Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) Q3 2022 Earnings Conference Call November 7, 2022 8:30 AM ET
Company Participants
Justine Koenigsberg – Senior Vice President, Corporate Communications and Investor Relation
Roger Tung – President and Chief Executive Officer
Marc Becker – Chief Financial Officer
James Cassella – Chief Development Officer
Nancy Stuart – Chief Operating Officer
Conference Call Participants
Maury Raycroft – Jefferies
Leszek Sulewski – Truist
Sean Kim – JonesTrading
Jason Butler – JMP Securities
Operator
Good day and thank you for standing by. And welcome to Concert Pharmaceuticals Third Quarter 2022 Investor Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]
I would now like to hand the call over to your host, Justine Koenigsberg. You may begin.
Justine Koenigsberg
Good morning, and welcome to Concert Pharmaceuticals third quarter 2022 investor update.
Before we begin, I’d like to mention that in addition to our corporate website as a source of information, we encourage you to follow along on our social media platforms, including Twitter, Instagram, and LinkedIn. We recently added Instagram as a social media platform and collectively you can find corporate news as well as information geared towards our science, culture and community initiatives on these platforms.
Joining me this morning with prepared remarks are Roger Tung, President and CEO; and Marc Becker, Chief Financial Officer. Nancy Stuart, Chief Operating Officer; and Jim Cassella, Chief Development Officer, will join the team for Q&A.
As a reminder, today’s discussion will include forward-looking statements about our future expectations, plans and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our most recent 10-Q filed with the SEC. Any forward-looking statements speak only as of today’s date, and we assume no obligation to update any forward-looking statements made on today’s call.
With that, I would now like to turn the call over to Roger.
Roger Tung
Thank you for joining us today. We’re at an exciting inflection point for Concert because we continue our journey from a late stage development company to becoming commercial organization. Going forward, we will now refer to CTP-543, a deuterated JAK1/2 inhibitor by its new name, deuruxolitinib. We believe that alopecia areata is a largely untapped multibillion dollar market and that deuruxolitinib potentially has the best overall profile of agents studied today in that disease.
The positive inconsistent Phase 3 results from our THRIVE-AA1 and THRIVE-AA2 international clinical trials position deuruxolitinib as a potential best-in-class treatment for alopecia areata. After releasing top line data from our first pivotal clinical trial in the second quarter of 2022, this past August we released top line results from THRIVE-AA2, and in September we presented additional results from THRIVE-AA1 during the late breaking news session at the EADV Congress in Milan. These data showed significant and clinically meaningful scalp regrowth for both doses of deuruxolitinib at 24 weeks compared to placebo, early onset of effect and high degrees of patient satisfaction. In both THRIVE-AA trials, deuruxolitinib met the primary and key secondary endpoints with both doses evaluated.
Importantly, we now have over three years of deuruxolitinib treatment experience in some of the patients participating in the open label extension study, giving us a sizable safety database to support our planned NDA filing in the first half of 2023 and supporting future commercialization. It’s been gratifying for us to be able to present the excellent THRIVE-AA data and to share additional detailed results with dermatology experts and clinicians, and we’ll continue to present data for deuruxolitinib and grow awareness within the treatment community in the months ahead.
As a prime example, we were very happy to have Dr. Brett King of the Yale University present the THRIVE-AA1 results at the 2022 EADV Congress during the late breaking news session. Building on the previously released top line results, he showcased SALT 10 scores, a more stringent measure of hair regrowth and the effect of deuruxolitinib on eyebrow and eyelash regrowth. As with the SALT 20 primary endpoint data, we believe deuruxolitinib continues to demonstrate impressive efficacy by these additional measures. As we parse the extensive data from the Phase 3 trials, we look forward to sharing additional analyses with the medical community.
Beyond the quantitative hair regrowth data described by Dr. King, we feel it important to highlight two other key attributes of deuruxolitinib, which are rapid onset of effect and high patient satisfaction. Both of these measurements were built into our statistical analysis plan as key secondary endpoints and both showed significant results versus placebo in the THRIVE-AA trials.
Specifically, onset of effect at the SALT 20 level in THRIVE-AA1 was statistically significant as early as eight weeks and in the THRIVE-AA2 as early as 12 weeks. When we look at relative change versus placebo in SALT scores, we see significant changes favoring deuruxolitinib as early as four weeks. The SALT scores continue to improve throughout the course of the study, and as we’ve described previously, continue to improve beyond the 24-week study completion in patients who continue to receive deuruxolitinib in the open legal extension study.
Regarding safety data from the THRIVE-AA studies, the deuruxolitinib safety profile in both trials was similar to that we observed in the Phase 2, which we believe is well suited for the treatment of alopecia areata.
Later this month, Dr. King will present additional THRIVE-AA1 results at the World Congress for Hair Research in Australia, which will look — which will include a look at the effect of deuruxolitinib stratified by disease severity, and by duration of current hair loss episode. We expect that deuruxolitinib will be an important addition to the market where effective treatment options are only beginning to emerge. It’s clearer than ever that alopecia areata is a large and compelling therapeutic opportunity, a common autoimmune disease that affects millions of patients worldwide, and that offers blockbuster commercial potential for deuruxolitinib.
Within Concert, we’ve had a core team in place for some time to prepare our NDA filing, which we plan to submit in the first half of 2023. The data from our large Phase 3 trials forms the basis of our NDA application. However, there are several supporting studies and of course, CMC work that we have conducted or are wrapping up to support the filing. We have a well defined plan going forward, and I have every confidence that our team will continue to consistently execute to our timelines as they have throughout the program.
In closing, let me underscore that we’re highly committed to bringing deuruxolitinib to market as quickly as possible, and I’m extremely proud of what our team has accomplished and where we’re headed.
Let me pause here and turn the discussion to Marc to review our third quarter financial results.
Marc Becker
Thanks Roger. As I review our third quarter 2022 financial results, please reference the financial tables found in today’s press release.
Research and development expenses were $24.4 million during the third quarter of 2022 compared to $21.9 million during the third quarter of 2021. We continue to incur clinical costs associated with the open label extension studies for deuruxolitinib. As a reminder, the North American extension study is expected to continue until approval.
General and administrative expenses were $5.3 million during the third quarter of 2022 compared to $5.5 million during the third quarter of 2021. The decrease in general and administrative expenses relates primarily to decreased non-cash, stock-based compensation and external professional services.
Our net loss attributable to common stockholders for the third quarter of 2022 was $28.9 million or $0.58 per share compared to a net loss attributable to common stockholders of $26.7 million or $0.78 per share for the same period in 2021. We ended the third quarter of 2022 with $148.9 million in cash, cash equivalents and investments. Under our current operating plan, we expect our cash runway to extend through the second quarter of 2023.
To summarize and recap Roger’s comments, we are very excited about the potential for deuruxolitinib. It not only addresses a large underserved market opportunity, but it has the potential to be the best-in-class based on the overall treatment profile. We’re on track with our plan to file our NDA in the first half of next year and believe we will have a meaningful treatment option that could significantly help patients who suffer from alopecia areata.
This concludes our prepared remarks and we would be happy to answer any questions.
Question-and-Answer Session
Operator
[Operator Instructions]
Our first question comes from Maury Raycroft of Jefferies. Your line is open.
Maury Raycroft
Hi, good morning. Congrats on the progress and thanks for taking my question. You’ve shown data from the two Phase 3s in alopecia with primary endpoint SALT 20 score. That’s roughly 10% better than the major competitors, Pfizer and Lilly. Can you talk about how meaningful the data is in the context of other factors like dosing, convenience, safety, and safety to doctors and patients?
James Cassella
Hi, Maury. Jim here. So, thanks for the question. So, I think, you’re right. The data we have clearly offers an advantage over the baricitinib [indiscernible] data from Lilly and Pfizer in terms of the overall effect. I think we also like to highlight that we have, I think meaningful differences in terms of the onset of activity, especially when you look at the SALT 20 score or look at changes from baseline, as Roger mentioned in the presentation.
I think the other thing that is also important, the highlight is the level of satisfaction that we see in our pivotal studies where both studies have shown a high level of satisfaction. That’s a key secondary endpoint.
As we noted in our previous discussions, we have a generally consistent and well behaved compound here. We did not see any thrombotic activity in the Phase 3 program. We have side effects that I think are consistent with the JAK class, but overall, our top adverse events were things that we’re seeing not only with other JAK inhibitors, but also consistent with what we’ve seen in the Phase 2 program. So, I think, in terms of what we’re seeing in the Phase 3 and what we’re seeing for the compound overall, we have a very consistent safety profile. Not unlike what you would expect to see with a JAK inhibitor, but very well behaved, very consistent. So, I think, in terms of that we have well established safety profile, consistent safety profile and a very good potentially best-in-class profile. So I’ll pause there, see if you have any other questions.
Maury Raycroft
Yeah. Thank you for the perspective. Very helpful. And then, why don’t to ask about gating factors to filing that you’ve discussed, including the need for supporting studies, the Phase 2 durability data and open label extension data. Can you talk about progress that’s been made since your second quarter update call, and have any specific gating factors been completed yet?
Roger Tung
Yeah. So, in NDA is a rather large and complex document. We have made meaningful progress in the supporting studies and conduct of those studies. We have worked on all the other aspects of data that need to be included in the NDA filing. As you know, there are three major components of the NDA. There’s the clinical section, there’s the non-clinical section, and there’s the chemistry manufacturing controls. So, the team is very experienced. We’re working diligently on wrapping up all the details that need to go into the NDA. So, we’ve made a lot of progress. We’re working steadily on it, and we are on track to file in the first half of 2023.
Maury Raycroft
Got it. Okay. Thanks for taking my questions. I’ll hop back the queue.
Roger Tung
Thank you.
Operator
One moment for our next question. Our next question comes in Joon Lee with Truist. Your line is open.
Leszek Sulewski
Good morning. This is Les on for Joon. Just in regards to the NDA filing, could you handicap the timeline in any sense? I understand you just gave some color around the factors that need to take place, but anything that could speed up the process. Would it be an early 2023 event or something like a latter part of the first half?
James Cassella
I think, Les, at this point it’s safe to keep it in the generality of the first half. We are really making the progress that we expect to make. We’re on the timeline that we set out and I don’t think we could really give any more clarity around the first half, but we are on track. We’re feeling very good about it and we’re making a lot of progress.
Leszek Sulewski
That that’s fair. Thank you. On the guide for your cash runway through second quarter of 2023, I guess this would imply a step up in spend. Does the guidance actually include the initial launch preparations or is this essentially all tied to the open label extension study and the costs around the NDA filing? Can you just provide a little bit more color on the puts and takes of this cash guide?
Marc Becker
Sure. Hey, Les. It’s Marc. I think you nailed it. I think that’s exactly right. I think, the open label extensions included in there and the cash guidance does include a fully burdened commercial effort, I would say. So, there are a lot of precommercial costs baked in there as well as NDA prep filing fees, et cetera. So, that is why there’s a step up.
Leszek Sulewski
Got it. Okay. Thank you. I guess last one from me. Then on the — in regards to the 149 patent appeal, just provide any available updates if possible. And then on the 659, I guess based on today’s filing, looks like PTAB has denied the request for the final decision reconsideration. Does this essentially provide closure or has the counter — or the counterparty potentially can pursue other options there? Thank you.
Roger Tung
Yeah. Thanks for the question Les. This is Roger. So, with respect to the 149 patent that is currently in the Court of Appeals. We have filed our appeal to the PTAB’s initial decision. And we’re in the process of going back and forth with Insight on that. We think we have very good arguments there and are looking forward to the adjudication by the Court of appeals.
In the case of the 659 patent, we were, of course, very happy to see that the PTAB denied the request for reconsideration from Insight. And we think that patent is on extremely strong grounds right now. They do have the right to file an appeal, but we think that given the very consistent and lengthy analysis given to their case, the PTAB judges really nailed the decision here and we like micro situation there. So, we feel very strongly that the 659 patent is on solid ground.
Leszek Sulewski
Excellent. Thank you for the color.
Roger Tung
Sure.
Operator
One moment for our next question. The next question comes from Sean Kim with JonesTrading. Your line is open.
Sean Kim
Hi. Good morning. Now that you have both Phase 3 trial results and also the pricing scheme from a competitor specifically alopecia [ph], how are you thinking about pricing for CTP-543 as you move forward with filing and prepare for potential commercialization?
Nancy Stuart
Hi. This is Nancy, and thanks so much for the question. Yeah. We — what we have said is we expect that our pricing will be in line with other JAK inhibitors in the autoimmune derm space, including alopecia. That price parity is what we will be going for.
Sean Kim
Okay. Great. Thank you. And also, another question from me. So, as far as the ongoing Phase 2 Durability of Response trial goes, what’s the expected timing of trial completion? And with results, how the results kind of tie into the labeling discussions they will have with that day? Thank you.
James Cassella
Yeah. Hi, this is Jim. So, that is an ongoing study. It will be — it’s basically in two parts. The first part of that study where we look at the dose reduction and dose termination will be included in the NDA filing. There’s going to be an ongoing part of the study, that will continue post filing, where we look at redosing again. So, we are on track to have that first part in the NDA filing, and that’s what the FDA is expecting.
Sean Kim
Thank you.
Operator
[Operator Instructions]
One moment for our next question. Our next question comes from Jason Butler with JMP Securities. Your line is open.
Jason Butler
Hi. Thanks for taking the question. Just thinking about as you continue your awareness and education work ahead of the launch, when you talk to opinion leaders or potential prescribers, what you think is resonating, what the messages that you think are resonating that, that could form part of the launch message. And you’ve mentioned things like the speed of onset, but what are you hearing back from physicians? Thanks.
James Cassella
Hey, Jason. This is Jim. So, great question. We have a lot of enthusiastic support for our program and the data from the KOLs. I think, we — what we talk about in terms of the overall effect that we see with deuruxolitinib, the early onset of effect patient satisfaction, all resonate very well with the KOLs. So, we hear that back from them, and I think that’s also a very important part of the messaging. So, I think, we’ve got those three legs to stand on and I think that is pretty well recognized within the community.
Jason Butler
Great. Thanks. Thanks for taking the question.
Operator
One moment for our next question. Our next question is a follow-up from Maury Raycroft with Jefferies. Your line is — actually his line just left the queue and I’m not showing any questions at time. I turn the call back to Justine for any closing remarks.
End of Q&A
Justine Koenigsberg
Okay. Well, thank you for joining us this morning. Next week we’ll be at the Jefferies London Conference and our Head of Development, Jim Cassella, be participating in a fireside chat on Wednesday. We hope you’ll tune in and in the meantime if there are any follow up questions, please don’t hesitate to reach out. This concludes today’s call.
Operator
Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.
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