

As we look to the year ahead, we expect to increase the pace of major milestone events and catalysts. By the end of 2019, we anticipate completing enrollment in ENHANCE, our global Phase III registration study for seladelpar in PBC, and also completing our ongoing Phase II study in PBC, for which we have already shared interim data at recent key medical meeting. In addition, we expect to announce top line data from our Phase IIb study of seladelpar in NASH in the second quarter. And finally, we intend to complete ongoing evaluation and reach decisions regarding other opportunities to expand the development of seladelpar.

Let us start with our development program in PBC. As I mentioned, ENHANCE is our global Phase III registration study of seladelpar in PBC that we initiated in the fourth quarter of 2018. This study is designed to establish the efficacy and safety of seladelpar in PBC patients who have an inadequate response to, or are intolerant to UDCA, the current first-line treatment for PBC. Our goal with the study is to support the submission of a global registration dossier with health authorities to obtain approval of seladelpar. I will asked Pol to review some of the key elements of ENHANCE. Pol?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [4]

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Thank you, Sujal. ENHANCE is a 52-week placebo-controlled randomized study with a target enrollment of approximately 240 PBC patients at more than 150 clinical sites in over 20 countries. Patients are being randomized to receive daily doses of placebo or seladelpar at either 10 milligram or 5 milligram with the possibility to increase the dose to 10 milligram after 6 months.

The primary endpoint is the composite responder rate in which a responder is defined as the patient who achieves an alkaline phosphatase level of less than 1.67x the upper limit of normal with at least 15% decrease from baseline and also has a normal level of total bilirubin at 52 weeks. We are making good progress in this large global study, which includes enrolling patient across 4 regions, North America, Europe, Latin America and Asia Pacific, and are working to complete enrollment in ENHANCE by the end of the year.

ENHANCE was initiated on the strength of what we believe to be a very compelling and differentiated profile in Phase II using the same dose regimen, the same duration of treatment and the same key outcome measures that we are using in ENHANCE. We believe that the results of -- in Phase II have helped to derisk the Phase III program by establishing a differentiated profile for seladelpar in efficacy and tolerability as a potential treatment for PBC.

Results from the 52 weeks of treatments in the ongoing Phase II were represented for the first time at the Liver Meeting this past November. We also described positive results at 26 weeks on pruritus, or itching, as well as in the subset of patients with cirrhosis at baseline. Each of these presentations from last November and the accompanying press release with additional details can be found on our website. All in all, this Liver Meeting was our busiest medical meeting to date, and it provided a forum for critical external evaluation of the sustained anti-cholestatic and anti-inflammatory effect in PBC patients treated with seladelpar out to 52 weeks.

Very importantly, and in contrast to the only approved second-line treatment today, the potential benefits of seladelpar on cholestasis and inflammation were seen without worsening of pruritus, the most common clinical symptom of PBC, and one that adversely affect patient's quality of life. The data from our ongoing Phase II study suggests the potential that seladelpar may in fact, improve pruritus in patients with PBC, an effect we will look to confirm in ENHANCE.

To recap, we believe that seladelpar has the potential to serve the 2 key unmet needs in patients with PBC namely, improved efficacy and better tolerability. Improved efficacy is believed to be linked to reduce risk of disease progression based on AP reduction as a surrogate in a greater number of patients. And better tolerability has the potential to foster better compliance while potentially improving overall quality of life for patients. Sujal?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [5]

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Thank you, Paul. I want to turn to a major accomplishment in the PBC program that we announced earlier this month. The FDA has granted breakthrough therapy designation for seladelpar for the treatment of early-stage PBC. In determining to grant this designation, the FDA examined the clinical evidence for substantial improvement over existing therapy. We believe that this decision by the agency reflects the importance of the existing Phase II seladelpar clinical data and the potential for seladelpar to be a substantially improved alternative over existing treatment for patients with PBC.

The benefits of the breakthrough therapy designation include those of fast track designation with greater FDA guidance on development efficiency, organizational commitment involving senior managers, as well as eligibility for rolling review and priority review. Seladelpar has also been awarded the corresponding priority medicine, or PRIME designation, by the European Medicines Agency. Together, these programs provide an opportunity for enhanced dialogue with regulatory authorities and are expected to facilitate the path for potential approval of seladelpar in PBC.

Moving to our NASH development program. We were very pleased to announce completion of enrollment in our Phase IIb study of seladelpar approximately 1 quarter ahead of schedule. I'll turn the call over to Chuck to provide an update on this study.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [6]

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Thanks, Sujal. A total of 181 patients with a baseline biopsy-confirmed diagnosis of NASH with fibrosis have been randomized into this comprehensive dose-ranging double-blind placebo-controlled study. Prior to a baseline biopsy, subjects were required to have a liver fat content greater than 10% using the magnetic resonance imaging proton density fat fraction, or MRI-PDFF, method. Subjects were randomized in a 2:2:2:1 ratio to receive once daily either seladelpar 10, 20 or 50 milligrams or placebo. In addition, subjects were stratified at randomization by the stage of liver fibrosis and the presence or absence of type 2 diabetes. The evaluation of baseline liver histology confirmed the subject had well-established NASH with a mean NAFLD activity score of 5.2.

Additionally, 150 subjects or approximately 83% of patients enrolled had stage 2 or 3 fibrosis at baseline. The primary efficacy outcome is the relative reduction in liver fat by MRI-PDFF at 12 weeks. Important secondary measures are the evaluation of the histological improvement at 52 weeks in NASH pathology and fibrosis using paired liver biopsy samples. Additional planned assessments include MRI-PDFF evaluations at 26 and 52 weeks, magnetic resonance elastography and other noninvasive imaging technologies, multiple biochemical markers and an innovative digital liver pathology evaluation using machine learning algorithms. We believe the screening approach in the study led to a higher proportion of subjects with F2 and F3 fibrosis than has been seen in similar recent Phase II studies. The patients enrolled are reflective of the non-cirrhotic population that would be targeted for Phase III registration studies in NASH.

We also believe, a greater proportion of patients with F2 and F3 fibrosis in the study improves the chances of distinguishing the potential anti-fibrotic effects of seladelpar in patients with NASH. We have also enrolled a significant number of patients, approximately 50% with diabetes, a population of NASH patients who are at increased risk for disease progression. Going into this study, we wanted to enable it for all the needed decisions regarding commitment to Phase III development. This included enrolling a Phase III-like population, including a complete dose ranging for appropriate dose selection, and evaluating histological endpoint and outcome measures to confirm key aspects of seladelpar's mechanism of action.

We believe that seladelpar has the potential to be a foundational therapy for NASH, with actions that could potentially correct pathways involved in disease pathogenesis and progression. We believe that the ability of seladelpar to lower bile acids, cholesterol and other lipotoxic lipids and hepatocytes, coupled with its anti-inflammatory and anti-fibrotic actions, constitutes a promising profile. Furthermore, seladelpar lowers LDL cholesterol and triglycerides in obese hypercholesterolemic subjects, suggesting a potential for a CV benefit or avoiding the concerns about increasing CV risk that have been raised with other NASH candidate therapies. Sujal?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [7]

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Thanks, Chuck. Beyond our current focus in PBC and NASH, we continue to make progress with evaluating opportunities to expand the development of seladelpar for other chronic inflammatory liver diseases with high unmet need. This work includes discussions with thought leaders, evaluation of scientific and clinical rationale for development, assessment of the unmet need and other criteria important for us to determine future opportunity. We look forward to sharing updates on this front over the course of this year.

Turning briefly to our financials. Our cash, cash equivalents and marketable securities totaled $178.7 million at December 31, 2018. Based on current projection, our existing cash is expected to fund the current operating plan into 2021. For a detailed overview of our operating results for the 12-month period ending December 31, 2018, I will refer you to the press release and to our 10-K filed with the SEC today.

With that, I'd like to open up 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 the line of Yasmeen Rahimi with Roth Capital.

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

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Question one is, you had mentioned in the past of conducting a Phase III study, a PBC study in hepatic-impaired patients. Can you maybe give us an update where you are in that regard? And maybe what are the gatekeepers? And then what caught our attention was also at the EASL preview was that you'll be presenting data on transplant survival at 52 weeks. So can you give us a little bit of color in that regard?

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

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Yes. Sure, Yasmeen, thanks for the question. Maybe I'll address the first one, and then I'll turn it over to Chuck and Pol to answer the second. I think, ultimately, with respect to our PBC study...

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

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Yes, this is Chuck. So yes, in terms of what's being presented at EASL, this is work that's really led from a collaboration with Bettina Hansen and Gideon Hirschfield. You know that they've developed an overall GLOBE risk score. And so what was done was to really take the baseline characteristics of patients who enrolled in the population and then evaluate what happens in the risk reduction using the GLOBE score analysis based upon their end-of-treatment biochemical parameters. And I think gratifyingly, what you see is what you would expect, we already know that the alk phos reduction was linked to improved transplant-free survival. This was underscored and reconfirmed by use of the most sophisticated methodology using the GLOBE risk score.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [5]

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And then, Yasmeen, to swap and answer your first question, we recognized that there's a need in the broader PBC patient population, particularly in patients with advanced disease, to have a better understanding of overall exposure, and also have a better understanding of what the benefit-risk profile is in that population. As you know, prior sponsor for obeticholic acid, that's a population that was not included in their Phase III development, even though that population is in fact on their label. And there is a desire, we continue to have conversations, particularly with the agency, in thinking through the right study design for hepatic-impaired patients with PBC in particular, and understanding, again, not only exposure, but being able to actually measure what the overall benefit-risk profile was in that population. So that's a dialogue that we continue to have with the regulatory agencies.

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Operator [6]

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The next question is from the line of Edward Nash with SunTrust Robinson Humphrey.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [7]

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This is Fang-Ke Huang for Edward NASH. One quick question on your ongoing Phase II study in PBC. And can you talk about, one, you're going to present the additional data this year? And my second question is on NASH. And given that we cannot see the data in second quarter, can you give us some of your internal expectations in terms of what you want to see in that trial?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [8]

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Yes. Sure. thanks for the question. So just to start off, with respect to PBC and the ongoing Phase II study, as you know, we've had a series of presentations at recent medical meetings as that study has progressed. At some time in the middle of this year, in fact, this is a very robust ongoing Phase II study with north of 100 patients randomized, that entire population will be through the 52-week treatment period. And as has been our practice in the past, it's our goal to share that fulsome data set in peer-reviewed publication and at upcoming medical meetings. And with all the patients coming through this study, somewhere in the middle of the year this year, that would be a data set that we would expect to be able to share, either the end of this year or early next year a fulsome data set that ultimately will come an entire year before the data from ENHANCE. So we think that's significant. To provide at least a little bit of an update by the way on this Phase II study, we continue to be very encouraged. This is a study now in which just over 60 patients in this study that have been through the 52-week treatment period and patients effectively eligible to roll into the long-term extension have all rolled into the long-term extension. So we've got a significant number of patients now in this study for which we continue to collect safety and efficacy data beyond 52 weeks. So we continue to be extremely encouraged by the ongoing conduct of that study. And perhaps, I'll turn it to Chuck and Pol Boudes to talk a little bit about some of the thoughts with respect to NASH.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [9]

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So I guess, for us, the benchmark is the recent results from similarly positioned Phase II data set. So one thing's about Madrigal data, to a certain extent the NGM data, where the key issue is really the relative fat reduction. So for example, Madrigal was about 30% net of placebo, 40% overall. And the key characteristic that we look at is the relative fat reduction, absolute fat reduction, and importantly, the proportion of patients who achieve a 30% reduction in fat. That's the key finding that has been increasingly been associated with histological improvement in NASH and linkage improvement in the fibrosis as well. So for us, we think maybe a clear sign of a competitive profile would be somewhere between 30%, maybe down to 20% reduction in -- relative reduction in hepatic fat.

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Operator [10]

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Our next question is from the line of Tyler Van Buren with Piper Jaffray.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [11]

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Congratulations on that breakthrough designation. Just wanted to follow up on that a little bit. In the release and on the call you mentioned in order to get it, you need to see clinical evidence, substantial improvement over existing therapies of at least 1 endpoint. And I imagine OCA's involved in that comparison analysis. And you mentioned alkaline phosphatase in the release, but is there any back-and-forth on that with respect to other measures and results that have been presented and in particular maybe pruritus, just curious to get thoughts there as it relates to the breakthrough designation.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [12]

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Yes, absolutely. Great question. So with respect to the package delivered to the agency when we applied for the breakthrough designation and (inaudible) here, I believe that's a tremendous accomplishment and a recognition now, not only by the FDA, but with PRIME designation by EMA that there is an opportunity, certainly, that we believe seladelpar can have a substantial improvement overall in treatment for patients with PBC. The designation is supported by the data that we've submitted to the agency to date. And that surrounds reductions in APs, the robustness of those reductions. And in particular, when you look at the proportion of patients thus far in our Phase II study that are experiencing normalization of AP, with the latter as a key secondary endpoint in ENHANCE, it's something that we think is quite differentiated with the profile of seladelpar relative to other treatments available today. Certainly, thus far, what we see around tolerability and the potential for seeing improvement on pruritus that we'll validate in ENHANCE, I think, is an additional -- a key upside potential differentiator with seladelpar relative to obeticholic acid. And that's a data set that I think the agencies will continue to review, but important for them to review that in the setting of ENHANCE where we have handheld device looking specifically at daily itch in that study with a validated PRO. And we'll be able to provide information with the placebo-compared around that outcome.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [13]

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Great. And the second question is with respect to the Phase II NASH results coming next quarter. Obviously, there's been a lot of focus on MRI-PDFF and reduction in fat, and you guys just spoke about that previously, and I think people are fairly well aware of how to think about potential anti-fibrotic effects and any sort of statistically significant result or new medical result would be impressive there. But with respect to the other things that you mentioned in terms of bile acids and lipotoxic lipids and anti-inflammatory effects, how should we think about those in terms of analyzing the data that we will see? And specifically, what types of reductions would be meaningful on the various endpoints related to those measures?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [14]

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Tyler, this is Chuck. So I think one thing that's really quite impressive in the study is the richness of the data that's going to be collected. You've already discussed what some of the endpoints and additional features will be. But at top line, as we anticipate sharing the data, it'll be the liver fat, I think transaminases are another feature, that is really important and does have some literature that supports the correlation between transaminases and histological improvement. I think that another measure of the quality of the population we enrolled is not just the NAS score, but the baseline transaminases. So ALT baseline had a mean of 61, AST was 46. So I think that'll be another point of interest to examine what the potential treatment effects would be. In addition, as you mentioned, we will collect a number of other wet biomarkers at 12 weeks. It will take us some time to work through those. And we have a principle or a practice, if you will, of releasing information, when it's been appropriately cleaned, understood, analyzed. And some of those features, they'll be -- will take some time to work through as they're batch analyzed. But you could anticipate that those would be part of a more fulsome data packet that we would seek to present at a medical conference. But all in all, I think the ability to look at liver fat, lipids, transaminases, bile acid markers, wet biomarkers around fibrosis, all links together to try to connect some of the -- some of our hypotheses and rationale about the mechanism of action of seladelpar really being foundational in terms of its effect on hepatocytes, inflammation and fibrosis.

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Tyler Martin Van Buren, Piper Jaffray Companies, Research Division - Principal & Senior Biotech Analyst [15]

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I just had a -- that's helpful. And I just had a follow-up with respect to transaminases and ALTs. We've seen elevation in ALTs in some of the other data sets for drugs that are reducing fat. What do you think is causing it? Because to some extent, with a higher proportion of reduction in fat, you're seeing increased ALTs, but then there's also some debate as to whether it's related specifically to the mechanism. And if that's the case, is there anything in particular with respect to seladelpar that you've seen preclinically that would suggest that you won't see an increase in ALTs?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [16]

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Well, I -- in our study in mixed dyslipidemia where we've studied 50 and 100 milligram in a little over 120 patients for 8 weeks, these are patients with baseline highly elevated LDL cholesterol and triglyceride obese subjects with presumptive fatty acid -- fatty liver disease, excuse me. We didn't see any signal in transaminases. I -- Tyler, I really can't help you much. I think that there is many mechanisms that lower lipids that I'm not aware that there's a -- there's nothing in the label for statins, there's not really anything that I can point to. THR betas, not necessarily the ones in development for NASH, but early first-generation compounds certainly did have a signal. Is that mechanism link? I would just be speculating that would be.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [17]

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Yes, it's Pol. So I think the PBC data are interesting because, I think for us, we see the increase in transaminase as the signal for inflammation in the liver, and we really have a very impressive decrease in transaminase that we see in PBC. So I think we are expecting to see that in NASH because the population is also population where you see the inflammation, which is linked to the transaminase. I think I was listening to Chuck, I think I know what you are talking about and it's probably related to the TR-beta agonist. In fact, there is one thing -- and especially with the former generation, I would say, of TR-beta agonist, one thing that we know is that they are actually increasing the synthesis of bile acid in the hepatocyte. And that could be one of the reasons where in previous compound, you saw an increase in transaminase. But I would say that for the other type of drug, in general, what you see is that if there is an anti-inflammatory effect, you see a decrease in transaminase.

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Operator [18]

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The next question is from the line of Pasha Sarraf with SVB Leerink.

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Michael Holden Kratky, SVB Leerink LLC, Research Division - Associate [19]

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This is Mike on for Pasha. So obviously still a couple of years away, but in terms of pricing dynamics between PBC and NASH, can you discuss how we should we be thinking about your pricing strategy? And is it an area which you potentially have seladelpar approved for both the rare disease in PBC and NASH?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [20]

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Yes. Thanks for the question, Mike. It's still somewhat early for us, so it's hard to have a specific answer. But, yes, certainly, it makes sense for me to be able to share with you some of the factors that we believe will be important as we put together some of the scenario planning that we'll do over the course of development for seladelpar, not only in PBC, but also in NASH. Between now and 2021, at which point we expect to have ENHANCE completed, we're anticipating a number of different potential developments that will be input into our consideration. So first of all, with respect to the overall seladelpar profile, we'll learn from ENHANCE and hopefully validate and confirm the efficacy profile on alk phos reduction, the composite responder rate as well as the normalization rate and effects on tolerability vis-a-vis pruritus. These are key things that we continue to believe significantly differentiate seladelpar and validating what we found thus far in ENHANCE will be a key input to thinking about the overall positioning, even from a pricing dynamic perspective with respect to seladelpar in PBC. We'll continue to look at the maturation of various strategies to also expand the addressable population. I think you're seeing today that there is a significant need for treatment -- for second-line treatment in PBC. And with the potentially better and more efficacious treatment, more -- a better tolerated treatment, and we think there's an opportunity to significantly expand that addressable population. That's another consideration that we'll put in as we think about the overall pricing dynamic. Of course, all of that is -- will be reflective also of the overall competitive environment, seeing how the current treatment continues to progress and the trajectory that we learned a bit about earlier today, and how that continues to progress over the course of a couple of years. As well as its overall safety, tolerability, patient retention on current treatment and how significant the pool of patients will be that are in a need of a better tolerated treatment alternative as well as a more efficacious treatment alterative. And finally, just connecting it to, I think, really the root of your question with respect to how things develop in NASH, not only for us, but I think it's important to recognize that the development of other agents in the NASH space will be another key input in terms of how we think about it. Fundamentally, with respect to PBC, the keys are the differentiated profile, the high unmet need in the population and our ability to ultimately grow the overall population. We'll get there first with respect to PBC and our goal is to be successful there as a substantially improved treatment alternative that we think will underscore a key pharmacoeconomic benefit for that patient population. As we progress in NASH, if we're successful in NASH. Of course, there's still questions around what doses we believe we will carry forward post Phase II into Phase III development with seladelpar in NASH. So that's an another key input in thinking about some of the differentiation between NASH and PBC. In the end, the profile and the data will also drive us to what the right positioning is for seladelpar in the NASH population. So if it's a more niche population, that's -- I think that gives you some sense of where the pricing could come in based on what we see, not only in the effects of hepatic fat reduction, but of course, importantly, on effects on NASH resolution and fibrosis. And if it's a broader population, of course, that's going to be reflective then of the pharmacoeconomic benefits to address the broader population. Look, I've given you a lot of different inputs, in the end, our goal fundamentally is to be able to, not only get these treatments through clinical development, but also to support through patient full asset. And we'll take all of these things into account when we think about pricing differential.

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Operator [21]

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The next question is from the line of Jay Olson with Oppenheimer and Company.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [22]

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You touched upon this earlier, but with regards to the top line results from your Phase II NASH study, in addition to efficacy, I guess, sort of expectations that you outlined for us, how much information can you provide around the safety and tolerability from that study? And how specific can you be in the top line?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [23]

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Yes, I think it's important to point out, of course, that the study progresses to 52 weeks with patients remaining blinded. So the measures we share at top line data will be group mean, so that we respect and keep the blinds for the patient population. Similarly, from a safety perspective, I think, this is also very important for us to be able to be transparent, report what we see from a top line perspective without jeopardizing the blinds with respect to fundamental findings. What I can tell you is that I think it's important, at least today for me to tell you as we now have the study enrolled, that we continue to be confident this is a study in which medical monitoring is done on a daily basis, as it's typical for all clinical development, and we continue to see support for executing the study as planned.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [24]

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Okay, great. And then just I wanted to follow up on some comments that you made earlier with regards to what you're doing with thought leaders on additional studies to pursue for development of seladelpar and potentially broadening the population in PBC, would you consider a first-line study in PBC?

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [25]

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I think maybe I'll start off and perhaps Pol can add some color here as well. Fundamentally in PBC, the target is second-line treatment. UDCA, as a generic treatment alternative, largely well-tolerated for patients, a number of patients are, in fact, adequate responders to UDCA. And so, really, the key unmet need in the population, of course, are those that remain at risk of disease progression. There, we start to think a little bit about patients that are technically responders to UDCA, some experience in AP drop that brings them below 1.67x up the limit of normal, but nevertheless, remain elevated above the upper limit of normal. And I think one potential alternative for seladelpar, if it continues to be an efficacious, well-tolerated and safe treatment alternative through development, there's a potential to expand into this patient population that we believe continues -- that would, in fact, benefit from a further reduction in AP, benefit from further anti-inflammatory measures from treatment alternative as well as even on some of the key clinical symptoms of the disease. So we think there's opportunities to expand the population even outside of thinking about the top-line therapy treatment alternative.

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Operator [26]

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The next question comes from the line of Ellie Merle with Cantor Fitzgerald.

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Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [27]

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First, just in terms of, I guess, mechanistically, on NASH and clinical trial endpoints, I guess, what's your take on whether NASH resolution will be easier or harder to achieve clinically in F2 and F3 patients relative to in F1 patients? I guess, first, just generally for NASH agents but also specifically in the context of PPARd, I guess, is there anything mechanistic that might drive greater activity in F3 and F2 versus F1?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [28]

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Yes, thank you for the question, Ellie. This is Chuck. I think that what we saw is that other sponsors have take that cut at looking at fat reduction as a function of different degrees of F stage and haven't really seen any differences in response. I -- maybe somewhat simplistically, I think about steatosis of fat, the internal hepatocyte, liver injury, matrix is extracellular. I don't necessarily feel like those 2 things have a strong connection if we drive that asset observation, which is basically pushing fat at a lipid droplets in the mitochondria, burning it, oxidizing it and breaking it down, I'm not sure that, that would be different depending upon the extracellular matrix environment. So actually, I'm -- so the goal there is actually really to reduce, not just fat, but ugly fat or bad fat, that's driving continually tissue injury, which is causing inflammation and driving the fibrogenesis. So I feel like across F stage, NASH resolution should be fairly neutral as at least the baseline assumption. Having said that, we all recognize that risk to progression, at least for liver complications, liver adverse events is strongly linked to F stage. And so NASH resolution, fat reduction, in the setting of a more advanced disease where you're looking to ultimately resolve a degree of fibrosis with the potential benefit and long-term on outcomes, that is the setting where we would have a key interest. And I think that thought leaders are focused there, at least as far as the liver is concerned, players are likely going to have a focus there. And so that's the really the aspect in terms of liver. Of course, in terms of cardiovascular risk, lipids in general decreasing them and thoughts of -- irrespective of stage, could have a potential PB benefit there as well. So that, again, would be, in large measure, I think, independent of F stage.

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Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [29]

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Got it. That's very helpful. And then, just a quick question on PBC enrollment for the Phase III. I think you mentioned 150 trial sites. I guess, just if you could characterize, I guess, what proportion of the trial sites are already up and running versus the ones that need to still get set up?

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

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Yes, sure. Thanks, Ellie. We don't typically comment on mid-stage enrollment as well as how things continue to progress with respect to specific number of sites. I can tell you, we initiated the study at the end of last year, over 150 sites as you pointed out in over 20 countries across 4 continents. We've held all of our key investigator meetings across these different regions and the sites continue to come on board and we continue to be very pleased with how things are progressing. These are challenged largely because it's an orphan and rare disease, and therefore, we have what we believe to be a very robust global effort. And ultimately, our most powerful tool, as we think, not only about site initiation, but ultimately with respect to enrollment and completing enrollment, are the strength of the Phase II data set that has been featured in key medical meetings across, really, all of the thought leaders globally in the space and in the field in PBC; the support both from the FDA and the EMA with respect to breakthrough and PRIME, these are the tools that we're able to leverage once these sites are opened to truly drive patients into our study, and continue to be very pleased with how things are progressing today.

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Operator [31]

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The next question comes from the line of Steven Seedhouse with Raymond James.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [32]

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I have one clarification question regarding the protocol for reading biopsies in your Phase II NASH study. Are baseline and posttreatment biopsies for each patient paired and read together by the same pathologist? Or are all the biopsies scrambled together and then read, i.e. not paired? Maybe if you could just describe that protocol. Then -- and are there any other ongoing or previous Phase II studies that used a similar protocol as the one you're using?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [33]

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Well, maybe I can -- it's Pol. Maybe I can take the -- we haven't actually communicated on the details of the way we are reading the biopsy, but suffice it to say that we will use the best possible technology to read the biopsy. I can remind you also that we are using actually 2 pathologists that are extremely well known in the field of liver pathology. And for us, we think it's a key criteria for having quality reading of the biopsy. NASH biopsies are not so easy to read, actually. And I think we communicated from last call and actually one of our reader is Elizabeth Brunt, who is the, I would say, the inventor of the NASH scoring system. So we feel very confident that we have a very robust technology beyond that. So, so far, everything looks very good.

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Steven James Seedhouse, Raymond James & Associates, Inc., Research Division - Research Analyst [34]

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Okay. And just on the enrollment of these NASH trials -- I mean, most of these trials are enrolling more or less overlapping patient populations. You're obviously, able to enroll your NASH study ahead of schedule. I'm just curious, is that more of a function of getting access to the right centers and the right trial lists? Or are patients actually educated about different mechanisms and playing a role in choosing which trials they enroll in?

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [35]

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I think it's a combination of factors. The one you are mentioning is certainly a very important one. I think also when you grow into this kind of, equipment campaigns, you want to really study what has been done before, what worked well, and what didn't work that well. So I think we are also working with somebody like Stephen Harrison who is really an amazing investigator. Extremely well organized and has a very efficient network of investigators. So I think also that's possible across the scope. And the last thing also is to be able to channel patients that are really the right patient that you want to enter in the study. And that's also, there is a way to do that. And I think, again, Stephen, for example, is a -- is very proficient in this kind of clinical trial.

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Operator [36]

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The next question comes from the line of 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 [37]

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So a couple of questions have already been asked, but I just wanted to drill a little bit further on your upcoming readout in the Phase II NASH study next quarter. So 3 here for me. First, if you could just discuss the considerations around the powering of that study in particular relative to key readouts like the 30% threshold on PDFF? Second, is on the novel secondary endpoints that you've mentioned a few times. If you could just go over how the -- those may support a more complete understanding of the compound in NASH? And then the final question is, given this is a dose-ranging study of, obviously, the 10, 20 and 50 milligrams, if you could just review how you decided on these 3 doses -- -- I know we discussed this before, but just to go over that and especially in terms of the prior data that you've seen.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [38]

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Ed, it's Chuck. I'm going to start out with the dose selection and the dose ranging. Just to remind you that in PBC, we've explored a very wide range of doses. And in particular, had settled on 10 milligrams in PBC as having a very effective treatment effect, in particular, to call attention to the degree of alkaline phosphatase reductions, which we know from our prior work are linked with bile acid suppression. So 10 milligrams with reductions in not only alk phos but also strong reductions in transaminases, which is the shared feature of the 2 diseases, really helped to set kind of the low end to the range for study. At the top end, we wanted to have a very wide range because if you really want to be able to select a dose if you decide to go forward, that's where many times in drug development folks trip themselves up. So at the top end, we had prior done a study in mixed dyslipidemia, so 120 subjects were treated for 8 weeks on 50 and 100 milligrams. These are subjects who are obese, have high LDL trig, have a lot of metabolic syndromes. And in that study, just to remind you, we saw a nearly 40% reduction in triglyceride, almost 30% reductions in LDL cholesterol. And the treatment effects there were comparable between 50 and 100 milligrams. So 50 milligrams really seems like the -- it's kind of the top end of the range to see an effect in a population that is, albeit, it's not NASH, it certainly shares some of the features, the potential to see the risk reductions, these are patients that one could think because of their body type are quite likely have a lot of fatty liver disease. And the fact that the drug was safe and well tolerated, we didn't see a transaminase signal, 50 milligrams really is kind of a -- was at the top end and then 20 milligrams was added just as a kind of a log to increase over 10 milligram to fill out the range.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [39]

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I think the other question was about the power of the study. So we powered the study on the MRI-PDFF. As a reminder, the outcome is the relative change in fat fractions, and the study is actually very well powered because we have more than 80% power for a difference of 20%. And actually in this calculation, we also included the expected drop-out rate. So that's a power that we take into account, the potential drop-out.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [40]

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I'm sorry, Ed, did we leave out any portion of your question? Was it on other additional biomarkers and measures in the study?

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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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The sort of -- some of the novel secondary endpoints that you've mentioned already previously, I just wanted to get maybe a little more details around how you're thinking -- I know there's a quite a number of them, but how you -- ultimately, once you got the full 52-week data, how that will sort of fill out the entire package and help you decide on the Phase III design?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [42]

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Yes, that's a great question. So maybe I'll take the first stab, and Pol can fill any of the -- if he's had additional thoughts on it. You're right, we have not only MRI-PDFF, we have MRI-lithography. In addition, we'll have the liver multiparametric methodology from perspective where we can look at corrected T1, which is essentially reflective of edema, which is linked to inflammation in the liver, inflammation in NASH. And then we'll have a number of biomarkers that have commonly been used in the study, PRO-C3, we'll have bile acid, C4. In totality, a lot of different measures that, ultimately, as I think you recognize, the histology is what matters, but what we're building is really a knowledge base, not only to help us make decisions. So for example, we make the, at least theoretically, differences in different doses and different parameters, and fibrosis may have, you would look, for example, to see an effect of 1 dose on say, a marker of fibrosis may be somewhat different than something we see for inflammation, maybe somewhat couldn't -- can align a little differently that you see in fat. And you put those all together, that's what we understand with respect to the kind of broad mechanism of seladelpar, that may help us to understand, do we want just one dose for Phase III. If we're -- if -- assuming that the data set really supports that decision or do you want to have 2 or do you want to have a focus more on fibrosis or do you want to make sure that NASH resolution is covered? So all of this really build a data package that could help to plan for Phase III as well as think about some of the characteristics of subsets of patients, the baseline patients who have a higher degree of fibrosis markers versus those that have lower or have higher bile acid responses versus those that have lower. So it's a little -- not just a little, it's highly affected at this point, but as a scientist, I'm really excited about the rich data set and to think through those alternative scenarios and hypotheses. So I don't know exactly how it'll turn out, but I know that we're very intrigued, and would be quite committed to really take in a kind of scientific view of the totality of the data set that we get to help make some decisions around trade-offs that we might be facing.

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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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Yes, it seems very interesting given that is such a highly specific PPAR delta, the data should mechanistically be very illuminating.

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Operator [44]

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The next question is from the line of Mayank Mamtani from B. Riley FBR.

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Mayank Mamtani, B. Riley FBR, Inc., Research Division - Research Analyst [45]

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My questions are generally follow-ups to points already discussed. On PBC first, the breakthrough designation, like you pointed out, very strong Phase II data, the unmet need. But was just curious how much of a role that different mechanism that seladelpar has there relative to bile acid analogue play in that -- in the consideration with your view with the FDA? And then in PBC also, I think you talked about a lot in the new indications, all new potential markets that you could go, and could you also maybe talk about maybe combinations? As you are aware, many other mechanisms are also being pursued in Phase II studies. And then I have a NASH follow-up.

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Sujal A. Shah, CymaBay Therapeutics, Inc. - President, CEO & Director [46]

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Sure. Thanks for the question. So with respect to breakthrough, the determination is not so much mechanism-specific as it is evident to see the potential for substantial improvement in overall profile and overall benefit. So I think fundamentally, the agency as we have seen in our Phase II development concurred that the robust nature of the alkaline phosphatase drop, the proportion of patients not only experiencing decreases below 1.67x, upper limit is normal, but also into the normal range, was quite significant and differentiated from Ocaliva. So it was more with respect to the actual treatment effects than anything determined with respect to it just being a different mechanism. And I'll highlight that seladelpar is really the only compound that has breakthrough designation as well as PRIME for PBC today. Maybe what I'll do is -- I think your other -- and your other question was I think addressing how we think about combinations and I think, there, in particular in the setting of NASH, while we're very focused on completing this Phase IIb study and understanding the overall profile of seladelpar, which we've long since discussed we believe could be a potential foundational treatment alternative, given its impacts on the metabolic element as well as the inflammatory and fibrotic nature of the disease, we -- I think in Chuck's group, we have been thinking a bit more about combinations with seladelpar, particularly in that setting, and maybe I'll turn it over to Chuck to talk a little bit about some of that work.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [47]

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Yes, so we've been -- kind of our focus has been trying to understand the scientific rationale where mechanisms could either enhance or reinforce actions against various features of the disease or might fill in a gap. So we've been focusing recently on selecting lead molecules, lead therapies that have either metabolic, anti-inflammatory or anti-fibrotic activities and have been studying those in obese mouse models of NASH where you can look at characteristics of various biochemical features both in the liver and in plasma as well as NASH pathology and fibrosis. We presented some of the leads, for example, at the Liver Meeting. We had a presentation at NASH-TAG and at the Keystone Meeting, and we should have a -- we will have an additional presentation coming up at EASL where we look at these agents both alone, so benchmarking and in combination. In that context, I think that we've had some really interesting observations. For example, on the study that we did looking at liraglutide, the GLP-1 receptor antagonist, which also has some human NASH data, has some effects on NASH pathology, comparing that mechanism and looking at it in combination, we found that those 2 really work well together, both in terms of effects on weight loss, fat reduction, NASH pathology, but interestingly there, where liraglutide in this mouse model had a very minimal effect on fibrosis, seladelpar was able to add to all of the components and then fill in the gap, if you will, add its anti-fibrogenesis component into the mix. So as one begins to think about combination therapy, I think that's a strong rationale with a combination with marketed drugs that have the potential to be redirected to NASH where you can have some additive aspect but, at the same time, add something that's not available with the other agents. We've continued to do that, that's some of the presentations that you'll see at EASL, and we continue, even to this day, to look at compounds that are in late-stage development as well as marketed drug that has the potential to be either metabolic, anti-inflammatory or anti-fibrotic or some combination of those 2.

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Mayank Mamtani, B. Riley FBR, Inc., Research Division - Research Analyst [48]

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Great. That's super helpful. And then on NASH, and also thinking about the sites, is there any overlap in the PBC -- and I, again, different patient population, but is there any overlap that you see in the NASH and the PBC's sites? And specifically for NASH, are there international studies also part of the program? Maybe I missed that if you have mentioned it before there. Generally, the baseline -- there have been different placebo responses of the -- in the U.S. versus international, so just thinking through how to think about the placebo response there.

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Pol F. Boudes, CymaBay Therapeutics, Inc. - Chief Medical Officer [49]

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So I can take the first part of the question. So there is some overlap between the PBC study and on NASH study. It's not a big overlap actually. People tend to be more specialized into the way they been signed into NASH study. But there is a little bit of overlap.

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [50]

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I think the placebo response question, again, of course, is a very germane question. There's been entire conferences, or at least major portions of conferences, trying to address that issue. KOL sponsors and regulators are keenly aware of that and you can see podium presentations showing a range of placebo responses. I think in our case, the practicality is that we selected the U.S. sites only in our study. This is really a syndicated site that have a lot of experience in NASH and were able to leverage a really -- a very -- I think, thoughtful and effective strategy to be efficient to enroll the kind of population that you would like to have in Phase III. And then, coming to your question around placebo response, I think that's in our favor is just the very high proportion of subjects with high NASH, our mean was 5.2, a high degree of inflammation, so baselines are 61 and 46 in ALT and AST, respectively. And I think, importantly, the proportion of patients with F2 and F3 baseline fibrosis, and the latter in particular, I think, gives some reassurance around -- let's put it this way, less likely to see a placebo effect. It's a little bit easier to imagine and I think there's some data that says a little bit easier for an F1 to kind of move back and forth between F1 and F0, whereas having more advanced fibrosis is not something that would necessarily be subject to the vagaries of a reader -- a reader difference or the time variation theoretically could be less than those in earlier stage fibrosis. So I think in terms of the practicality of a study of this size, and the speed of which, and the quality that is vital to us, I think we've done just about every reasonable measure we can to try to minimize any potential placebo effect.

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Operator [51]

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The next question is from the line of Patrick Dolezal with LifeSci.

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Patrick Edward Dolezal, LifeSci Capital, LLC, Research Division - Senior Analyst [52]

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Just one for me. Can you just speak to the potential of seladelpar in diabetic versus nondiabetic NASH patients and provide guidance on whether you plan to analyze data from these populations separately?

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Charles A. McWherter, CymaBay Therapeutics, Inc. - Senior VP & Chief Scientific Officer [53]

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Of course, the overall top line result will look at the entirety of the population. This particular aspect, I'm a little uncomfortable speculating or handicapping what we might be, but we certainly would examine various subsets of population with respect to the baseline parameters. Importantly, I think, because diabetes is a risk factor that's known to be associated with higher-risk progression of NASH, we did stratify for diabetes as a baseline component. And I think also because it's such an important co-morbidity, and some drugs that I alluded to earlier that may have a place ultimately in the treatment of NASH are, in fact, registered as antidiabetic medications. I think that examining that makes a lot of sense. So having about half of our patients being diabetic in a study of this size at least will give us some insight to think about, are there any differences in, say, a sensitivity analysis, amongst various parameters, including the potential for an effect on glycemic parameters is certainly something that we -- of course, you'd expect us to take a look at. What that ends up happening to be, I -- Patrick, I'm really not sure. Does that shape our strategy for Phase III, does that push us one way or another in terms of a potential ultimate type of population we would target if we're ultimately successful? It's early to say. But as you would expect, we always take the position that we should be informed by the data. But we've at least made sure that we can collect the data.

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Operator [54]

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At this time, I will turn the floor back to management for closing remarks.

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

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Well, thank you all once again for joining us today. We are extremely passionate here at the company about the work that we have an opportunity to do with patients, their caregivers, really world-renowned thought leaders in the space. We continue to remain focused on our core objective to bring seladelpar to patients. In PBC, we firmly believe that we have an opportunity to substantially improve treatment for patients. We're certainly heartened to see that with the granting of the breakthrough designation as well as previously PRIME, that both the FDA and EMA see this potential for seladelpar as well. At NASH, we are excited to be quickly approaching a data set that we believe has the potential to support the positioning of seladelpar truly as a foundational treatment alternative for patients with this disease. And particularly, given seladelpar's unique mechanism of action, we fundamentally believe there isn't a more compelling compound being studied today. We look forward to providing updates on these programs, and plans to expand the development of seladelpar in the coming year. Thank you.

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Operator [56]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.