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Edited Transcript of CHMA earnings conference call or presentation 5-Nov-19 10:00pm GMT

Q3 2019 Chiasma Inc Earnings Call

Newton Centre Nov 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Chiasma Inc earnings conference call or presentation Tuesday, November 5, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dawn Schottlandt

Chiasma, Inc. - VP of IR & Corporate Communications

* Mark J. Fitzpatrick

Chiasma, Inc. - President

* Raj Kannan

Chiasma, Inc. - CEO & Director

* William H. Ludlam

Chiasma, Inc. - SVP of Clinical Development & Medical Affairs

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Conference Call Participants

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* Brandon Richard Folkes

Cantor Fitzgerald & Co., Research Division - Analyst

* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Kumaraguru Raja

Brookline Capital Markets, LLC, Research Division - Director & Senior Biotechnology Analyst

* Paul O'Brien

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the conference call to discuss Chiasma's third quarter 2019 operating and financial results. (Operator Instructions)

At this time, I would like to introduce Dawn Schottlandt, Vice President of Investor Relations. Please go ahead, ma'am.

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Dawn Schottlandt, Chiasma, Inc. - VP of IR & Corporate Communications [2]

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Thank you, operator. Today, we will be making certain forward-looking statements about events and circumstances, including, but not limited to, statements regarding our development and potential commercialization of MYCAPSSA, our expectations on timing of regulatory submissions and review periods and release of clinical data, our plans to seek regulatory approval in the United States and European Union, our plans and expectations for a U.S. commercial launch, our anticipated cash runway and the size and composition of potential markets for MYCAPSSA, if approved. These statements are based on current expectations. Actual results may differ materially due to numerous risks and uncertainties, including those detailed in the Risk Factors section of our Form 10-K filed with the SEC for the year ended December 31, 2018, as well as our subsequent filings with the SEC. Except as required by law, Chiasma disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

Joining the call today is Raj Kannan, Chief Executive Officer; Bill Ludlam, Senior VP of Clinical Development and Medical Affairs; and Mark Fitzpatrick, our President, who will review our financial results.

And now I would like to turn the call over to Chiasma's Chief Executive Officer, Raj Kannan. Raj?

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Raj Kannan, Chiasma, Inc. - CEO & Director [3]

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Thank you, Dawn. I wanted to take an opportunity to welcome Dawn Schottlandt as our newest addition to the Chiasma team as the new Head of Investor Relations. And thank you, everyone, for joining our call this afternoon to discuss our third quarter operating highlights and financial results.

The highlight of this quarter was the positive statistically significant data that we reported in July from our pivotal Phase III CHIASMA OPTIMAL trial of our lead product candidate, oral octreotide capsules, conditionally trade named MYCAPSSA.

Bill Ludlam will briefly summarize the data in a moment, but suffice it to say, we were very pleased with the trial results and are working diligently to prepare our NDA for submission. We remain on track to submit our NDA by the end of this year.

Following the top line data release in July, we completed a successful financing. With the capital we raised, we believe we have sufficient cash resources to execute our planned commercial launch of MYCAPSSA in the U.S. if approval is obtained and through the planned completion of our ongoing Phase III MPOWERED trial of MYCAPSSA in acromegaly, as you know, with top line data expected in the second half of 2020. The MPOWERED trial is designed to support an application for marketing approval of MYCAPSSA in the European Union. Mark Fitzpatrick will touch on the financing and our overall financial position in his remarks.

Turning now to our U.S. commercial preparedness activities. We are finalizing our go-to-market plan and have made key commercial hires in advance of our NDA filing, which are highlighted on our management page of our corporate website. These include Dan Thornton as Vice President of Patient Services and Market Access. Dan was previously with Chiasma in 2015, 2016; Derek Brown as our new Vice President of Marketing; and Anand Varadan, our Chief Commercial Officer from 2015, 2016, who has been retained as a Commercial Adviser through the anticipated U.S. MYCAPSSA launch in the second half of 2020. These individuals represent top talent in our industry, and we believe we are well positioned for a successful commercial launch with this team.

In addition, we strengthened our medical affairs capabilities with the hiring of Scott McConnell as our Vice President of Medical Affairs. Scott was also with the company in 2015, 2016, and we are delighted to welcome him back. In this capacity, Scott will work with Bill Ludlam to evolve our medical communication strategy, define our additional data generation activities and execute our publication plan, which includes our intent to publish the CHIASMA OPTIMAL clinical data in a peer-reviewed medical journal.

Finally, Scott and Bill will represent Chiasma at the upcoming annual Acromegaly Consensus meeting later this month. We look forward to providing additional details on our go-to-market plans for MYCAPSSA at the J.P. Morgan Conference in January.

At this point, I would like to turn the call over to Bill Ludlam, who will briefly recap the compelling results from the CHIASMA OPTIMAL trial that we reported in July. Bill?

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [4]

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Thanks, Raj. As previously communicated, the CHIASMA OPTIMAL study was a randomized, double-blind, placebo-controlled 9-month clinical trial of octreotide capsules that was conducted under a Special Protocol Assessment, or SPA, agreement with the FDA. The trial enrolled 56 adult acromegaly patients whose disease was biochemically controlled by injectable somatostatin analog, defined as an average IGF-1 less than or equal to 1.0x the upper limit of normal at screening. The patients also had confirmed active acromegaly following their last surgical intervention based upon an elevated IGF-1 at that time of greater or equal to 1.3x the upper limit of normal.

As we have previously shared, the study met its primary endpoint and all 4 secondary endpoints with statistical significance. Octreotide capsules appeared safe and well tolerated in the study population and no new or unexpected safety signals were observed. As you know, while the trial was carefully designed and conducted to meet the SPA-agreed regulatory requirements, the primary endpoint and secondary endpoints should be viewed holistically to determine the clinical relevance that practicing physicians will infer from the results. Today, I would like to focus on some of the more clinically relevant information to practicing physicians that we learned from the trial.

We see that the mean IGF-1 of all 28 patients treated with MYCAPSSA was maintained within the normal range of 0.97x the upper limit of normal at the end of oral treatment compared to 1.69x the upper limit of normal for the placebo group. This is clinically relevant in that the population of patients transitioning from injectable SSAs to octreotide capsules exhibited a consistent treatment effect. By contrast, the population of patients that transitioned to placebo lost biochemical control, suggesting the observed control for patients treated with MYCAPSSA was attributable to our product candidate.

We also see that 75% of patients on MYCAPSSA achieved an IGF-1 less than or equal to 1.1x the upper limit of normal at the end of treatment. This is clinically important as we believe these patients would likely continue on the oral drug in clinical practice.

Please remember that given the known variability in IGF-1 levels, the value of 1.1x the upper limit of normal is well within the range a clinician would expect that controls patient's IGF-1 level to fluctuate. Further, we note that 75% of patients successfully completed the trial on octreotide capsules. In other words, did not require rescue by their prior injections of either octreotide LAR or lanreotide depot. And of these, 90% elected to continue into the open-label extension phase on MYCAPSSA. We believe these findings demonstrate patient and physician satisfaction with MYCAPSSA and are indicative of what will be seen in medical practice if approved.

Finally, we are excited to remind everyone that the primary endpoint, which was rigorously designed to support potential regulatory approval was the proportion of patients who maintain biochemical response in each arm. This was defined as the average IGF-1 at weeks 34 and 36 being fully within normal limits and anyone not concluding either treatment arm on oral treatment for any reason being counted as a nonresponder. Here, we see that 58% of patients on MYCAPSSA maintained biochemical response versus 19% on placebo with a p-value of 0.008. As a company, we are committed to generating additional clinical relevant data that has the potential to impact medical practice. We are pleased to announce that we are planning a multiyear U.S. disease state registry, which is scheduled to begin enrollment early next year. We expect that this registry will involve over 40 U.S. sites and yield important real-world data on treatment burden and effectiveness of various treatments.

Turning briefly to our second global Phase III clinical trial, MPOWERED. This trial continues to progress as planned. To briefly recap, MPOWERED is being run under a protocol accepted by the EMA. The trial is a global, randomized, open and active-controlled 15-month trial intended to support marketing approval in the European Union. Chiasma completed enrollment of 146 adult acromegaly patients in the trial in June 2019. Of these, the EMA required a minimum of 80 patients who are responders to octreotide capsules per the protocol following a 6-month run-in were randomized to either stay on MYCAPSSA or return to their prior SSA injectables and then followed for an additional 9 months.

To date, we continue to see greater than 60% of patients randomized at 6 months as responders per protocol to octreotide capsules. The trial is designed to evaluate the proportion of patients who maintain their biochemical response to octreotide capsules compared to patients treated with standard-of-care injectable somatostatin analogs.

Patient-reported outcomes, in patients treated with octreotide capsules versus injectable SSAs is also being assessed. We remain on track to release top line data from the MPOWERED trial during the second half of 2020.

At this point, I will turn the call over to Mark Fitzpatrick to review the financials. Mark?

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Mark J. Fitzpatrick, Chiasma, Inc. - President [5]

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Thank you, Bill. General and administrative expenses were $4.1 million for the quarter ended September 30, 2019, compared with $2.3 million for the same period of 2018. The current period results as compared to the prior year period include increased compensation-related expenses, the initiation of precommercial activities and increased insurance premiums, which were primarily offset by a reduction in legal costs.

Research and development expenses were $4.1 million for the quarter ended September 30, 2019, compared with $5.5 million for the same period of 2018. The decrease over the prior year period was primarily driven by a decrease in clinical trial costs and was offset by increased manufacturing and regulatory cost.

For the quarter ended September 30, 2019, net loss was $7.7 million or $0.20 per basic share compared with a net loss of $7.5 million or $0.31 per basic share in the same period of 2018.

Cash, cash equivalents and marketable securities as of September 30, 2019, were $102.7 million compared with $41.7 million at December 31, 2018. We completed a follow-on offering of common stock that raised net proceeds of approximately $52.3 million in the third quarter, which further strengthened our balance sheet and lengthened our runway beyond the expected release of top line data from the MPOWERED trial in the second half of 2020 and into our planned U.S. launch.

I will now turn the call back over to Raj.

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Raj Kannan, Chiasma, Inc. - CEO & Director [6]

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Thanks, Mark. Before opening the call to questions, I would like to restate that we do plan to share additional information regarding our go-to-market plans in the U.S. with investors during the upcoming J.P. Morgan Healthcare Conference in January. As we previously shared, we also plan to provide additional insights into our company's strategy for long-term growth during the first half of 2020.

That concludes our remarks. We will now open the call to your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Yasmeen Rahimi of Roth Capital.

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Paul O'Brien, [2]

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This is Paul O'Brien on for Yasmeen. Team, 2 questions today. So first, can you walk us through how patients were titrated in 01 and OPTIMAL and its translatability into real-world clinical practice? Like how does this compare with current SSA injectables? And then I have a follow-up.

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Raj Kannan, Chiasma, Inc. - CEO & Director [3]

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Thanks. Bill, do you want to take that question on the titration in 01 and 303?

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [4]

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You bet. Yes, you bet. Thanks for that question. So really, the overarching important principles are two: one, that in both the 01 study, the original study published in 2015 in JCM, and now the 303 trial, placebo-controlled trial, in both trials, patients were started on 40 milligrams, titrated up to 60 at clinician's discretion and then ultimately, to 80, if needed. And the important point here is that it's per clinician discretion and could be based on biochemistry, it could be based on symptoms. And so from that perspective, how patients are titrated in the trials really will reflect real world, where clinicians will work with patients and base it on the biochemistry and their clinical experience.

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Paul O'Brien, [5]

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Okay. Great. And just a quick follow-up about pituitary centers. I was just wondering how many of these centers exist in the U.S.? What percentage of them -- what percentage of total acromegaly patients they treat? And I was also just curious what the -- yes, if you could just say. And then what the -- are they aware of the MYCAPSSA therapeutic profile?

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Raj Kannan, Chiasma, Inc. - CEO & Director [6]

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Yes. Thanks for that question. Bill, do you want to take part of that question, and then I can weigh in on the rest of the question.

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [7]

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You bet. So in very broad strokes, you can think of a pyramid and a matter of fact, we have a schematic of that in our corporate deck. And at the top of the pyramid is a relatively small number of really the top KOL-type centers, where the top publishers, very large patient volumes are. And depending on how you define them, where you draw your cutoff, there's maybe 10 to 20 of those sites.

Then there'll be a larger portion, sort of the next tier down, which would be regional medical expert centers, where they are often referral centers. They see a lot of pituitary patients, and they also publish and have an academic presence. And I would really consider those top 2 layers as being the pituitary centers, and then you start getting to center -- or places that I think the clinicians themselves would consider themselves are community centers. Sometimes large volume for pituitary patients but community centers that don't have direct academic affiliations.

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Raj Kannan, Chiasma, Inc. - CEO & Director [8]

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Yes. And if I could add a comment, I think the pituitary centers, say, roughly about 30 to 40 of them, that would be within our sort of target list, which are essentially very much focused on the newly diagnosed patients for surgery, and then we would work with the regional referral centers and making sure that the pituitary centers are aware of our product profile, are aware of the option. But most of the management and the decisions would be at the regional referral centers or the community centers as Bill pointed out.

And to your last question, in terms of the awareness, I believe we would say a large percentage of the thought leaders within pituitary centers, treatment centers are well aware because of the sites that we had involved in the U.S. and the close association that we've had over the years with the endocrinology community.

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Operator [9]

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The next question comes from Brandon Folkes of Cantor Fitzgerald.

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Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [10]

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I have a few. So -- but first, by talking to patients that are already on treatment, can you help us think through the commercial plan, just in terms of it would make sense to do the equivalent of a DTC, but just given the limited patient population, how would you reach the patients yet to create awareness of MYCAPSSA? And that's my first question.

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Raj Kannan, Chiasma, Inc. - CEO & Director [11]

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Yes. Great question, Brandon. Obviously, as you mentioned, the DTC efforts are not going to be cost effective at all, but however, a DTP-focused, direct-to-patient campaign. As you know, the Acromegaly Community is relatively a close-knit community. There's multiple social media platforms that we know of where they have exchanges, the Acromegaly Community run by Jill Sisco, in particular, for example, has a significant number of acromegaly patients that are in contact with each other in terms of taking tips and sort of strategies to improve their own quality of life.

So we have avenues that we have earmarked, and it's still a work in progress to be able to start reaching those patients that are not within a community or within a social media platform. And we are actually right now working in identifying those so that we can get the information to them so that they can have informed discussions with their physician when it comes to treatment choices.

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Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [12]

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And at your R&D Day, the speaker you had who actually had acromegaly, she spoke about the potential for the FDA to schedule a patient advocacy meeting potentially in January next year. Can you update us if that actually has been finalized? And if so, what we may expect to come out of that meeting?

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Raj Kannan, Chiasma, Inc. - CEO & Director [13]

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Yes. So Brandon, we have not heard a confirmation on a date. I do know that we had a confirmation that the FDA accepted the application to hold the PFDD on acromegaly, which is a positive development. However, as soon as we get the date, we'll be able to know who's been invited and bring the stakeholders on what they plan to accomplish. But it's definitely a positive development from a regulatory agency perspective and for the patients who face significant treatment burdens.

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Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [14]

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Great. And then one more, if I may, Raj. You touched on what we're going to hear in 2020, and I don't want to get too far ahead about those here. But how should we start thinking about Chiasma and TPE as a platform. Obviously, MYCAPSSA being the first product has a very good commercial opportunity, but as does the technology behind it? Any color there would be great.

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Raj Kannan, Chiasma, Inc. - CEO & Director [15]

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Yes. So Brandon, thanks for the question. So I think the company does have a technology platform, which was a genesis for the company's formation in the first place and octreotide was the first capsule that we identified as the product that we would develop through this technology delivery platform. That being said, I think the #1 focus for the company right now is to get the launch right and to be -- to have a successful launch. And as we continue to move forward, beyond the filing and the FDA acceptance, I think it'd be a good time for management to start detailing out the plans in terms of what drives the mid- to long-term growth for the company, and that's why we had positioned that as the first half of 2020 discussion with investors.

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Operator [16]

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The next question comes from Ted Tenthoff of Piper Jaffray.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [17]

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Can you hear me okay?

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Raj Kannan, Chiasma, Inc. - CEO & Director [18]

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Yes. We can.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [19]

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I just want to double-check, and I apologize if this was asked. But with respect to Europe, very clear on the plans for the U.S., what are the plans for filing with the EMA and potential commercialization in Europe?

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Raj Kannan, Chiasma, Inc. - CEO & Director [20]

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Yes. Thanks, Ted. Good question. So right now, our MPOWERED trial, which has been designed with the European Union in mind for marketing approval is scheduled to read out in the second half of 2020. We hope to file in the first half of 2021, which will take us to an approval in somewhere in the first half of 2022. So we're a little behind from the U.S. in terms of the launch and approval. And as you know, in Europe, there's also the pricing and reimbursement, which could also have a lack period. So we're working in terms of thinking about our potential options, in terms of how best to commercialize and what adds the best value to our investors in terms of Europe and other ex-U. S. markets.

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Operator [21]

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The next question comes from Douglas Tsao of H.C. Wainwright.

Perhaps you're on mute. It seems like we've lost Mr. Tsao. (Operator Instructions)

The next question comes from Kumar Raja of Brookline Capital Markets.

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Kumaraguru Raja, Brookline Capital Markets, LLC, Research Division - Director & Senior Biotechnology Analyst [22]

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Congratulations on the quarter. First, maybe on the time line with regard to the filing, given that you expect a 6-month review, what are your expectation in terms of the time line with regard to when you will hear back regarding the AdCom as well as the time line for the labeling discussions as well as what is your expectation in terms of the label? And maybe -- okay, okay.

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Raj Kannan, Chiasma, Inc. - CEO & Director [23]

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Yes. Thanks, Kumar. Good questions. So as we have stated previously, we remain on track to file in this quarter. We've always said that by the end of this year, and the team is really focused on making sure that we absolutely do the best job we can in submitting a quality NDA. And if you take that assumption forward, as you know, this is a resubmission, which then puts us on a time line of about 6 months review, which we expect a PDUFA decision in the middle of 2020. So if we file at the end of December, you would expect a PDUFA decision by the end of June. So that's basically the time line.

In terms of the question on label, the label would reflect what we put -- what we did with our clinical trial. So as you recall, the clinical trial was taking patients who were on SSA injectables, controlled and tolerated them and we put them on MYCAPSSA versus placebo. So our label, we expect our label to reflect the same dynamics of a clinical trial in terms of being indicated for patients who are on SSA injectables. So that's the label that we expect. Again, these are all FDA review topics, which we expect to have negotiations with them closer towards the end of the PDUFA period. But the FDA is always open with us in terms of potentially having a ongoing dialogue.

And then the last question was about the AdCom. We have no evidence at this point in time that the FDA would conduct an Adcom. So anything else, Bill or Mark, that you know that I haven't characterized here.

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [24]

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You covered it.

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Raj Kannan, Chiasma, Inc. - CEO & Director [25]

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Yes.

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Kumaraguru Raja, Brookline Capital Markets, LLC, Research Division - Director & Senior Biotechnology Analyst [26]

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Okay. And maybe a question on the time line with regard to full data presentation/publication in a journal? And also, what can you share with regard to the open-label extension study? How is it progressing? And what happens to the patients, the open-label, say, they are not yet told.

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Raj Kannan, Chiasma, Inc. - CEO & Director [27]

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Yes. So great questions. I'm writing them down. And if I missed one of them, Kumar, let us know. So the first one, in terms of the time line for data publications, obviously, we have released many of the data points that we think were useful and valuable to investors, we had kept a few of those data points for dissemination at a major congress. The ENDO, which is the flagship congress for endocrinology is at the end of March, where we intend to present new scientific data that is meaningful to thought leaders and clinicians. So you will see that as the first step of our data presentations that we have not announced publicly.

Importantly, our publication that we are working on is the CHIASMA OPTIMAL trial. This is a pivotal trial that we hope to publish in a peer-reviewed journal, which will come, hopefully, again, we can submit it, the publishing and printing is not within our control, but we expect that sometime in the first half of 2020. That's on the best -- in the best case. And in terms of how patients are doing on the open-label extension and for patients who are not controlled, I'll hand back to Bill. Bill, do you want to characterize that?

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [28]

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Sure. I'll just say that the open-label is progressing as planned. No new information to discuss at this point.

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Kumaraguru Raja, Brookline Capital Markets, LLC, Research Division - Director & Senior Biotechnology Analyst [29]

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Okay. Maybe finally, if you guys can provide us some insight with regard to any payer versus physician interactions you had and what kind of feedback you are getting so far.

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Raj Kannan, Chiasma, Inc. - CEO & Director [30]

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Yes. Thanks, Kumar. I think as we have stated previously, physicians are becoming increasingly aware of the treatment burdens, in particular, and they see this as a valuable option for their patients. And so that is very encouraging. And when it comes to payers, there's no evidence that we see that they would treat MYCAPSSA any differently than the SSA injectables, which, as you know, enjoys broad coverage and reimbursement on the specialty tiers.

So we expect payers to support MYCAPSSA as a differentiated option for their members, member patients who are on SSA injectables. Obviously, there's a lot of factors that go into it in terms of how we price it, in particular, and our distribution strategy. But those will be made more granular as we get closer to approval. And surely, as soon as we get approval, we certainly plan to announce the price, which will be a factor in how payers will view this.

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Operator [31]

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This concludes the question-and-answer session. I would now like to turn the conference back over to Mr. Raj Kannan for any closing remarks.

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Raj Kannan, Chiasma, Inc. - CEO & Director [32]

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Thanks, operator. So I would like to take the opportunity to reiterate our commitment to improving the lives of patients with acromegaly by acknowledging Acromegaly Awareness Day that was recently held on November 1. Thank you, again, for joining us, and we look forward to our next quarterly update call in March. Have a great evening.

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Operator [33]

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This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.