Chimerix, Inc. (NASDAQ:CMRX) Q1 2024 Earnings Call Transcript

Chimerix, Inc. (NASDAQ:CMRX) Q1 2024 Earnings Call Transcript May 1, 2024

Chimerix, Inc. misses on earnings expectations. Reported EPS is $-0.25 EPS, expectations were $-0.21. Chimerix, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to the Chimerix First Quarter 2024 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 first quarter 2024 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 website. With me on today’s call are President and Chief Executive Officer, Mike Andriole; Chief Medical Officer, Allen Melemed; Chief Operating and Commercial Officer, Tom Riga; Chief Financial Officer, Michelle LaSpaluto; and Chief Technology Officer, Josh Allen. Before we begin, I’d like to remind you that the statements made on today’s call will 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.

Mike Andriole: Thanks, Will, and good morning, everyone, and thank you for joining us. I’m pleased to be joined this morning by other members of our senior leadership team to share an update on a productive quarter across several key initiatives. Of primary strategic importance to Chimerix this year is the continued focus and drive of enrollment in the Phase 3 ACTION study, for which the team continued to execute at a high level during the first quarter. The study remains on track, the first interim readout next year and is reaching steady state accrual. The success of the ACTION study, which is the most advanced trial in H3 K27M-mutant glioma is central to our strategy as a positive outcome likely represents approval of the first medicine to treat this specific disease.

As the organization drives ACTION enrollment, we are keenly aware of the significant unmet need for patients with this disease, as there are no approved treatment options available that have proven a clinical benefit beyond radiation therapy in H3 K27M-mutant glioma. As a result, our team is continuously evaluating registration pathways globally to accelerate commercial access to dordaviprone, also known as ONC201, where possible. As we undertake this effort, we are also aware that having a pivotal Phase 3 study well underway is an important consideration in global regulatory conversations that contemplate accelerated approval and the ongoing maturation of ACTION enrollment enables such discussions. To that end, I want to share a set of experiences that have been complementary to our strategy and underscore the magnitude of the unmet need we see every day with this lethal disease.

Late last year, I received a communication from the Australian Ministry of Health inquiring about dordaviprone for patients in need within his country. During this interaction, the topic of provisional approval in Australia was raised, which is similar to the accelerated approval pathway in the United States. This interaction was the catalyst to our recent pre-submission meeting in Australia with the Therapeutic Goods Administration, or TGA, to explore dordaviprone’s eligibility to advance for provisional registration in Australia. That pathway is a three-step process, which begins with a pre-submission evaluation of the current data set in recurrent disease as well as other program features, including the status of pivotal studies. We’re pleased with the outcome from this meeting and intend to advance dordaviprone to the second step in the process, the provisional determination application.

I’ll let Allen provide more details on the process going forward. To be clear, we recognize that dordaviprone remains early in the provisional registration process. However, we are sharing the outcome of this meeting now as we are encouraged by TGA’s review of the program to date and their conclusion that the Phase 2 data set does potentially meet their criteria for provisional approval. This along with the status of the Phase 3 ACTION study, supports advancement in the provisional registration process. This example is emblematic of our overall strategy to accelerate global access to dordaviprone, and we’re eager to partner with the TGA in Australia to further advance dordaviprone towards potential provisional registration. Turning to our second generation imipridone ONC206, we have increasing confidence in the safety profile, therapeutic window and potential for novel and differentiated indications from the parent compound dordaviprone.

While Phase 1 safety studies are not yet complete, we are nevertheless preparing development strategies for this program that we expect to share before the end of the year as we near a Phase 2 investment decision. I’ll let Josh frame this process further as we look into the second half of 2024. Finally, financially, the company remains on strong footing, and we continue to execute with financial discipline. Michelle will provide a full summary of our financial performance in the first quarter and insights into cash runway. I’ll now turn the call over to Allen to discuss the process and path we’re undertaking in Australia. Allen?

Allen Melemed: Thanks, Mike, and good morning, everyone. As Mike mentioned, our development strategy is to accelerate access to dordaviprone as quickly as possible for patients in need around the world. We expect that the vast majority of the countries will require positive results of our Phase 3 ACTION study, as this is designed to provide a definitive assessment of safety and efficacy in a randomized trial in the frontline setting of H3 K27M-mutant diffuse glioma. That being said, as ACTION enrollment advances, we are exploring options for early approval in the recurrent setting where regulatory pathways allow [ph]. The recent interest from the TGA in Australia was very supportive on moving to the next step in the provision of registration process based on three attributes: one, a high unmet need in H3 K27M-mutant glioma; two, the encouraging Phase 2 data in the recurrent setting and additional supportive data; and three, our current progress in the ACTION study.

We find the outcome of this meeting will validate in to the program and complementary to our broader strategy. The unmet nature is undeniable, and the potential of being this problem to treat the patients sooner is inspiring to me as a pediatric oncologist. We will work collaboratively with the TGA as dordaviprone advances to the next step in the process in the coming months. Once the provisional determination application is submitted, the review process is expected to last about a month. If successful, an application for provisional registration will be submitted, and that review process will take approximately one year. We expect the filing could be submitted by the end of 2024, with potential commercial availability in 2026. Our organization is preparing an NDA submission in parallel to the execution of the ACTION study to ensure readiness for early stopping scenarios at upcoming interim efficacy analyses.

The potential to submit [indiscernible] complementary to the regulatory work already in progress. Tom will have much more to say about the specific commercial opportunity and plans as those time lines and activities come to focus later this year. With that, I’ll turn the call over to Josh Allen to discuss our ONC206. Josh?

Josh Allen: Thank you, Allen, and good morning, everyone. In addition to dordaviprone, we are also excited about our earlier stage programs. Regarding Phase 1 evaluation of ONC206, dose escalation remains on track to report preliminary safety and pharmacokinetic finding this summer. As a reminder, the compound is being evaluated in pediatric and adult patients with advanced CNS tumors. Dose escalation on a once per week basis, with doses ranging from 50 milligrams to 350 milligrams has completed without limiting safety signals and is now being evaluated on an intensified dose schedule of twice per day for three consecutive days per week. This intensified dose schedule was selected based on observations that the majority of advanced cancer model maximized their response to ONC206 at or prior to this duration of exposure.

While dose escalation studies are inherently adaptive with variable time lines, we remain on track to report preliminary safety and exposure data this summer at dose levels anticipated to be within the therapeutic range. Ensuring that a potential new treatment is present at therapeutic concentration for an adequate amount of time while being adequately safe in humans is the primary aim of Phase 1 evaluation. Establishing this is critical prior to the next step in clinical development, which will be aimed at efficacy evaluations in carefully selected patient population. Non-clinical investigations continue in parallel to Phase 1 to identify and prioritize opportunities for future clinical efficacy evaluation. These include tumors that occur both within and outside of the central nervous system that do not harbor the H3 K27M mutation, but do rely on disease drivers that are directly addressed by the therapeutic mechanism of ONC206.

We are leveraging the dordaviprone clinical experience as well as the vast knowledge of the multidimensional mechanism of our compounds that impact critical aspects of tumor biology. These include reversal of epigenetic disease drivers, degradation of specific oncogenic proteins and inactivation of a central pro survival signaling pathways. We are delighted that some of these concepts are showing promise in the lab, and we look forward to providing more details in the context of a Phase 2 investment decision anticipated by the end of the year in view of the totality of the program. With that, I will now turn the call over to Michelle for an update on financial results.

Michelle LaSpaluto: Thank you, Josh. Earlier today, we issued a press release containing our financial results for the first quarter of 2024. Chimerix’s balance sheet at March 31, 2024, included $188.2 million of capital available to fund operations and no outstanding debt. We remain highly disciplined in the financial management of the company. Our rolling four quarter burn rate of $58 million at the end of Q1 2024 benchmarks us among the most capital efficient Phase 3 companies in our peer group. Our approach is to retain strong, discipline and gate investment as we evaluate commercial models in the different territories. We continue to expect our cash balance to be sufficient to support operations into 4Q 2026. Turning to our results for the first quarter of 2024, the company reported a net loss of $21.9 million or $0.25 per basic and diluted share compared to a net loss of $21.4 million or $0.24 per basic and diluted share in the first quarter of 2023.

Research and development expenses of $18.8 million were flat compared to the same period in 2023. General and administrative expenses decreased to $5.5 million for the first quarter of 2024 compared to $5.7 million for the same period in 2023. With that, I will now turn the call back over to Mike for closing remarks.

Mike Andriole: Thanks, Michelle. In closing, our primary strategic importance for Chimerix this year is the continued focus and drive of enrollment of the Phase 3 ACTION study for which the team continues to execute at a high level. Additionally, we continue to explore pathways which may accelerate access to dordaviprone for patients with this ultra-rare and lethal disease. More broadly, we’re excited about the profile of ONC206 that is potentially emerging and look forward to reporting preliminary safety and PK data later this summer. At Chimerix, we’re devoted to filling gaps in the treatment paradigm in oncology. Despite advances in the field of genetically defined tumors, there remains a significant unmet need, particularly in neuro-oncology, and we’re focused on bringing potential new medicines to these patients in need.

I’d like to take this opportunity to thank our dedicated team at Chimerix as well as the doctors, patients, patient advocates and caregivers for their unwavering commitment as we move closer to bringing life altering new medicines to the patients we serve. With that, John, we’ll open the call to questions.

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Q&A Session

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

Maury Raycroft: Hi, good morning. Congrats on the progress, and thanks for taking my questions. I was going to start off with just enrollment for the Phase 3. Seeing that you added five additional sites since your fourth quarter update, does that include some of the higher volume ex-U.S. sites and geographies? And can you provide perspective on whether you’re seeing a meaningful change in the enrollment and event rates in the study? Or do you think you’ll require more sites to further optimize enrollment?

Mike Andriole: Hi, Maury. It’s Mike. Appreciate the question. Yes, the additional five sites that have been added recently were sort of part of the initial tranche of sites, so not including the additional sites that we talked about last quarter. And that’s probably going to be less than 10 in any event. It’s really strategic for markets where we’re seeing patients travel great distances. So those aren’t necessary to achieve our enrollment projections, and we continue to expect first interim OS in 2025.

Maury Raycroft: Got it. Okay. That’s helpful. And then for getting your filing application submitted to the Australia TGA, I’ve got a couple of questions there. I guess, what are the gating factors for the application and submission? When and how often do you plan on meeting with the TGA prior to the filing? And what do you anticipate the TGA will want to see as it relates to progress in the Phase 3 ACTION study? Is it just the status of Phase 3 enrollment? Or do you expect the approval will be contingent on the interim OS data that you get in 2025?

Mike Andriole: Yes, great question, Maury. Yes. So in terms of what’s needed for the application and our ongoing interactions, look, the next step in the process is a preliminary determination application. We’ll initiate that here over the summer, and then they’ll evaluate that. Assuming that we move to the final step in the process, the provisional application will resemble traditional new drug application. So the overlap between the work we’re already doing within the company for creating that document and the submission in Australia, as Allen alluded to earlier, there’s a lot of overlap between those two things. In terms of progress in enrollment, their key consideration is making sure that they’ll have definitive safety and efficacy data during the provisional registration period.

I think they’ve already seen enough to feel comfortable with that. And so continued trajectory on the trajectory we’re on is, I think, assumed. And of course, we expect there’s going to be additional tailwinds to that, which we’ve already talked about. Other parts of your question that I missed, and that are settled.

Maury Raycroft: Yes. Just how often you plan on meeting with TGA prior to filing and when those meetings could take place? And will you provide updates to the public after those meetings?

Mike Andriole: Yes, certainly, there’s ongoing collaborative interactions with TGA, particularly as we move through this next second phase of the process, the preliminary determination application. And then we expect to meet with some degree of frequency heading into the third step in the process, assuming that we get that far. So Allen, I don’t know if there’s any additional regulatory interactions that you would comment there, but I think that covers it.

Allen Melemed: The only thing I’ll add, this is Allen, is that the submission is not contingent on the Phase 3 trial data. It’s to ensure that the trial is well underway at the time of approval for them to make a decision.

Maury Raycroft: Got it. Understood. Okay. Thanks for taking my questions. I’ll hop back in the queue.

Operator: The next question comes from the line of Naureen Quibria from Capital One. Please go ahead.

Naureen Quibria: Hi. Good morning. Congrats on the progress, and thanks for taking my questions. I guess sort of following up on what Maury just asked regarding the – well, sort of on the accelerated approval in Australia, the potential for that. Just curious what the commercial opportunity might be in Australia? And – and also, if you could talk a bit more about other territories that you might be considering along the same lines?

Mike Andriole: Yes. So thanks, Naureen, for the call, for the questions. I’ll take the second one first, and then I’ll ask Tom Riga to comment on the commercial potential in Australia. So look, the – in terms of other countries, we’re focused on the ACTION study first and foremost, as I mentioned, is our key strategic priority. We are evaluating a handful of other countries that have a pathway. As you can imagine, strategically, the time line of when you could potentially submit there is an important variable as we think about that because we’re just around the corner from a potential first interim on the ACTION study next year. So if we intend to evaluate or pursue a pathway that we’re evaluating, we’ll update the market at that time. Tom, comments on commercial potential in Australia?

Tom Riga: Yes. Hey, Naureen, Tom Riga. I think, first, we’re excited about the proposition of submission here by the end of the year. And along with that process, and it runs in sequence and potentially in parallel, is a process with the Australian regulators for pricing, access and reimbursement, the HTA process. So that market is more analogous to those in Southern Europe and very much different than U.S. prices are lower. But as we have studied this particular market, there is some room for optimism when we evaluate the criteria for how those evaluations are conducted and we see attributes of ONC201 that could be potentially very interesting from a commercial perspective. I think those issues are, one, first-in-class product in an area of high unmet medical need.

I think second is an ultra-rare disease. And third, and I think of significant importance is that there is not an anchor product that’s currently approved to treat this area of illness. So early, but we do see some optimism from a commercial standpoint. I think that coupled with the high unaided awareness that exists in country today within our ACTION sites, along with the efficient network that exists in the neuro-oncology community in Australia could make for a very lean and efficient commercial model. We do not foresee significant investment from a human capital perspective on behalf of Chimerix, we would be looking for in-country collaborations, and we’ll have much more to say about that as we progress in the process.

Naureen Quibria: Got it. That’s helpful. Thank you. I guess one more for me on ONC206, the dose escalation trials. I know you’re not commenting on what stage is that. But let’s say, in terms of both the trials, are they moving at the same pace? For instance, if you have adult data and the pediatric is incomplete, will you still report data from one trial if the other isn’t complete in that time frame?

Mike Andriole: Thanks, Naureen. Josh, would you like to answer that?

Josh Allen: Yes. Thanks for the question, Naureen. I mean both trials in adults and pediatrics are proceeding in parallel. There are some nuances in the exact design and kind of how they play out in different ways. But at the end of the day, I think what you can expect to see on the next quarter as just provide an update on key safety and pharmacokinetic information from both of the studies. I think across the different dose levels and cohorts, et cetera, I think we would expect to have an experience that’s around 75 patients, it’s going to be a little pediatric SKU. I’d say about two-thirds of that aggregate population, just because the pediatric trial has enrolled in a couple of setting in contrast to the adult study. So you can expect to see safety and PK information represented from both trials.

Naureen Quibria: Okay. Terrific. Thanks. Thanks for taking my question.

Operator: The next question comes from the line of Soumit Roy from Jones Research. Please go ahead.

Soumit Roy: Good morning, everyone, and congratulations again on progress on every front. A quick question on – with the approval of [indiscernible] is there any overlap between H3 K27M and BRAF alteration? Or are you expecting any change in enrollment pace across both for ONC206 or ONC201?

Mike Andriole: Great question, Soumit, and a contemporary one. I’ll ask Josh to comment on that specifically. But before I do, I just want to pause and congratulate day one on that approval. It’s a meaningful milestone for the field of neuro-oncology. I think by our account, that’s the third genetically defined approval in the field in the last several years. And after a girth of innovation over the last quarter century, that’s a really significant milestone and are quite meaningful for pediatric patients with low-grade glioma. So congratulations to that team, and we’re excited for the field. Josh, do you want to talk about the overlap between H3 K27M and BRAF?

Josh Allen: Yes. Thanks, Mike. And I think well said, the congratulations for day one. Yes, I think first and foremost, the thing to point out is that H3 K27M doesn’t really co-occur with other actionable mutations, and that includes the BRAF fusions and V600E population. So these are populations of patients that really don’t overlap. The final thing I would point out, Soumit, is just that in the unlikely event that you do have a patient that has a co-occurrence. I would just highlight that the accelerated approval for tovorafenib was in the relapse or recurrent setting. And our Phase 3 trial is focused in the frontline setting. So again, co-occurrence would be exceedingly rare based on the available evidence that there are – there’s actually an opportunity for sequence therapy following the action.

Soumit Roy: The other thing is, I don’t know if you can provide any color as you are expanding globally. Is the percent H3 K27M mutation is still according to your initial market survey of 8% to 9% to 10%? Or is it changing depending on U.S. versus ex-U.S.? And the second one is, are you seeing in ex-U.S. territories any difference in prior treatment or how patients are being handled? Last time you mentioned ex-U.S. patients have more temozolomide usage, anything else you are seeing that could affect the ACTION expected results?

Mike Andriole: Yes. Thanks, Soumit, for the question. I’ll take the first one on just the ex-U.S. percent of the mutation. And I’ll ask Allen to talk about what we’re seeing in terms of different standards of care, if any, broadly speaking, geographically. On your first one, Soumit, the percentage with H3 K27M in terms of incidents, we have no reason to conclude that it’s different country to country or within different races. In fact, our proportion of enrollment relative to where we have sites is almost uniform globally and it’s kind of consistent with that conclusion. So no reason to expect any geographic differences in terms of the mutation. Allen, would you like to comment on the standards of care?

Allen Melemed: Thank you for the question, Soumit. In general, the standard of care worldwide is still radiation therapies for these patients. There’s a slight difference that you may have seen in the U.S. Some patients are receiving proton beam radiation. But as a whole, it’s still radiation as the mainstay. There are some patients who are receiving temozolomide. This is typically more in the adult setting. Pediatric patients globally do not, but there is a little higher instance of prior temozolomide, even in the pediatric patients globally.

Soumit Roy: Thank you, and congratulations again.

Operator: The next question comes from the line of Joel Beatty from Baird. Please go ahead.

Unidentified Analyst: This is [indiscernible] on for Joel Beatty. Thanks for taking the question. On the future development path of ONC206, would it be possible to give us a sense of what’s being contemplated? Is that a monotherapy? Is that a combination therapy potentially with tumor treating fields? Or is that maybe non-CNS solid tumors?

Mike Andriole: Thanks, Ben, for the question. Josh, would you like to comment?

Josh Allen: Sure. Thanks for the question. I mean I think the short answer to the question is prioritization is given to opportunities for monotherapy development. At least initially, the focus is on solid tumors that don’t harbor the H3 K27M mutation and the opportunities are inclusive of but not restricted to CNS tumors. So I wouldn’t pitch and hold this drug to the specific combination that you just mentioned there. I’ll highlight there is – in line with this, if you’re looking for more specificity, right? There’s several positive in vivo studies with monotherapy ONC206 in histologically defined indications that are published and summarized in our corporate deck. Those examples include GBM, medulloblastoma, uterine cancer, breast cancer and certain kinds of neuroendocrine tumors, such as paraganglioma.

I mentioned in my prepared remarks some of the specific mechanistic considerations that we’re using to guide some of these monotherapy activity potentials and how we identify and prioritize them. And really, the goal of that is to further refine those opportunities for indications that are either defined by or enriched for specific biomarkers of ONC206 that we think could represent meaningful opportunities for clinical development.

Unidentified Analyst: Great. Thank you.

Operator: The last question comes from the line of Troy Langford from TD Cowen. Please go ahead.

Troy Langford: Hi. Congrats on all the progress, and thanks for taking our question. So just with respect to the next steps for ONC206, do you believe any of these future studies for the program could constitute pivotal studies in the selected patient populations? Or do you think you’ll more likely to do smaller single-arm Phase 2 studies first, followed by a larger controlled Phase 3 study, similar to what you did with dordaviprone?

Mike Andriole: Sure. Thanks for the question. I’ll let Josh speak to that. I think, in short, it may well depend on the direction of the program and the indication pursued. But Josh, would you like to comment further?

Josh Allen: That’s exactly right. Our goal in the near-term is going to be to make sure that the drug is able to get into humans at adequate therapeutic concentrations for an adequate amount of time and be well tolerated. We think if we can achieve that and update everyone on this in the middle of the year, that that’s going to be sufficient to open up a lot of additional opportunities for further development. And we intend to take that decision via the totality of the program and the exact nature of that sort of registration opportunity. Like Mike said, the trial design, what the exact next steps are and the exact endpoints are very much something that we’re thinking about right now and are tailored to the specific opportunity. But obviously, we’re going to be focused on identifying clear monotherapy signals and the most efficient path to approval possible for that disease if we see confirmation of that activity.

Troy Langford: Great. Thanks for all that color.

Operator: As there are no further questions at the queue this time, I would like to turn the call over back to Mike Andriole.

Mike Andriole: Thanks, John. Thank you, everyone, for your time this morning, and we look forward to updating you in the coming months.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.