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Edited Transcript of CHMA earnings conference call or presentation 9-May-19 9:00pm GMT

Q1 2019 Chiasma Inc Earnings Call

Newton Centre May 24, 2019 (Thomson StreetEvents) -- Edited Transcript of Chiasma Inc earnings conference call or presentation Thursday, May 9, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Drew Enamait

Chiasma, Inc. - VP of Finance & Administration and Principal Accounting Officer

* Mark J. Fitzpatrick

Chiasma, Inc. - President, CEO, Secretary & 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

* Kumaraguru Raja

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

* Yasmeen Rahimi

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

* Glenn Garmont

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Presentation

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Operator [1]

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Ladies and gentlemen, greetings and welcome to the Chiasma, Inc. First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this program is being recorded. It is my pleasure to introduce your host, Glenn Garmont, of LifeSci Advisors. Thank you. You may begin.

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Glenn Garmont, [2]

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Thank you, operator. Good afternoon, and welcome to the Chiasma First Quarter 2019 Financial and Operating Results Conference Call. Before we begin, today, we will be making certain forward-looking statements about events and circumstances, including, but not limited to, statements regarding development of octreotide capsules, our expectations on timing of release of clinical data and regulatory submissions, our plans to seek regulatory approval in the United States and European Union and our anticipated cash runway.

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. Chiasma disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

And now I would like to turn the call over to Chiasma's President and Chief Executive Officer, Mark Fitzpatrick. Mark?

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [3]

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Thank you, Glenn. And thank you, everyone, for joining our call this afternoon. This is our first quarterly update conference call since 2016, and we are excited to share an update on our clinical progress as we approach the anticipated release of important Phase III data and begin preparation to transition to a commercial stage company. Joining me today is Bill Ludlam, our Senior VP of Clinical Development and Medical Affairs, who will discuss our clinical progress; and Drew Enamait, our Vice President of Finance and Administration, who will review our financials. Following our prepared remarks, we will open the call for questions.

We are approaching a potentially transformational milestone for our company, which is the anticipated release of top line data from our ongoing international Phase III CHIASMA OPTIMAL clinical trial of our investigational oral octreotide capsule's product candidate, which we are developing for the maintenance treatment of adult suffering from acromegaly.

If the results of this trial, which we are conducting under a Special Protocol Assessment agreement, or SPA agreement, reached with the FDA are positive, we plan to resubmit our NDA by the end of this year. We would then anticipate a 6-month PDUFA review classification and possible FDA approval in mid-2020.

For those who may be new to this story, acromegaly is a rare but debilitating disorder caused by a benign tumor in the pituitary gland that causes the release of excessive growth hormone. Common features of acromegaly include altered facial features, intense headache, joint pain, impaired vision and enlargement of the hand, feet, tongue and internal organs.

The disease leads to significant health problems and if left untreated can lead to premature death. Multiple epidemiology studies since 1980 have led us to estimate that the prevalence of acromegaly is approximately 75 cases per million, suggesting a worldwide patient population of approximately 69,000 individuals. We estimate that approximately 24,000 of these patients reside in the United States and that an estimated 8,000 of these are currently treated with the standard of care long acting injectable somatostatin analogs, or SSAs.

The initial treatment for adults diagnosed with acromegaly is usually surgery to remove or reduce the size of the pituitary tumor. Patients who are not successfully cured by surgery are typically treated with lifelong, monthly, long-acting somatostatin analog injections to suppress the production of growth hormone, an IGF-1. However, injectable SSAs have significant and well-documented treatment burdens. In March, we presented 3 posters at the 2019 ENDO conference detailing the ongoing challenges experienced by these patients, including inadequate acromegaly symptom control despite being biochemically controlled on somatostatin analog, particularly toward the end of the monthly injection cycle, significant pain of the injection site and other injection site reactions and the inconvenience in terms of both the need to schedule monthly injections and to travel to receive injections.

We believe these findings highlight a significant unmet need in the treatment of acromegaly patients. If approved, octreotide capsules, which we have conditionally trade named Mycapssa, would be the first oral somatostatin analog in an injectable-only treatment market.

We estimate the global market for injectable SSAs for the treatment of acromegaly to be in excess of $800 million annually, and we believe we may be well positioned to capture significant percentage of this market if Mycapssa is approved in both the U.S. and the European Union.

If we achieve our important 2019 Chiasma OPTIMAL clinical data and regulatory filing milestone, Mycapssa could be approved by the FDA for commercialization in the U.S. in mid-2020. Given this timing, we are beginning preparations for U.S. commercial readiness activity following the Chiasma OPTIMAL data.

We expect to be able to refer to much of the commercial launch planning and strategy that was developed in 2015 and '16 in connection with our original NDA filing. If Mycapssa is approved, we plan to commercialize in the U.S. using a small specialty sales force. By targeting pituitary centers, regional referral centers, high-volume endocrinologists and community endocrinologists, we believe we can reach approximately 90% of the somatostatin analog treated adult acromegaly patients.

Now I would like to turn the call over to Bill to discuss our clinical development activity.

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

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Thanks, Mark. The Chiasma OPTIMAL Phase III trial is a randomized, double-blind, placebo-controlled, 9-month trial of Mycapssa. In August 2017, we reached a special protocol assessment agreement with the FDA under which we are conducting the Phase III trial. The Chiasma OPTIMAL trial is designed to address the efficacy concerns raised in the complete response letter received in April 2016.

On October 1, 2018, we completed enrollment in the trial, randomizing 56 adult acromegaly patients on a one-to-one basis, Mycapssa versus placebo. The primary endpoint is the proportion of patients treated with Mycapssa who maintain their biochemical response compared to the placebo-treated patients at the end of 9-month trial period.

The trial is progressing as planned, and we currently anticipate reporting top line data from the trial during the third quarter of this year. If positive, we anticipate that Chiasma OPTIMAL will support an NDA resubmission in the U.S. by the end of this year, and we further anticipate a 6-month PDUFA review classification.

In parallel, with our ongoing Chiasma OPTIMAL trial, we are also evaluating Mycapssa in a second Phase III trial, MPOWERED, under a trial protocol accepted by the European Medicines Agency.

This is a randomized, global, open-label, active controlled trial of up to 150 adult acromegaly patients that is designed for regulatory approval of Mycapssa in the EU. In October 2018, we reached the EMA-required minimum of 80 octreotide capsules responder patients being randomized after enrolling 135 patients into the 6-month run-in phase of MPOWERED. In November, we announced that we plan to enroll up to an additional 15 patients from the U.S. in an effort to gain further U.S. investigator and patient experience with Mycapssa.

The MPOWERED trial consists of a 6-month run-in phase followed by a 9-month randomized controlled phase where responder patients are randomized either remain on octreotide capsules or return to prior injectable somatostatin receptor ligand, either lanreotide depot or octreotide LAR. The primary endpoint is the proportion of patients who maintain their biochemical response to octreotide capsules and patient-reported outcome in the patients treated with octreotide capsules as compared to patients treated with injectable SSA.

This trial is progressing as planned with enrollment expected to be completed this quarter. We continue to expect to report top line data from MPOWERED in the second half of 2020.

If positive, data from MPOWERED could support a planned MAA submission in 2021. Acromegaly treatment guidelines and options are similar in the EU as they are in the U.S., and injections are typically administered in secondary or tertiary hospitals, which add to the total cost of treatment.

Now I would like to turn the call over to Drew Enamait to provide a financial update.

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Drew Enamait, Chiasma, Inc. - VP of Finance & Administration and Principal Accounting Officer [5]

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Thanks, Bill. In April, we closed the follow-on public offering of our common stock, which raised net proceeds of approximately $32.2 million.

The funds raised in this offering extend our runway into late 2020, including through the release of Chiasma OPTIMAL top line data and if positive through anticipated mid-2020 PDUFA date.

Turning to our first quarter results, general administrative expenses were $2.5 million for the quarter ended March 31, 2019, compared with $2.4 million for the same period of 2018.

The current period results include increased professional services fee, which were primarily offset by a reduction in legal costs. Research and development expenses were $6.5 million for the quarter ended March 31, 2019, compared with $4.9 million for the same period of 2018. The increase was primarily due to an increase in manufacturing-related costs in 2019.

For the quarter ended March 31, 2019, net loss was $8.8 million or $0.36 per basic share compared with $7 million or $0.29 per basic share in the same period of 2018. Cash, cash equivalents and marketable securities as of March 31, 2019, were $33.9 million compared with $41.7 million at December 31, 2018.

I will now turn the call back over to Mark.

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [6]

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Thanks, Drew. That concludes our prepared remarks. We will now open the call for your 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 Brandon Folkes with Cantor Fitzgerald.

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Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division - Analyst [2]

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Given that a few companies have recently started to talk about the attractiveness of acromegaly market and you look like you are the first -- potentially the first to market these new wave of treatment, how do you think that tailwind of sort of increased awareness of the market may help you when you bring Mycapssa to market? And then apologies if you mentioned this on the call, but what response rate do you think that physicians will want to see in the Mycapssa readout?

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [3]

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Okay. Brandon, this is Mark. Thank you very much for your question. So the first part of that question is just the increased awareness around the acromegaly market given the number of players that seem to be active there. We certainly feel that same market trends that you're getting as well that with the advent of Clinetix initiating Phase II earlier this year and the like, there does seem to be a fair amount of activity. We will prepare to launch our product as you know in our 2016 and do believe that in 2020 there will be a significant amount of additional data in connection with our product, if it's approved. And there is certainly been several ENDO conferences and other conferences since 2016 where we and others have been able to feature a fair amount of additional information like the posters that we presented at ENDO 2019.

I think in relation to your second question, in terms of response rate, as you know, the trial is designed to determine whether there is a 45% delta in response rate between the active Mycapssa arm and placebo-control arm. And as we've said from the outset of the trial, we believe that the placebo response and the trial design has been built such that the placebo response is up to something like 10%. And so that delta of 45% would equate to a 55% response rate on Mycapssa treated patients.

In the first Phase III trial, when physicians were polled, a prescription decision was deemed to be a positive idea in their mind that we were able to demonstrate a 50% response rate in patients. And we know on some recent calls hosted by others speaking with KOLs that response rate in that area or perhaps even lower would still render likely a positive prescription decision for a physician and a patient for a product like ours.

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Operator [4]

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Our next question comes from the line of Yasmeen Rahimi from Roth Capital Partners.

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

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Congrats on the continued progress. Two questions for you. Question one, can you walk me through at what point do you in your patients that are on placebo and OPTIMAL you would perform a rescue? What I mean with that is, what cutoff of IGF levels do you want to see before you come to rescue? And once that occurs, are these patients' in the placebo response counted towards the analysis? And then I have a follow-up.

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [6]

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Okay. Thank you, Yas, for your question. I'm going to refer that question to Dr. Bill Lublin, who is on the line with us today. Bill?

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

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Thanks, Mark. Thanks, Yasmeen. So the predefined withdrawal criteria is as follows: patients have 2 IGF-1, 2 consecutive IGF-1 that are 1.3x the upper limit of normal or greater and are on the highest number of pills, 4 pills per day for at least 2 weeks. And at that point the patients have met -- and they have clinical symptoms, binary symptoms to go along with that elevated IGF-1.

At that point, they've met the predefined withdrawal criteria, they're eligible to withdraw. At that point, they are considered nonresponders. So it's the nonresponse of these patients. If they typically define withdrawal criteria, they're eligible to go into the open-label but they will be considered nonresponders from that point forward.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [8]

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That's very helpful. And then also, Bill, maybe question for you is to kind of enlighten me a little bit more. What element of the trial design should ensure that we have less dropouts that we have seen previously with the 01 study?

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [9]

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Yes. Great question. So I think there is -- as any time you work with a drug, there's always learnings that go on. And we certainly have studies -- what we can do to maximize the patients staying in the trial. These included several things. One is, we had several investigator meetings where we really emphasized the importance that the investigators choose their patients carefully so that they really are sort of signing up for the full duration and that these patients understand that there is at least a 50% chance that they're going back on injections.

We've talked with investigators to convey to their patients that we learned from the first 01 study that, for example, GI side effects are really a class effect and that they resolve in a median of 13days, and that if clinicians simply treat through that with conservative measures that these patients will often resolve on that.

And then I would say the third really important piece is that we've encouraged rapid dose escalation. We learned again, after that first trial, but looking back at the data that there is no clear correlation between dose escalation and increase in AEs. There's no penalties for going up in dose. However, by going too slow, you potentially lead the patient under treated and exposed to their disease state.

So by putting all of those things together, we believe we're maximizing the chances that the patients will successfully stay in the study. Again, we presume at least half are going to be going on to rescue medications, but that they'll stay in the study, we'll be collecting data until week 36.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [10]

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And if I may ask one last question. How aware are physicians in terms of managing the symptom burden beside biochemical control? And is that of a segment of a market that you're very much focused on?

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [11]

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So Yasmeen, that was featured in a poster presentation with the Pituitary Society or ENDO society meeting this year as well as discuss with the Pituitary Society meeting in New Orleans. So I think that the physician awareness that patients that are under biochemical control can still be suffering quality of life issue with symptom control and the like. I think that, that learning has taken place over the last couple of years, and it seems to be -- to us to be a real heightened awareness as to the fact that patients do continue to suffer from the condition even under biochemical control.

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Operator [12]

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Our next question comes from the line of Douglas Tsao from H.C. Wainwright.

Our next question comes from the line of Kumar Raja from Brookline Capital Markets.

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Kumaraguru Raja, Brookline Capital Markets, LLC, Research Division - Former Director & Senior Biotechnology Analyst [13]

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So I wanted to focus on the poster where you showed that there's inadequate symptom control as well as treatment dissatisfaction. So I wanted to know what is driving this. Is it mostly the somatostatin injectable or challenges with the reconstitution of the depots? And how this can be addressed or highlighted in the label as well as education effort for physicians and the patients?

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [14]

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Kumar, thanks for your question. I think the first part of that question, Bill, has to do with the how -- I think we can -- certainly, I'm going to go to the second part of the question, which is label comments, which is not something we're going to be able to discuss today. But Bill speaking to the posters and the symptoms, perhaps you could expand on that for Kumar.

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William H. Ludlam, Chiasma, Inc. - SVP of Clinical Development & Medical Affairs [15]

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So the questions that we asked were -- didn't get to the granularity of trying to understand what it was specifically about the injections that were causing issues. Certainly, injection site reaction, some of the early-on symptoms immediately after injections, the wear off of the drug, approximately half the patients complain of some symptoms that come on towards the end of the month, sometimes requiring additional therapies toward active somatostatin analog injections to cover that last period of time. So these things collectively, certainly, add to the burden, and we believe is contributing to the issues with injections despite an overall satisfaction with somatostatin analog therapy.

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Kumaraguru Raja, Brookline Capital Markets, LLC, Research Division - Former Director & Senior Biotechnology Analyst [16]

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Okay. And one final question, like, following the data, what would be the steps and timeline for NDA resubmission? And what efforts are being made at that time for those?

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [17]

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So Kumar, if the data is positive in Q3, we would expect to resubmit our NDA by the end of the year. We have then -- we have submitted an NDA before in relation to this product. We have been working on the project of preparing that NDA for the data and the other elements that are necessary to go into the NDA preparation, so our goal would be to submit that NDA by the end of the year. And we have been working actively to ensure that once we have data, we are prepared to move forward with those pieces and analysis of information that we don't have until we receive data and incorporate that into the filing document and then be able to submit that before the end of 2019.

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Operator [18]

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(Operator Instructions) Ladies and gentlemen, we have no further questions in queue. I'd like to turn the floor back over to management for closing.

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Mark J. Fitzpatrick, Chiasma, Inc. - President, CEO, Secretary & Director [19]

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Thank you very much, operator. That concludes today's call. I want to thank you on behalf of Bill and Drew and myself for joining us today. We look forward to our next quarterly update call with you in August. Have a very good evening. Thank you.

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Operator [20]

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Thank you. Ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.