Q4 2023 DURECT Corp Earnings Call
Participants
Tim Papp; Chief Financial Officer; DURECT Corp
James Brown; President, Chief Executive Officer, Director; DURECT Corp
Norman Sussman; Chief Medical Officer; DURECT Corp
Keith Lui; Senior Vice President, Business Development, Commercial, Medical Affairs; DURECT Corp
Francois Brisebois; Analyst; Oppenheimer & Co., Inc.
Carl Byrnes; Analyst; Northland Capital Markets
Thomas Yip; Analyst; H.C. Wainwright & Co., LLC
Presentation
Operator
Greetings and welcome to the DURECT Corp fourth-quarter and full-year earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Papp, Chief Financial Officer. Thank you. Tim, you may begin.
Tim Papp
Good afternoon and welcome to direct Corporation's Fourth Quarter 2023 earnings conference call business. Tim Taft Chief Financial Officer of Darex.
Before we begin, I would like to remind you of our Safe Harbor statements. During the course of this call, we may make forward-looking statements regarding direct products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. For further information regarding these and other risks can be found in our SEC filings, including our 10 K and 10 Q under the heading risk factors to begin, I would like to review our fourth quarter and full year 2023 financial results. Total revenues in 2023 were $8.5 million compared to 19.3 million in 2022. 2023. Revenues were lower primarily because 2022 revenues included 10 million of milestone payments related to our partner agreement with Inox. For the fourth quarter of 2023, revenues were 2.7 million compared to $3.3 million for the prior year. This decrease is due to lower revenue from collaborations in 2023.
R&d expense was $29.4 million in 2023 as compared to $36.9 million for the prior year and $5.6 million for the fourth quarter compared with 10 million for the prior year. The decreases were primarily due to lower clinical trial related expenses as we substantially completed the AFFIRM trial, lower contract manufacturing expenses and lower employee related costs.
Sg&a expenses were $14.4 million in 2023 as compared to 15.9 million for the prior year and 2.7 million for the fourth quarter compared with $4.3 million for the prior year. These decreases were primarily due to lower patent expenses as well as lower employee expenses. As of December 31st, 2023, we had cash and investments of 29.8 million as compared to $43.6 million at December 31st, 2022, and our cash burn for 2023 was 38.1 million. Excluding net proceeds from financings, we believe our cash on hand is sufficient to fund operations through the end of 2024.
Now I would like to turn the call over to Jim Brown, our Chief Executive Officer, for a business update.
James Brown
Thank you, Tim, and hello, everyone. Thank you for joining us today for our fourth quarter 2023 update. Last November, we announced top line results from our first Phase IIb clinical trial, which evaluated last sucrose, sterile and alcohol associated hepatitis. The key takeaway from these results is that patients treated with our sucrose. Daryl had lower mortality at 90 days compared with patients that received placebo. We're excited about the result and believe they show the potential for lifecycle sterile to provide a clinically meaningful survival benefit in these severe AH patients to our knowledge, no previously controlled trial has demonstrated an improvement in mortality of this magnitude in this devastating disease. We also saw an encouraging safety profile for lesser cholesterol with a lower number of adverse events for the active arms as compared to placebo. We are in ongoing communications with the FDA about the design for a potential confirmatory Phase three trial that could serve as the basis for an NDA filing. We expect to provide a further update in the second quarter. We continue to be encouraged by the overwhelming support of a thought leaders and the broader hepatology community who have had no effective therapy for these patients.
Our Phase IIb AFFIRM trial was a placebo-controlled, double-blind multinational study with two active arms of 30 milligrams and 90 milligrams of Mexico sterile and a placebo arm of approximately 100 patients each. We allowed physicians to utilize their standard practice for treating age, which allowed for the use of corticosteroids in addition to supportive care, such as fluids and nutritional support as well as antibiotics for infection. In total, we randomized 307 patients with severe AH from a global network of clinical sites, including leading hospitals in the United States, Australia, the EU and the UK. Our sites included renowned liver centers, and we had the honor of working with some of the world's preeminent thought leaders in AH., the top line results in the key secondary endpoint of mortality at 90 days showed a 41% reduction, but the 30 milligram dose, that's actually both sterile and a 35% reduction with a 90 milligram dose of Mexico sterile when compared with placebo.
We also reported a numerical improvement in the primary endpoint of reduction in mortality or liver transplant at 90 days. So neither the primary or key secondary endpoint results achieved statistical significance even more impressive results were observed in the U.S. population, which comprised three quarters of the total enrollment in a firm that was 232 out of the 307 patients in the U.S. patients, we saw reductions in mortality of 57% and 58% for the 30 and 90 milligram arms, respectively, as compared with placebo. Although not part of the original statistical analysis plan. The p-values for these results were both approximately 0.01. Very importantly, our single share all exhibited an excellent safety profile with no serious adverse events in either arm and greater than 20% reductions in the number of treatment emergent adverse events, both active arms in these severely ill patients. Ultimately, these clinically meaningful reductions in mortality, coupled with the reduction in adverse events in these severely ill patients reinforce the compelling risk reward proposition for luxury goods sterile. We are in active communication with the FDA about the design of a confirmatory Phase three trial in age. We continue to believe that the AFFIRM data provide compelling evidence that our sucrose gel could represent a safe and effective therapy with lifesaving potential for age patients. As a reminder, AH. is the cause of more than 150,000 hospitalizations each year in the U.S. and with a 90-day mortality rate of approximately 30% was responsible for tens of thousands of deaths each year.
There are no effective treatments for age.
Flushing cholesterol meets our expectations in Phase three and we are able to gain approval. It would likely be the first FDA approved treatment for this disease. In addition to its high mortality rate, AH represents a significant cost to the U.S. health care system. Hospitalizations attributed to age typically incur costs ranging from 60 to over $160,000. This result in a total cost to hospitals of approximately $10 billion annually. As a result, our sequel style represents a potential multibillion-dollar opportunity in the United States alone could simultaneously provide overall cost savings to the health care system. We would now like to take any questions you may have.
Question and Answer Session
Operator
(Operator Instructions) Francois Brisebois, Oppenheimer & Co. Please go ahead.
Francois Brisebois
Hey, Tom, can you help us understand maybe a little more of the timing of when the discussions with the FDA took place, how long maybe how long after that, you intend on updating the market?
James Brown
I think you know right now we're right in the middle of the communication. So I don't have a sense I'm going to have some sense, but I really can't share much from where we are now. I think we'll have to wait for the for the process to complete and then once we have on clarity from them, then we will communicate that in a very rapid fashion.
Francois Brisebois
Understood. And then can you help us understand maybe a little bit of the feedback you're getting from physicians from the you know, obviously the publication of the data that you released?
James Brown
Yes, it's been just extremely positive. As we all know, this disease hasn't had really any major breakthrough as far as being able to help these patients out in more than 40 years. And in our US population, which was the 232 hundred to 307, we had a 28% mortality, which fits right into that 30% we've been talking about, and that's been in the literature. It was 100, 50,000 hospitalizations we're talking 40 plus thousand people dying every year in the United States. That's about as many as die from breast cancer. And it's a horrible circumstance and there's nothing out there so when they see these data and they see 40 50, 60% reduction in mortality and what appears to be a safer alternative to what they're giving today?
Certainly, we're not seeing anything in the way of increased side effects and potentially fewer of them that mix that matters a lot to them. So we've got tremendous grassroots support from the physicians who treat these patients and they are looking forward to getting the product out there and have a great number of them have volunteered to help out, I guess the outlet norm and maybe knock on wood, what are you hearing from your colleagues with regard to that, and
Norman Sussman
hello, Frank. It's overwhelmingly positive on one one of the I think we were at 10 you're at the big meeting in Boston and one of the leaders, you were one of the very first overall papers on age. When I showed it in said, man, this is the first. This is the first positive result in over 30 years. It gives you some idea of the level.
Yes.
Francois Brisebois
Great. Thank you. And then maybe can you share how involved with the FDA communications are thought leaders or and just anything about that process or can you not disclose it?
James Brown
Yes, probably not. I mean, typically, the communication between the FDA is between the FDA and the Company has excuse me, what we do involved. The thought leaders to a large extent as we're looking at worked in the the additional study would look like the Phase three trial, the so they're involved heavily there. And we're also having I have people involved thought leaders involved in as we analyze the data because this I've heard a number of people say this is the most comprehensive study that's probably been done in a channel talking over 300 patients. We're learning a lot about, you know how this disease is diagnosed and treated globally as well as here in the United States. And so as every week or so goes by, we end up learning more from this database and more about this disease and how to approach the disease. So it's science. It's really been a just a wealth of information.
Francois Brisebois
Thank you.
James Brown
Sure.
Thank you.
Operator
Carl Byrnes, Northland Capital Markets.
Carl Byrnes
Thanks for the question and congratulations on the progress or I'm wondering in the same kind of on the heels of the prior questions. Do you have any comments on in terms of the FDA's enthusiasm, considering the urgent unmet medical need to treat a age and the compelling US. subject subgroup analysis for August was circa sterile along with the profound safety profile. And then I have a follow-up as well.
James Brown
Thanks.
Yes, I wouldn't want to be trying to state what the FDA feel I think they're they're very clinical in their approach and very logical and rational. And so they're they they certainly there are I know at least two physicians in this division that have treated liver patients. So I'm sure that this matters a lot to them, but I don't I couldn't speak to anything beyond that.
Carl Byrnes
Okay.
Fair enough. And then do you have any comment on whether or not you continue to expect that the Phase three would be a US-only enrollment type study? Or has there been any change in terms of that thought process?
James Brown
No, I don't think so. I think we would still be looking to conduct it. And I'd say, because of the homogeneity of healthcare provision in the United States, we've got a large population there, a huge problem here. And the disease is, although it certainly is a global disease and it influences people, unfortunately, everywhere around the world where alcohol is consumed at.
And but in the United States, we do have our population.
I think we've talked about this. Generally speaking, there were a bit younger than the outside regions of the world also, we tend to have a number of metabolic issues from the guidance that we have. When you combine that with alcohol, you end up with with patients that I think are maybe a bit more predisposed to at this disease. But that being said, I do believe once this drug has a chance to be tested again, there will be a nice opportunity for both inside the US and outside the U.S. because these diseases are global problem.
Carl Byrnes
Excellent. Thanks so much.
Yes.
Operator
Ed Arce, H.C. Wainwright.
Thomas Yip
Hi, good afternoon, everyone. This is Thomas Yip asking a couple of questions for ad tech in particular questions. So first, just to clarify on that the communications data describing what the FDA is this the end of Phase two meeting and also assuming a path forward is identified by commission meetings. Can you just talk about a rough time line to a pivotal readout, specifically how many months for the trial to begin and also how long the study will be finished?
James Brown
We I wouldn't want to comment on that until we have finished a communication with them around the protocol. But certainly what we're discussing is a path forward for Phase three to obtain approval for this drug and that much you can take home. But beyond that, I would wait till the committee.
Thomas Yip
He finished the communication and understood on sense that perhaps found as you are actually part of the year and communications agency. I'm can you share some preliminary thoughts just internally what we consider to be key elements of this pivotal study, specifically the and some key endpoints that you will focus on? And also what how large do you anticipate this study will be?
James Brown
Yes, I would want to wait until we finished with our dialogue with them, but that will be similar. I think to what we have seen or if you look at the trial that we just had, we looked at the 232 patients that we dosed within the United States. And we saw this year 60% reduction statistics of boy below 0.01% from 20% fewer adverse events. Those kind of things coming so I think we've got a good basis to build from as we look for Phase three design, but a little bit of wait till it's done before we talk about a spin-off. But I think if you consider it that trial, you'd have to even be in a ballpark.
Thomas Yip
And as there are perhaps one more question from this one regarding deals have agreement with Charles River Labs. And I'm just wondering if you can share some financials with you and the licensing fee there and how the profit share structure between the two companies
James Brown
yes, I don't know how much we would share on that on the financials, but I would we have Keith Lui on Alliance and Keith is our Head of Commercial and Business Development and that reports into him.
So I'll let him kind of speak to the relationship with Charles River and the excitement that we have for being able to work with them. Keith?
Keith Lui
Yes, thanks, Jim. I don't think we discussed the financials in particular, but this is the first ever sales and marketing collaboration for deals, that product line that we've had in the US and Canada. So we are certainly excited about that and done with that important collaboration with as quality of an organization as Charles River that has and a well-known organization worldwide and partnering, particularly with their research models and services group. And they have a pretty robust sales force out there. It's the presence that we've never had in U.S. or Canada for the of that product line. So and we are really looking forward to the partnership which kicked off just on January first, our sales force is trained, and I think we can report some of the and the positive findings from that relationship in subsequent calls.
Thomas Yip
Got it.
Thank you again for your questions and we look forward to your at the conclusion of your discussions with the FDA for the last there?
James Brown
Absolutely.
As do we thank you so much.
Operator
Thank you. It appears we have no additional questions at this time. So I'd like to pass the floor back over to Dr. Brown for any additional closing remarks.
James Brown
With that, I just want to thank you for your time. And as always, if you have additional questions, please reach out to us, and we look forward to catching up. Thank you all. Take care.
Operator
Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation and you may disconnect your lines at this time.
