Neuroderm Q4 Earnings Conference Call: Full Transcript

Operator: Good day and welcome to the Neuroderm Fourth Quarter and Full Year 2015 Financial Results Conference Call. Today's call is being recorded. For introductions and opening remarks, I would like to turn the call over to Roy Golan, CFO of Neuroderm. Please go ahead sir. Roy Golan: Chief Financial Officer: Good morning and thanks for joining us today. With me is Oded Liebermann, CEO, and Sheila Oren, VP of Clinical and Regulatory Affairs. Before we begin, I would like to read the following regarding forward-looking statements. Certain statements in today's conference call and responses to various questions may constitute forward-looking statements. We wish to caution you that such statements reflect only the company's current expectations and that the actual events or results may differ materially. For more information about factors that could impact these forward-looking statements, please refer to the risk factors contained in the company's most recent Form 20-F and subsequent filings with the Securities and Exchange Commission. I will now turn the call over to Oded Lieberman. Oded S. Liebermann: Chief Executive Officer: Thank you, Roy, and thank you everybody for joining us. On our call today I will provide a corporate update including updates on our ongoing and upcoming clinical trials, then I will turn the call back over to Roy to discuss our fourth quarter and full year 2015 financial results. We will then take your questions. 2015 was an important year for Neuroderm in which we were highly focused on advancing our product pipeline, including our lead product candidate ND0612H and ND0612L. Clinical data suggests that these product candidates may provide a more effective therapy alternative than what is currently available to patients who suffer from Parkinson's disease. We believe they have the potential to transform treatment options and offer a higher quality of life for Parkinson's disease patients and their caregivers. Following last November's announcement of our streamlined clinical development program based on feedback from the FDA, which not only decreased the number of total patients to be enrolled in our clinical trial, but also reduced the total number of products now included in our development program, we have make solid progress advancing our product pipeline. In December, we announced the start of trial 006. This is the first-ever efficacy trial of ND0612H, our high dose product candidate intended for severe Parkinson's disease patients who cannot be added to be controlled with oral therapy and might otherwise require surgical intervention. This open label pilot phase II study of 36 patients treated for 28 days is designed to investigate the efficacy, safety, tolerability and for pharmacokinetics of two dosing regimens and compare them to the baseline oral standard of care. We are encouraged by the progress of this trial so far and we plan to announce topline results of the study in the second of half of this year. In parallel, we are proceeding as planned with our 005 study, EU study of a pharmacokinetic trial comparing ND0612H to Duodopa in healthy volunteers as part of our bioequivalence-based regulatory approach in Europe towards obtaining approval in the EU. I can confirm that we anticipate completing this pilot trial and announcing its results in the second quarter of 2016. Turning to our low-dose product; ND0612L, our product candidates for patients with moderate-to-severe Parkinson's disease, we plan to initiate a trial 007, the pivotal Phase III efficacy trial around mid-year 2016. Our 012 trial, which is the long-term safety follow up study for both NDO612H and NDO612L intended to satisfy the requirements of both the US and EU regulatory authorities. This trial should start soon in Q2, 2016. Now I would like to provide an update on our US activities. As a reminder, the FDA previously requested additional documentation pertaining to good manufacturing practices of the quality system regulation to commend the Italian supplier of the devices used in our ND0612H and ND0612L clinical trials. Although use of the devices for investigational purposes is not currently precluded, Neuroderm decided to request additional documentation from Kinect (ph) before proceeding with enrollment at US investigator science. I am pleased to confirm the documentation has been provided and we anticipate commencing patient enrollment in the US in the second quarter of 2016, consistent with the guidance we provided on our third quarter call last November. We are also in discussions with several third-parties in order to develop alternate sources of supply for our delivery devices. We have added several highly-qualified employees to the Neuroderm team over the past few months. These individuals bring highly specialized experience in the areas of clinical medical devices and regulatory developments. We continue to attract high caliber professionals, but believe that with the team we have in place today and headcount of 42 employees, we have a highly experienced CNS and Parkinson's team in-house already. I will now turn the call over to Roy for a review of our financial results. Roy? Roy Golan: Chief Financial Officer: Thanks Oded. As of December 31, 2015, Neuroderm had cash, cash equivalents and short-term bank deposits totaling $99.8 million. We believe that this is sufficient to advance our product pipeline and reach our clinical and regulatory milestones through mid-2018. As you may have noted, we have filed an F-3 this morning. We believe this constitutes good corporate housekeeping and allows the company flexibility in the future. As for research and development expenses, net they were $4.1 million in the three months ended December 31, 2015 compared to $3.4 million in the same year in 2014. The increase was primarily due to an increase in subcontractors, mainly from clinical studies and production costs related to our product candidate partially offset by a decrease in share-based compensation expenses. In the three months December 31, 2015, general and administrative expenses were $2 million compared to $2.8 million in the same period in 2014. The decrease was primarily due to a decrease in share-based compensation expenses. The company reported a net loss of $6.7 million in the three months ended December 31, 2015 compared to $20.3 million in the same period in 2014. The decrease in net loss was primarily due to a decrease of $13.5 million in financial expenses, net, mainly from non-cash financial expenses for the three months ended December 31, 2014 related to the fair value of the company's convertible loans, embedded derivatives and financial instruments which were converted into ordinary shares prior to the company's initial public offering in the fourth quarter of 2014. For the year ended December 31, 2015, research and development expenses net were $12.8 million compared to $8.1 million in the same period in 2014. The increase was primarily due to an increase in materials and subcontractors, mainly related to clinical studies and production costs related to our product candidates. General and administrative expenses were $5.2 million for the year ended December 31, 2015, compared to $5.3 million in the same period in 2014. The decrease was resulted mainly due to a decrease in professional services related to the completion of our IPO in 2014. The company had financial income net of $2.4 million for the year ended December 31, 2015, compared to financial expenses net of $16.5 million for the year ended December 31, 2014. These financial expenses net were mainly non-cash expenses primarily related to changes in fair value of our convertible loans, embedded derivatives and financial instruments that were converted into ordinary shares prior to the company's initial public offering in the fourth quarter of 2014. The company reported a net loss of $15.6 million for the year ended December 31, 2015, compared to $29.9 million for the same period in 2014. The reduction in net loss was driven primarily by the decrease in non-cash financial expenses described above, partially offset by an increase in research and development expenses, net. Turning to cash guidance, for the full year 2016, we expect our cash burn to be approximately $35 million. I will now turn the call back to Oded. Oded S. Liebermann: Thank you, Roy. Before we take your questions, I would like to summarize our upcoming milestones in 2016. For trial 012, the long-term safety follow-up trial in Israel, the EU and the US for both ND0612L and ND0612H, we plan to initiate this trial in the second quarter of 2016. For trial 005, the pharmacokinetic pilot dose finding study comparing ND0612H with Duodopa in the EU, this is ongoing and we expect top-line results in the second quarter of 2016. This study will be followed by definitive bioequivalence study. For study 006, our study investigating the efficacy, safety, tolerability and pharmacokinetics of two dosing regimens of ND0612H compared to the baseline oral standard of care on 36 patients treated for 28 days, we plan to announce top line results of this study in the second half of this year. For study 007, our Phase III pivotal efficacy trial of ND0612L, we plan to initiate this trial around mid-year 2016. We expect also to begin enrolling US patients in the second quarter of 2016. Lastly, we will be meeting with the FDA for an end of Phase II meeting later in the year, probably in Q3 and we'll be doing similarly with the EU Authorities. Before we begin the Q&A session, I'd like to say that we are all very excited by the work we are doing. We have received some very encouraging feedback from our first efficacy trial with ND0612H which motivates and drives us onward. It is our goal to help these patients live the higher quality of life. Operator, please begin the question-and-answer session. Question & Answer Operator: Thank you. [Operator Instructions] We'll take our first question from the line of Ken Cacciatore from Cowen and Company. Ken Cacciatore: Cowen and Company: Good morning guys. Congratulations on all the progress. I guess as we go into some of the data release, Oded, I was wondering if you could help bring for us what exactly success looks like maybe starting with the comparator study against Duodopa, help us understand what are the things we should be looking for? I know it could be obvious, but trying to understand that when we look at comparatability to what degree do we need to compare and when we look at magnitude in terms of the ability for you to get comparatability open to the system, can you give us a sense of what threshold would be clinically meaningful versus similar, just frame for us what we should be looking at in term of success from that data reports out? Thank you Oded S. Liebermann: Okay. Well, thank you Ken for this question. The regulatory approach in the EU is as mentioned a bioequivalence type approach. This means that this falls under the rationale of bioequivalence. What also this means is that under such a rationale, we are not required to demonstrate efficacy in an efficacy trial, but rather demonstrate PK similarity to the comparator product, in this case Duodopa, in a fashion similar to what is done with generic drugs. Generic drugs are not required to demonstrate a new efficacy, but rather the fact that they are similar enough to the comparator drug. And this is exactly the same case here. So there are three basic parameters that are always taken into account. It is the Cmax, it is the area under the curve, and it is the general shape of the curve. And as you may recall, the EU Authorities have agreed to evaluate our product not only according to the bioequivalence rules, but in fact according to, I would say, a more relaxed sets of considerations, which is PK similarity, which means that the same principles apply, but the strict rules of bioequivalence as they are applied to generic drugs do not necessarily hold in our case. So what would one could expect as far as the results would be broadcasting out. I think that for us and for everybody, the important conclusion is how similar we are to the comparator drug with these three parameters. I doubt if we will be giving out the exact numbers, I would say, for obvious competitive reasons, but we will do our very best to be as transparent as possible in reflecting how similar these three parameters are in our drug candidate vis-a-vis Duodopa according to, I would say, the discussions we had with EU Authorities. Does this answer your question, Ken? Ken Cacciatore: It does. Thank you very much. Operator: Thank you. And our next question comes from the line of Chris Raymond from Raymond James. Chris Raymond: Raymond James: Hey, thanks and congrats on the device getting the documentation this year. I have a question on this and just one maybe a clarification. I was just looking through your 20-F and it seems that the language doesn't mention that the documentation has been submitted. So -- but I think I heard you guys say that you did check that box. Can you maybe -- was that just in the last day or so and can you also clarify if you had any sort of feedback from the FDA that they were satisfied with that particular submission. Oded S. Liebermann: Right, so the first question was it done very recently, the answer is yes, it was done very recently. Regarding your second question, feedback from the FDA, we, again I am a bit limited in what I can disclose regarding exchanges between the FDA and Kinect (ph) I am not at liberty to disclose that. What I can tell you is that Kinect (ph) are in constant touch with the FDA and to our knowledge, they are answering all the requirements of the FDA to their best ability and as far as beyond that, I cannot really respond. That's as much as I can say. Chris Raymond: Okay. Thank you. Operator: Thank you. [Operator Instructions] Our next question comes from the line of Scott Henry from Roth Capital. Scott Henry: Roth Capital: Thank you. Good morning. A couple of questions, first, could you talk about R&D spending levels for 2016? How should we think about that relative to 2015? I assume G&A, we you should expect, it's kind of a steady trending increase, but R&D is probably the bigger variable. Oded S. Liebermann: Roy, can you please take this question? Roy Golan: Yes, Scott, thank you for this question. As we did not disclose anything within the budget that we approved and as we disclosed right now it is going to be approximately $35 million. Your assumption is absolutely correct. There are not going to be any major changes to our G&A. So, it's mainly going to go to R&D, specifically to two areas; clinical trials and our production. Scott Henry: Okay. So $35 million for 2016 will be kind of your all-in expenses number? Roy Golan: That is correct. Scott Henry: Okay. Thank you, that's helpful. And then on the clinical side, it looks like everything's pretty much right in line with expectation. The question is do you still think that you can file these products by the end of '17, how should we think about the filing timeline? Oded S. Liebermann: Well, this is Oded. Yes, we believe we will be able to file by the end of 2017. We have, as I mentioned, we are encouraged by the progress that we have in our equivalence trial, that was a bit case and we are certainly encouraged by the enrollments, the enrollments rates. It is, again gives us reasons for encouragement. And yes, we confirm that we expect to file by the end of 2017. Scott Henry: Okay, great. Thank you for taking the questions. Operator: Thank you. And that concludes our question-and-answer session for today. I will turn the call back over to Oded Liebermann for his closing remarks. Oded S. Liebermann: Thank you. Today's question-and-answer -- I am sorry. Thank you, first of all, for joining us today on our call. We look forward to updating you on our progress throughout the year as we continue to make progress on our products pipeline and development. Operator: Thank you. Ladies and gentlemen, that concludes our call today. You may now disconnect.