Chimerix, Inc. (NASDAQ:CMRX) Q4 2022 Earnings Call Transcript

Chimerix, Inc. (NASDAQ:CMRX) Q4 2022 Earnings Call Transcript March 2, 2023

Operator: Good morning, ladies and gentlemen, and welcome to the Chimerix Fourth Quarter and Year-End 2022 Earnings Conference Call. I would now like to introduce your host for today’s call Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed.

Michelle LaSpaluto: Thank you, Jack. Good morning, everyone and welcome to the Chimerix fourth quarter and year-end 2022 financial and operating results conference call. This morning we issued a press release and our fourth quarter operating update. You can access this press release in the Investors section of the website. With me on today’s call are President and Chief Executive Officer, Mike Sherman; Chief Medical Officer, Allen Melemed; Chief Financial and Business Officer, Mike Andriole; and Chief Technology Officer, Josh Allen. Before we begin, I would 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 would like to turn the call over to our President and Chief Executive Officer, Mike Sherman.

Mike Sherman: Thanks, Michelle and good morning everyone .Thanks for joining us. We completed an important transition for the company in 2022, monetizing TEMBEXA and fully capitalizing the company without shareholder dilution, establishing runway into 2027 in the process. This was a very attractive transaction for Chimerix with potential for additional meaningful economics in the future. We’ve now also largely completed our transition responsibilities for TEMBEXA which allows for full focus on our oncology pipeline. Our confidence in these programs continues to grow as we announced new independent survival analysis related to ONC201 or Dordaviprone treatment late last year and now today a clinical milestone for our next generation imipridone ONC206.

We began opening sites for the Phase 3 ONC201 ACTION trial in the U.S. late last year and just opened our first international site in Israel. We also received recent approval to proceed from health authorities in both the UK and Canada. We expect to activate sites in those countries shortly followed by the rest of Europe this spring. We remain on track for most sites to open for enrollment by mid-year and we’ve been encouraged in the meantime by the referral process through which sites that have not yet opened or sending patients to already active sites to initiate treatment. Those patients will later transfer back to their home site. We continue to expect first data readouts in early 2025 and look forward to sharing our continued progress as we open more sites.

As a bit of an aside, it was nice to hear from one of our leaders at our CRO partner PPD in a meeting yesterday recognized the particularly strong collaboration they have with our team distinguishing it from other trials they’re working on. That speaks both to the quality of a team in both organizations and the uniqueness of this trial, particularly the pull we get from patients and investigators. It’s worth noting that our endpoint strategy is designed to optimize the speed to data, as well as provide multiple opportunities for success. The interim overall survival analyses at 164 and 246 events provide the opportunity to stop the trial early if a survival advantage is observed. If results are consistent with the independent analysis previously reported at the recent SNO Conference, this is what we would expect to happen.

That’s particularly true with the inclusion of the higher dosing arm, which is independently powered. Trail design also provides another opportunity for success with the incorporation of the PFS analysis at 286 events, which is expected to occur just after the first interim overall survival analysis. With a successful PFS analysis, we plan to speak to the FDA about seeking an accelerated approval and then would incorporate the overall survival analysis as a post marketing requirement. The independent data announced in December supporting an ONC201 survival benefit in the H3 K27M-mutant population more than doubling median survival compared with those not treated with ONC201 26 months, compared to 12 months in the frontline setting. The flexibility afforded by our trial design on top of the durable response data we previously disclosed from Phase 2, we remain confident that probability of success for the ACTION trials at least is higher than other Phase 3 trials.

In parallel to executing in the clinic, we’re completing the clinpharm and CMC work that will otherwise be required for regulatory filing. That work has proceeded with supportive findings along the way. We also continue to generate data that enhances the scientific understanding of our pipeline, adding to our confidence and the ability of and imipridone’s broadly to uniquely address high unmet needs in oncology. Recent data released at SNO demonstrated the ability of ONC201 and ONC206 to selectively tap novel targets for oncology to control multiple critical aspects of tumor biology. Josh will elaborate on this in a bit. As it relates to our earlier stage pipeline, including ONC206, we have new reason to anticipate additional catalyst on the horizon for that program, while we’re executing the ACTION trial.

We’re certainly encouraged to learn of a confirmed response in one of the early dose cohorts. We wouldn’t ordinarily highlight a single case of tumor response, but because this happens so early in the escalation and in a patient with non-H3 K27M glioblastoma. This is a setting where we’ve never seen a tumor response with ONC201. It stands out as an important signal for ONC206 an important signal about potential broader market opportunities. I’ll now turn the call over to Josh Allen to provide some updates on the science and more color on this ONC206 development.

Josh Allen: Thanks, Mike. So, with respect to the preclinical data released at SNO, alongside the launch of the ACTION trial, presentations there shed further light into how ONC201 and ONC206 can be unique detrimental effects to advanced CNS tumors. Our own studies presented at that conference demonstrated the role of ClpP in response to these compounds, highlighting that this target can impart a strong therapeutic response as shown in CRISPR and acquired resistant studies, and that these compounds are the first therapeutics to tap that target. In addition, a team of researchers affiliated with PNOC unveiled a new dimension of ONC201 activity into Diffuse Midline Gliomas, abbreviated as DMGs. They found that the compound induces immunomodulatory effects in vitro and in vivo, including increased expression of specific .

While we published on immunostimulatory effects of the drug in the past, that was largely in the context of natural killer cells outside of the brain. These new findings suggest that ONC201 may have the ability to convert a so-called immune cold tumor such as DMGs into an immune hot tumor so they can be recognized and eliminated by the immune system. All of this molecular information helps us understand how ONC201 triggers deep and durable responses in patients with H3 K27M-mutant glioma and how ONC206 could address additional forms of brain cancer. Next, let me follow-up on Mike’s comment related to a recent clinical findings with ONC206. And I’ll begin by briefly reminding you of what that compound is and where it came from. So, ONC206 is a small molecule that emerged from a medicinal chemistry campaign, leveraging the unique core chemical structure and first-to-class mechanism of action of ONC201.

The goal of that campaign was to identify new cancer therapies capable of treating new indications beyond those addressed by ONC201. ONC206 emerged from these efforts as an ideal second generation compound exhibiting minimal or potency in vitro against a variety of advanced cancers, as well as its direct dual target DRD2 and ClpP. The spectrum of anti-tumor activity of this compound has been verified as the monotherapy in vitro and in vivo in specific advanced forms at CNS tumors, neuroendocrine tumors, and gynecological malignancies that are distinct from the lead indication of ONC201, and each represent urgent unmet medical needs. All of this is accomplished by ONC206, while maintaining brain penetration, as well as a wide therapeutic window in oral administration that we expect will translate to patient convenience, compliance, and quality of life in the clinic.

And it’s not just us that sounds as compelling, it’s also our team of collaborating experts in Europe and the U.S. who have validated much of the efficacy I just mentioned in their . Chief among them was the Neuro-Oncology Community, which was eager to pull this treatment forward to their patients with advanced CNS tumors. To that end, the NIH, as well as PNOC worked closely with us and secured external funding to introduce this molecule into the clinic to begin dose escalation directly in adult and pediatric brain tumor patients respectively. Their work suggests that the efficacy of ONC206 could extend beyond the H3 K27M-mutant glioma population being addressed by ONC201, including indications such as glioblastoma and medulloblastoma. The primary objective of these first-in-human studies is to establish monotherapy safety.

However, key information will also be gained on pharmacokinetics, as well as pilot efficacy in certain cohorts that would select for patients with recurrent disease. While these studies are still early and we anticipate much more dose escalation and intensification still lies ahead, we are encouraged by what we have heard from investigators so far. No surprises on safety in-line with its preclinical profile. The pharmacokinetics suggest that we are only scratching the surface of what ONC206 may be able to achieve in terms of therapeutic exposure, and it’s likely we have more room to intensify beyond the initial weekly schedules. Finally, as Mike mentioned, an investigator has recently notified us of a response in a patient with recurrent glioblastoma.

This patient initiated monotherapy ONC206 in April of last year at only the second dose level in the study and has achieved a radiographic response per the investigator, as well as a decrease in metabolic activity in their tumor as seen on PET imaging. This patient was not on corticosteroids, which removes the potential confounding factor in the evaluation of . This patient continues on therapy at 10 months and is clinically doing well. Importantly, this patient’s glioblastoma did not harbor the H3 K27M-mutation. This is quite exciting as to date we have not observed a response to ONC201 in a patient with a brain tumor that lacks the H3 K27M-mutation. Overall, this suggests that the broader activity profile observed with ONC206 in preclinical models may translate to the clinic to address these sizable unmet needs outside of the indication where we are currently developing ONC201.

These studies continue to enroll and in the upcoming months we could share more details on these programs and expect further readouts to be recorded at appropriate conferences in the future. With that, I’ll now turn the call over to Mike Andriole.

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Mike Andriole: Thanks, Josh, and good morning, everyone. We remain focused on site activation and recruitment for the action study and are encouraged by the progress to date both in the U.S. and internationally. Furthermore, the early clinical activity of ONC206 has the potential to address a much larger patient population with an equally acute unmet need, and provide additional catalyst. Both programs have the potential for substantial value creation to patients and shareholders, which I’ll take a moment to recap. In the case of Dordaviprone or ONC201, in H3 K27M-mutant glioma, recall there are no approved agents targeting this mutation and this is the lead program clinically by a wide margin. We have previously guided to a commercial opportunity of 750 million in revenue annually, with about 5,000 newly diagnosed glioma patients harboring this mutation in the Top 7 markets, the potential approval in this population would be a stepwise change in the standard of care for these patients and would be accompanied by ultra-orphan drug pricing.

This means pricing anchors of comparative therapies that treat U.S. populations of 2,000 patients or less and were full approvals predicated on an overall survival benefit. With these anchors in mind, and based on ongoing commercial planning work we’ve performed, we believe a $750 million revenue forecast is likely the lower bound of what we might expect subject to final survival data from the action study. In the case of ONC201, this is a second generation imipridone designed to expand benefit to other tumors from what Dordaviprone is expected to address. While the program is early, we are nevertheless encouraged by the confirmed response in a patient with recurrent glioblastoma without the H3 K27M-mutation early in dose escalation, a first for this platform.

Glioblastoma is comprised of roughly 30,000 newly diagnosed patients in the Top 7 markets annually, so about 6x the size of the market for Dordaviprone’s lead indication. With orphan-drug pricing and the scale of the unmet need in glioblastoma, we believe the global market opportunity for ONC206 comfortably exceeds $1 billion annually as we consider development in this indication. This opportunity is supported by composition of matter IP where we own full operational rights to the program globally. We’re driven by the potential for each of these programs to change to the standard of care and their respective high grade glioma indication that have each seen such a dearth of new innovation in the last 20 years and where the competitive commercial intensity is about as low as one would find across all of oncology.

We believe success in one or both of these programs will lead to significant value for both patients and shareholders. Lastly, earlier today, we issued a press release containing our financial results for the fourth quarter and full-year 2022. Starting with our balance sheet, at the end of 2022, we had approximately $266 million in capital, which could fund operations into 2027, a period that could potentially include the U.S. launch of Dordaviprone. That timeline could be extended if we receive additional economics from our TEMBEXA partnership with Emergent during the next four years or could be shortened if we accelerate investment in one or more pipeline programs. That would of course be driven by supporting clinical data catalysts. As a reminder, under the TEMBEXA agreement, we received an additional $31 million for each of the remaining four BARDA procurement options totaling up to 124 million in milestone payments.

In addition, we’ll earn TEMBEXA royalties equal to 15% of international gross profit and royalties equal to 20% of U.S. gross profit should U.S. demand for TEMBEXA exceed 1.7 million treatment courses during the exclusivity period. Turning to our statement of operations, the company reported a net loss of $21 million or $0.24 per basic and diluted share for the fourth quarter of 2022, compared with a net loss of 39.5 million or $0.45 per basic and diluted share in the fourth quarter of 2021. R&D expenses decreased to 19.3 million for the fourth quarter of 2022, compared with 34.3 million for the same period in 2021 in which we paid a one-time $20 million success payment for ONC201. General and administrative expenses of 5.3 million were essentially flat year-on-year, compared to 5.2 million for the same period in 2021.

Our previously announced reduction in force was largely completed in January and the favorable impact on our burn rate will begin to be realized next quarter. Subject to changes in pipeline investments that may occur during the year, the current plan is for our 2023 end of year cash balance to exceed $200 million. With that overview, I’ll turn the call back to Mike for closing remarks. Mike?

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Q&A Session

Mike Sherman: Thanks Mike. We have an exciting year ahead as we continue enroll the ACTION study and prepare for potential commercialization of ONC201. We’re particularly excited to see such an early signal from the ONC206 program, and the fact that that occurred in a non-H3 K27M-mutants glioblastoma. So, certainly encouraged by the potential for additional catalyst that program can provide on top of the ACTION study execution. With that, Jack, we’ll open the call up for questions.

Operator: Certainly. Maury Raycroft with Jefferies. Your line is open.

Kevin Strang: Hi. This is Kevin on for Maury. Congrats on the update today and thanks for taking my questions. Just first question on 206, I believe the response was in a patient that received 100 milligrams once per week and then you said that was in the second dose level. Can you just talk about where that fits in your proposed escalation. I know you talked about increasing the intensity as well? And then just in terms of overall trial design, anything you can say about that and what we could expect at a first update at a medical conference?

Mike Sherman: Yes, maybe I’ll take a high level cut at that and Josh you can add to it. So, of course, we expect the dose itself to escalate and we’ve got plans in place to accelerate that as you mentioned, the intensity and more frequent dosing, we also believe based on PK modeling we’ve done can provide some benefits. So, pretty significant increase in exposure in potential therapeutic window is just ahead and so working on with both PNOC and NIH to execute that. But I don’t know if there’s maybe a little bit more Josh to clarify in terms of the potential, particularly around dose intensity, what we’ve learned?

Josh Allen: Yes. Happy to add. Thanks for the question, Kevin. So, the starting dose of these trials was 50 milligrams once per week. And as you rightly point out, this response was in a patient second dose cohort following a that escalated up at their enrollment to 100 milligram. So, you got that right and then in terms of the future of the trial as you alluded to and Mike points to as well, our preclinical data both safety and efficacy, as well as the available clinical pharmacokinetics suggest that driving towards an increased dose schedule may be beneficial and feasible. So, to that end, we expect the studies to intensify towards a 3-days in a row per week dose schedule, perhaps with twice per day dosing as the future of these studies.

And like I mentioned in my comments, the primary goal of these studies is really aimed at establishing monotherapy safety, but of course, we expect to pick up additional information on pharmacokinetics, as well as how these patients do. So, we expect to be able to share those details as the trials unfold.

Kevin Strang: Great. Thanks. And just a quick follow-up. So, with the early response for 206, how are you thinking in the future about potential company-sponsored trials? And does this change your sort of calculus at all on potential in-licensing or R&D spend? And just how do you think about that moving forward?

Mike Sherman: Yes. I’ll start that, and Mike, perhaps you can add. We had stated before, we’re always looking broadly in the marketplace as any management team should, essentially to set a bar for your own development internally. And so, to see a response in a new patient population with our internal program, it certainly raises the bar for anything that we might be looking at externally. And as it relates to future investment, we’ve been fortunate to be able to leverage the funding garnered through the PNOC and NIH in the near-term. That I think continues to be sufficient. The enthusiasm at both of those institutions and across those collaborations have increased with, kind of the data as they’ve seen it, most of the qualitative data that they observe in treating patients where sometimes you don’t have a patient where you can even assess the tumor response, but particularly in this patient where tumor €“ the tumor is accessible for response.