ObsEva SA (NASDAQ:OBSV) Q1 2018 Earnings Conference Call May 16, 2018 8:00 AM ET
Mario Corso - Senior Director, IR
Ernest Loumaye - Co-Founder, CEO and Director
Tim Adams - CFO
David Wong - Jefferies
Julian Harrison - H.C. Wainright
Good day, ladies and gentlemen and welcome to the First Quarter 2018 ObsEva SA Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mario Corso, Senior Director, Investor Relations. Sir you may begin.
Thank you, operator. Good morning or afternoon, everyone and welcome to today's call, to review ObsEva's first quarter 2018 results and business update. On this call, I'm joined by Ernest Loumaye, our Co-founder and Chief Executive Officer, Jean-Pierre Gotteland, our
Chief Scientific Officer and Tim Adams, our Chief Financial Officer.
During the call today we will make forward-looking statements, and we remind you of our Safe Harbor language. We will make forward-looking statements including but not limited to statements related to financial results and trends, the process and timing of the anticipated future development of ObsEva's product candidates; our gonadotropin-releasing hormone or GnRH receptor antagonist, OBE2109; our oxytocin receptor antagonist, nolasiban; and our PGF2alpha receptor antagonist, OBE022, including clinical trial results, and potential regulatory pathways towards gaining approval of our product candidates in the US, Europe and Asian countries as well as the therapeutic and commercial potential of ObsEva's product candidates.
These forward-looking statements are based on ObsEva's current expectations and inherently involve significant risks and uncertainties. ObsEva's actual results and timing of events could differ materially from those anticipated in such forward-looking statements and as a result of these risks and uncertainties, which include without limitation, risks related to ObsEva's development programs; clinical trial time lines and results; the uncertain clinical development process, including adverse events; the success cost and timing of all development activities and clinical trials; the market potential for ObsEva's product candidates; the accuracy of ObsEva's estimates regarding expenses; capital requirements; and the need for financing and other risks detailed in the Risk Factors and elsewhere in ObsEva's US Securities and Exchange Commission filings and reports, including its 20-F report filed on March 9, 2018, and F1 form filed on December 30, 2016.
ObsEva undertakes no duty or obligation to update any forward-looking statements contained in this presentation, as a result of new information, future events or changes in its expectations.
I will now turn the call over to Ernest Loumaye, our Chief Executive Officer.
Thank you, Mario. Good morning, good afternoon, everybody. On today's call, we'll provide business update including clinical trial, first quarter 2018 financial results and our outlook for achieving key feature clinical milestones.
The first quarter of 2018 was another step forward in ObsEva evolution as we announced the result of our first Phase 3 clinical trials of nolasiban in IVF, the IMPLANT2 trial. We'll provide more details on that later. We also completed patient randomization in our Phase 2b EDELWEISS clinical trial for our oral generation antagonist OBE2109 in Endometriosis. Topline results are expected by the end of the second quarter of this year. This event another make 2018 a year of important data read outs following on all the hard work that took place in 2017 to design and initiate our five ongoing Phase 2 and Phase 3 clinical trials in total for three compound which are at clinical development stage.
I would now like to take a few minutes to provide an update on all three of our compounds. I will start by reviewing our announcement that took place in February. Positive topline result of our double-blind, placebo-controlled Phase 3 IMPLANT2 clinical trial of nolasiban for improving the outcome of Assisted Reproduction or IVF procedures. IMPLANT2 included 787 women across more than 40 fertility centers in Europe. Either a one-time 900 milligram dose of nolasiban or placebo was administered overly four hours prior to embryo transfer which could occur either three days or five days after [indiscernible]. The primary endpoint of this clinical trial was ongoing pregnancy 10 weeks plus embryo transfer.
The primary endpoint of IMPLANT2 was successfully achieved with 10 weeks ongoing pregnancy rate of 35.6% for patient receiving nolasiban as compared to a rate of 28.5% for patient who received placebo. This represents a 25% relative increase with P value of 0.031. Of notable importance among the 50% of patient 1.1 day-5 embryo transfer. Nolasiban treatment resulting 10 weeks ongoing pregnancy rate of 45.9% versus 34.7% for placebo. A 32% relative improvement with a P value of 0.034.
A few points of context to provide on these results. Key opinion leaders and prospective US clinical trial center that we've spoken to, have expressed enthusiasm over the result and in particular the day five result considering the 11% absolute and 32% relative improvement. This result really represent an impressive achievement with a potential to have a dramatic impact on clinical practice if replicate in future US clinical trial and ultimately, commercially available.
The importance of the IMPLANT2 clinical trials result within the setting of single embryo transfer should be fully appreciate by those who are not familiar with a current state-of-the-art for IVF treatments. We believe that nolasiban has a potential to have a major impact on the field, as it will not only increase the efficacy of the IVF procedure but would also have to generalize a practice of single embryo transfer.
Indeed up-to-date, double embryo transfer is still too often used to increase a pregnancy rate by an absolute 8% to 10%. This practice have some dramatic adverse consequence which are to increase rate of multiple birth associate with double embryo transfer over single embryo transfer i.e. about 40% versus 2% according to CDC data. Two, the risk to both mother and infant for multiple pregnancies and associated premature birth such as pre-eclampsia, birth defect and mortality. And third, the significant financial cost of twins, triplets birth that are estimate around from US$100,000 to US$400,000 or five to 20 times that of a singleton delivery. Thus nolasiban has a potential of delivering an ongoing pregnancy rate similar to the one resulting from double embryo transfer but with a single embryo transfer and thus largely avoiding the multiple pregnancies and death serious consequences.
Now we look forward to receiving live birth rate data from this trial in the fourth quarter of 2018 as well have the 28 days neonatal follow-up later in that same quarter. given that approximately 90% pregnancy that we tend are expect to result in live birth, we expect to see a level of improvement with nolasiban as compared to placebo that is similar to the 7% to 11% absolute benefit seen in the ongoing 10 weeks pregnancy rate from IMPLANT2.
In summary, we're obviously very pleased with the IMPLANT2 result and enthusiastic about its global commercial potential given the relatively small required commercial infrastructure to address the concentrated clinics in major geographies such as US and Europe. We're presently seeking feedback from regulatory authorities in US and Europe on any additional clinical trial requirement beyond IMPLANT1 and 2. We're proposing to conduct a US clinical trial to be known as IMPLANT3 that we're planning to begin Q4, 2018 and which could potentially satisfy all part of additional requirement in both the US and Europe. We expect to be able to speak to more definitive plans with regulatory feedback in hand during Q3, 2018.
Now turning to OBE2109, our oral generation antagonist for the treatment of Endometriosis and uterine fibroids. Patient randomization of approximately 330 patient in US and Europe into our Phase 2b EDELWEISS clinical trial for the treatment of Endometriosis is now complete. Topline results following three months of treatment remain on track for mid-2018 and today we're able to narrow that to the end of the second quarter of 2018. We're often asked what we believe will constitute in this trial so we believe, this is worthy of a few minutes of discussion.
Broadly speaking, we're seeking to identify two therapeutic dosing option to serve the need of this large and diverse Endometriosis patient population. One; one dosage with the potential for alleviating patient symptoms with moderate estrogen suppression that will not meaningfully decrease bone mineral density, thereby not necessitating hormonal add-back therapy, and two, another dosage that fully or nearly fully suppressive estrogen which what require adding back estrogen to counter back bone loss.
More specifically, the trial has power to show a 77% response rate for each individual active treatment arm as compared to placebo response of 45%. Purpose of this trial, a response that is defined as 30% reduction in pain score on a zero to three verbal rating scale, which combine both menstrual and non-menstrual pain measurement over the final 28 days of the treatment period. As Phase 2b dose ranging trial, we're interested in seeing the dose response from 50 to 200 milligram. I would be very pleased if one of the lower dose 50 or 75 were to shown the ability to alleviate symptoms in the majority of patients at an estrogen level around 20 to 60 picogram target range, that is believed to balance symptoms relief with bone mineral density safety.
It is important to note that final dose selection of OBE2109 for the phase 3 program will be made after bone mineral density data at the standard six-month time pond [ph], this would be available by the fourth quarter of 2018. On our two ongoing Phase 3 clinical trial for uterine treatment [ph] PRIMROSE 1 and PRIMROSE 2, please record that these studies are two double-blind, placebo-controlled, phase 3 international clinical trial in women with heavy menstrual bleeding at the stage with uterine fibroids. [Indiscernible] approximately 1,000 patients in total. The primary endpoint of reduction in heavy menstrual bleeding as measured by the standard alkaline hematin method.
Since beginning, PRIMROSE 1 and 2 in April 2017, we've been targeting completion of patient enrolment in both studies by the end of 2018. The PRIMROSE 2 clinical trial remained on track to achieve our enrolment goal, noting that approximately 70% of sites are in Europe. However, our US study PRIMROSE 1 is expect to reach completion of enrolment in the first quarter of 2019. This changes largely influenced by highest [indiscernible] that was initially anticipated in the US. We believe this [indiscernible] at least partially consequence of current entry for trachea regarding myoma size. We're taking measure to improve the recruitment rate such as enhancement site management [ph] and revisiting the myoma size entry for trachea and expect to see a positive impact over the coming months.
Wrapping up now on OBE2109. We remain focused on providing a potential best-in-class therapy into large and diverse patient population of women who we believe are likely to best serve by multiple treatment option, with multiple dosing strategy including both width and result hormonal add-back therapy.
Finally onto our third pipeline program, the potential first in class oral and selective prostaglandin F2 alpha receptor antagonist OBE022 being developed to treat pre-term labor. In late 2017, we began a phase 2a proof-of-concept trial known as PROLONG. This trial will PK safety and contraction inhibition targeting delay of delivery by two to seven days in women, who are in acute pre-term labor between 24 and 34 weeks of gestation. PROLONG is being conducted in several countries outside of United States with OBE022 added into the standard of care at atosiban. This clinical trial is being conducted in two part, with an open label Part A measuring PK and safety. Followed by placebo-controlled, double-blind Part B subsequently and running up to 120 patients with follow-up extending for 14 days post-treatment to neonatal delivery and infant follow-up. We are very pleased to report, there have been babies delivered close to term in the open label portion of the study with nothing noteworthy to report on tolerability and safety. We expect interim efficacy result from this trial in an [indiscernible] of patient in the fourth quarter of 2018.
Summing up, the first quarter of 2018 start the year strong with positive IMPLANT 2 results and we look forward to achieving additional clinical and regulatory milestone over the course of 2018.
I will now turn the call over to our CFO, Tim Adams for our financial overview. Tim?
Thank you, Ernest. Good morning or good afternoon, everyone and thank you for joining us on the call today. I will provide a brief update of our results for the first quarter of 2018 and our current financial position. Starting with our income statement, net loss for the first quarter of 2018 was $19.8 million or $0.54 per diluted share which compares to a net loss of $15.5 million or $0.58 per diluted share in the first quarter of 2017. This increase in the net loss during the quarter was primarily driven by our investment in our research and development programs.
Research and development expenses were $16.3 million for the first quarter of 2018 compare to the $13.1 million in the prior year quarter. This increase in investment is attributed to the clinical trial progress outlined by Ernest for all three of our development compounds. G&A expense in the first quarter was $3.6 million compared to $2.7 million in the prior year quarter. This increased expense level includes additions to our staff and the non-cash item of equity base compensation of approximately $2.4 million for the first quarter of 2018.
Our cash balance at March 31, 2018 was $95.4 million reflecting a $14.8 million use of cash in the first quarter which was similar to the run rate at which we existed fiscal 2017. This cash investment reflects spending in support of our three pipeline assets. Continued enrolment of our Phase 2b EDELWEISS study in Endometriosis. Ongoing Phase 3 enrolment of the PRIMROSE 1 and 2 clinical trials in the treatment of uterine fibroids the data readout of our Phase 3 clinical trial of nolasiban and continued progress in the prolonged study of OBE022 in pre-term labor. We continue to believe that our existing cash is sufficient to fund our operations into the second half of 2019. Noting that our 2018 cash usage from operations is expected to be meaningfully than the $56 million investment from the full year of 2017.
In summary, we continue to invest prudently in the development of our three new chemical entities as we endeavor to complete three ongoing Phase 3 clinical trials and two ongoing Phase 2 clinical trials and with that operator, we open the call for questions.
[Operator Instructions] thank you and our first question comes from Kennen Mackay with RBC Capital Markets. Your line is open.
This is [indiscernible] on for Kennen, congrats on all the progress and thanks for taking the question. As we look towards the Endometriosis update, just wanted to get a sense from you on what level of data you'd be looking for in terms of being competitive versus some of the other agents in the class, specifically elagolix, just wanted to get your thoughts on that?
Yes, Ernest speaking. So you remember that we're going to report on the 12 weeks data and the total duration of administration is six months or 24 weeks in this trial. So that's the primary endpoint at 12 weeks in term of pain reduction and pain reduction is going to be translating to responder rate. Responder being defined as a reduction of 30% from baseline for each individual. We're going to have a responder rate therefore on the different dose of the compound and we will have a dose for which we would consider that is viable to have no add-back therapy and that responder rate could be compared to some extent to the elagolix, 150 milligram dose per day which is not requiring add-back therapy. For the higher dose, we will have also an opportunity to see and report the responder rate.
Keeping mind however, that the final decision on what dose will be move forward into the Phase 3 will need to review the bone mineral density which will be available in Q4 to finalize the decision on dose and consolidated NDA in the end of Phase 2 meeting. So we are intending also to report by end of this quarter, not only the pain reduction in the combined menstrual and non-menstrual pain but also in individual non-menstrual pain and menstrual pain which are in our protocol secondary endpoints. Does that answer your question, Kenny [ph]?
Great. Thanks so much, Ernest. That's perfect and if I could just ask a follow-up question. Given the delay that we saw announced by the FDA for elagolix's current NDA potentially relating to some liver issues. Was wondering if you could just speak to any read-through's just as a class and the level of comfort you have with 2109's profile based on all the diligence you've done from licensing the compound.
Sure, as you know adverse effect, adverse even can be either on target effect, on/off target effect. If you have on target effect, that means it's related to the mechanism faction of the drug, you may have a class effect. If it's off target effect it's really peculiar and specific to a specific chemical structure of a given compound. It's obvious for us that this is not a class effect. On top of that, we just through the mechanism of action, if the peptides not metabolized by the liver. I'm saying it's a small molecule and we don't see that the mechanism of action would target it differently.
Now in terms of current safety database we have for 2109, we have more than 1,400 subject exposed in Japanese and non-Caucasian subject and we've obviously a very close monitoring of all safety parameter including liver enzyme with [indiscernible] process in case of any abnormal move and we can tell you now that we have no concern or no identified safety signal regarding lever toxicity on our 1,400 patients exposed to the drug.
Perfect. Thanks for all that color, Ernest. Congrats again and looking forward to the upcoming data.
Thank you. [Operator Instructions]. Thank you and our next question comes from Biren Amin with Jefferies. Your line is open.
This is David Wong on for Biren. Thanks for taking the question. I guess two on nolasiban. The first is, and thinking about the registration requirements, have you zoned in on a day three versus day five requirement for the embryo transfer protocol. Are you thinking both or maybe just one of those protocols would be in the label? And additionally in terms of commercialization are you thinking that you would pursue commercialization solely with just your organization in the U.S. and here would you be looking for a partner in either?
Yes, based on the IMPLANT 2 data. Based on literature with atosiban. Based on current practice or leading current practice in United States for the initial and first registration, we're going to focus on day five single embryo transfer. Further development on day three embryo transfer it's still in discussion. Especially because Stage 3 seems to be more used currently in Asia, China for example than in Europe, in the U.S. so that could make additional development. But the current focus we have engaged both with the FDA and national authorities in Europe and we intend to report in Q3 about that feedback and the aim is to register day five single embryo transfer.
Regarding commercialization, will ask Tim maybe to comment on that. Given that it looks very accessible for company like both in Europe and US.
David, good morning. Thank you for the question. The commercial opportunity for nolasiban is actually very exciting. When you think of the number of IVF cycles across the globe, it's approximately two million cycles per year. In the U.S. market, we see that number of 230,000 plus. Europe is a very exciting market, it's over 600,000. Japan over 400,000 and China just a huge market opportunity. So when you think of the U.S. market for a second. This is in even Europe, this is an opportunity for our company that we could go to market and commercialize directly ourselves because you don't need a huge sales force because you're calling on the number of IVF centers in these different geographies. So in the U.S. market we could ramp up sales force let's call it 20 to 25 reps that would go in and call on the IVF centers. And based on the recruitment level, the time of recruitment and readout for nolasiban for Phase 3 was within a 12-month period, we know there is a lot of excitement and a lot of demand for something like nolasiban in the market. So we don't think you need a large sales force to cover the geographies in Europe, maybe the sales force would be a little bit bigger because you're dealing with different countries and different languages, but call it 25 to 40 reps over in Europe and again, we just think the patient and the physician excitement in a product like nolasiban would allow a company like ObsEva to take this drug to the market, once approved and commercialize ourselves.
Great. Thank you.
Thank you. Our next question comes from Ram Selvaraju with H.C. Wainright. Your line is open.
This is Julian on for Ram. First off, assuming positive data from a PROLONG trial later this year. What would be the developing path moving forward for 022?
Yes, I'll remind you that what we have say that we will have some initial interim data on the PROLONG by the end of the year, that mean that the PROLONG will not be complete obviously NDA, but it will take more time to complete. Now having a positive final data on the PROLONG. The question will be, where to develop and how to develop it? We have different options. Currently you would remember that in PROLONG, we in Europe. We recruiting patient will have premature labor and for which they start to receive atosiban. The registered product in Europe for pre-term labor which is oxytocin antagonist administered IV and stop the atosiban treatment with our drug. Why did we do that? Is because to have pure placebo-controlled trial and other was to say to a patient at seven months with premature contraction you're going to have either a new drug which has never been administered to pregnant woman or a placebo that's impossible. So we can say now, the physician can say, you have the standard of care and on top of that, we're giving you an additional chance or placebo to keep your baby in [indiscernible] and prolong [ph] your pregnancy. And we see already that this is helping and the attraction of the protocol for the center is clearly higher that it would have pure placebo trial.
Now atosiban can be the way to develop it in Europe by topping indeed the standard registered care, but that would not be applicable for the U.S. It will be applicable for Europe and for Asia. So a decision will have to be made, where we focus initially the development. Based on positive data, we can also consider doing some trial in the United States. But the definition of the trial needs to be discussed with the authority. We believe that pure placebo trial is going to be very difficult maybe not impossible, but very difficult. So to summarize my answer, I would say that we have a clear path forward in Europe and Asia pending the results and we need to further assess whether how we can develop it outside of an addition to atosiban for Europe and for the rest of the world including United States.
Great. Thank you for the added color on that. Just one last quick question, regarding the Phase 2b EDELWEISS study. When your four top line results later this quarter, do you plan on hosting a conference call?
Tim, I guess so. Tim?
Yes we will. We will be excited to share the news with the marketplace. Yes.
Excellent. Looking forward to it.
The end of this quarter. Thank you.
Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Ernest Loumaye, Chief Executive Officer for closing remarks.
So clearly I want to thank everyone for taking the time to join us on the ObsEva first quarter 2018 update call. As always we appreciate your support and we look forward to updating you on our progress again next quarter. We obviously the next time [indiscernible] will be the result of the EDELWEISS study. As always don't hesitate to reach out to Tim Adams or Mario Corso for any follow-up question. And this concludes our call. Thank you everybody.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.
Source : https://seekingalpha.com/article/4174681-obseva-obsv-ceo-ernest-loumaye-q1-2018-results-earnings-call-transcript4374