Longboard Pharmaceuticals, Inc. (NASDAQ:LBPH) Q4 2022 Earnings Call Transcript

Longboard Pharmaceuticals, Inc. (NASDAQ:LBPH) Q4 2022 Earnings Call Transcript March 2, 2023

Operator: Good day and thank you for standing by. Welcome to the Longboard Pharmaceuticals Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. . Please be advised that today’s conference is being recorded. I’d now like to hand the conference over to your speaker today, Brandi Roberts, Chief Financial Officer. Please go ahead.

Brandi Roberts: Thank you. And good afternoon, everyone. Welcome to Longboard’s conference call and webcast where we will be discussing our 2022 financial results and providing a corporate review of the past year and an update on the year ahead. Before we begin today, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company including, without limitation, statements about the anticipated timing of commencement, enrollment and completion of clinical trials for our product candidates; the anticipated timing of release of clinical trial data; the market opportunity for our product candidates; and the expected timeframe for funding operations with current cash, cash equivalents and short-term investments.

These statements are subject to risks and uncertainties that could cause actual results to differ. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our most recent reports filed with the SEC. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. With that, I’ll hand the call over to Kevin Lind, Longboard’s President and CEO. Kevin?

Kevin Lind: Thanks, Brandi. And thank you very much to everyone joining us today on our first earnings call. We wanted to provide an update since it’s been just about two years since our IPO and just over three years since we started this endeavor. I’m extremely proud of what our team has accomplished during this time, and I’m incredibly excited about the opportunity ahead of us in 2023 as we expect top line data readouts for both LP352 and LP659. On today’s call, I will provide a high level business update for our potentially best-in-class pipeline. Our Chief Medical Officer, Dr. Randall Kaye, will give key updates on LP352, and then Brandi Roberts will provide an overview of our 2022 financial results before we open the line for Q&A.

As many of you are aware, we spun out of Arena Pharmaceuticals and formed Longboard with the mission of advancing neurology assets with differentiated pharmacokinetics, pharmacodynamics and targeted engagement. To do this, we’ve focused on building a world class neuroscience team, with the ability to strategically select the best indications, design the right clinical trials, and move the assets through clinical development in a differentiated way. Ultimately, our goal is for our compounds to deliver differentiated clinical outcomes that meaningfully impact the lives of patients. What is so compelling to me today is that I’m seeing a lot of the same characteristics that we saw at Arena when I joined. And what drives our team is that our assets have the attributes of great medications that have successfully helped patients.

First, each one utilizes a more precise approach, targeting a well understood mechanism of action. Second, each one has been developed for our target patient population to remove receptor interactions that negatively impact patient safety or are not known to contribute toward efficacy. Third, each one is going after a potential billion plus opportunity with multiple relevant multibillion dollar M&A analogs for similar mechanisms of action. And importantly, each is going after a mechanism of action where the legacy Arena discovery scientists have had success. So, let’s start with LP352. LP352 is an oral, highly selective, centrally acting 5-HT2C superagonist. LP352 is the only 5-HT2C receptor agonist being dose optimized for developmental and epileptic encephalopathies, or DEEs. Given its greater selectivity and specificity, we believe that LP352 could be a treatment for individuals with DEEs who either, one, have not had access to newer therapies, or two are still searching for a safer, more efficacious, easy to add on treatment in the syndromes where current therapies are inadequate.

We’re advancing LP352 in our ongoing Phase 1b/2a PACIFIC study, which is a basket study accepting participants with a range of DEEs. And we expect to have top line data from PACIFIC in the second half of this year. I’ll now turn it over to Randall to go deeper into DEEs, the reason to believe for 352 and why we are so excited about the PACIFIC study. Randall?

Randall Kaye: Thanks, Kevin. Good afternoon, everyone. As Kevin mentioned, we have a really unique opportunity and responsibility to patients given the value that we believe our highly selective molecules have over existing medications in the space. Let’s begin with LP352. Just as a reminder, DEEs refer to a group of severe heterogeneous epilepsies that are characterized by significant developmental delay, treatment refractory seizures, and abnormalities in brain wave function, as an example, EEGs. While there have been significant advances in the treatment of DEEs over the past decade, the unmet medical need of these patients and their families is striking. Most of you are familiar with a few of the DEEs, syndromes like Dravet and Lennox-Gastaut.

But beyond these two, there are overt over 20 other DEE syndromes that are described. And in total, only four of these DEEs actually have specifically approved therapies. These patients still have a significant unmet medical need and multiple seizures that interfere with their development. Physicians and caregivers are looking for a safe, efficacious and easy to add on therapy. And we know that safety is incredibly important to this community. So, why do we believe that LP352 is a potential best-in-class 5-HT2C superagonist for the treatment of DEEs? Well, let’s start with selectivity and precision. 352 is the only 5-HT agonist that has no detected activity in receptors that are associated with significant adverse side effects in the case of 5-HT2B with valvular heart disease and pulmonary arterial hypertension and in the case of 5-HT2A with psychiatric AEs such as insomnia, hallucinations and euphoria.

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Second, preclinical validation. We have reported multiple preclinical models that demonstrate significant reduction in seizure activity and epileptiform events where we expected to, and this is similar to other compounds that are in the class. Third, clinical validation. In our Phase 1 SAD/MAD studies, 352 was demonstrated to have favorable safety and tolerability and with adverse events that are generally consistent with the expected effects of serotonergic medications. And fourth, clinical CSF EEG data. We designed an interesting CNS Phase 1 study to see if we could further characterize 352 in plasma and CSF as well as get to read on EEG or brainwave function. The results confirm that plasma and CSF PK concentrations increased in a dose dependent and consistent manner, and that LP352 demonstrated effects on qEEG activity within the first few doses with a sustained dose dependent effects on this activity after continuous dosing.

This is really important because this indicates that LP352 is getting into the brain as evidenced by receptor engagement. Well, let’s turn to the PACIFIC study. I’d like to start by thanking the epilepsy community as we’re extremely motivated internally by the engagement that we have had with parents, caregivers, physicians, our trial sites, as well as advocacy groups. In my 30 years involved in drug development, I have never seen a more engaged community. As a dedicated company, we take an extremely hands-on approach to the conduct of our clinical trial. We personally conduct in-person visits at every one of our participating sites. We feel this is incredibly valuable in order to ensure the speed of enrollment, as well as the consistency across the seizure analysis.

We also work very closely with the epilepsy study consortium to help review every trial participant and train sites and caregivers on how to categorize and count every seizure for even greater consistency. In the PACIFIC study, we plan to enroll 50 participants, 40 on medication, 10 on placebo, across 30 sites in the US and Australia. And our goal is to have a mixture of patients across multiple DEEs with approximately 10 patients with Dravet, 10 patients with Lennox-Gastaut, and then a combination of 30 patients diagnosed with other DEEs. Well, as we’re out there and we’re interacting with our sites, what do we hear from our study sites? Excitement, commitment, passion. And we’re excited to be part of this journey. And we continue to hear that there’s tremendous remaining unmet medical need across both the DEEs with approved recent medications and the DEEs without any recent approvals.

We are looking forward to the completion of the enrollment of the PACIFIC study in the first half of this year, and presenting top line data in the second half of this year. Let’s now pass it back over to Kevin.

Kevin Lind: Thanks, Randall. As you can tell, we’re very enthusiastic about 352. But this is also an important year for LP659. A significant reason why we started Longboard because we saw the striking results generated by etrasimod and realized that there remained a tremendous opportunity for more selective, next generation S1P receptor modulators with optimized pharmacology, PK and target engagement. In this case, LP659 was designed to be a centrally acting S1P receptor modulator focused on the modulation of the S1P1 and P5 receptors that are known to contribute towards efficacy while having no observable impact on the S1P2 and P3 receptors that have safety concerns and are involved in some of the potential off-target effects, including renal injury, hypertension, pulmonary issues and macular edema.

We believe LP659 could have potential in a number of inflammatory neurological conditions, and we look forward to initiating our Phase 1 shortly. So why do we think 2023 will be an important year for LP659? Typically, Phase 1 data are not particularly telling. But in this Phase 1, we think we will see some really interesting potential data, which could highlight certain differentiating characteristics of 659. First, we obviously will be looking at safety and tolerability. Secondly, we expect to see rapid reduction in lymphocytes, as well as rapid recovery of lymphocytes, which we have seen in preclinical models. Of note, this was a significant advantage that etrasimod has seen over some of the other S1P receptor modulators. We look forward to sharing that SAD data later this year and framing the opportunity and thoughts on initial indications as we get closer to advancing the compound beyond healthy volunteers and into patients.

With that, I’ll pass the call to Brandi to review our financial results. Brandi?

Brandi Roberts : Thanks, Kevin. We ended the year with $67.6 million in cash, cash equivalents and short-term investments. Our 2022 operating expenses were just under $45 million. R&D expenses were $34.6 million for 2022 compared to $19.8 million in 2021. Our 2022 R&D expenses increased over 2021 levels as we progressed both of our programs and added headcount to our team. G&A expenses were $10.2 million for 2022 compared to $8.1 million in 2021. Our 2022 G&A expenses increased over 2021 levels as we continue to build out support functions as appropriate for a public company of our size. Net loss was $43.9 million or $2.56 per share for the full year 2022 compared to $27.8 million or $1.93 per share for the full year 2021. We expect that our expenses will trend upwards during 2023 as we continue the development of LP352 and advance LP659 into the clinic.

We are providing expected guidance for 2023 operating expenses to be in the range of $57 million to $63 million, excluding stock-based compensation. We are focused on spending responsibly as we progress our programs. We have built a very solid team with a lot of expertise and they are able to do a tremendous amount of work. As we prepare for our Phase 3 program with LP352 and, down the road, a Phase 2 for LP659, we are planning for the resources we will need both internally and externally and we’ll bring them onboard at the appropriate time. We want to be able to move our programs through clinical development as quickly and efficiently as possible. I also wanted to take this opportunity to provide a little bit more color on our recent financing.

In February, we completed a $23 million follow-on public offering of our common stock. This financing was the result of receiving several reverse inquiries from strong institutional funds that indicated interest in building a position in our stock. We are happy that we were able to bring some new funds into the Longboard family, as well as increased investments from some of our existing holders who have strongly supported us through our Series A financing in October of 2020, our IPO in 2021, and now our follow-on offering. We are focused on creating long-term value for those who believe in our technology and are supporting us through our journey. We believe that the proceeds from this financing along with our cash, cash equivalents and short-term investments as of year-end 2022 will be sufficient to fund our current planned operations into mid-2024 and, importantly, through our PACIFIC data later this year.

I’ll now turn the call back to the operator to open the line for Q&A. Operator?

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Q&A Session

Operator: . Our first question comes from the line of Neena Bitritto-Garg from Citi.

Neena Bitritto-Garg: I was just wondering if you could remind us of a few things on the PACIFIC study design. So, first, appreciate you giving updates on the number of patients with Dravid and LGS that you expect to have in the study. But can you remind us if you will have both active and placebo patients in each of those subgroups that we can potentially see a difference there. And then, also thinking about what you would consider to be a success from the PACIFIC study. Can you lay out for us what sort of reduction in seizure frequency you would consider to be a success on the top line?

Kevin Lind: Randall, do you want to take both of them in terms of study design, active and placebo?

Randall Kaye: We put, as we noted, 10 patients with Dravet, approximately 10 with Lennox-Gastaut and a mixture of the other DEEs. We have not stratified in this design because of the size of the study. Statistically, we’d expect to see equal numbers of placebo and drug in each of the groups, but that would be the general hope. In terms of efficacy expectations, remember, primarily, this is a safety and tolerability study as the most important of the endpoints. We are looking in the primary endpoint position at reductions in seizure frequency relative to baseline. We haven’t put out a number of what the expectations are. What we’re looking to see is €“ our hypothesis is that the reduction in seizure frequency is similar qualitatively across the DEE spectrum. And I think that’s something that we would be looking more closely at once we actually know what the mixture is per se of different DEEs.

Kevin Lind: I was just going to add, remember, the placebo effect across most of these DEE studies has been in a fairly acceptable band, in the kind of 7% to 20% range along the way. And so, we didn’t feel that it was necessary to stratify.

Neena Bitritto-Garg: Can you just remind us as well of what we should expect and what you’re kind of looking for on the AE side? I know you’re not doing any cardiovascular monitoring in the study, but anything in particular that we should be looking out for there?

Randall Kaye: The AE profile that we’ve seen so far has been relatively benign. The most common adverse event has been headache. To some degree, some mild GI symptomatology. We’d expect to continue to see that to some degree. Again, we’re focusing more on tolerability. Can we get patients on an initial starting dose and maintain them during the overall maintenance period. And thanks for bringing up the point about other adverse events. Since our compound, 352, does not interact with the 5-HT2B receptor, we do not anticipate the typical cardiovascular risks that are associated with other medications out there, such as Fintepla. In fact, in our study protocol, FDA did not require us to do echocardiogram. So, we’re just doing routine monitoring.

Kevin Lind: Remember, from a long term perspective, we fundamentally believe safe and easy to add on to current standard of care is going to be incredibly important. At the same time, we’re balancing out that this is the only 5-HT2C that’s being dose optimized for these patients. And so, what we’re trying to do is really, in this study, figure out where do we want to push, how do we want to push, how do we want to get patients to that optimal dose where we’re balancing both that safety profile that we hope to have as well as that efficacy that comes from dose optimization.

Operator: Our next question comes from the line of Josh Schimmer from Evercore ISI.