Concert Pharmaceuticals, Inc. (CNCE)
Q2 2022 Earnings Conference Call
August 04, 2022, 08:30 AM ET
Company Participants
Justine Koenigsberg - Senior Vice President, Investor Relations
Roger Tung - President and CEO
Marc Becker - CFO
Nancy Stuart - COO
Jim Cassella - Chief Development Officer
Conference Call Participants
Jason Butler - JMP Securities
Leszek Sulewski - Truist
Kevin Strang - Jefferies
Presentation
Operator
Good day, and thank you for standing by. Welcome to Concert Pharmaceuticals Second Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Justine Koenigsberg, Senior Vice President, Corporate Communications and Investor Relations. You may begin.
Justine Koenigsberg
Good morning, and welcome to Concert Pharmaceuticals Second Quarter 2022 Investor Update, which will include a discussion of our recently reported Phase III results for CTP-543 in alopecia areata. Details of the top line data are available in our corporate slide presentation, which can be found in the IR section of our website.
Joining me this morning with prepared remarks are Roger Tung, President and CEO; and Marc Becker, Chief Financial Officer. Nancy Stuart, Chief Operating Officer; and Jim Cassella, Chief Development Officer, will join the team for Q&A.
As a reminder, today's discussion will include forward-looking statements about our future expectations, plans and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our most recent 10-Q filed with the SEC. Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call.
With that, I would now like to turn the call over to Roger.
Roger Tung
Thank you, Justine, and thank you, everyone, for joining us for today's update. During the second quarter, we reported several key positive developments related to our CTP-543 program in alopecia areata, led by outstanding Phase III top line data from the THRIVE-AA1 study.
We're extremely pleased that our THRIVE-AA2 study, released earlier this week, produced similarly impressive top line results confirming and underscoring the rapid high level of efficacy observed with CTP-543 in the treatment of moderate-to-severe alopecia areata. Our team is moving at pace to further review and fully consolidate our clinical and nonclinical data, and we're advancing to filing a new drug application with the FDA, which is planned for the first half of 2023.
Let me describe the market opportunity that we see before us. We envision that CTP-543 will be well positioned to address an important unmet need for a large, underserved population of patients with alopecia areata. Given the extent of patient need and the strong clinical profile we've seen to date with CTP-543, we believe it has blockbuster potential.
Based on current market assessments, there are multiple hundreds of thousands and potentially up to approximately 1.5 million patients in the U.S. with sizable subset having moderate-to-severe disease. With positive and consistent top line results from both THRIVE-AA registration studies, we believe that CTP-543 has demonstrated a highly competitive product profile.
We were one of the first companies to see the opportunity to develop groundbreaking treatments for alopecia areata. And now that we have a positive Phase III data in hand, we're one step closer to providing what we hope will be the best-in-class treatment for patients. Both of the Phase III THRIVE-AA clinical trials were randomized, placebo-controlled, double-blinded, multicenter studies evaluating the safety and efficacy of 543 in adults, aged 18 to 65 years old, who have 50% or greater scalp hair loss. Both trials were conducted in the U.S., Canada and Europe.
Each study included 2 doses of CTP-543, 8 milligrams and 12 milligrams twice daily compared with placebo for 24 weeks. The primary endpoint for both trials is the percentage of patients achieving an absolute SALT score less than or equal to 20 at week 24 of treatment, which we believe represents a clinically meaningful result.
SALT, or the severity of alopecia tool, is a measure to determine the amount of scalp hair coverage by assessing 4 regions of the scalp that contribute to the total score, which ranges from 0 to 100. A SALT score of 0 corresponds to no scalp hair loss, while a SALT score of 100 corresponds to a total lack of hair on the scalp.
In the THRIVE-AA1 study, the primary endpoint met statistical significance in both the 8-milligram twice daily and 12-milligram twice daily dose groups compared to placebo. The treatment difference from both dose groups of CTP-543 versus placebo at 24 weeks had a p-value of less than 0.0001. THRIVE-AA1 also met all the key secondary endpoints in both doses. These key secondary endpoints included statistically significantly higher levels of patient satisfaction with their scalp hair compared to placebo after 24 weeks of treatment and statistically significant hair regrowth as early as 8 weeks.
Similarly, we saw consistent results in THRIVE-AA2, our confirmatory Phase III trial. As we announced earlier this week, the THRIVE-AA2 study met the primary endpoint for scalp hair regrowth and statistical significance in both the 8- and 12-milligram twice-daily dose groups relative to placebo. The treatment difference for both dose groups of CTP-543 versus placebo at 24 weeks had a p-value of less than 0.0001.
Additionally, with regard to our key secondary end points, we again showed highly statistically significant patient satisfaction relative to placebo at both doses of CTP-543. And we continue to see a rapid onset of effect with statistically significant differences from placebo in attaining SALT 20 or better as early as 12 weeks into dosing. Treatment with CTP-543 was generally well tolerated in both trials demonstrating a safety profile that we believe is well suited for its proposed indication.
Based on the results of THRIVE-AA1 and THRIVE-AA2, we continue to believe that CTP-543 has the potential to be the best-in-class treatment for adults with moderate-to-severe alopecia areata. Many patients are impacted with alopecia areata in the prime of their lives. And for many people, the disease causes severe consequences, broadly and negatively impacting their ability to live their lives.
With effective treatments just starting to become available, we hope that awareness for alopecia areata continues to grow and that it's truly recognized as a serious autoimmune disease and not misunderstood to be an inconsequential cosmetic condition. We're on the cusp of great change for the alopecia areata treatment community, and Concert is pleased and proud to be part of it.
Let me pause here and turn the discussion to Marc, who will provide an overview of our financial results.
Marc Becker
Thank you, Roger. As I review our second quarter 2022 financial results, please reference the financial tables found in today's press release. Research and development expenses were $20.9 million during the second quarter of 2022 compared to $20.2 million during the second quarter of 2021. We continue to have clinical costs associated with the open-label extension studies for CTP-543, and as a reminder, the North American extension study is expected to continue until approval.
General and administrative expenses were $4.8 million during the second quarter of 2022 compared to $5.6 million during the second quarter of 2021. The decrease in general and administrative expenses relates primarily to a decreased noncash stock-based compensation.
Our net loss applicable to common stockholders for the second quarter of 2022 was $24 million or $0.59 per share compared to a net income applicable to common stockholders of $5.4 million or $0.16 per share for the same period in 2021. We ended the second quarter of 2022 with $153.7 million in cash, cash equivalents and investments.
This includes $73.5 million of gross proceeds received in June 2022 through the combination of a follow-on equity offering and the exercise of a portion of the warrants issued in connection with our November 2021 financing. Together, we expect that these 2 transactions will extend our cash runway into the second quarter of 2023.
The gross proceeds received through the follow-on equity offering totaled $54.6 million before underwriting discounts and operating expenses, which included the full exercise of the green shoe. The proceeds received through the partial warrant exercise by BVF and RA Capital totaled $18.9 million. We have the potential to receive an additional $70 million upon the exercise of all remaining outstanding warrants that we issued in connection with our November 2021 financing.
With two positive Phase III readouts behind us, we are optimistic about the future opportunity for CTP-543. Alopecia areata is a large and underserved market that affects millions of patients around the world. With CTP-543, we have the ability to make a major positive impact in the lives of these patients. We look forward to our planned NDA submission in the first half of 2023, and this concludes our prepared remarks. We'd be happy to address any questions.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from Jason Butler from JMP Securities. Your line is now open.
Jason Butler
First, can I maybe just ask for you to give a little bit more color on work that needs to be done between now and submitting the NDA including regulatory interactions? And then also how you're advancing your plans to commercialize the product?
James Cassella
Jason, this is Jim. Thanks for the question. I'll answer the first part. So things are progressing. It's great to have both of our positive Phase III trials behind us. We just reported out the top line data for THRIVE-AA2. Obviously, we have more data coming in.
We'll be finalizing our clinical study reports for both THRIVE-AA1, THRIVE-AA2. We have some other supportive studies to wrap up in the Phase I world. These are mostly for labeling purposes, and those studies are being conducted or have been completed, and they're on track to support the filing.
Also on the clinical front, as you know, we are conducting a Phase II durability study, and we'll be able to report out a part of that data in the NDA as planned. And the open-label extension study is continuing as we've rolled over subjects from THRIVE-AA1, THRIVE-AA2 as well as the Phase II subjects. Our intent is to have a large safety database to report in our NDA that will be comprised of the Phase II and the Phase III subjects that have rolled over.
Our goal is to have a large number of patients in there. So as we continue to enroll subjects in there and they gain more time on drug, we'll have a cut of those data and provide those in the NDA as well. So things are progressing very nicely on all the clinical side of things, and we're really on track to file in the first half of next year.
Nancy Stuart
Jason, it's Nancy. I'll answer your commercial question. We are actively laying the groundwork to ensure commercial readiness, and we're doing the appropriate activities to prefer successful launch. And these include things like payer evidence planning to ensure market access, KOL and early adopter mapping, understanding the patient journey, patient advocacy work, medical communications, just to name a few.
Jason Butler
Great. And then just one quick follow-up for Jim. Can you -- just in terms of the extension study, what's patient retention been like, in the -- patients that enrolled earlier and the -- that have been in there for several months? Obviously, we would have a really high enrollment rate or transfer rate from THRIVE-AA1 and AA2, but just what's the persistence been like?
James Cassella
Yes. So Jason, it's a great question. As you note, we have had very high enrollment rate. For example, with THRIVE-AA1, THRIVE-AA2, we've had greater than 95% of the subjects who were eligible to roll over, did roll over. The study has been ongoing for a while. We have patients that have been on drug for over 3 years and a large number of patients have been on drug for over two years.
And obviously, as we count backwards, we've had a large number of patients on for a year. I don't have an exact number for you for the retention rate, but it's been very high. So I would say it's clearly showing the motivation of the patients to stay in the trial and -- but it is something that is very, very high numbers. And I'm sorry, I don't have the exact number because it changes -- the number in this trial changes daily now as we roll the subjects in.
Operator
And our next question comes from Joon Lee from Truist. Your line is now open.
Leszek Sulewski
This is Les on for June. Congrats on the data. Just to kind of look through the data and maybe not to nitpick, but what was the nature of the one SAE that was possibly treatment-related in each trial? I'll start there.
James Cassella
Sure, Les. Yes, so we did have a number of SAEs reported in each trial. Most of those SAEs were determined not to be related to study treatment. But in THRIVE-AA1, we did have 1 subject with possibly related SAE. That was somebody who had a fever and possible meningitis. There were some extenuating circumstances there, but the investigator thought it was prudent to call that possibly related.
In THRIVE-AA2, we had an individual in the 8-milligram BID dose group. Of the 5, we had 1 subject who was possibly related and this individual had pneumonia associated with the flu and the investigator and their judgment thought that this could be possibly related because of the possible effects of JAK inhibitors on immunity. So I think those are the -- well, those are the 2 cases where we had possibly related SAEs. As I said, there were other SAEs in each trial that were determined to be not related to study treatment.
Leszek Sulewski
Got it. That is helpful. And then when looking at achieving absolute SALT score of 20 or less, can you comment on why you think separation versus placebo at the higher dose was -- the 12-milligram dose was higher in your THRIVE-AA1 study versus AA2?
James Cassella
I think there's a couple of points difference between those. I think it's clearly within the range of each other. There are a few points apart. I think the important thing about the findings with the 12-milligram dose as with the 8-milligram dose is that we have very consistent findings between both studies. These data show that we have a high level of efficacy for both the 8- and the 12-milligram BID. I think these are reported to be the highest numbers that have been out there looking at the literature.
So I think they're definitely within range of each other. I think THRIVE-AA2 is a very good confirmatory study. So I wouldn't say that there's a major difference between the 2 findings for the 12-milligram dose, but I think they do support each other as a high level of efficacy.
Roger Tung
Well, I'll also note that the trajectory of response is continuing to move upwards through the 16-, 20-, 24-week time frame. As Jim has reported previously that efficacy continues to rise beyond the 24-week time point to a significant extent. So I think what you may be looking at is just a little bit of a kinetic phenomenon of where that patient group is at that particular 24-week endpoint. But we think that the efficacy of 543 clearly continues to be greater than is estimated by that point.
Leszek Sulewski
Got it. And then what is your strategy for dose selection heading into the NDA filing?
James Cassella
Yes. Our plan from the beginning has been to investigate both the 8-milligram and 12-milligram dose group because in our dose-ranging Phase II trial, we determined that those were the 2 effective doses, and we ruled out another dose that was not as effective. Our strategy all along has been based on conversations early in the program with KOLs who thought that having 2 doses available to patients would provide a lot of flexibility for physicians and for patients to choose the best dose for the subject.
Our plan is to file both doses. We have good data for both and high efficacy for both and then make a determination as to what the recommended starting dose will be. That will be a conversation with the FDA, but we do believe that the 12-milligram dose group is clearly one that has shown consistently higher results than the 8. It shows good benefit to a lot of patients, but generally is better performing than the 8. So obviously, our recommendation would be to start with the 12, but we will have those conversations. Our plan is to file both.
Leszek Sulewski
Okay. Just last one, if I may. You did mention that you will present open-label extension study to with -- along with the filing. Was that something you're going to share with the Street as well prior to NDA submission?
James Cassella
Yes. So, Les, I mean, obviously, we've been focusing on the Phase III program and patients have been rolling over into the open-label extension study. We will need to do a more formal analysis of the open-label extension data, and our plan is to be presenting those data at some future meeting.
Operator
Our next question comes from Maury Raycroft from Jefferies. Your line is now open.
Kevin Strang
This is Kevin on for Maury. Congrats again on the great data. Just wanted to ask with the 2 derisking Phase IIIs in hand, how are you thinking about partnering ex U.S. or even U.S.? And what are some scenarios for what the time line could look like there?
Roger Tung
Thanks for the question, Kevin. We are, in fact, very pleased to have that data with us now. As we said before, our intent is to commercialize ourselves in the U.S. So partnering ex U.S. would make sense. We don't discuss business development specifics, but I think it's safe to say that there's good interest in the asset that is continuing to accrete now that the second Phase III data has been released. And as far as the U.S. is concerned, as Nancy indicated, we're doing work that's necessary to move us in a position to commercialize. We've never ruled out a partnership, but our first intent is to move forward ourselves.
Kevin Strang
Okay. Great. And then just a follow-up on IP going forward. So could you just lay out what you think are possible scenarios and what you think are likely scenarios as you move into filing and launch?
Roger Tung
Well, with respect to our own patents, as you know, we had confirmation from the PTAB of the validity of our dosing and method of use patent, which is valid to 2037, which will be an Orange Book listable patent on approval of CTP-543. There's potential for extension of that possibly out another year, and we're continuing to work on the composition of matter patent, which we -- which is valid, and we believe that there are strong reasons why it should continue to be valid and will continue to be valid. So that's playing out as we go along.
Operator
And I am showing no further questions. I would like to turn the call back over to Justine Koenigsberg for closing remarks.
Justine Koenigsberg
Thank you, Justin. Thank you for joining us this morning. If there are any follow-up questions, please don't hesitate to reach out. This concludes today's call. Thank you.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
For further details see:
Concert Pharmaceuticals, Inc. (CNCE) CEO Roger Tung on Q2 2022 Results - Earnings Call Transcript