Chimerix Inc

NASDAQ:CMRX

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the Chimerix First Quarter 2023 Earnings Conference Call.

I would now like to introduce you to your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

[Michelle LaSpaluto]

Thank you. Good morning, everyone, and welcome to the Chimerix First Quarter 2023 Financial and Operating Results Conference Call. This morning, we issued a press release related to our first-quarter operating update. You can access the press release in our Investors section of the Web site. With me on today's call are President [Technical Difficulty] Officer, Allen Melemed; Chief Financial and Business Officer, Mike Andriole; and Chief Technology Officer, Josh Allen. Before we begin, I would like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties and other factors. These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties.

At this time, I would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

[Mike Sherman, President and Chief Executive Officer]

Good morning, everyone, and thanks for joining. 2023 is definitely off to a good start from an execution standpoint. We continue to open action study sites and now have regulatory approval for the protocol in nine countries. The latest approval was received a few weeks ago from the European Union, and we're activating sites there now. We remain on schedule for our first efficacy analysis in early 2025, which includes an initial overall survival assessment. We are pleased in the meantime to have a strong showing at the American Association for Cancer Research Annual Meeting this year with more than a dozen presentations related to the imipridone platform. Those were presented by the company and our collaborators at Brown University and the University of Michigan. The presentation by Dr. Carl Koschmann from the University of Michigan was the highlight. He presented clinical evidence of ONC201's ability to reverse H3K27 trimethyl loss.

We've described previously the relationship between ONC201's molecular targets and the H3K27M target population, but this goes a step further. This is the first known example of any therapy reversing H3K27 trimethyl loss. This is a characteristic, which you may know has been linked to tumor growth and poor prognosis. So on top of the durable tumor responses observed in the Phase II data set, the overall survival advantage reported by multiple nonrandomized analysis of patients treated with ON201 compared to all others. This provides additional confidence in the outcome of the ACTION trial. I'll let Josh dig a little bit deeper into the science and why it matters in a moment. We also continue to progress ONC206 in the dose escalation studies. We expect the open-label dose escalation to run into the first half of 2024. That will both inform the dosing strategy and create the opportunity to identify other signals of activity. As you recall, last quarter, we reported an investigator-assessed response in a recurrent glioblastoma patient without the H3K27 mutation who received ONC206 at one of the lower doses. This signals the potential for this drug in much larger patient populations compared to the H3K27M glioma indication.

With that, I'll turn the call over to Josh for a deeper review on ONC206's ability to reverse this trimethyl loss and ONC206 development.

[Josh Allen, Chief Technology Officer]

Thanks, Mike. So I'd first like to expand on one of the novel findings from AACR that Mike alluded to, as it bolsters our confidence in the probability of success of ONC201 for the treatment of H3K27M glioma patients in our ongoing Phase III ACTION study. These findings suggest both in lab models and in patients' tumors that ONC201 reverses would have thought to be the H3K27M mutations pathogenic hallmark. To put this into context, the H3K27M mutation directly causes sequestration of the PRC2 enzyme that normally carries out trimethylation of Histone H3 at position K27 as a repressive epigenetic mark to tamp down gene expression. Said another way, the H3K27M mutation found in tumors caused global loss of H3K27 trimethylation to drive oncogenic gene expression.

Turning back to the effects of ONC201. We already knew there were certain mechanistic vulnerabilities associated with H3K27M mutant glioma that rationalized hypersensitivity. This new finding demonstrates a reversal of the direct consequence of the mutation as a whole new mechanistic layer and gives us additional confidence in the potential utility of ONC201 in the ACTION study patient population. The reversal of the H3K27 trimethyl loss associated with ONC201 treatment was consistent, persistent, and pervasive across patients in their tumors. While we have documented intra-glioblastoma activity in other patient populations, this new demonstration is particularly reassuring as it indicates consistent biological activity at the recommended Phase II dose in our targeted population. Furthermore, recent literature demonstrates that removing the H3K27M mutation to increase H3K27 trimethyl in established tumor models corresponds with a significant tumor effect and prolongation of overall survival. All of this data indicates that ONC201 has a direct effect on H3K27M mutant glioma in patients. It also sparks a number of scientific offshoots that are being pursued, not the least of which are the implications for additional indications that exhibit loss of H3K27 trimethyl through several mechanisms other than the H3K27M mutation. We look forward to sharing more as the science unfolds.

Now turning quickly back to 206. This program remains on track to complete dose escalation by the first half of 2024. You will recall our prior announcement of a monotherapy objective response in a patient with non-H3K27M recurrent glioblastoma who enrolled early in dose escalation. This has added to the enthusiasm for the program and further escalation is expected to target dosing on a twice per day, 3 days on, 4 days off schedule. When possible, these studies are collecting archival tumor tissue to enable molecular response signature studies downstream that will be crossed and formed by potential signs of clinical activity in parallel laboratory investigations that are expected to collectively inform a data-driven path forward.

With that, I'll turn the call over to Mike Andriole for a financial update.

[Mike Andriole, Chief Financial and Business Officer]

Thanks, Josh, and good morning, everyone. I'll provide just a quick update on our financial performance for the quarter and our cash position. For the first quarter of 2023, we reported a net loss of $21.4 million compared with a net loss of $24.8 million for the first quarter of 2022. The majority of our expenses were related to research and development, which decreased to $18.8 million for the first quarter of 2023 compared to $19 million for the same period in 2022. A meaningful portion of our R&D spend recently has been on clinical pharmacology studies needed to support a potential future NDA filing. This investment and the associated clean farm work we are finishing positions us well to prepare for a quick submission following the ACTION study. Regarding general and administrative expenses, we continue to manage these tightly despite above-average wage inflation over the past year. Those expenses increased slightly to $5.7 million for the first quarter of 2023 compared to $5.6 million for the same period in 2022. Looking forward, we expect the financial impact of our previously announced reduction in force to begin to take effect this quarter.

Turning to our cash position. We ended the first quarter of 2023 with approximately $246 million in cash and equivalents. Net burn in Q1 was at the high end of what we expect for the year as Q1 included several nonrecurring items, including severance expense, upfront CRO payments associated with ramping up the action study, and expenses related to TEMBEXA, which we paid in Q1 but won't be reimbursed by emerging until Q2. Under our current operational plan, we continue to expect year-end cash of around $200 million, which we expect will be sufficient to fund the organization into 2027, including through the primary endpoint readouts of the Phase III ACTION study, which are expected to occur beginning in early 2025. We also expect cash balances to be sufficient to fund the initiation of efficacy studies for ONC206, should they be pursued following the ongoing dose escalation work during this period. Importantly, we have not included any incremental non-dilutive capital arising from our TEMBEXA agreement with Emergent in this forecast. So any procurement exercises over this period by the U.S. government would generate an additional $31 million milestone per full option exercise. We also have the potential to receive royalties from international shipments of TEMBEXA volumes during this period. In summary, any proceeds from TEMBEXA demand in the U.S. or internationally would be incremental to our capital plan.

And with that overview, I'll turn the call back to Mike for closing remarks. Mike?

[Mike Sherman, President and Chief Executive Officer]

Thanks, Mike. Actually, we'll turn it to the operator, and let's just open it up for questions.

[Operator]

Thank you [Operator Instructions]. Your first question comes from the line of Maury Raycroft from Jefferies.

[Kevin Strang, Jefferies]

This is Kevin on for Maury. Just had a quick couple on 206 to start. You said you expect the dose escalation to complete by the first half of next year. Are you giving any more color into where you're at with the escalation in terms of which cohort and whether you're able to amend the protocol to dose up to 3 weeks? And also just in terms of when we might see data, if we're going to wait until the recommended Phase II dose is found or not?

[Mike Sherman, President and Chief Executive Officer]

Maybe Josh or Allen can add to this. The escalation has continued with the once-a-week dosing in parallel to preparing for the more intense dose. And so we expect that to happen that to initiate shortly. In terms of data, it's an open-label trial. So we'll be able to provide updates as we have it. We expected the therapeutic window would be in doses that we could initiate either late this year or early next year. So I think the notion that having some insight both into the dosing schedule and how that's playing out as well as potential signals on activity are likely to be into the first half of next year.

[Kevin Strang, Jefferies]

And for the action Phase III, you reiterated the early 2025 timeline for initial data. Can you just give any color on how that enrollment is going? Any feedback from investigators so far? And any granularity on maybe regionally how the trial is enrolling in the U.S. or ex-U.S.?

[Mike Sherman, President and Chief Executive Officer]

You can imagine the U.S. sites were active first. So that's really where most of the enrollment has occurred so far. I think the U.K. and Israel were the first sites outside of the U.S. to follow with the sites in Western Europe opening here over the coming weeks, that will begin to ramp up there as well. The feedback has been really positive as we've rolled this out and begun to activate sites, we've actually had more interest in participation than we anticipated initially. And so that may mean we have an opportunity to activate more sites than the original plan. We'll see how that goes. But so far, the patient enrollment per site per month active has exceeded our expectations and yet, it's early. So I don't necessarily think you can count on that continuing, although that's certainly the right side of the equation to be on as we're early in the study.

[Operator]

Your next question comes from the line of Naureen Quibria from Capital One Securities.

[Naureen Quibria, Capital One Securities]

So just a quick one on 206 first, going back. So how many doses are you able to comment? How many doses have been completed at the current regimen, less frequent dosing regimen? I know that you're switching up to a more intense dosing but...

[Mike Sherman, President and Chief Executive Officer]

I don't know what to add to the prior comment that Josh or I don't know if you wanted to shift in there.

[Josh Allen, Chief Technology Officer]

Not a lot of color to add, to be honest, other than where the study is moving. I think there was a prior question on if we're able to amend the protocol from where we are right now and that answers yes. So we previously commented the escalations continued well. That responder went up to a dose of 100 milligrams that we've reported previously in the future of the study and was aimed at moving as quickly as possible to increase those schedules.

[Naureen Quibria, Capital One Securities]

And then on the update from AACR, where Dr. Koshmann presented on the mechanism of 201 on the reversal of the Histone. I was just curious if you were able to incorporate that new finding into the ACTION study in some way. So for instance, maybe not -- you might not be able to get tissue samples, but like looking at ctDNA or CSF and looking indirectly at 2HG levels that they increase or decrease or in some way, incorporating the new finding.

[Mike Sherman, President and Chief Executive Officer]

I'll let Allen and Josh speak to that. I'll say for starters, it has no impact on our protocols. We're not amending it in that way and yet, I do think this is a metric that can be interesting, both as we think about the development of ONC201 and ONC206, but I don't know if Allen or Josh, do you want to expand on that?

[Allen Melemed, Chief Medical Officer]

One thing I'll add is that we are collecting tissue in all patients that we can. Unfortunately, at this point, we haven't received this tissue until we've resolved the question of whether we need a CDx and FDA. Our hope is that a CDx will not be necessary, and we can use the tissue that we collect to do other additional studies that will, I think, help the field and our understanding of the disease as well as ONC201 better. So more to come after we clarified the need for the CDx.

[Naureen Quibria, Capital One Securities]

And just one more…

[Josh Allen, Chief Technology Officer]

I was just going to quickly add, in addition to the tissue that Allen spoke about, we're also collecting blood samples as well. As what Mike mentioned, we don't expect this to change anything with the protocol. We have preserved optionality for additional molecular assays on tumor tissue, like Allen mentioned and on flood samples as well. So we'll have an opportunity to dig in a little more later in the study. And of course, just to highlight, I think that's what Mike was getting at there. There's a lot of implications outside of the ACTION trial as well as several other cancer types exhibit this trimethyl loss as well. So we can be mindful of this as we contemplate future development, not just the 201, but also 206.

[Naureen Quibria, Capital One Securities]

And just one more. So with regards to your participation in the Canadian Neuro-Onco Meeting, will there be any presentations from your collaborators there?

[Mike Sherman, President and Chief Executive Officer]

Josh, do you want to highlight that we're sponsoring that if you want to comment, we'll have a team there. I don't think there's a meaningful data expected to be presented there, as Josh can clarify on…

[Josh Allen, Chief Technology Officer]

That's right. Our team is actively off the ground as we speak at that conference, sponsoring, engaging and the real focus of that is standing up the trial in that particular geography. So I wouldn't expect there to be specific presentations, but a lot of conversations ongoing to stand the ACTION trial in Canada as quickly as possible.

[Operator]

Your next question comes from the line of Ed White from H.C. Wainwright.

[Ed White, H.C. Wainwright]

Just going back to the ACTION study and the sites. Congratulations with the European approval. How should we be thinking ultimately of the split between U.S. and outside the U.S. sites and patient enrollment? What are your goals there? And I think you had said the initial goal was over 100 global sites, but you just said you might have some more interest. So how should we be thinking about that in totality?

[Mike Sherman, President and Chief Executive Officer]

I think broadly speaking, this isn't precise, but we estimate most of our patients will come from the U.S. or North America, say, 2/3. But obviously, there's some variability around that as we get -- Europe is opening a little bit more rapidly than we anticipated, so that could impact that. And in terms of the total number of sites, I think 120 sites is well within our expectations and could potentially go slightly beyond that. As I mentioned before, for this size trial, we don't necessarily need that many. But to the extent that these sites end up being productive in terms of enrolling patients, it can always accelerate the timelines and that of course, the acceleration of timelines is among the best ways to preserve capital and preserve opportunity for other investments. So we're always keen to look for ways to accelerate. But yes, the short story is it could be north of 120, but not much.

[Allen Melemed, Chief Medical Officer]

This is competitive enrollment. And I can tell you when we did meet with our European plant at [Diano]. There is a lot of interest there. So having Europe opened as quick as we could, we could definitely change that power depending on the sites and the excitement.

[Ed White, H.C. Wainwright]

And just thinking about the timing of data, you had mentioned that the first OS assessment is expected in early 2025. Are you still expecting the PFS readout sometime after that, but before the second OS assessment? And is the timing of that also in early '25 or how should we be thinking about that?

[Mike Sherman, President and Chief Executive Officer]

Yes, you can imagine there's some variability around that. The range of -- we do expect the PFS to -- and that's the final PFS mind to read out just after the initial OS assessment, so still during 2025, probably not early 2025, but that's certainly a potential. That second OS have the potential to also read out during later that year with final analyses happening in 2026. So I do think that PFS will be second to that initial overall survival assessment.

[Ed White, H.C. Wainwright]

And the last question I want to ask is just a big-picture question. Regarding ONC206, based on your small amount of clinical data so far, but also on your preclinical data, where do you ultimately want to take the drug? I just want to get you to compare what you're thinking as far as the ultimate markets for ONC206 versus ONC201, including what can be probably turned in each opportunities.

[Mike Sherman, President and Chief Executive Officer]

Yes, I'll start with that and maybe expand from there. And I'll say this trimethyl loss of finding has broadened our thinking there. The first comment is the fact that we've got demonstrated activity in a non-H3K27M glioblastoma suggests there's a potential to access that segment, which is some 6x the size of the patient population with the mutation. And that's not to diminish the 5,000-plus patients that have the mutation. It's an orphan indication, and yet it's a significant opportunity in and of itself. Going outside of that mutation, you multiply that opportunity by about 6 in terms of the patients that you could reach. What becomes interesting though is preclinically, we see broader potential for ONC206. And so are in parallel to this dose escalation, identifying opportunities, both where we've seen activity in models and now expanding that to -- and focusing on indications where this trimethyl loss is indicated as target opportunities. There's actually some overlap where that's been demonstrated, and we have preclinical data. So I think more to come on where the focus will be in terms of indications beyond glioblastoma as we nail down the dosing strategy. Allen and Josh, if you want to expand on that.

[Josh Allen, Chief Technology Officer]

Yes, I think I agree. Just to say it a different way, Ed, I think we've seen clearly ONC206 has broader activity in the lab, clearly, a number of expansion opportunities. Some data presented at AACR shows that I don't think 206 is going to fit very well as a me-too or a follow-on in the context of H3K27M mutant glioma. We've seen sequencing those therapies in the lab. It doesn't seem to make a lot of sense with the data. We've yet to generate in vivo data that's just adding to [indiscernible] vivo setting for H3K27M mutant glioma is the most logical. Instead, it seems like there's a number of other opportunities that do present themselves that would make more sense. Clearly, within CNS, we've had published data on a number of non-H3K27 in mutant glioma was responding to the drug in lab models, and we've seen the first proof of concept come through with that one responder in the trial. So like I mentioned, we'll have the privilege of letting the drug play out in the broad CNS tumor space, collect molecular tissue so that we can do a signal refinement when we get those signals coming through in the trial. So I think within CNS, it will clearly be activity or opportunities outside of K27M distinct from that of 201 that will be the most logical. And then, of course, there's non-CNS activity as well with a bunch of lab studies that we'll look to refine throughout the course of the year as well. There could be additional lease to opportunities. Allen, anything to add?

[Allen Melemed, Chief Medical Officer]

No, nothing to add.

[Operator]

Your next question comes from the line of Troy Langford from TD Cowen.

[Troy Langford, TD Cowen]

Congrats on the progress. Just in terms of the future data updates around ONC206, can you provide any more color or granularity around your expectations for what you would like the first day set to include in terms of number of patients, dose levels, the amount of follow-up, anything like that?

[Mike Sherman, President and Chief Executive Officer]

I think we'll be able to -- we've held off until we got into the actual dosing of this more intense to elucidate that strategy, but we'll be able to define that a little bit more in upcoming updates. I think the next thing will be essentially -- obviously, the focus on those trials is always the safety and can you escalate safely and get into the anticipated therapeutic window. So well, to date, no real safety signals, that will be an important to update as we go. The efficacy signals are a little bit trickier to anticipate. We didn't expect to see a response at the dose that we saw in patients that we've previously reported. But that opens the window for activity to be seen from a response standpoint, at any point. That having been said, it's less typical that you have a patient where you can reliably measure tumor response because of prior therapies that confound measurements as we've discussed before. So we've really only had a few patients where a response was potential. And to C1 in that setting is actually what was unexpected. But there are other ways to measure activity via markers. And so there's the potential to do that. It's important to remember that the primary goal of this work is to define and a dosing strategy and a safety profile. But at the same time, if you're fortunate and we get the right patients, we may be able to provide additional efficacy signals. As I say, that will likely happen more into 2024, but we'll keep pressed as that data unfolds.

[Operator]

There are no further questions at this time. I turn the call back over to Mike Sherman.

[Mike Sherman, President and Chief Executive Officer]

Great. Well, thanks again for joining us. Thanks to the Chimerix team and our collaborators for the good work that they're doing and strong execution so far, and I look forward to providing you updates in the coming months. Thank you.

[Operator]

This concludes today's conference call. You may now disconnect.