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Chiasma Inc (NASDAQ:CHMA)
Q3 2019 Earnings Call
Nov 5, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen and welcome to the conference call to discuss Chiasma's Third Quarter 2019 Operating and Financial Results.

[Operator Instructions]

At this time, I'd like to introduce Dawn Schottlandt, Vice President of Investor Relations. Please go ahead ma'am.

Dawn Schottlandt -- Vice President of Investor Relations & Corporate Communications

Thank you, operator. Today we will be making certain forward-looking statements about events and circumstances, including but not limited to statements regarding our development and potential commercialization of MYCAPSSA, expectations on timing of regulatory submissions and review periods and release of clinical data. Our plans to seek regulatory approval in the United States and European Union, our plans and expectations for US commercial launch, our anticipated cash runway and the size and composition of potential markets for MYCAPSSA if approved. These statements are based on current expectations.

Actual results may differ materially due to numerous risks and uncertainties, including those detailed in the Risk Factors section of our Form 10-K filed with the SEC for the year ended December 31, 2018, as well as our subsequent filings with the SEC. Except as required by law, Chiasma disclaims any obligations of update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

Joining the call today is Raj Kannan, Chief Executive Officer; Bill Ludlam, Senior VP of Clinical Development & Medical Affairs; and Mark Fitzpatrick, our President, who will review our financial results. And now I would like to turn the call over to Chiasma's Chief Executive Officer, Raj Kannan. Raj?

Raj Kannan -- Chief Executive Officer

Thank you, Dawn. I wanted to take an opportunity to welcome Dawn Schottlandt, as our newest addition to the Chiasma team, as a new Head of Investor Relations. And thank you everyone for joining our call this afternoon to discuss our third quarter operating highlights and financial results. The highlight of this quarter was the positive, statistically significant data that we reported in July from our pivotal Phase III CHIASMA OPTIMAL trial of our lead product candidate, oral octreotide capsules, conditionally trade named MYCAPSSA.

Bill Ludlam will briefly summarize the data in a moment, but suffice it to say, we were very pleased with the trial results and are working diligently to prepare our NDA for submission. We remain on track to submit our NDA by the end of this year. Following the top-line data release in July, we completed a successful financing. With the capital we raised, we believe we have sufficient cash resources to execute our planned commercial launch of MYCAPSSA in the US, if approval is obtained and through the planned completion of our ongoing Phase III MPOWERED trial of MYCAPSSA in acromegaly. As you know, with top-line data expected in the second half of 2020. The MPOWERED trial is designed to support an application for marketing approval of MYCAPSSA in the European Union. Mark Fitzpatrick will touch on the financing and our overall financial position in his remarks.

Turning now to our US commercial preparedness activities. We are finalizing our go-to-market plan and have made key commercial hires in advance of our NDA filing, which are highlighted on our management page of our corporate website. These include Dan Thornton, as Vice President, of Patient Services and Market Access. Dan was previously with Chiasma in 2015, 2016. Derek Brown as our new Vice President of Marketing; and Anand Varadan, our Chief Commercial Officer from 2015, 2016, who has been retained as a Commercial Adviser through the anticipated US MYCAPSSA launch in the second half of 2020.

These individuals represent top talent in our industry and we believe we are well positioned for a successful commercial launch with this team. In addition, we strengthened our medical affairs capabilities with the hiring of Scott McConnell as our Vice President of Medical Affairs. Scott was also with the company in 2015 and 2016. And we are delighted to welcome him back. In this capacity, Scott will work with Bill Ludlam to evolve our medical communication strategy, define our additional data generation activities and execute our publication plan, which includes our intent to publish the CHIASMA OPTIMAL clinical data in a peer-reviewed medical journal.

Finally, Scott and Bill will represent Chiasma at the upcoming Annual Acromegaly Consensus Meeting later this month. We look forward to providing additional details on our go-to-market plans for MYCAPSSA at the JP Morgan Conference in January. At this point, I'd like to turn the call over to Bill Ludlam, who will briefly recap the compelling results from the CHIASMA OPTIMAL trial that we reported in July. Bill?

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

Thanks. Raj. As previously communicated, the CHIASMA OPTIMAL study was a randomized double blind placebo-controlled nine-month clinical trial of octreotide capsules that was conducted under a Special Protocol Assessment or SPA agreement with the FDA. The trial enrolled 56 adult acromegaly patients, whose disease was biochemically controlled by injectable somatostatin analog, defined as an average IGF-1 less than or equal to 1.0 times the upper limit of normal at screening. The patients also had confirmed active acromegaly following their last surgical intervention based upon an elevated IGF-1 at that time of greater or equal to 1.3 times the upper limit of normal. As we have previously shared, the study met its primary endpoint and all four secondary endpoints with statistical significance. Octreotide capsules appeared safe and well tolerated in the study population and no new or unexpected safety signals were observed. As you know, while the trial was carefully designed and conducted to meet the SPA-agreed regulatory requirements. The primary endpoint and secondary endpoint, should be viewed holistically to determine the clinical relevance that practicing physicians will infer from the results.

Today, I would like to focus on some of the more clinically relevant information to practicing physicians that we learned from the trial. We see that the mean IGF-1 of all 28 patients treated with MYCAPSSA was maintained within the normal range of 0.97 times, the upper limit of normal at the end of oral treatment, compared to 1.69 times the upper limit of normal for the placebo group. This is clinically relevant in that the population of patients transitioning from injectable SSAs to octreotide capsules exhibited a consistent treatment effect.

By contrast, the population of patients that transitioned to placebo lost biochemical control, suggesting the observed control for patients treated with MYCAPSSA was attributable to our product candidate. We also see that 75% of patients on MYCAPSSA achieved an IGF-1 less than or equal to 1.1 times the upper limit of normal at the end of treatment. This is clinically important, as we believe these patients would likely continue on the oral drug in clinical practice.

Please remember that given the known variability in IGF-1 levels, the value of 1.1 times the upper limit of normal, is well within the range a clinician would expect that controls patients IGF-1 level to fluctuate. Further, we note that 75% of patients successfully completed the trial on octreotide capsules. In other words, did not require rescue by their prior injections of either octreotide LAR or lanreotide depot. And of these 90% elected to continue into the open label extension phase on MYCAPSSA. We believe these findings demonstrate patient and physician satisfaction with MYCAPSSA and are indicative of what will be seen in medical practice if approved. Finally, we are excited to remind everyone that the primary endpoint which was rigorously designed to support potential regulatory approval was the proportion of patients who maintain biochemical response in each arm. This was defined as the average IGF-1 at weeks 34 and 36 being fully within normal limits and anyone not completing either treatment arm on oral treatment for any reason being counted as a non-responder.

Here, we see that 58% of patients on MYCAPSSA maintained biochemical response versus 19% on placebo with a p-value of 0.008. As a company, we are committed to generating additional clinical relevant data that has the potential to impact medical practice. We are pleased to announce that we are planning a multi-year US disease state registry, which is scheduled to begin enrollment early next year. We expect that this registry will involve over 40 US sites and yield important real-world data on treatment burden and effectiveness of various treatments.

Turning briefly to our second global Phase III clinical trial, MPOWERED. This trial continues to progress as planned. To briefly recap MPOWERED is being run under a protocol accepted by the EMA. The trial is a global, randomized, open and active controlled 15 months trial intended to support marketing approval in the European Union. Chiasma completed enrollment of 146 adult acromegaly patients in the trial in June 2019. Of these, the EMA required a minimum of 80 patients, who are responders to octreotide capsules per the protocol following a six-month run-in were randomized to either stay on MYCAPSSA will return to their prior SSA injectables and then followed for an additional nine months.

To date, we continue to see greater than 60% of patients randomized at six months as responders per protocol to octreotide capsules. The trial is designed to evaluate the proportion of patients who maintain their biochemical response to octreotide capsules compared to patients, treated with standard of care, injectable somatostatin analogs. Patient reported outcomes, in patients treated with octreotide capsules versus injectable SSAs is also being assessed. We remain on track to release top-line data from the MPOWERED trial during the second half of 2020.

At this point, I will turn the call over to Mark Fitzpatrick to review the financials. Mark?

Mark J. Fitzpatrick -- President

Thank you, Bill. General and administrative expenses were $4.1 million for the quarter ended September 30, 2019 compared with $2.3 million for the same period of 2018. The current period results as compared to the prior year period include -- increased compensation-related expenses, the initiation of pre-commercial activities and increased insurance premiums, which were primarily offset by a reduction in legal costs.

Research and development expenses were $4.1 million for the quarter ended September 30, 2019, compared with $5.5 million for the same period of 2018. The decrease over the prior-year period was primarily driven by a decrease in clinical trial costs and was offset by increased manufacturing and regulatory cost.

For the quarter ended September 30, 2019, net loss was $7.7 million or $0.20 per basic share compared with a net loss of $7.5 million or $0.31 per basic share in the same period of 2018. Cash, cash equivalents and marketable securities as of September 30, 2019 were $102.7 million compared with $41.7 million, at December 31, 2018. We completed a follow-on offering of common stock that raised net proceeds of approximately $52.3 million in the third quarter, which further strengthened our balance sheet and lengthened our runway beyond the expected release of top-line data from the MPOWERED trial in the second half of 2020 and into our planned US launch.

I will now turn the call back over to Raj.

Raj Kannan -- Chief Executive Officer

Thanks, Mark. Before opening the call to questions, I would like to restate that, we do plan to share additional information, regarding our go-to-market plans in the US with investors during the upcoming JP Morgan Healthcare Conference in January. As we previously shared, we also plan to provide additional insights into our company's strategy for long-term growth during the first half of 2020.

That concludes our remarks, we will now open the call to your questions, operator.

Questions and Answers:

Operator

Certainly, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Yasmeen Rahimi of Roth Capital. Please go ahead.

Paul O'Brien -- Roth Capital -- Analyst

This is Paul O'Brien on for Yasmeen. Hi team, two questions today. So first, can you walk us through how patients were titrated in 01 and OPTIMAL, any its translatability into real-world clinical practice? Like how does this compare with current SSA injectables. And then I have a follow-up.

Raj Kannan -- Chief Executive Officer

Thanks. Bill, do you want to take that question on the titration in 01 and 303 [Phonetic].

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

Yeah, you bet. Thanks for that question. So really, the overarching important principles are two; one that in both the 01 study, the original study published in 2015 in JCM. And now, the 303 trial placebo-controlled trial. In both trials patients were started on 40 milligrams, titrated up to 60 at clinician's discretion and then ultimately to 80 milligrams if needed. And the important point here is that it's per clinician discretion and could be based on biochemistry could be based on symptoms.

And so from that perspective how patients are titrated in the trials really will reflect real-world, where clinicians will work with patients and base it on the biochemistry and their clinical experience.

Paul O'Brien -- Roth Capital -- Analyst

Okay, great, thanks. And just a quick follow-up about pituitary centers. I was just wondering how many of these centers exist in the US? What percentage of them -- what percentage of total acromegaly patients they treat. And I was also just curious what the -- yes, if you could just say. And then what the -- are they aware of the MYCAPSSA therapeutic profile. Thanks.

Raj Kannan -- Chief Executive Officer

Yeah, thanks, thanks for that question. Bill, do you want to take part of that question and then I can weigh in on the rest of the question.

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

You bet. So in very broad strokes, you can think of a pyramid. And a matter of fact, we have a schematic of that in our corporate deck. And at the top of the pyramid, is a relatively small number of really the top KOL-type centers, where the top publishers, very large patient volumes are. And depending on how you define them, where you draw your cut-off there is maybe 10 to 20 of those sites. Then there'll be a larger portion, sort of the next tier down, which would be regional medical expert centers, where they are often referral centers. They see a lot of pituitary patients and they also published and have an academic presence. And I would really consider those top two layers, as being the pituitary centers. And then you start getting to essentially -- or places that I think the clinicians themselves would consider themselves are community centers. Sometimes large volume for pituitary patients but community centers that don't have direct academic affiliations.

Raj Kannan -- Chief Executive Officer

Yeah. And if I could add a comment I think, the pituitary centers, say roughly about 30 to 40 of them, that would be within our sort of target list, which essentially very much focused on the newly diagnosed patients for surgery. And then we would work with the regional referral centers and making sure that the pituitary centers are aware of our product profile, are aware of the option, but most of the management and the decisions would be at the regional referral centers or the community centers as Bill pointed out. And to your last question, in terms of the awareness. I believe we would say a large percentage of the thought leaders within pituitary centers, treatment centers are well aware, because of the sites that we had involved in the US and the close association that we've had over the years with the Endocrinology community.

Paul O'Brien -- Roth Capital -- Analyst

Okay, great. Thanks for your answer. And congrats again on a great quarter.

Raj Kannan -- Chief Executive Officer

Thank you.

Operator

The next question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi, thanks for taking my questions. I have a few. So, but first -- by talking to patients that are already on treatment, can you help us think through the commercial plan, just in terms of it would make sense to do the equivalent of a DTC, but just given the limited patient population, how would you reach the patients yet to create awareness of MYCAPSSA and that's my first question?

Raj Kannan -- Chief Executive Officer

Yes. Great question, Brandon. Obviously as you mentioned, the DTC efforts are not going to be cost effective at all. But however a DTP, focused direct-to-patient campaign. As you know the Acromegaly Community is relatively a close-knit community. There is multiple social media platform that we know of where they have exchanges, the Acromegaly Community run by Jill Sisco, in particular, for example, has a significant number of acromegaly patients that are in contact with each other in terms of taking tips and sort of strategies to improve their own quality of life. So we have avenues that we have earmarked and it's still a work in progress to be able to start reaching those patients that are not within a community or within a social media platform. And we are actually right now working in identifying those, so that we can get the information to them so that they can have informed discussions with their physician, when it comes to treatment choices.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Thanks. At your R&D Day, the speaker you had who actually had acromegaly, she spoke about the potential for the FDA to schedule a patient advocacy meeting potentially in January next year. Can you update us if that actually has been finalized, and if so, what we may expect to come out of that meeting?

Raj Kannan -- Chief Executive Officer

Yes. so, Brandon, we have not heard a confirmation on a date. I do know that we had a confirmation that the FDA accepted the application to hold the PFDD on acromegaly, so, which is a positive development. However, as soon as we get the date we'll be able to know, who's been invited and bring the stakeholders on what they plan to accomplish. But it's definitely a positive development from a regulatory agency perspective and for the patients who face significant treatment burdens.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Great, thanks. And then one more if I may Raj, you touched on what we're going to hear in 2020 and I don't want to get too far ahead about those here. But how should we start thinking about Chiasma and TPE as a platform. Obviously MYCAPSSA being the first product, had a very good commercial opportunity, but as does the technology behind at. Any color there would be great.

Raj Kannan -- Chief Executive Officer

Yes, So, Brandon, thanks for the question. So I think, the company does have a technology platform, which was a genesis for the company's formation in the first place and octreotide was the first capsule that we identified as the product that we would develop through this technology delivery platform. That being said, I think the number one focus for the company right now is to get the launch, right and to be -- to have a successful launch. And as we continue to move forward beyond the filing and the FDA acceptance, I think it will be a good time for management to start detailing out the plans in terms of what drives the mid to long-term growth for the company and that's why we had positioned that as the first half of 2020 discussion with investors.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Understandable. And thank you very much for the color.

Raj Kannan -- Chief Executive Officer

Thanks, Brandon.

Operator

The next question comes from Ted Tenthoff of Piper Jaffray. Please go ahead.

Edward Tenthoff -- Piper Jaffray -- Analyst

Hi, everybody. Can you hear me OK?

Raj Kannan -- Chief Executive Officer

Yes, we can. Hi Ted.

Edward Tenthoff -- Piper Jaffray -- Analyst

Thank you. Hi, there, thanks for the update. And a very exciting time for the company. I just wanted to double check and I apologize if this was asked, but with respect to Europe, very clear on the plans for the US. What are the plans for filing with the EMA and potential commercialization in Europe? Thank you.

Raj Kannan -- Chief Executive Officer

Thanks, Ted. Good question. So, right now our MPOWERED trial, which has been designed with the European Union in mind for marketing approval is scheduled to readout in the second half of 2020. We hope to file in the first half of 2021, which will take us to an approval in somewhere in the first half of 2022. So we are a little behind from the US in terms of the launch and approval. And as you know, in Europe, there is also the pricing and reimbursement, which could also have a lack period. So we're working in terms of thinking about our potential options, in terms of how best to commercialize and what adds the best value to our investors in terms of Europe and other ex-US markets.

Edward Tenthoff -- Piper Jaffray -- Analyst

Great, that's very helpful, thank you so much.

Raj Kannan -- Chief Executive Officer

Thanks, Ted.

Operator

The next question comes from Douglas Tsao of HC Wainwright, please go ahead. Douglas, you are in live. Please go ahead. Perhaps you're in mute. It seems like we've lost Mr. Tsao. [Operator Instructions] The next question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Kumar Raja -- Brookline Capital Markets -- Analyst

Hi, congratulations on the quarter. Thanks for taking my questions. First, maybe on the time-line with regard to the filing, given that you expect a six-month review, what are your expectation in terms of the time-line with regard to when you will hear back regarding the AdCom as well as the time line for the labeling discussions, as well as what is your expectation in terms of the label? And they may be -- OK, go ahead.

Raj Kannan -- Chief Executive Officer

Yes, thanks Kumar. Good questions. So as we have stated previously, we remain on track to file in this quarter. We've always said that by the end of this year and the team is really focused on making sure that we absolutely do the best job we can in submitting a quality NDA. And if you take that assumption forward, as you know, this is a resubmission which then puts us on a timeline of about six months review, which we expect a PDUFA decision in the middle of 2020. So if we file at the end of December, you would expect a PDUFA decision by the end of June. So that basically the time-line, in terms of the question on label, the label would reflect what we put -- what we did with our clinical trial. So, as you recall the clinical trial was taking patients who were on SSA injectables, controlled and tolerated them and we put them on MYCAPSSA versus placebo. So our label, we expect our label to reflect the same dynamics of a clinical trial in terms of being indicated for patients who are on SSA injectables.

So that's the label that we expect again, these are all FDA review topics, which we expect to have negotiations with them closer toward the end of the PDUFA period, but the FDA is always open with us in terms of potentially having an ongoing dialog. And then the last question was about the AdCom. We have no evidence at this point in time that the FDA would conduct an AdCom. So anything else Bill or Mark that you know a bit I haven't characterized here.

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

It's great.

Kumar Raja -- Brookline Capital Markets -- Analyst

Okay. And maybe a question on the timeline with regards to full data presentation/publication in a journal. And also, what can you share with regard to the open label extension study, how is it progressing and what happens to the patients, with the open label, say, they are not yet told?

Raj Kannan -- Chief Executive Officer

Yeah. So great questions. I'm writing them down. And if I missed one of them Kumar, let us know. So the first one in terms of the time-line for data publications, obviously, we have released many of the data points that we've been were useful and valuable to investors, we had kept a few of those data points for dissemination at a major congress. The ENDO which is the flagship congress for endocrinology, is at the end of March where we intend to present new scientific data that is meaningful to thought leaders and clinicians.

So you will see that as the first step of our data presentations that we have not announced publicly. Importantly, our publication that we're working on is the CHIASMA OPTIMAL trial. This is a pivotal trial that we hope to publish in a peer-reviewed journal, which will come, hopefully again we can submit it, the Publishing and Printing is not within our control, but we expect that sometime in the first half of 2020 that's on the best -- in the best case.

And in terms of how patients are doing on the open label extension and for patients who are not controlled, I'll hand back to Bill. Bill, do you want to characterize that?

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

Sure. I'll just say that the open label is progressing as planned. No, new information to discuss at this point.

Kumar Raja -- Brookline Capital Markets -- Analyst

Okay. Maybe finally if you guys can provide us some insight with regard to any payer versus physician interactions you had and what kind of feedback you're getting so far? Thank you.

Raj Kannan -- Chief Executive Officer

Yes. Thanks, Kumar. I think as we have stated previously, physicians are becoming increasingly aware of the treatment burdens in particular and they see this as a valuable option for their patients. And so that is very encouraging and when it comes to payers, there is no evidence that we see that they would treat MYCAPSSA any differently than the SSA injectables, which as you know enjoys broad coverage and reimbursement on the specialty tiers. So we expect payers to support MYCAPSSA as a differentiated option for their members, member patients who are on SSA injectables. Obviously, there's a lot of factors that go into it in terms of how we price it in particular and our distribution strategy, but those will be made more granular as we get closer to approval.

And surely as soon as we get approval, we certainly plan to announce the price, which will be a factor in how payers will view this.

Kumar Raja -- Brookline Capital Markets -- Analyst

Okay, great. Thank you.

Raj Kannan -- Chief Executive Officer

Thanks, Kumar.

Operator

This concludes the question-and-answer session. I'd now like to turn the conference back over to Mr. Raj Kannan for any closing remarks.

Raj Kannan -- Chief Executive Officer

Thanks, operator. So, I would like to take the opportunity to reiterate our commitment to improving the lives of patients with acromegaly by acknowledging Acromegaly Awareness Day that was recently held on November 1st. Thank you again for joining us and we look forward to our next quarterly update call in March. Have a great evening.

Operator

[Operator Closing Remarks]

Duration: 32 minutes

Call participants:

Dawn Schottlandt -- Vice President of Investor Relations & Corporate Communications

Raj Kannan -- Chief Executive Officer

William Ludlam -- Senior Vice President Clinical Development and Medical Affairs

Mark J. Fitzpatrick -- President

Paul O'Brien -- Roth Capital -- Analyst

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Edward Tenthoff -- Piper Jaffray -- Analyst

Kumar Raja -- Brookline Capital Markets -- Analyst

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