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Edited Transcript of ZSAN earnings conference call or presentation 14-Aug-19 8:30pm GMT

Q2 2019 Zosano Pharma Corp Earnings Call

FREMONT Sep 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Zosano Pharma Corp earnings conference call or presentation Wednesday, August 14, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Donald J. Kellerman

Zosano Pharma Corporation - VP of Clinical Development & Medical Affairs

* Gregory Kitchener

Zosano Pharma Corporation - CFO

* Hayley Lewis

Zosano Pharma Corporation - SVP of Operations

* John P. Walker

Zosano Pharma Corporation - Chairman, CEO & President

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Conference Call Participants

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* Anthony V. Vendetti

Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Robert Cummins Hazlett

BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentleman, and welcome to the Zosano Pharma Second Quarter 2019 Earnings Conference Call. (Operator Instructions). As a reminder, today's conference may be recorded.

I'd now like to introduce your host for today's conference, Mr. Greg Kitchener, Chief Financial Officer. Sir, please go ahead.

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Gregory Kitchener, Zosano Pharma Corporation - CFO [2]

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Good afternoon, and welcome to Zosano Second Quarter 2019 Financial Results and Operational Conference Call.

Today's call will focus on our financial results and the highlights of the quarter ended June 30, 2019, as well as important recent milestones. Copies of our press release are available on the Investor Relations press release section of our website at www.zosanopharma.com.

Today's call is being recorded, and a replay of our webcast will be available on our website approximately 3 hours after the call and available through September 14, 2019.

Joining me on the call today with prepared remarks is John Walker, Chairman and Chief Executive Officer. Later for the question and answer portion of the call, we'll -- we will also be joined by Don Kellerman, VP of Clinical Development and Medical Affairs; and Hayley Lewis, Senior Vice President of Operations.

Before we begin, let me remind you of today's call may include forward-looking statements reflecting management's current expectations and beliefs. These statements are subject to risks and uncertainties that are difficult to predict and the actual outcomes may differ materially from those anticipated in such forward-looking statements.

Forward-looking statements include, but are not limited to, our current expectations and projections relating to the anticipated progress of Qtrypta, also known as M207 and for C213, and the projected timelines for research and development activities in our other milestones; our ability to obtain FDA approval for Qtrypta and C213; our expectations regarding the relative benefit of our product candidates versus competitive therapies; our business partnering and capitalization strategy; our expectations regarding potential markets or market sizes; our expectations regarding the therapeutic and commercial potential of Qtrypta and C213; and our future financial results.

We assume no obligation to update or revise any forward-looking statements, except as required by law. For a detailed description of the risks and uncertainties regarding our business, please refer to the Risk Factors section of our 10-Q and 10-K file with the SEC.

Before I turn the call over to John, let me spend a few minutes discussing our financial results for the second quarter. Zosano reported a net loss of $9.4 million or $0.55 per share during the second quarter of 2019, which compares to a net loss of $8.8 million or $0.75 per share during the second quarter of 2018.

Total operating expenses for the second quarter of 2019 were $9.4 million, up about $0.6 million over last year. Research and development expenses of $6.6 million for the quarter compared to $6.5 million last year. This relatively small increase in R&D was mainly due to the scale-up and technology transfer to our contract manufacturer, which was offset by a decrease in costs associated with our long-term safety study.

General and administrative expenses were $2.8 million during Q2 of 2019 compared to $2.3 million during Q2 of last year. The increase in G&A was primarily due to consulting and cost in preparation for commercialization.

As of June 30, we had cash, cash equivalents and marketable securities of $17.7 million.

With that, I will now like to turn the call over to John Walker, our Chairman and Chief Executive Officer. John?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [3]

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Thanks, Greg. For those of you who've followed the company over the past 2 years, you are well aware that we have consistently executed and met our milestones in the development of Qtrypta as a promising new offering in the underserved migraine market. I use the term underserved not based on the number of product offerings, but rather on the migraineurs own reporting of unmet therapeutic needs in regard to their desire for fast onset, high degree of pain relief, freedom from pain, durability of effect and the reduction in drug-related side effects.

It is our strong belief that Qtrypta will offer an answer to these unmet needs if approved by the FDA. The data that we have generated to date in both our pivotal efficacy study and in our recently completed long-term safety study have demonstrated our clinical benefit in each of these categories.

Regarding fast onset and degree of pain relief, our Phase II/III pivotal efficacy study showed that treatment with Qtrypta at the dose we intend to market resulted in 23% of patients having pain relief in the first 15 minutes, 46% of patients having pain relief at 30 minutes, and 81% having pain relief at 2 hours.

Regarding complete freedom from pain, one of the 2 required FDA endpoints, 41.5% of patients achieved pain freedom at 2 hours, while 70% of patients were pain-free at 24 hours post-treatment. As we have reported previously, our long-term safety study confirmed the magnitude of these responses by delivering 81% pain relief at 2 hours and 44% pain freedom at 2 hours in the approximately 6,000 migraineurs treated in that study.

Regarding durability of effect, 76% of patients who were pain-free at 2 hours, maintained that pain freedom through 24 hours and 65% maintained freedom from pain through 48 hours, which was the last time point monitored in our efficacy study.

These results were even better in our long-term safety study, which we plan to present at the International Headache Conference early next month. In that study, 85% of migraine attacks that reached pain freedom at 2 hours did not have a recurrence of pain at 24 hours, and approximately 80% of those patients were still pain-free at 48 hours.

The long-term safety study also confirmed our observation of a reduction in drug-related side effects in comparison to those which are reported in the packaging inserts of other acute migraine therapies. In our study, we saw that 0.3% of these patients reported fatigue, 1.5% reported dizziness and 1.2% reported paresthesia.

We believe these lower levels of reported side effects could be a differentiator with Qtrypta compared to other therapies available to patients.

The combination of these factors was assessed by the Migraine-ACT survey, an assessment of the effectiveness of a migraine therapy. This survey was completed by each patient during their scheduled visits in our long-term safety study and the results were presented at the recent American Headache Society meeting.

After 48 hours -- 48 weeks on treatment, 96% of these respondents said that Qtrypta worked in the majority of their attacks, 85% reported that the pain disappeared within 2 hours, 84% of patients reported the ability to function normally at 2 hours after taking Qtrypta to treat an acute migraine attack and 94% reported that they were comfortable enough with Qtrypta to plan their daily activities.

This strong set of results to this standardized questionnaire demonstrates the key deliverables to patients, fast consistent pain relief and the ability to return to their normal daily activities, whether that be work, family, caregiving or leisure.

By the end of this year, we plan to file an NDA with the Food and Drug Administration to seek approval to bring this new therapy to market. Our pre-NDA meeting to review our preclinical and clinical data has been scheduled for mid-September. And we anticipate our pre-NDA meeting covering CMC or manufacturing will follow shortly thereafter. As we have announced the completion of site registration batches at our contract manufacturer and await the results of our 12-month stability study later this month.

Over the last quarter, we have increased our focus on the market opportunity and positioning of Qtrypta. As most of you know, migraine affects 39 million people in the United States. As reported in the peer-reviewed literature, it is a disease that is characterized by nausea in approximately 50% of attacks. Where almost half of presenting migraines occur in their early morning between 4 a.m. and 9 a.m. and where 90% of sufferers are unable to work or function normally during their migraine.

In January of this year, Dr. Stewart Tepper of Dartmouth published in Headache: The Journal of Head and Neck Pain, the results for Qtrypta in treating what he described as "difficult to treat migraines", which included migraines that present on wakening, those with associated nausea, severe pain with the migraine attack and those where there has been delayed treatment.

In each of these categories, our results aligned with those observed for the overall intent to treat population in our pivotal efficacy study.

Each of these categories of migraine are not as responsive to oral medications due to the delay in achieving pain relief or pain freedom, the presence of nausea and general GI motility associated with migraine.

The combination of our demonstrated efficacy in these migraines, a low level of drug-related side effects and the fact that these difficult to treat attacks represent over 50% of the presenting migraines for episodic sufferers, leads us to conclude that this should be our initial target market.

Qtrypta is well positioned in regard to other offerings for this patient population based on the combination of fast onset pain relief, pain freedom, durability of effect and the reduction in drug-related side effects.

While we continue to discuss partnering opportunities with an established sales and marketing partner, we are also, as I have commented in our previous calls, preparing the ground for taking Qtrypta to the market on our own.

This is in keeping with our stated desire to gain the best long-term results for our stakeholders in bringing this important new therapy, pending FDA approval to migraine sufferers.

Related to pipeline expansion, as you may have noted in our press release this morning, we have filed an IND with the Food and Drug Administration to commence Phase II/III studies in cluster headache with C213. This is the same product configuration as Qtrypta renumbered to illustrate that this is a new indication and may eventually differentiate from Qtrypta on the basis of the data from the study.

We're very excited about this expansion of our portfolio as the treatment of cluster is an underserved market and where the pain associated with these attacks is considered to be amongst the worst experienced by humans.

Our investigator's meeting will be held next month and provided, we received no additional comments from the agency, we expect to have our first patients enrolling in the early part of the fourth quarter.

We continue to see our platform as an underutilized asset and are planning on strengthening our business development function in the near term to expand the number and frequency of contacts with developers of biologics, vaccines and biosimilars.

We believe we have the lead in developing an intracutaneous delivery method that will offer an alternative to IV, intramuscular and subcu administration of these biological agents.

Certainly, in regard to vaccines, we have generated data that illustrates the increase in antibody titers and serological levels that should enhance the development of vaccines with less antigen, room temperature stability, easier administration and demonstrated scale-up capability.

Our entire team continues to execute on our stated goals and the filing of our NDA by the end of the year will be an important milestone in the development of this new technology, and more importantly, in positioning us to bring a new treatment forward for acute migraine and an answer to many of the unmet needs of these patients.

Thanks for your attention. And we will now open for Q&A.

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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 Charles Duncan with Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [2]

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Congrats on the progress in the quarter.

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [3]

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Thank you.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [4]

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I had a quick question regarding Qtrypta and the NDA. I appreciate the extra insights there being a pre-NDA meeting coming up. I guess I'm wondering, what are the other rate-limiting steps to filing that document?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [5]

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So I'm going to, Charles, ask, Hayley, who, as you know, has overall responsibility for operations in the company, but importantly, as well our regulatory functions. So Hayley?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [6]

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Hi, Charles. Yes, so we need 12 months of registration batch stability, which we will be pulling by the end of this month that we need to collate. We still need to finish our summative human factor study, which is scheduled to start pretty soon. And once we've done that, we will prepare the CMC package, which we will have a separate meeting with the FDA about. Because we believe that our system is complex and it being the first, we wanted to keep the disciplines of the nonclinical and clinical review as separate from the CMC. And we think it's best for us to spend that time basically familiarizing the FDA with those sections of the NDA. So right now we're waiting for our stability data, which is all required by the regs as well as the human factor studies to be complete.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [7]

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That's helpful, Hayley. Could you provide a little bit more color on the human factors study? In the past, products have been challenged had, had a device component, and I guess what gives you confidence, perhaps even the clinical experience with Qtrypta thus far that you'll be able to sail through those human factor studies?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [8]

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Sure. So we've done formative studies, which are -- they're kind of fact-finding studies where you would see how the subjects interact with your labeling and your device. And you would then either modify your package inserts or try and make it a little bit easier for them to understand. So we've done several of those and we then also submitted our protocol, which is also required under the regs for our summative study. And the FDA has a requisite amount of dates to review it and get back to you with any comments.

So we feel that we have an IFU, which is the labeling -- that is adequate for us to go into these studies, and right now, we are just preparing the materials and getting out -- our site ready for us to start that study. So we have no concerns that we would not be successful in that. We've certainly got all of the right consultants and all of the right parts of our human factors clearly identified. And also, having the experience that we have in our clinical trial and knowing that our patients who were able to stay and stayed in it for a year and with the associated questionnaires that they filled out, we know that our device and our labeling is adequate for them to use.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [9]

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Okay. That's helpful. And that's what I figured. Moving on quickly to the cluster headache, an indication I'm really intrigued with that because it seems like Qtrypta or a Qtrypta like approach could be quite valuable there. I guess I'm wondering, how does 213 really differ from Qtrypta in terms of perhaps dosing or anything else that is different?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [10]

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So Charles, let me answer the first one real quickly. So the reason we've numbered it C213, and to be clear about it, at the start, it is Qtrypta, but we're doing a dose-ranging Phase II/III study. So as you would've seen in, I think, the announcement this morning. So it's possible, we end up with a different dose than Qtrypta as we look to the market and there may be other differentiating factors as well. In addition to that, we have, as you know, with Qtrypta, a provisional tradename with the agency that is for migraine treatment.

So we want to be careful in our communication and correspondence with the Food and Drug Administration not to confuse the 2, nor to do anything that might concern the agency in regard to our labeling of Qtrypta for the treatment of migraine. So that's really the reason to differentiate it by number, C213, and it is possible that it could be a more highly differentiated product based on the data we generate in this indication. But to be clear about it, it -- as we made the clinical trial material, which we have done so, it is -- it was essentially a product that was made the same as Qtrypta just at 2 different dosing levels, 1.9 and then the 3.8 mg for the study. And so that hopefully is responsive to that part of your question. And I'm going to ask Don simply to comment about why we believe that cluster is a good indication for our delivery of zolmitriptan as the active agent.

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Donald J. Kellerman, Zosano Pharma Corporation - VP of Clinical Development & Medical Affairs [11]

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Sure. Yes, Charles, I share your excitement about this program. I think in our discussions with many key opinion leaders in the headache community, they've really -- they looked at our PK data going back some years now, when we first got our initial pharmacokinetic data and said, you should really think about that for cluster. And so given that PK data and then our results, as John highlighted in our efficacy study, we think there's really a good chance that this could be the first new therapeutic agent to be approved for cluster in some time. So we're excited to get started with that. Next month, we'll get our investigators together and start enrolling shortly thereafter.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [12]

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And do you plan to announce first patient in and possibly give periodic updates on how the enrollment's going?

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Donald J. Kellerman, Zosano Pharma Corporation - VP of Clinical Development & Medical Affairs [13]

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Yes. Yes. I think that's right. And that's -- that have been our history to try and be transparent as we can about the progress we're making in the trial. The trial will be then both episodic and chronic cluster patients. So if it's stratified for that, and again, as John said, it's really 2 doses versus placebo based on the anecdotal experience with subcu sumatriptan that lower doses may be effective in cluster and are required for migraine. So again, looking forward to that one.

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [14]

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And as we indicated, Charles, the clinical endpoints for this study will be pain relief, not pain freedom. But pain relief at 15 minutes and the durability of effect through 1 hour. So it is different disease, as you now, and does present itself differently in terms of the patient population. And so we know based on our discussion with headache specialists, the clinicians that see these patients that this is a highly underserved market, and that they welcome the opportunity to be involved in a new drug study to serve these patients.

In fact, at our recent advisory board meeting at the American Headache Society meeting, one of the folks really commented that this was very important work to do. And as we've discussed with you previously, we feel that during the next 12 to 18 month period of time, as we continue to move forward with filing the NDA for migraine and the period of time it will take for FDA to review that application that this will continue to keep us in front of the clinical community, involved with the key opinion leaders and headache specialists. Because they truly recognize that this is an important undertaking on the part of any company to try to, basically, provide a new therapy for these unfortunate patients.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [15]

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John, given the paucity of viable alternatives for treating these patients, it would seem that this trial would enroll relatively quickly. I could imagine headache specialists have pretty good sense of well-characterized patients. So I guess I'm wondering what you would guestimate the time line to be for fully enrolling that trial?

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Donald J. Kellerman, Zosano Pharma Corporation - VP of Clinical Development & Medical Affairs [16]

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Well, I hope you're right. I mean it's been a while since anybody did a pharmacologic agent, I think, there had been a fair amount of device work over the years. And you're right, we are going to the headache specialists who'd these -- who see these sorts of folks and they all claim to have a list of them. I mean historically, cluster trials have not enrolled that quickly. But we're hoping that some time over the course, we'll see, I guess there hasn't been any drug studies in a while in cluster. So -- but historically, they've not been fast to enroll like migraine trials.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [17]

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Okay. Last couple of questions. I appreciate you taking all my questions. One is regarding business development. You talked about provocative views of the ADAM technology platform with vaccines and I guess I'm wondering if you're talking with any vaccines developers and if you have a goal of being able to tie in a broader technology platform partnership in the next, call it, 12 months?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [18]

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So we do believe the vaccines represents a very unique opportunity for our technology. We're not the only ones to report on this type of intracutaneous delivery, that as you know, Charles, takes advantage of the natural biology, the proliferation of antigen-presenting cells within the dermis, the delivery into the dermis of the antigen that does result in the increased antibody levels and so on. And we know that the companies, we have started to have some discussions along this line, clearly see the opportunity in the application. And that's one of the reasons why we've made the decision, as I commented about in my prepared remarks, Charles, to really beef up our business development capability. I think you'll see something from us in that regard in the next 6 weeks or so. Really with the idea of both following up on some discussions that have been initiated at this point in time, but importantly, to broaden the scope of interactions we have with vaccine developers.

And within that context, I certainly feel that this is the type of application, and with the fact, as I commented about the -- our having scaled up the ADAM technology in manufacturing puts us in a pretty good position to be able to initiate a partnership of some kind on the development of what I hope would be new and very important new vaccine. So we certainly recognize the opportunity in terms of cancer vaccines at this point, but as you know, there is also great deal of effort being put into harnessing the immune system to treat other diseases. And our early discussions certainly indicate that the major players that are involved in vaccine discovery and development really have that same thought. And as I indicated, Charles, do, at least, initially recognize and see the value of this method of delivery as a preferential delivery over subcu or IM injection. So we feel comfortable that, that should point us in the direction of being able to get some type of nondilutive capital into the company by way of that type of a deal or relationship. And it's obviously, with that thought in mind that we are beefing up our business development function.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [19]

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That make sense to me. Last question perhaps for Greg, can you -- I'm not sure, if I missed this, maybe you already stated it. Can you give some guidance as to the quarterly cash burn for the rest of the year?

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Gregory Kitchener, Zosano Pharma Corporation - CFO [20]

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Sure, Charles. As you probably know, this year, we are undergoing a fair amount of manufacturing work both in terms of getting our CMO safety on up to speed and transferring our technology to them as well as the build-out of our new manufacturing lines and that will be used in the commercial scale. So this year, our cash burn is a little higher than it was last year. Last year, it was in the high single digits, and so far this year, we'd expect that trend to continue over the next couple of quarters here. We expect our cash burn to be in the low double digits of millions of dollars over the next couple of quarters at least here. We do think that after that, we will probably return to more normal levels. But of course, need to evaluate different opportunities in the business and other business pipeline expansion opportunities as well kind of going forward. So for at least the near-term cash burn in that low double digits of millions of dollars.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [21]

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And look forward to some news flow in the near term on cluster and the NDA for migraine.

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [22]

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Great. Thanks, Charles.

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Operator [23]

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(Operator Instructions) Our next question comes from the line of Anthony Vendetti with Maxim Group.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [24]

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So if -- you said in the press release that the -- that you are on track for the submission of the NDA by the fourth quarter of this year. Is that most likely at the end of the fourth quarter in December? Or too hard to say, at this point?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [25]

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No. I think we certainly have clarity on timing, and it will be towards the end of the fourth quarter, as you indicated. Because, obviously, we have already written some of the sections for the submission and are in process of writing additional sections as we speak. So we've got a pretty good look at the time line, Anthony, and if we don't run into any unexpected hurdles, we are very comfortable in guiding to an end of fourth quarter submission of the NDA.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [26]

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Okay. And prior to that, John, you mentioned there will be a pre-NDA meeting in September and that will further clarify the guidelines, is that right?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [27]

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I'm going to ask, Hayley, to respond to that again, but the intent of these pre-NDA meetings is certainly to make sure that, as you submit your documentation and so on, that it's presented in the way: number one, that the agency would like it; and certainly that we review with them the types of data that we have to some degree. So that when they receive the package, they will have some familiarity. But Hayley, I'll ask you to respond further on the pre-NDA.

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [28]

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Yes. Sure. Thanks, John. So John commented quite accurately that that's what we would be doing. We will outline how we will be presenting our datasets and the review of all of our studies, whether they be development from a CMC standpoint or our clinical studies as well and how we intend to position our NDA with our clinical claims. And so what the FDA would then to is just kind of give you guidance on what else they would like to see in terms of analysis, not any new additional analysis in trials, but in terms of the statistics that you've already compiled.

And then we'll go to the FDA with our CMC package as well. And that will have all of our registration data, the 12 months, like I said, that you would need to file an NDA and then we made other batches at Patheon so that we can qualify that site as our commercial manufacturer. So all that information will go in there and all of the tests and methods that we've developed and validated and the specifications that we'll be setting will be discussed with the FDA. So that they know what they're getting when we do file the NDA and then the regulatory time frames that they take to then review to see if it's acceptable to filing, they're certainly not surprised by anything we put in there.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [29]

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Okay. And then just to follow up on that. So there'll be no new trials, it just -- they'll give you guidance on what other type of analysis. And then since you have a contract manufacturer, what do they have to sign off on to approve that contract manufacturer for the manufacturing of this drug?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [30]

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Was that -- the new contract manufacturer in the beginning stages, as you've identified, they now will put the data in it to show that we can manufacture the batches as we did here in California, the same way that we would do at Patheon and then we will, obviously, note where it's manufactured at a physical location. And then throughout the review of the NDA, the FDA would schedule inspections at all of your contract manufacturers or some of them, whichever they deem to be needs to be inspected. And so they would then go out there, and basically, just ascertain that what you said in your NDA is accurate and it does actually exist and that you're capable of manufacturing your commercial product.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [31]

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Okay. And then could we -- based on all that, what do you think the time line is for them to finish all the analysis of the data, assuming nothing too different than what you presented maybe a little more statistical analysis? Is this a year-long process? Is this a couple of month process? What do you think?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [32]

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Do you mean the FDA or do you mean us compiling the data in our NDA?

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [33]

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Just compiling the data, what they need? And then finishing the inspection?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [34]

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Okay. So yes. So we have a requisite amount of data in the datasets that we have. So we have a project management tool that we will be dropping it in, which is why we've communicated that we'll be able to file our NDA by the end of this year. And then the current PDUFA time lines, we are expecting a 12-month review for our first cycle review an approval by the FDA. And based on those time lines within that 12-month review, the FDA have to do certain things in order to get to certain milestones within their review. So PAIs can happen at our sites and from any time from 65 days after filing the NDA, all the way out to about month 10 or 11. So it's up to them to schedule based on their time lines and resources when they would go out there. But we have to be ready in order to host those inspections and so do our contractors by the time we file our NDA.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [35]

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Okay. So about a year out before they would potentially make a decision?

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Hayley Lewis, Zosano Pharma Corporation - SVP of Operations [36]

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Yes. The review is 12 months, yes.

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [37]

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Yes. So Anthony, try to be crisp about that is that, once we file the NDA, the FDA will assess the package, et cetera. As Haley indicated, they will, we believe schedule a visit to our contract manufacturer and because we made certain batches of clinical trial materials and so on, they will also, most likely inspect our facility here. So to give you some sense about, we've already started preparing our team here for our -- what needs to be done in an inspection and the preparation work for that. You should know that one of the reasons we selected Patheon as our contract manufacturer, is they've received continuing clean bill of health from the FDA because their subject, they manufacture other products. So they have been subject to more routine inspections over time, and we are pleased to note they had one recently.

And there are no issues with our contract manufacturer in regard to their capabilities and so on. So the inspection will really focus on the quality control and the quality assurance measures that are built into our manufacturing process. And obviously, it'll allow the FDA to assess that we are providing the product that they would be approving through our manufacturing. That should all be done we believe sometime in the early part of the third quarter of next year. And then that would lead to on the cycle that Hayley has mentioned, that is PDUFA directed, we would probably receive the results of the FDA's consideration, which we certainly believe will be approval. We think we have a highly de-risked asset here at the end of 2020. So that would be the guideline, I think in terms of the time line, generally, post-filing of the NDA.

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Anthony V. Vendetti, Maxim Group LLC, Research Division - Executive MD of Research & Senior Healthcare Analyst [38]

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Okay. So assuming no problems then FDA clearance late 2020 is realistic?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [39]

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Yes. Absolutely. We would anticipate that based on our filing date.

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Operator [40]

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(Operator Instructions) We have a question from the line of Bert Hazlett with BTIG.

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Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [41]

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Yes. Lots have been asked, lots have been answered. Just with regard to cluster. Could you give us a sense of how much the Phase II/III study is going to cost? And then secondly, do you need a second study for that indication?

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John P. Walker, Zosano Pharma Corporation - Chairman, CEO & President [42]

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Thanks very much, Bert, we appreciate the question. I'll comment about cost here and then the second part of your question, I'll turn over to Don. But from a cost standpoint, we already have engaged a clinical research organization to assist us in the study. The direct cost of that is anticipated to be mid- to low single digits if you will for the CRO in terms of millions. And then, of course, you have our own cost associated with our clinical development work in activity and so on. So I believe that the cost as we project it over the next 18 months or potentially longer depending on enrollment, et cetera, will be in the mid-7 figure category. All right. Don?

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Donald J. Kellerman, Zosano Pharma Corporation - VP of Clinical Development & Medical Affairs [43]

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So regarding the second study, it is a new indication. Typically they are -- 2 studies are required for any new indication. However, we will be looking at it after the first study, if we get a knockout p-value, it's certainly possible that we could appeal under the single pivotal trial guidance. I think we'll wait and see and have it -- I think our goal is to do the study, see how the doses differentiate from placebo and then plan to have a conversation with the FDA. But I think you infer that the most new indications require 2 pivotal trials. Zolmitriptan has never been approved for cluster headache.

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Operator [44]

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And I'm showing no further questions in queue at this time. Ladies and gentleman, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.