Chimerix Inc

NASDAQ:CMRX

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, ladies and gentlemen, and welcome to the Chimerix Fourth Quarter and Year End 2023 Earnings Conference Call. I would now like to introduce you to your host for today's call, Will O'Connor of Stern Investor Relations. Please proceed.

[Will O'Connor]

Thank you, operator. Good morning, everyone, and welcome to the Chimerix Fourth Quarter and Year-end 2023 Financial and Operating Results Conference Call. This morning, we issued a press release related to our fourth quarter operating update. You can access the press release in our Investors section of the website. With me on today's call are President and Chief Executive Officer, Mike Andriole; Chief Operating and Commercial Officer, Tom Riga, Chief Financial Officer, Michelle LaSpaluto; Chief Medical Officer, Allen Melemed; and Chief Technology Officer, Josh Allen.

Before we begin, I'd 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'll now turn the call over to Chimerix President and Chief Executive Officer, Mike Andriole.

[Michael Andriole, executive]

Thanks, Will, and good morning, everyone, and thank you for joining us. We're excited to be with you this morning to share the considerable corporate and clinical progress made throughout 2023, highlighted by key management appointments and meaningful advancements across our microtome pipeline. During the fourth quarter, we welcomed Dr. Lisa Decker to our Board of Directors. Dr. Decker brings 25 years of drug development, strategic partnership and corporate transaction experience to our Board.

We also continue to strengthen our management team with the additions of Tom Riga as Chief Operating and Commercial Officer; Michelle LaSpaluto as Chief Financial Officer; and Dr. Pablo Lee as Vice President of Medical Affairs. They have collectively made a strong and immediate impact on the organization, and I'm confident their collective expertise will be invaluable as we seek to maximize our future growth potential for both patients and shareholders.

Before I jump into an operational update, I want to share some insights since becoming CEO last August. I joined Chimerix 5 years ago, and I am as confident now in our future and the positive impact I expect us to have on patients as at any point during that time. This confidence is guided by the very real impact our team is having against this lethal disease and the meaningful progress I see us making toward our number one objective to bring ONC201 to patients as soon as possible.

For context, when I started in this role, I heard about a number of challenges Chimerix might face. I heard about the challenges of operating in an indication where the mere existence of the mutation our lead program is intended to treat confers an automatic grade 4 by WHO criteria, the most aggressive form of brain cancer. I also heard about the difficulty in operating in the brain cancer field in general. And even when developing an agent with activity, the difficulty of enrolling studies in rare diseases, any rare disease.

And all of this, in many respects, is true. It's true that the field of neuro-oncology really is the last frontier in cancer research. As a subspecialty, it's arguably the one that has advanced least in the last 25 years as the mortality rate of most other cancers has improved meaningfully over that time. But I've also heard about the resilience that patients and their families who participate in our studies demonstrate.

That resilience continues to amaze me and it motivates our team to bring the best version of themselves every day. Rather than be intimidated by these challenges, our team is energized and motivated by them. It's a team that is working tirelessly to enroll the ACTION study to bring a definitive answer for this patient population, and I'm proud to say we're on track to do just that as early as next year.

So turning to our operational update. We remain laser-focused on advancing the Phase III ACTION study of ONC201 and completing ONC206 dose escalation studies to identify a recommended Phase II dose and schedule later this year. I'll begin with an update on the 201 program. Our team is focused on the disciplined execution of the ACTION study as our top priority. And while 2023 was largely centered on site activation for most of the year, 2024 is the year, we expect to hit our full stride in enrollment rate for the study.

We're currently opening over 130 sites across 13 countries. When you consider the number of sites we opened last year, we're proud of where we stand today, not just in terms of the quantity of sites and the geographic coverage, but as importantly, the quality of those sites and engagement with our investigators. We expect continued acceleration of enrollment this year as data indicate that a site becomes productive typically in the second quarter following activation.

This is largely due to the frontline study protocol where the radiation window, combined with any necessary Temozolomide washout takes approximately 3 months from treatment start. Additionally, we've observed that the recent publication of the ONC201 Phase II data in the Journal of Clinical Oncology has accelerated broader awareness of the program, especially outside of the U.S. and is providing yet another tailwind to enrollment early this year. This publication provides additional patient-level detail and attributes of response, which Josh will delve deeper into during this call.

The guidance we reiterated today for first interim data readout in 2025 reflects our current enrollment trends. Importantly, the enrollment rate and event rate error bars, while still wide are beginning to narrow as the study continues to progress and mature. There are scenarios where the first OS interim occurs earlier in 2025 and scenarios where it occurs later in the year. We're encouraged by early indicators but also understand the importance of continued execution of the study to get the data as quickly as possible.

We'll continue to narrow our guidance as the error bars come into focus during the year. As the study has progressed, we've been heartened by the global demand we've experienced even beyond the 13 countries we're currently operating in. For example, we currently have patients traveling from South America to the Southeastern United States to participate in the study. We're also experiencing a similar dynamic in Southeast Asia, where parent -- patients are traveling between countries to gain access to ONC201. This is a reminder that the unmet need in this population knows no borders.

In an attempt to address this global demand, we are in the process of assessing the feasibility of expanding the ACTION study into the specific parts of the world where demand is high and the catchment area isn't readily convenient to our current ACTION footprint. We intend to be prudent in our evaluation. We understand we can't address every situation, but we are receptive to opening a limited number of additional sites. For example, Brazil, Argentina, Hong Kong and Singapore are among geographies where the proactive outreach has been significant.

The population density is high and where there is a high likelihood to expand catchment. These geographies will not only accelerate time to data, but will also be beneficial to the regulatory process within these strategic markets around the world. We expect any potential expansion to be with highly productive sites in these key markets and limited to 10 to 15 additional sites. Strong execution of the ACTION study is our top priority, and we're excited to be in a position to have potentially pivotal data next year for this first-in-class agent and the first potential approval in this aggressive form of high-grade glioma, which represents an unmet need as high as any across the field of oncology.

With that, I'd like to turn the call over to Tom Riga, who joined us last November, just in time to accompany the team to the Society of Neuro-Oncology Conference. Tom?

[Thomas Riga, executive]

Thanks, Mike, and it's great to be with all of you today. It's been an inspiring and fast-paced entry into Chimerix. In fact, my first day was in Vancouver at the SNO meeting, and I'm thrilled to be a part of the team. Special thanks to the Board, Mike, the management team and all of the Chimerix employees who have welcomed me into the company with open arms. It's truly been a seamless transition. I expect that my operational, commercial and business development experience will contribute to the mission of the company to help bring solutions to cancer patients in need. Since joining, I had the pleasure of meeting virtually or live, the majority of our global investigators, patient advocacy groups and other key stakeholders who play an integral in the patient's journey.

From those engagements, there are 3 insights that fuel our passion to execute the ACTION study with urgency. First, the unmet medical need is undeniable. High-grade glioma patients who have the H3 K27M mutation have very few options and are in desperate need of new solutions. Second, there is an extremely high level of support and commitment for the ACTION study by our investigators and an authentic hope for what ONC201 could potentially mean for their patients.

And finally, given the rarity of the mutation, the network of caregivers who impact the patient journey are equally as important to ensure both awareness and alignment to our study. In addition to the neuro-oncologist, neurosurgery, neuropathology, radiation oncology and patient advocacy are all important stakeholders to engage.

Chimerix has established a strong presence across the treatment ecosystem, and I'm looking forward to helping to accelerate those efforts throughout 2024 and beyond. The leading edge of brand development starts with medical affairs. In addition to the hiring of Dr. Pablo Lee, we will be expanding our medical affairs footprint both within and outside the United States.

These strategic additions will further support our enrollment efforts with the ACTION study and enhance our relationships across the treatment landscape. Our focus is clear to execute the ACTION study with both discipline and urgency. Operationally, that is where my initial focus will be. As the year progresses, we will also look to ready the organization for commercialization. Key elements such as brand development, payer engagement, pricing research, qualitative and quantitative message development and sales force size and structure will progress throughout 2024 and accelerate as our launch window comes into focus.

We will use gated milestones to guide our activity and spend to ensure our preparation efforts are both timely and cost effective. In the meantime, we will be deepening our relationships across neuro-oncology in executing the ACTION study. In closing, it's a powerful combination when you have a passionate and talented employee base, combined with a committed group of investigators, all aligned to help a group of patients in need.

That is exactly what I believe we have at Chimerix. With that, I'll turn the call over to Josh.

[Joshua Allen, executive]

Thank you, Tom, and welcome to the team. Earlier this month, the previously announced Phase II results from our ONC201 program in H3 K27M mutant glioma was published in the Journal of Clinical Oncology, a peer-reviewed journal of the American Society of Clinical Oncology. This integrated efficacy analysis evaluated the monotherapy activity of ONC201 in 50 patients with recurrent H3 K27M mutant diffuse midline glioma. You may recall that these results represented the first demonstration of bona fide durable objective responses in this disease setting that were rigorously evaluated by blinded independent central review and isolated away from prior or concurrent confounding therapies.

Consistent benefit was seen across the range of efficacy endpoints examined including a 20% response rate using RANO criteria that quantitates enhancing tumor regions. That response rate extended up to 30% when additional RANO criteria was considered that is inclusive of non-enhancing regions as well. Other notable observations were a 40% disease control rate, approximately 1.5 years of clinical benefit amongst responders while considering both onset and duration of response as well as concentration of responders among the 35% 2-year survival tail in addition to other forms of clinical benefit, such as performance status improvement and tapering of steroids.

All of this was accompanied by a favorable safety profile with rare instances of dose modifications. This publication goes into further details and prior data releases on patient-level data as well as subgroup analyses. That include several aspects that increase our confidence in the ACTION study. One consideration is dosing as nearly all patients in the Phase II analysis received ONC201 at a once-weekly frequency.

So the twice weekly frequency incorporated into the ACTION study has the potential to enhance the probability of patient benefit or duration of benefit or both. In addition, subgroup analyses suggest that response associations that were baked in to the design of the ACTION trial to enrich for those characteristics. This includes performance status inclusion criteria as well as movement to the frontline setting where disease burden and progression kinetics are expected to be less acute.

The JCO publication follows our publication last year in cancer discovery, which reported on the mechanism of ONC201 and in H3 K27M-mutant glioma in addition to its activity in a frontline setting where the ACTION study is focused. Together, these publications strongly suggest that ONC201 is a first-in-class targeted agent that addresses the core oncogenic mechanism of H3 K27M in mutant glioma and appears to be associated with dual benefit as a single agent while being well tolerated.

The survival outcomes of patients are favorable relative to historical controls in multiple retrospective analyses, which adds to our enthusiasm for its prospective evaluation in action. I will also point out that this joins a recent wave of publications related to ONC201 and this disease in the journal neuro-oncology as one of our many initiatives emerging from our medical affairs function that is dedicated to raising global awareness for this compound and for this disease.

Turning to the ONC206 program. Dose escalation continues at the increased dosing frequency of 6 times per week which follows our prior experience with once-weekly dosing. At a high level, there have been no surprises to date on this clinical program, and we continue to escalate towards the top dose of 200 milligrams that is expected to be well within the therapeutic range. We expect preliminary safety and PK data to arise from this program first after the conclusion of dose escalation that is expected in the middle of this year, an interpretation of any activity likely to follow after adequate maturity.

The preclinical evaluation of this drug for candidate Phase II indications is in full swing. The scope is focused on advanced solid tumor indications within and outside of the central nervous system that do not involve the H3 K27M mutation. This evaluation folds in our deepening knowledge of the first-in-class ClpP and DRD2 targets of the microtome, the growing set of empirical ONC206 data as well as the vast translational and clinical experience that we've gained with ONC201.

We continue to believe that ONC206 holds promise as a potential new treatment for unmet needs in oncology with distinct opportunities from the parent compound that could benefit from a sharply increased potency and dosing frequency while maintaining favorable safety and oral administration features.

Along these lines, one of our collaborators reported last December at the San Antonio Breast Cancer Symposium, strong monotherapy tumor regressions in a patient-derived xenograft of chemorefractory breast cancer. Of equal importance, diverse efficacy was observed across a spectrum of additional patient derived xenograft that is the focus of ongoing biomarker work as is the case in many other advanced solid tumors that we are evaluating with an eye towards precision oncology.

With that overview, I'll now turn the call over to Michelle for a review of the financials. Michelle?

[Michelle Laspaluto, executive]

Thank you, Josh. Earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2023. We remain highly disciplined in the fiscal management of the company during 2023, ending the year with just over $204 million in capital. We will continue to be measured and efficient with our capital allocation in 2024. For the fourth quarter of 2023, the company reported a net loss of $18.2 million or $0.20 per basic and diluted share compared to a net loss of $21 million or $0.24 per basic and diluted share in the fourth quarter of 2022.

Research and development expenses decreased to $15.6 million for the fourth quarter of 2023 compared with $19.3 million for the same period in 2022. This decrease is primarily driven by costs associated with the reduction of workforce related to the divestiture of TEMBEXA during the comparable 2022 quarter. General and administrative expenses of $5.2 million were essentially flat year-on-year compared to the $5.3 million for the same period in 2022.

Last year, we recorded a net burn of approximately $61.5 million or just over $15 million a quarter. We continue to expect our cash balance to be sufficient to support operations into Q4 of 2026. This year, this runway may be further extended with potential additional non-dilutive capital arising from milestones or royalties earned associated with TEMBEXA through our partnership with Emergent and/or with potential proceeds for monetizing a pediatric rare disease priority review voucher, for which the ONC201 program is currently eligible should it receive U.S. approval.

While we continue enrollment in our Phase III ACTION trial, we do expect a modest increase in burn as we expand our medical affair efforts and commercial preparations in anticipation of the interim data readout next year. With that, I will now turn the call back over to Mike for closing results.

[Michael Andriole, executive]

Do we want to maybe start with Jericho. Any additional questions?

[Operator]

Yes. So the first question comes from the line of Maurice Raycroft with Jefferies.

[Maurice Raycroft, analyst]

Just going to start off with one ONC206 for the Phase I dose escalation. Can you talk about where you're at in enrollment for the higher dose cohorts 7 through 11 and for safety and PK top line, can you talk more about what you plan to report midyear? And will that be at a medical conference? And will you have enough at that point to expand one or more dose cohorts? And maybe just talk about next steps.

[Michael Andriole, executive]

Yes. Yes. Thanks, Maury, for the question. So we're on track. We had previously talked about beginning of dose level 7, we've graduated from there heading to dose level 11 expected by the middle part of the year. And so we're not giving a play-by-play on exactly where we are in that continuum.

And there are, to be sure, 2 different Phase I studies ongoing, one of the NIH and one at PNOC that are operating independently. And so we'll have in the middle part of this year, preliminary safety data and PK data arising from that. And we don't expect that, that will be delivered at a medical conference, but rather likely at an upcoming earnings call later in the year.

Josh, anything you would add to that summary?

[Joshua Allen, executive]

No, that covers it.

[Maurice Raycroft, analyst]

Okay. That's helpful. And for the Phase III ACTION study, now that you've reached your cycle with 130 sides, can you provide any more perspective on when you need to reach full enrollment in order to be on track for the first interim overall survival readout in 2025 and what gating factors can lead to an interim readout in early 2025? Maybe just talk a little bit more about that.

[Michael Andriole, executive]

Yes. To get to early 2025, Maury, that we need to probably see an acceleration of enrollment or productivity from any expanded markets and/or earlier, more frequent event rates than we're seeing now.

So there's a couple of scenarios where we could see that. And certainly, we are not at where -- what I would consider an enrollment rate that is hitting full potential. It's on track and good and has the potential to accelerate even further to accomplish that. So there's a few levers that could get us to the first part of '25 as opposed to the middle part of that year.

[Maurice Raycroft, analyst]

Got it. And I don't know if there's any more perspective you can provide on that? Is it something due to study design? Is it more seasonality or any more perspective on just getting patients into the study?

[Michael Andriole, executive]

Yes. Demand in the study, as we've talked about, is really strong. This is a -- it's a rare mutation to be sure. But the identification of this mutation is almost reflexibly done at almost all sites currently, whether that's by NGS or IHC. And so funneling those patients into the study, the potential patients in our pipeline are well identified early.

We're seeing really good throughput going from potential patient identification, through screening and into randomization and have really good visibility on that over the next 2 or 3 months. So there's not more I would say in terms of root causes for the current trend. In fact, it's, if anything, tracking ahead of expectations for their current enrollment rate. I don't know, Allen, would you add anything to that?

[Allen Melemed, executive]

Yes. The only thing I'll add is that early on in the study, patients sometimes aren't able to travel to sites, so they can't go long distance because of the disease. Now that we have a wider spread and a wider catchment area, we feel that we will be capturing these patients as these are mainly referral centers, so we can capture more patients.

[Operator]

Our next question comes from line of Ed White with H.C. Wainwright. Please go ahead.

[Edward White, analyst]

I guess just a follow-up to the questions that were just asked. Mike, you mentioned that the patients are traveling between countries to get into the studies. I'm just wondering if there's any difficulty with follow-up anticipated or additional cost or time for the company to be treating these patients that are traveling across borders?

[Michael Andriole, executive]

No, it's a good question, Ed. Allen, do you want to make any preliminary comments on just...

[Allen Melemed, executive]

I'll take that. The study was designed so we can actually travel or pay for regional travel. And that's that we are covering. So that is -- we are covering both airfare or bus fare, depending on train for whatever it is and hotel for patients to travel. However, we are also expecting most of these countries to be open soon and so they can then actually transfer their care to their regional center. So that was built in the study at the beginning.

[Edward White, analyst]

Okay. And then, Tom, you had mentioned building up of the sales team potentially later in the year. I'm just wondering if you can give us your thoughts on the size of the sales team and marketing team that you're going to need and maybe a little bit more on your strategy?

[Thomas Riga, executive]

Yes. Ed, thanks for the question. I see this very much a lean and efficient commercial infrastructure, and I think that's guided by a few things. I think, one, the unaided awareness of ONC201 throughout this particular specialty is exceptionally high. The prevalence, we now at 2,000 patients roughly in the United States, we know where those patients are treated. So when we think about commercial infrastructure, we think the value is significant for the asset and the commercial infrastructure could be done very efficiently.

So we will use gated milestones to advance our commercial efforts, especially at the FTE level. I think we have a lot of financial discipline in our current plan, and we want to make sure that we're both timely and prudent with our resources to make sure the focus stays on getting to that pivotal data to enable us to capitalize on the full potential of ONC201.

[Operator]

Our next question comes from the line of John Thome with TD Cowen.

[Joseph Thome, analyst]

It's Joe. Thank you for taking my questions. Maybe the first one, just on the overall geographic differences, I guess, is there a -- when you think about expanding new sites, do different regions kind of handle the care of these patients differently so that, that might be a potential risk when expanding to new territories? Or is the enrollment criteria sufficient enough that kind of streamline things?

And then second, patients aren't allowed to have bevacizumab before entering the study. I guess over portion of patients do have bevacizumab in the overall population, I guess, is this a headwind for enrollment? And when you think about the commercial opportunity what does that sort of shake out like?

[Michael Andriole, executive]

Thanks. Allen, do you want to talk about how we're assessing sites and different standards of care in harmonizing that?

[Allen Melemed, executive]

Absolutely. Thanks, Mike. That is definitely one of the consideration and look out at the center that we're picking. We're only picking centers that have the ability to do the proper neurosurgical approach the proper radiation therapy and then a proper follow-up. As you know, the standard of care in this patient population is that surgery and radiation, and that's it.

However, we need to make sure these are qualified centers that can actually follow these patients and have appropriate care. And that is a very critical assessment that we use to that, whether the center we want that we will choose. We will not choose center that we do not think have that kind of standard. In regards to bevacizumab, most of these patients don't come off of that. Actually beva is not allowed on this. We do allow for a concurrent Temozolomide, though there is a washout we know that patients need to be off of that prior to starting the ACTION study.

[Operator]

Our next question comes from the line of Soumit Roy with Jones Research.

[Soumit Roy, analyst]

Thank you for providing the details on that progress. One question on the ONC201. Are you seeing the screening versus from the screening versus enrollment data, still at 30% of the midline glioma to be H3 K27M mutation? And in U.S. versus ex U.S., are you seeing any difference in the treatment regimen prior to enrollment or they're fairly similar?

[Michael Andriole, executive]

Allen, do you want to talk about those geographic differences, if any?

[Allen Melemed, executive]

Yes. So one of the main difference that we do see is there is a higher utilization Temozolomide outside the U.S. In the U.S. population Temozolomide is used more in the adult population and not as much in the pediatric. It's used a little more frequently in outside the U.S. However, there has been very little concerns about stopping this after they receive the current radiation therapy.

[Soumit Roy, analyst]

Okay. You are still seeing from the screening versus enrollment like about the mutation person mutation rate is still in line with your prior expectations?

[Allen Melemed, executive]

Yes. So the -- what we're seeing is on part of what our expectations are.

[Soumit Roy, analyst]

Okay. Prior to the top line data next year, would you be giving us following full enrollment, would you be giving us some baseline characteristics of these patients enrolled, like tumor size, size of the tumor, any co-mutational status?

[Michael Andriole, executive]

Allen?

[Allen Melemed, executive]

Can you repeat your question? I'm not following what you're asking here.

[Soumit Roy, analyst]

Prior to the data update next year, the top line data, would you be providing us any granular details on the patient characteristics being treated like size, tumor size, the size of the tumor, or mutational status? Or will these all come out after the top line data is announced?

[Allen Melemed, executive]

Thank you, Soumit. I think that will all depend on how we plan to release this. So as you know, since this is a double-blind study. The only thing we'll be able to look at would be aggregate data, which would be all 3 arms combined. And that data, we could potentially discuss so that is something we have to discuss internally how best to share those results. But we will not be able to look at a per arm evaluation until we actually share the results.

[Michael Andriole, executive]

Yes. I'd just reiterate Allen's commentary that we won't know that in advance at the ARM level, Soumit. And so it's likely a level of detail that would come out when full data is disclosed following top line data, we've had a chance to analyze it.

[Soumit Roy, analyst]

Totally understand. And one last question. So much interest in the ex U.S. territories. Would you be considering any business development or partnership activities in the near future?

[Michael Andriole, executive]

Tom?

[Thomas Riga, executive]

Yes. So it's a great question. Thank you. I think as we look at this, the vast majority of the value for ONC201, we see in the U.S., and we are more than capable and ready to commercialize with a lean and efficient force.

Secondly, I think as a reminder, we do have partners in Japan and China for ONC201, ONC206, by the way, is totally unencumbered. But in other geographies, whether it be Europe or South America, especially Europe, there are some challenges in commercializing there, and we don't take that lightly. And they're very well may be an alternate partner that could do it more efficiently.

But we'll evaluate that once we get the pivotal data we'll look to maximize value either as a stand-alone doing it commercially or finding a partner that allows us to retain some of the economics for those geographies. But I think really, that decision will come down to what we see when we get that pivotal data.

[Soumit Roy, analyst]

Congratulations on the progress.

[Operator]

Since there are no further questions at this time. I'll turn the call back over to Mike Andriole.

[Michael Andriole, executive]

Thank you, everyone, for joining the call today, and we look forward to additional updates next quarter.