CymaBay Therapeutics, Inc. (NASDAQ:CBAY) Q2 2023 Earnings Call Transcript

CymaBay Therapeutics, Inc. (NASDAQ:CBAY) Q2 2023 Earnings Call Transcript August 10, 2023

CymaBay Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.01 EPS, expectations were $0.21.

Operator: Good day, ladies and gentlemen, and welcome to CymaBay’s Second Quarter 2023 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company’s request. It is also being webcast live on the Investors section at the CymaBay website at www.cymabay.com. Now, I would like to turn the call over to Mr. Paul Quinlan, General Counsel at CymaBay. Mr. Quinlan, please proceed.

Paul Quinlan: Thank you operator and good afternoon everyone. I hope that you have had a chance to review the press release we issued announcing our second quarter 2023 financial results and business updates. You can access that release on our website under the Investors tab. Joining me on the call today are Sujal Shah, Chief Executive Officer; Chuck McWherter, Chief Scientific Officer and President of R&D; Lewis Stuart, Chief Commercial Officer; and Harish Shantharam, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I’d like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay’s expected future performance, business prospects, events or plans, including clinical plans, regulatory approvals, funding and repayment schedules, anticipated timelines and data release dates, cash runway and planning for commercialization are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

Although, the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual outcomes, and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors. The company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Participants are directed to the cautionary statements set forth in today’s press release, as well as the risk factors set forth in CymaBay’s quarterly and annual reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

This conference call is the property of CymaBay and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. At this time, I’d like to turn the call over to Sujal.

Sujal Shah: Thank you, Paul and good afternoon. We are confidently advancing towards what is a key and exciting milestone this fall, when we expect to report top line results from RESPONSE. Our global Phase 3 registration study of seladelpar in people with primary biliary cholangitis or PBC, we anticipate releasing top line results from RESPONSE by the end of September. And we’ll then plan to submit for regulatory approval as soon as feasible. Our update today includes the announcement of IDEAL, an important new clinical study in the development program of seladelpar for PBC and an overview of our pre-commercial planning activities for seladelpar. Before we get to these updates, let me welcome our new CFO, Harish Shantaram to this call.

Harish joined us in May and brings over 20 years of experience driving various financial functions in commercial biotech companies with a particular focus on setting strategy and building financial planning and accounting operations to prepare companies for commercial drug launch. We are delighted to have Harish during this time of critical growth for the company as we plan for the completion of our Phase 3 study, regulatory filing and commercialization of seladelpar for patients with PBC. His operational leadership capabilities as well as his strong strategic finance and commercial experience will be critical as we embark on a transformation to a fully integrated commercial biotech company. Turning to our progress with seladelpar, we continue to execute on what we believe is currently the largest clinical development program in PBC.

Between our Phase 2 studies, prior Phase 3 ENHANCE study, the ongoing Phase 3 RESPONSE study and the open-label ASSURE study, the development program for seladelpar is one of the most robust ever conducted in patients with PBC with over 600 participants including over 300 currently receiving treatment with seladelpar in our ongoing studies. It is the depth of clinical data that gives us the confidence in seladelpar potential to offer a clear, differentiated second-line treatment option for patients who are either intolerant or have an inadequate response to ursodeoxycholic acid, the approved first-line agent. At the EASL Congress in Vienna in June, there was considerable discussion among PBC thought leaders, industry sponsors, and patient advocacy groups that centered on revisiting treatment goals for PBC.

We noted a consistent theme in the dialogue to consider adjusting treatment goals to include normalization of cholestatic and inflammatory markers and the need to include improving symptom burden. Earlier today, we announced the initiation of IDEAL, a study that will compare the effects of EASL on normalization of ALP versus placebo in patients who continue to have persistent elevations of ALP’s above normal but below 1.67 times the upper limit of normal, a level that has been often used as a lower cut off in clinical trials for PBC. In several publications, this population has been identified to be at continued risk for disease progression. However, they do not meet current guidelines for recommending second-line treatment and are not typically included in clinical research.

We believe that IDEAL has the potential to be transformational for this neglected population, potentially resetting expectations for second-line treatment. We are optimistic for the potential results in IDEAL given seladelpar’s previous rates of alkaline phosphatase normalization and ENHANCE a population that had much higher levels of ALP than will be recruited to IDEAL. We are excited that this study is now actively recruiting and while it is too early for us to comment on timelines for enrollment and data, Chuck will provide more detail on this study during today’s call. Seladelpar is the first in the delpar class of drugs that targets PPARδ in the liver. Study results to-date suggests that it has a differentiated profile for efficacy on cholestatic markers of disease, including the registration endpoint of primary composite responsive ALP and total bilirubin and on ALP normalization.

Unique among agents approved or in development for PBC, prior studies have suggested that a key feature of seladelpar profile might be improvement in quality of life by reducing pruritus in those patients with clinically significant itch. If seladelpar’s profile is confirmed in the ongoing pivotal RESPONSE study and if the safety is consistent with that scene today, we believe seladelpar could be an important step forward in patient care. If in the future we are able to confirm our expectation of positive results in IDEAL, this would be important to advance our aspirations to remake the landscape for treating PBC, far more than those that are treated with second-line therapy today. On the operational front, we continue to make good progress with our medical affairs organizational build, including both leaders and field members having years of experience, including in PBC.

We have also been successful in assembling key talent for our commercial infrastructure in line with our pre commercial priorities. Lewis will provide more details later in the call. Before that, let me hand the call over to Chuck, who will provide updates on our clinical progress.

Charles McWherter: Thank you, Sujal. I’m pleased to report the progress we made this quarter in our two global Phase 3 studies of seladelpar in patients with PBC. We are now entering what is the most important stage of our Phase 3 RESPONSE study. Our last study visits are imminent and we are diligently closing out activities for final database cleaning and locking followed by unblinding and analysis for top line results. In this, as in all of our development activities, we are committed to the principles of quality, data integrity and efficiency. With the team having many members with experience in pivotal studies, we are well positioned to share top line results on our key pre specified endpoints by the end of September followed by timely, in-depth communication of results at a medical conference and in a publication.

We then intend to complete and submit regulatory applications for approval as soon as feasible. The depth of this seladelpar program is further underscored by the long-term Safety ASSURE study. Currently active in more than 25 countries and 115 research sites it has over 300 patients taking seladelpar 10 mg. We expect ASSURE to contribute to both safety and efficacy data sets supporting our regulatory filings. And will be a source of important information documenting the long-term impact of seladelpar treatment, a disease and symptoms in PBC. We continue to be encouraged by patient retention in both studies and are pleased to report that the most recent quarterly review by the RESPONSE DSMB directed that as before the study can continue without any changes.

Our confidence in the clinical profile of seladelpar stems both from the robust clinical data set we have accumulated from past trials as well as our understanding of the underlying delpar mechanism driving differentiated and clinically important profiles. Seladelpar is the first selective PPARδ agonist or delpar. To regulate critical pathways important in PBC pathology in the liver, including cholestasis and inflammation. Given that this is our last call before top line results and there may be many who are just now trying to learn more about our program I’d like to briefly recap some other parts profile from our prior studies. In our open-label Phase 2 study, among patients taking daily oral seladelpar 10 mg 67% achieved the alkaline phosphatase bilirubin composite endpoint at twelve months previously used by regulators for approval.

And in the ENHANCE study the seladelpar 10 mg arm saw over 78% achieved this end point at three months. In addition, nearly one in three of these patients had ENHANCE normalized alkaline phosphatase levels after three months, despite having on average pretreatment ALP levels of 2.5 times the upper limit of normal. With respect to the key quality of life, result amongst patients with pre specified baseline moderate to severe itch, those taking seladelpar 10 mg for three months had significant improvements compared to placebo in their pruritus intensity using a daily electronic diary. These results give us confidence in seladelpar clinical profile and also set our expectations on the range of outcomes that we hope to achieve in RESPONSE. Perhaps the high point for me on today’s call is the opportunity now to talk about IDEAL, a study that we have been working on initiating over the past few months.

First, let me give you some background for context, beginning in 2020 publications from the Global PBC Study Group have shown that patients having any elevation of alkaline phosphatase above normal are at a greater risk for disease progression than those with normal levels of ALP. Our early market research suggests that in the U.S. greater than 20,000 patients on UDCA may have a persistent ALP level between one and 1.67 times the upper limit of normal. These patients would typically be managed by treatment with UDCA in a wait to fail paradigm, in spite of evidence of the risk of their progression of disease. To make it worse, they wouldn’t be eligible for clinical studies of new second-line agents. This is where IDEAL has the potential to lead the way to gather some critical evidence that this population could benefit from additional treatment with seladelpar.

Given the situation for this overlooked population, we believe that the IDEAL study is groundbreaking for patients. IDEAL is a Phase 3 randomized, placebo-controlled study of patients with a diagnosis of PBC taken a stable dose of UDCA, unless intolerant with ALP levels between one and 1.67 times the upper limit of normal. It is planned to randomize 75 patients two to one daily oral seladelpar 10 mg to placebo the treatment plan for 52 weeks. The primary endpoint will be ALP normalization at 52 weeks. All other eligibility criteria and many secondary and exploratory endpoints will be similar to prior studies of seladelpar prurituswill be evaluated using a daily electronic diary. In a poster, we presented at EASL in June, we reported that approximately half of the patients screened in our prior PBC studies in seladelpar screen failed because of ALP levels that are between one and 1.67 times upper limit of normal.

The prevalence of these patients provide us considerable encouragement regarding the feasibility of enrolling this study. Before I turn the call over to Lewis to discuss our pre-commercial preparations for seladelpar I’ll provide a brief update on the progress in our Phase 2A proof of pharmacology study for MBX-2982. As a reminder and the MBX-2982, a GPR119 agonist discovered and developed by CymaBay is being investigated for its potential to prevent or minimize hypoglycemia in patients with type 1 diabetes. The study is fully funded by the Leona M. and Harry B. Helmsley Charitable Trust, with CymaBay retaining all rights to MBX 2982. In addition to safety and tolerability, the primary endpoints are maximal glucagon release and glucagon area under the curve, MBX-2982 treated patients versus placebo.

The study is now fully enrolled and we expect to share data before the end of the year. Depending on the results from the study we will determine the next steps related to the clinical and regulatory path. With that, I will turn it over to Lewis.

Lewis Stuart: Thank you, Chuck. Over the last few months I have continued to CymaBay’s commercial vision driven by an unwavering focus on PBC and its stakeholders, utilizing a high tough engagement model that is supported by scientific rigor and innovation. During the first half of 2023, we have been diligently building the foundation of our commercial infrastructure. We began by developing a highly specialized distribution model designed to support the patients and their providers throughout their treatment journey. In parallel, we established agencies of record to support seladelpar patient and HCP marketing programs as well as kicked off new programs designed to enhance CymaBay’s corporate brand, media outreach and of course ongoing partnership with all global PBC advocacy groups.

During the second quarter, we were fortunate to recruit and hire key senior commercial leaders in marketing, market access and commercial operations, each of whom come with considerable experience and will have an essential role as we accelerate our commercial build in alignment with key corporate milestones. CymaBay’s success in achieving our commercial vision begins with the science of seladelpar and its potential for resetting the IDEAL goals for PBC treatment. Our secondary research indicates that less than 40% of UDCA treated patients are able to experience a complete response, in other words, normalization of ALP and total bilirubin. Our research suggests there is an opportunity to improve biochemical response and reduce symptoms for a significant proportion of patients not being treated with second-line treatment today.

We’re very excited with the initiation of the IDEAL study and its potential for expanding seladelpar utility in this target population. I’ll now hand the call over to Harish to discuss our financial results. Harish?

Harish Shantharam: Thank you, Lewis, and good afternoon, everyone. The second quarter was another productive one for CymaBay. As highlighted by everyone before me, we made significant progress towards meeting our key objectives for the year related to development, regulatory and pre-commercial planning. In terms of financials, we finished the quarter with a strong balance sheet with cash, cash equivalents and investments totaling $213.8 million as of June 30, 2023. In line with the prior update call we believe that cash and investment on hand are sufficient to fund CymaBay’s operating plan through the third quarter of 2024. We recognize $31 million of collaboration revenue in the second quarter of 2023 following completion of the initial technology transfer to Kaken associated with the license to develop and commercialize seladelpar in Japan.

Off the $34.2 million upfront payment paid by Kaken $2.7 million remains deferred and will be recognized upon completion of the companies ongoing clinical data delivery and CMC development performance obligations. As for our operating expenses, research and development expenses for the Quakers and their June 30, 2023 and 2022 were $19.5 million and $17.9 million respectively. Research and Development expense for the quarters ended June 30, 2023 were higher than the corresponding period in 2022 and were primarily driven by higher personnel costs to support our clinical studies and regulatory activities. As we continue to progress in the late stage development of seladelpar in PBC, we expect our overall research and development expenses to increase in the future.

Turning briefly now to a review of general and administrative expenses. These costs for the quarters ended June 30, 2023 and 2022 were $11.6 million and $5.9 million respectively. General and administrative expenses for the quarters ended June 30, 2023 we’re higher than the corresponding period in 2022 and were primarily driven by initiation of commercial and medical affairs organization build and spend related to pre commercial planning. Overall, our net loss for each of the quarters ended March 31, 2023 and 2022 was $0.8 million and $27.11 million or one cent and $0.31 per share respectively. Net loss for the quarter ended June 30, 2023 was lower than the corresponding period in 2022 due primarily to higher collaboration revenue, partially offset by an increase in operating expenses.

Overall, we expect operating expenses to increase in the future as we continue to execute our development and pre commercialization plans for seladelpar in PBC. Let me hand the call back to Sujal.

Sujal Shah: Thank you, Harish. I’d like to take this opportunity to thank our team here at CymaBay for their tireless efforts. The PBC patient community and their caregivers for their dedication to our work and our investigators, thought leaders and investors for their support. It is the result of these partnerships that we have been able to come one step closer in our journey towards our goal of improving the lives of patients with PBC. We remain laser focused on this objective and look forward to sharing updates related to top line results from RESPONSE before the end of September. We’re now happy to take questions. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question going to the line of Yasmeen Rahimi with Piper Sandler. Please go ahead.

YasmeenRahimi: Good afternoon team and thank you so much for the updates. Congrats on IDEAL. Two quick questions for you. The first one is, I know that you guys have spoken about the IDEAL study in many calls before, but I think a lot of investors are wondering why is the time ideal now especially as we are a couple weeks going into the top line data? And then the second question is directed to — on the commercial side which is, what percentage of the current PBC market would fall under patients that are somewhere between 1 to 1.67, so like that IDEAL population? And then one short mini question at the end if I may squeeze that.

Sujal Shah: All right, thanks for the questions, Yas. This is Sujal. I’ll just start off with respect to the timing of IDEAL I think important for me to highlight as we have in prior calls, our experience in PBC of course dates back to 2015 and with the extensive work that we’ve conducted through Phase 2 development as well as our prior ENHANCE study, the timing is really predicated on an expectation around success. I think it’s also important for me to highlight that it’s many months in the making with respect to planning for, meeting with experts, conducting market research to be very thoughtful about how we might learn from additional data sets that could really reset as we describe potential expectations around treatment and benefits for a broader treatment patient population in the setting of PBC.

So much of the timing I think from our perspective has to do with a planning for success and really being able to deliver a data set as quickly as possible. As you might imagine, these patients that we described who have not really to-date been evaluated in the second-line setting, patients that we believe remain at a higher risk of progression, our patients living with the disease every day. So our attention to this population is 1 for which we’re excited to press forward on now and excited about collecting that data set as quickly as we can to support more knowledge that we may have around these potential benefits for patients. With respect to your second question, maybe I’ll just start off and invite Lewis to provide some additional context.

We continue to conduct a significant amount of market research as you might imagine as we particularly advance beyond RESPONSE top line data towards regulatory submissions and then all the planning that Lewis and his entire team will continue to conduct from a commercial launch readiness perspective. Early market research that we have to date suggests that of the patients, if I just look at the U.S. population that are on UDCA. Post at least twelve months of treatment on UDCA, it could be a population that is almost a third of those that are actually taking UDCA that could be patients that remain in this bucket between one and 1.67 times the upper limit of normal. Lewis, I don’t know if you want to talk a little bit about what we’re continuing to do to get a better sense of this population.

We continue to evaluate really. How these patients flow through their treatment of UDCA, we as I mentioned in my earlier comments about less than 40% of those patients actually experience a complete response. So we tend to segment these patients out as of course as Sujal described, the 20,000 that are partial responders and be in of course and then on into those patients and of course above 1.67 times upper limit of normal which are the incomplete responders. And of course as we’ve defined the second-line market based on poise criteria at 1.67 times the upper limit of normal, that’s about 25,000 to 30,000 patients. So we continue to look at this population will continue to understand exactly how those patients are really experienced not just from a standpoint of liver health but also of course symptom management too.

We think that between both the complete responders and those that. Of course, are partial responders there are probably about 15,000 patients that continue to experience pruritus. So that’s how we’re looking at it now, but we’ll continue to look at that data.

YasmeenRahimi: Thank you, team. And then just in regards to the timing of response, I just want to make sure that everyone is clear on when you’re saying the data is coming by end of September, does that mean it could be any day between now and the last day of September? or option two, it will come end of September? And I’ll jump back into the queue and thank you for allowing me to ask my questions. Sure.

Lewis Stuart: Yes, you know, the expectation has always been that we would release top line data before the end of Q3. I think importantly, we highlight that we want to have appropriate quality and data integrity as we close out final visits, follow-up visits, cleaning and locking the database. I think I would simply leave it as having an expectation that the top line results will come sometime in September.

YasmeenRahimi: Thank you so much and best of luck.

Lewis Stuart: Thank you.

Operator: Our next question is from Steve Seedhouse from Raymond James. Please go ahead.

Steve Seedhouse: Hi. Thanks so much for taking the questions. I have two on IDEAL. One is just — you published some days I think data, I think it EASL on the screen failure rates for your prior clinical studies and it was something like a quarter of screen failures, a quarter of patients screened I believe, in fact actually failed on the basis of having this range of ALP, so like some 200/250 patients let’s say. Does that mean, like are these patients essentially in the care of your investigators and very easy to go back and identify and enroll this study? Rapidly or will this be sort of starting from scratch and enrolling steadily despite that dynamic. And then the second question is just pruritus in this population. Do you have any data and sense of if it’s similar or less prevalent given the ALP levels than it would be in? Um, in the population with over 1.67 times upper limit of normal ALP. Thank you.

Sujal Shah: Yeah, thanks Steve for that question. I think you’ve identified a strategy that of course has occurred to us to. Go back to investigators who would want to be involved in IDEAL, who’ve already screened patients and may know patients who would potentially qualify. So that of course is a lever that we will pull. I would say a couple of comments, when you say it’s of course clinical research it always takes attention and it’s never something that we take we take lightly. I do, I would though add a comment that you know based upon our experience look there’s no competing trials for this population right. This is the first example where we know we’re a sponsor. Is step forward and said we want to study patients with this level of alkaline phosphatase to find out what might benefit might accrue to them.

So I do think we have an opportunity to move forward very. We’re not ready to communicate any timelines yet because we’re basically just off the mark now, but we’re pretty excited about the potential and I must say that the feedback from our experts who we consulted when we first. Conceived of this idea and then developed the protocol as well as the investigators is extremely enthusiastic. So, stay tuned for that. In terms of Pruritus it’s a hard question to answer with — from a perspective of pruritus intensity that’s used in the study, in a clinical research setting because we don’t generally collect with an electronic diary with a 24 hour recall those values. But if you look at our poster that we presented at EASEL, what you can see is you can look at medical history of pruritus and it was very significant in this population.

I wouldn’t want to draw a conclusion about exactly the same one is greater, one is less just because of the limitations and the methodology that I mentioned. It’s really just a patient saying, yes, I’ve been vexed with itching before, but we do think that it’s quite common. And in fact if you look in the literature, you’ll find that generally speaking there’s not a strong connection between levels of alkaline phosphatase and pruritus and in fact published work with UDCA which is a drug that for many patients has a good effect on disease activity, it lowers alkaline phosphatase, it can affect bilirubin, it doesn’t affect pruritus. So while pruritus is a consequence of the disease, it doesn’t travel in lockstep with the level of disease activity.

So this is another interesting aspect for us as we examine seladelpar, which at least initially appears to have effects on cholestatic markers as well as pruritus.

Steve Seedhouse: Perfect. Thank you.

Operator: Our next question is from Kristen Kluska with Cantor Fitzgerald. Please go ahead.

Kristen Kluska: Hi, everyone. Thanks for taking my questions. I know in your prepared remarks you talked about quality of life and symptom burden really being a major issue that physicians are looking to address with new treatments. So given the huge unmet need in addressing pruritus, can you talk about what specifically you would characterize as a win here in the upcoming readout?

Sujal Shah: Yes, happy to start off and answer that question, Kristen. I think important here first to recognize that existing treatment as Chuck mentioned with UDCA, the only existing first-line treatment, it’s never really been shown to reduce pruritus in patients with PBC. And so, as one element of quality of life for patients, you’ve got a first-line treatment that has yet to demonstrate real benefit on improving quality of life from that perspective, the only existing second-line treatment obeticholic acid in the U.S. of course has been shown to cause or worsen itch. So when we look at the totality of the evidence we’ve generated to-date with seladelpar, whether it’s from our Phase 2 studies looking at VAS scores on pruritus or even the scores from the 5D itch scale and PBC 40 questionnaire as well as of course the placebo-controlled benefits we saw on 10 mg seladelpar in ENHANCE at reducing NRS even the responder rates for patients with three and four points or greater reductions in itch on seladelpar versus placebo.

And then — all of that with the evidence that we shared at EASL with respect to Aisle 31 and inflammatory cytokine that’s been associated with it and seeing those reductions correlate with patient reported reductions in itch, we fundamentally believe that the benefits patients have on pruritus with seladelpar, is quite real. And so we think a bit about the win. Clearly, there’s an opportunity to differentiate when you don’t cause or worsen itch from existing second-line treatment, but obviously our aspiration is really suggestive of what we’ve seen to date with seladelpar, which is to see this improvement. And so our expectation is we’ll continue to see this improvement to the degree that we see statistical significance in that measure in RESPONSE.

And the key secondary endpoint of course, it puts us in a much stronger position to go to regulators thinking about opportunities to get seladelpar’s approval potentially for actually treating itch in PBC patients as well. So we think there’s real opportunity based on the profile of seladelpar that exists today, if that’s really confirmed in RESPONSE to take a new dialogue to patients really for the first time in a treatment alternative that has an opportunity to improve quality of life.

Kristen Kluska: Thank you. And can you talk about what additional hiring plans you anticipate after RESPONSE?

Sujal Shah: Well, I can say that to-date we’ve started to build out as we mentioned in the prepared remarks, our medical affairs organization both in house as well as folks out in the field think post top line data with and by the way we’ve also done the same with some of our key commercial hires internally marketing, market access, commercial operations, a host of additional folks internally here now with the company preparing ourselves again for a positive result and ultimately preparing for both regulatory approval and commercial launch post data, you’ll see us only continue to step up those specific app reverts within medical affairs and particularly within commercial. Of course the field force itself would come later closer to approval from a timeline perspective, but we’ll have continued activity here in supportive roles within the company.

Again, all gear towards helping us prepare ourselves for commercial launch if we’re successful in RESPONSE as well as in regulatory submissions.

Kristen Kluska: Okay, thank you and all the best heading into the readout.

Sujal Shah: Thank you, Kristen.

Operator: Our next question is from Patrick Dolezal with LifeSci Capital. Please go ahead.

Patrick Dolezal: Hi, thanks for taking the question. So a couple more on IDEAL, if I may. Could you just speak to any potential kind of label expansion implications of this study or is this kind of more so a study that just might support some marketing efforts? And then as it relates to success in the primary, obviously it’s kind of elk fast focused. How are you guys thinking about variability there? And I mean I’m curious if there were any patients in past studies that were like just above 1.67 X upper limit of normal that may have helped inform the study design there? Thank you.

Sujal Shah: Yes, oh, thank you. Patrick. I appreciate your question. Because ultimately we would think that the potential for label expansion is a is a question down the road, but of course it was very much central to our thinking. Initially, you know we worked very hard to develop the strategy for the study. We had a very concerted effort internally where we looked at the known distributions of alkaline phosphatase, not only in our screening efforts, work that we’ve done in clinical studies, but also accessing registry data where we could look at the distribution. So I think what you’re kind of getting at is, are there any concerns around imbalances or something that’s going to lead you astray where you might have some representation of alkaline phosphatase that’s not distributed across the range that we’re intending to study.

And I think we’ve got very comfortable around the design, the availability and prevalence of the patients both in screen populations and registries. So that I think we’re really set up for success. With respect to the label expansion question, I guess we would just say that, our first intent is really to gather the data what’s the evidence are we convinced that the effects that we expect to see are in fact seen. Then of course we would share those results with the medical community. And then we’ve of course submitted this protocol both to ethics committees and IRB’s as well as to the agency. We had very little feedback from them other than just in a very supportive way. I think right now our focus is on RESPONSE and making sure that we get the first indication locked down those conversations.

The cadence of regulatory interactions as you might imagine is very high at this stage and we would address the issues around ideal and label expansion basically at a later point in time.

Lewis Stuart: The only other thing I’d add Patrick is as you know the label based on RESPONSE would be an indication for treating patients who are either intolerant or inadequate responders to UDCA and with RESPONSE serving as the initial registration study for approval and that label. The idea around IDEAL is to perhaps have a support for a broader patient population of course and that’s part of that key consideration. And I think we’re excited to have an opportunity to learn how patients in this category may benefit from seladelpar.

Patrick Dolezal: Definitely makes sense. I appreciate the thoughts.

Operator: Our next question is from Julian Harrison with BTIG. Please go ahead.

Julian Harrison: Hi, thank you for taking my questions and really looking forward to the response date of next month. On Ideal, I’m curious if you have any feedback yet from payers regarding what they would like to see in terms of clinical data for reimbursement patients between one and 1.67 times the upper limit of normal at the start of second-line therapy?

Sujal Shah: That’s a good question, Julian. Certainly work that’s actually in front of us. We don’t yet have input yet from payers. But when we think a bit about creating the body of evidence that would support the potential benefits in the population, as Chuck mentioned, we spent a considerable time thinking about the design of IDEAL, gathering input from thought leaders in the field, HCP’s and the like — and we think very carefully about how this data set may influence treatment guidelines in the future. So I think with all of that work in front of us, inclusive of getting feedback from payers, these are things that will continue to provide some updates on into the future.

Julian Harrison: Okay, got it. Thanks. That’s helpful. And then beyond IDEAL for those with incomplete response to UDCA but have not yet gone on to pursue second-line therapy, is there a prevailing reason why these patients are not seeking additional treatment now and could that change at all as seladelpar is initially approved supported by RESPONSE?

Sujal Shah: That’s a good question. I think, again, from some of our early market research, it’s very likely a variety of different reasons you think about first of all the exist — the only existing treatment itself dictates to some degree which patients are willing to go on to second-line or I should even say which patients HCP’s believe would be good for the current second-line treatment. And here again I think if we’re successful with seladelpar based on the profile we’ve seen to-date meaningful response rate on the primary composite endpoint to bring patients below 1.67 times the upper limit of normal a meaningful proportion of patients actually fully normalizing alkaline phosphatase, lipid parameters, clinical symptom burden using of course pruritus as a key element of that improving over time and to-date good safety across both non cirrhotics as well as compensated cirrhotics that we’ve studied to-date.

When you think about that overall profile we certainly believe. There’ll be more patients that are not yet on second-line treatment today moving to second-line treatment. And so excited about having additional treatment alternatives for those patients that have perhaps been hesitant or perhaps haven’t been considered for second line as of yet.

Julian Harrison: Okay great. Thanks very much.

Operator: Our next question is from Jay Olson with Oppenheimer. Please go ahead.

Jay Olson: Hi, congrats on the progress and thank you for taking the questions. Can you talk about the rate of normalization you’ve seen with seladelpar in the ENHANCE trial for patients with ALP of above 1.67, the upper limit of normal? And how could we potentially extrapolate that normalization rate to a population of patients with ALP between one and 1.67?

Sujal Shah: Well, at least I’ll highlight ENHANCE here and maybe give some additional commentary. Jay, thank you for the question. I think it ENHANCE as you’ve seen with the data at three months, 10 mg, we saw about 27% of patients normalize ALP. Again these are patients that started above 1.67 times upper limit of normal as you highlighted. The baseline of course in ENHANCE was around 290 units per liter across the enrolled population in each arm. So obviously striking when you compare that to 0 patients out of roughly 55 and placebo that normalized the three months, I think a bit difficult for us to extrapolate here for this population, of course the baseline that ultimately becomes enrolled in ideal will be 1 parameter that has influence.

But I take you back to data we’ve shared and is in our in our published literature around the percent reductions we see in alkaline phosphatase from baseline. That’s — I think largely the guide as we think about the potential to bring patients that are at these lower levels of phospholine fully into the normal range. And remember, these are patients we’re enrolling who despite being on UDCA for at least twelve months are at these levels above normal and below 1.67 times the upper limit of normal. So with what we’ve seen with seladelpar versus placebo, I think we’d expect to continue to see these 45% reductions potentially in this patient population because it’s not a measure that’s been dependent on baseline ALP. And I think that will ultimately dictate what we see in terms of the data set out of IDEAL.

Charles McWherter: Yes. Just, this is Chuck, Jay, thanks for the question. Maybe I’ll just add a — just a fact is that if you take 1.67x upper limited normal, which is in our reference range is right around 196 units per liter and take a 45% reduction that’s below the upper limit of normal. That’s actually 0.9x the upper limit of normal. Not to say that you would — of course, you wouldn’t expect — that’s an at 45% as an average and the baselines are going to be on average, you’re going to get some distribution if patients are to drop out, of course, they’re imputed non-responders. But it just kind of sets you — I guess, it’s encouraging to know that at the top end of the range, if you get the average response, you’re actually normalized.

Jay Olson: Okay, great. That’s super helpful. And I had a couple of follow-ups, if I could. Do you know if the patients who are currently between 1 and 1.67x [ zipper ] than normal are receiving off-label treatment with OCA based on your market research? And if so, what the sort of response would be?

Sujal Shah: Yes. It’s another good question, Jay. We don’t really believe these patients are. In fact, off-label therapy, particularly in the U.S. is not what we believe a very significant proportion of patients. And so I think fundamentally, these are patients that are just left on UDCA as the best alternative and wherever their ALP lands, they are maintained at those levels effectively. So this is what’s exciting about an opportunity perhaps to demonstrate some additional benefit for this patient population.

Jay Olson: Okay. Great. And if I could sneak in one more question. Can you just talk about what percent of patients in RESPONSE have rolled over into the ASSURE study?

Sujal Shah: Yes. We haven’t provided specific numbers there, Jay. But historically, we’ve seen across our prior studies when we’ve had long-term extensions ongoing significant proportion of patients actually roll into the long-term extension over 90% historically. So as we’ve mentioned, ASSURE now has over 300 patients many of which came from prior studies, but of course, many of which now has RESPONSE is nearing completion, have in fact, rolled over into RESPONSE. So it’s a high number, just based on the patient experience from our clinical studies to date.

Jay Olson: Great. Thank you so much. I appreciate you taking the questions.

Sujal Shah: Thank you.

Operator: Our next question is from [indiscernible] with William Blair. Please go ahead.

Unidentified Analyst: Thanks for taking our questions. So just a couple of quick ones. For the IDEAL study, any plans regarding longer-term follow-up or basically, these patients will eventually be rolled over to ASSURE as well?

Charles McWherter: Yes. So currently, we haven’t put in place an opportunity for those patients to roll over and into ASSURE. But we’re at the beginning of the study, I guess we wouldn’t necessarily roll that out. Another option would be to open up an extension of IDEAL. And then depending on things how it play out, they could potentially even transition into commercial. So we’ll have to see. We’re just at the start now. It’s a good question, but I just don’t have an answer for you yet.

Unidentified Analyst: Got it. That’s fair. And since we are on this theme of expansion opportunities, just curious about your thoughts on potentially combination therapies going forward, maybe perhaps like a triplet with 5 rates, happy to hear your thoughts there?

Sujal Shah: Yes. I think there are a number of paths forward as we think about broader treatment for the treatment landscape in PBC. Of course, there will be some patients even after UDCA, and if we’re successful, Seladelpar say as a second-line agent that may require a third agent who have ultimately a highly elevated out [indiscernible]. So we haven’t yet committed Andy, to any specific studies or strategies there, but I can tell you we’ve got a team that continues to think thoughtfully about additional life cycle management as we think about success, hopefully, post RESPONSE.

Unidentified Analyst: Got it. Got it. And I just want to make sure, so for IDEAL, the requirement is basically patients would have to be on UDCA for 12 months, right? So it can’t be six months, it can’t be three months, have to be 12 months?

Charles McWherter: That’s right. We’re following the standard practice. We want to enroll a population that couldn’t be criticized as being something that’s not more traditionally a second line treatment. I would mention though, that, of course, they can be intolerant to UDCA. So if they had levels of alkaline phosphatase between 1 and 1.67, but simply can’t take UDCA, they’ve tried it before and not able to tolerate it they would also be eligible.

Unidentified Analyst: Got it, that’s very helpful. Thank you so much.

Charles McWherter: Thank you.

Operator: Our next question is from Ed Arce with H.C. Wainwright and Company. Please go ahead.

Ed Arce: Great. Thanks for taking my questions and congrats on continued progress with the study. Regarding IDEAL, I know you mentioned this on this call already. Obviously, label expansion is clearly a goal there. I wanted to ask you though, if that would be a reason to also consider further data expansion on label with your quality of life measures regarding pruritus and fatigue, two of which I know you’ve collected and generated data on new trials. Yes, and then I have a follow-up.

Sujal Shah: Yes. I certainly say that’s absolutely a focus of ours as well. As we continue to generate data on pruritus as well as some data that we hope to gather in RESPONSE, particularly from the PBC-40 questionnaire around fatigue. These will continue to be areas that we invest as we better understand Seladelpar’s effects on both of these symptoms of disease and quality of life overall.

Ed Arce: Great. And with regard to pruritus, I wanted to ask if you had a sense from the agency including additional data, how important would it be to have the mechanistic rationale that you have now at least initially with IL-31 and having some of that. Rationale as part of underlying this and supporting the inclusion of some of that data on the future label.

Charles McWherter: Yes. Well, thank you for mentioning that. And, of course, we’re pretty interested and very intensely thinking about IL-31 and the mechanism, which is the mechanism of cholestatic pruritus is really not been understood for decades. I wouldn’t want to speak for regulators. I don’t know how they think about it, are going to think about it. Hopefully, they take a scientific perspective. I think that, of course, pruritus, not only for PBC, but for many different diseases as subjective, it’s nothing that you can measure only the patient can tell you about a symptom. Now moving to something that could potentially be considered a biomarker is really intriguing. I think that would be something — if I were a patient, I would be feel very validated.

I now have something that I can line up what I’m experiencing with what’s something that can be measured as a starting point. And also just to know how well people respond, pruritus is something that fluctuates quite a bit, having something you can measure, I think, is quite interesting. At the end of the day, I really kind of coming to your question, what’s the FDA going to look at? I think they’re going to start with the patient-reported outcome, have we used appropriate methodology or the data robust? Do we have data that supports a sensitivity analysis that confirms not only the key measure of pruritus that we negotiated with them, but also suggest that there’s additional independent ways to measure it. I think they’re going to focus on that first because it’s a patient-reported outcome.

But having something else that’s biochemically or laboratory related, I think will at least let the medical community have some increased confidence what regulators do, we’ll just have to wait and see.

Ed Arce: Right. Great. And then one last one, if I could for Harish, I think you had mentioned in your prepared remarks an expectation for overall OpEx to increase. I realize all of this is related to the commercial build-out and launch preparations, but is there any sense qualitatively or just subjectively to describe the degree of increase this year and into next year. Thanks.

Charles McWherter: Ed the only thing I would add, I think Sujal had talked about, I mean, our infrastructure we’re building both in the medical side as well as in the commercial side for bringing on are in our MSLs and then the commercial will accelerate. We’ve added some key commercial leaders now, which will — and then we’ll bring in more on the other side of data and I think the main, I would say, the lift will be on the — when we bring on the field teams, which will be mostly next year closer to approval. So I think the goal is to make sure we’re we have the best possible launch and to support and have the resources that’s required to support that beyond that, I’m not in a position to give any quantitative specific guidance on what the level of that spend would be, but we’re making sure we’re having the infrastructure that’s needed to support launch.

Sujal Shah: I think what’s helpful there, Ed, as you think about the runway guidance of having cash that takes us at least to the end of Q3 next year, that can help you with some estimates.

Ed Arce: Great, thank you.

Operator: Our next question is from Thomas Smith with Leerink Partners. Please go ahead.

Thomas Smith: Hey guys. Good afternoon. Thanks for taking the questions and let me add my congrats on all the progress. Just a follow-up on pruritus. I guess, based on what we’ve seen from the elafibranor top line, it doesn’t seem like Ipsen will be able to claim an explicit benefit there. I’m just wondering, within all of your recent market research, whether you’ve been able to quantify a clinician prescribing preference for an agent that’s explicitly labeled with that benefit, versus an agent that has data suggesting a trend toward improvement but isn’t explicitly labeled, like all things being equal, have you been able to quantify the incremental benefit of having the pruritus plane on the label?

Lewis Stuart: We don’t have a very specific increase that I can give you, but I can tell you qualitatively, there’s no question there’s a significant impact that we see in overall expectations for utilization based on pruritus and having the claim. I think that couple that with really the fact that patients really tell us, so succinctly how their expectations around symptom burden really aren’t being addressed by the providers. And of course, providers just have not had the tools to address those. And I think that as we think about a new paradigm for treatment, not only will you have certainly providers interested and wanting to utilize Seladelpar in that setting, but there are going to be patients coming in and saying, really, that they want to be able to address this issue that they’ve been played with throughout their — the course of the disease.

So I think what we see qualitatively is an extremely strong preference for an agent that provides that benefit.

Thomas Smith: Got it. That’s helpful. And then I was just wondering if you could elaborate a little bit on some of the sort of pre-NDA preparation activities, things that you can kind of undertake now to try to help prepare for the submission and maybe try to close the gap between the time from top line data to NDA submission?

Charles McWherter: It’s a great question, Thomas. You can imagine that anybody in our industry and our situation who wants to be successful is doing exactly what you’re alluding to. There are a lot of things that are complete in the nonclinical space. We’ve made a lot of progress in manufacturing. We have prior clinical studies that are completed and closed out. We have ongoing studies that are approaching completion for which we have a lot of information we can assemble into all the documentation that has to be assembled written QC made consistent. All of those efforts are in place. We built our teams really around this as being the most important activity in the company. We have supported that with additional expertise, consultants and the like who have experience in this space that can set us up to succeed.

So I think what you’re getting at is that you do as much of the work, you prepare as much as you can in advance so that you’re ready to drop the data in, so to speak. And I think that’s really what everyone does in this situation.

Thomas Smith: Got it. That’s helpful. Thanks again for taking the question.

Operator: Our next question is from Mayank Mamtani with B. Riley Securities. Please go ahead.

Mayank Mamtani: Hi good afternoon team. Thanks for taking our questions and congrats on the progress. So I’m great to see Harish join the team here. So maybe just on that runway comment, if I could, Harish, beyond IDEAL, what additional trials are sort of big in the runway guidance. I know you’ve talked about in the past about cirrhosis population, outcomes, obviously, I’m sure is top of mind and any crossover study to solidify pruritus label. And maybe for Chuck, you guys do get very broad spectrum, liver [indiscernible] going down. Any of your trials and if you work even in IDEAL that looks at the complete biochemical response as an endpoint, which obviously is also is being talked about in that ad board setting, in that the EASL that you talked about. So would love to hear your thoughts on that. And I have a quick follow-up.

Harish Shantharam: Mayank, let me first start with the question on the R&D clinical trial expenses, right? I think you listed some of the key ones there. We spoke about ASSURE, of course, which is where we have enrolled over 300 patients. That’s the long-term study that’s actually currently on — and besides that IDEAL as we talk about, this is something that will expand as we recruit patients in this study. And then the other one is the outcome study that we will have — we’ll be initiating and this is part of our NDA filing. So we need to have that activated and enrolling so we will see that ramp up. So those are the three main ones that I would say from a clinical trial perspective that we would — it would hit it from an [indiscernible] spend lens and those are the main trials out there. Chuck, I don’t know if you want to add on the other part of the question?

Charles McWherter: Yes. So thanks for the question, as you’ve seen the recent presentations, both from us as well as from others, normalization of biochemical parameters is a very appealing idea. The total normalization or if you wanted to call it biochemical remission, of course, is something that’s talked about. But it’s not actually receive the same level of validation and it’s certainly not true that the regulators are there by any means. In terms of whether the medical community will move there, I think that the concept is appealing qualitatively, but I don’t think quantitatively, it’s yet happened. And the issue really relates without getting too far into the weeds, these various parameters to what extent are they true independent covariants to — or how often do they just travel together?

Are you just measuring some of the same thing. What we know from the work from the global PBC study group from the U.K. PBC Group from some of the work coming out of the Italian National Registry as well as the Dutch Registry, that the key ones that there’s really not much debate about our alkaline phosphatase bilirubin is especially a powerful one. And we’re beginning to understand that liver injury, elevated transaminases in particular, ALT, reflects ongoing inflammation and has been linked to fibrosis. In other liver diseases like NASH, but also in PBC using histological evidence with long-term follow-up. So those 3, we believe, have the strongest level of evidence they would get the most near-term embrace, I think, from the medical community.

Clearly, ALP and bilirubin are already to a degree at least, accepted by regulators, although one still needs to look at outcome studies. We believe the data sets that we’re going to produce are going to suggest that ALT is also an important parameter. Beyond biochemical normalization, I think I would also mention that a lot of attention is moving towards noninvasive measures like liver stiffness using Fibroscan or transient elastography. I think that has a lot of merit. Some of the work coming out of Christoph [indiscernible] show as the lead is really suggesting PBC like other diseases, this is going to be an important measure in terms of serial long-term follow up for patients potentially in clinical research and we by the way include this in our long-term studies.

But importantly, I think this is going to be used — is being used, actually, I should say, in medical practice. It’s being used to follow patients. Many clinicians will use it to make decisions and judgments around how patient’s disease are progressing, especially towards cirrhosis.

Mayank Mamtani: Very helpful. I appreciate the comprehensive color there. And then just on RESPONSE, as you know, after seeing another study readout, questions are asked, obviously about we have not seen the full data, but if you could comment on your expectation for discontinuation rate? And also on the NRS score, what placebo response you’re expecting there?

Sujal Shah: Thank you, Mayank. With respect to discontinuation rates, I think historically, we’ve seen rates that have been less than 10%. So that would continue to be our expectation with RESPONSE. Again, we anchor on very significant patient numbers from our prior experience, north of 100 patients in our 1-year Phase II study. And obviously, randomizing 265 patients into ENHANCE even though that study had been terminated early. So I think we continue to have the expectation that we see very similar expectations around discontinuation. With respect to NRS, again, I think all we have with respect to placebo is the data in ENHANCE itself. And so with patients that came into the study with an NRS of 4 or greater where the baseline and placebo as well as the treatment arms was 6.2. We saw this 1.5 point drop in NRS in the placebo arm, that’s today our only expectation and the best data set we have, obviously, here we will have more significant number of patients.

We continue to expect to see roughly 30% of our patients coming into response with at least an NRS of 4 or greater as well. So that’s our historical experience. It’s really the only data point that we have to date.

Mayank Mamtani: Thank you, Sujal. I appreciate you taking our questions and all the best for the data set.

Sujal Shah: Thank you.

Operator: Our next question is a follow-up from Jay Olson with Oppenheimer. Please go ahead.

Jay Olson: Oh thanks for taking the followup. With the increased emphasis on treating PBC early and aggressively, it seems like the IDEAL study is one step closer to line treatment. So just wondering if you could please share your latest thoughts on the pursuit of the first-line indication for Seladelpar in PBC?

Charles McWherter: Well, thanks, Jay. I think we do kind of hold to the sentiment to treat to normal, treat earlier, treat the symptoms. Whether we would actually be frontline, I think, is a little bit further away from us. Our current focus is really trying to get the second line indication and getting data in this additional population going for a frontline therapy has very specific implications for how one would conduct a trial. It would potentially need to be a comparator trial it might need to be an outcome trial because UDCA was approved based upon outcomes. So there’s a lot of different implications. I think Seladelpar can be an enormously beneficial patient to patients if we confirm the profile in RESPONSE. I think it has a really bright future in terms of its positioning it’s availability. But I wouldn’t want to set the expectation at least right now that we’re — that it’s an easy reach to move to frontline therapy.

Jay Olson: Okay great. Thank you so much for taking the followup.

Charles McWherter: Thank you.

Operator: And Mr. Shah, we have no further questions at this time. I’ll turn the call back to you. You may continue with your presentation or closing remarks.

Sujal Shah: Thank you, operator. I’ll close today with just a few thoughts. First, on IDEAL, as we’ve discussed today, work on the design and merits of this important study started by our teams at CymaBay many months ago. And it included gathering input from market research, thought leaders and patient advocacy groups around the world. We’re excited, as we’ve discussed to bring this novel study to many patients with PBC who have been neglected for new treatment alternatives in many ways to date. We look forward to the opportunity to learn from data we collect an IDEAL that we believe may have the potential to reset treatment expectations for a broader patient population that may have an opportunity to benefit from Seladelpar if we’re successful.

Over the coming weeks, our teams are intensely focused on final visits in RESPONSE as well as cleaning and locking the database, continuing rolling eligible patients into ASSURE and of course, conduct across many other clinical and regulatory preparatory activities. Work across all functions in the company has only been accelerating, and we’re proud about the progress we’re making on many fronts. Finally, we’re excited about being back in front of you again before the end of September with top line results from RESPONSE. We hope this study can be a significant event for all that have been part of our journey not the least of which are the patients that may benefit from our work. We hope this may open up a new chapter in the treatment of patients with PBC, and we look forward to talking to you again soon.

Thank you.

Operator: And that does conclude the conference call for today. We thank you all for your participation. I kindly ask that you please disconnect your lines. Have a great day, everyone.