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Chiasma Inc (NASDAQ:CHMA)
Q4 2019 Earnings Call
Mar 16, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome the Chiasma Inc. Fourth Quarter and Year End 2019 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dawn Schottlandt, VP, IR and Corporate Communication. Thank you Dawn, you may now begin.

Dawn Schottlandt -- Vice President, Investor Relations and Corporate Communication

Thank you, operator. Today we will be making certain forward-looking statements about events and circumstances, included but not limited to statements regarding our development and potential commercialization of MYCAPSSA, our expectations on timing of regulatory review and release of clinical data, our plans regarding regulatory approval in the United States and the European Union, our plans and expectations for US commercial launch, our anticipated cash runway and capital needs 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 today for the year ended December 31st, 2019, as well as our subsequent filings with the SEC. Except as required by law, Chiasma disclaims any obligation to 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 and 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. Thank you everyone for joining our call this afternoon to discuss our recent operating highlights, 2020 anticipated milestones and the fourth quarter and full year 2019 financial results.

The highlight of this past quarter was the resubmission of the NDA for our lead product candidate, oral octreotide capsules, conditionally trade named MYCAPSSA for the maintenance treatment of adults with acromegaly. We resubmitted the NDA in late December and we were extremely pleased to be notified by the FDA of its acceptance in early January. This was a key milestone for Chiasma and highlighted a year of significant progress for the company that included the positive results of the CHIASMA OPTIMAL Global Phase 3 Trial and the completion of enrollment of the MPOWERED Phase 3 Trial, which as you know is designed to support an application for the marketing approval of MYCAPSSA in the European Union.

As I look at our anticipated milestones, 2020 has the potential to be a transformational year for Chiasma. With the acceptance of the NDA resubmission, the FDA singed a PDUFA target action date of June 26, 2020. We were scheduled to present additional clinical data from the CHIASMA OPTIMAL trials at ENDO 2020 that would offer relevant clinical insights to healthcare providers. As you may know, the ENDO conference in San Francisco was canceled. We are currently working with the endocrine society and expect to identify new ways to share our seven accepted abstracts with the scientist and medical community in the near term.

Let me take a few minutes to provide a high level overview of our planned commercial launch strategy and why we believe it is differentiated from most traditional rare disease commercial launches. First, we believe acromegaly patients treated with injectable somatostatin analogs are relatively readily identifiable. Our research indicates that 90% of our targeted population are treated by less than 1,000 accounts, primarily composed of endocrinologist. We expect that this will enable us to efficiently use our resources in identifying target patients, while we focus on developing a highly differentiated patient services platform.

Second, the active ingredient in MYCAPSSA, octreotide, is a well-known standard of care where endocrinologist are familiar with and have prescribed in an injectable form for over three decades. We believe this will allow us to focus our healthcare provider education on the potential benefits of a daily oral therapy rather than on education about octreotide itself. Third, we believe payers may view MYCAPSSA as an important and differentiated option that addresses many of the significant burdens faced by patients on SSA injectables, while minimally impacting their overall drug budget. And lastly, we believe that the U.S. market for MYCAPSSA is potentially addressable with its specialty, small orphan, drug customer facing team ranging between 30 and 50 people. Overall if approved, we believe MYCAPSSA has unique characteristics that gives us confidence on executing a successful launch. As we noted before, pending FDA approval of our NDA and one of our two planned API manufacturing supplements to secure commercial supply, we plan to launch MYCAPSSA in the fourth quarter of 2020.

Now, turning to our plans for driving mid to long term growth for Chiasma, we plan to announce in late 2020 our pipeline expansion plans to develop one or more oral therapies utilizing our technology platform designed to improve the lives of patients suffering from other debilitating diseases that are currently being treated with injectable therapies.

At this point, I would like to turn the call over to Bill Ludlam to discuss key highlight of our medical and clinical organization. Bill.

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

Thanks Raj. I'm excited to share with you the substantive progress we have made so far this year. We have completed the hiring of our MSL team, began enrolling in our acromegaly registry, and continued to progress on the publication plans for the CHIASMA OPTIMAL manuscript.

Let me start with our MSL team. We made some great hires and were able to fill out this critical team early in the year. Our MSLs will play a key role in engaging the scientific and medical communities. The team will focus on educating healthcare professionals on the unmet need of acromegaly patients, which includes a significant burden of existing treatments and engaging in appropriate scientific exchanges. I believe we have hired great talent that gives us a top tier MSL team.

Another highlight was the initiation of our registry study. I am pleased to report that we have initiated enrollment in a multi-year US Disease State Registry called The Management of Acromegaly Registry or the MACRO registry. The registry is actively enrolling acromegaly patients currently on existing maintenance therapies. We expect that this registry will involve over 40 US clinical sites, hundreds of patients and yield important real world data on the current standard of care and the treatment burdens and effectiveness associated with various treatments. Even though we are in the early days of enrollment, I am very pleased with the physician and patient interests that we have received thus far.

Turning to ENDO 2020, the conference was canceled due to concerns over the spread of the coronavirus. We expect to provide more details in the weeks ahead on some exciting presentation opportunities that are developing and our plans to share the additional CHIASMA OPTIMAL trial data that was included in the seven accepted abstracts that were posted on the ENDO website. We believe it is important to share this relevant clinical data widely with the medical community and we are committed to doing so. Our team is intently focused on completing the CHIASMA OPTIMAL Trial Manuscript and submitting it for publication and a peer review journal. We expect to have that data published in mid-2020.

Turning briefly to our third global Phase 3 clinical Trial, MPOWERED, this trial continues to progress as planned. Randomization was completed in January with 63% of patients randomized following a six month run-in phase as responders per protocol to octreotide capsules. We remain on track to release top line data from the MPOWERED trial during the fourth quarter of 2020. We look forward to the MPOWERED data read-out as this comparator study has the potential to provide us with incremental clinically relevant data such as a head-to-head comparison between the efficacy and safety of MYCAPSSA versus injectable SSAs, as well as the assessment of patient reported outcome data in these two groups. As a reminder, MPOWERED is designed to support a potential request for an EMA marketing application.

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 $5.9 million for the fourth quarter ended December 31, 2019 compared with $2.7 million for the same period of 2018.

General and administrative expenses were $15.1 million for the year ended December 31, 2019 compared with $10 million for the year ended December 31, 2018. The increase for both periods was primarily driven by the initiation of pre-commercial activities and compensation related expenses which were primarily offset by a reduction in legal expenses.

Research and development expenses were $6.4 million for the fourth quarter ended December 31, 2019 compared with $5.7 million for the same period of 2018. The increase was primarily driven by increased regulatory and manufacturing costs, and offset by decreased clinical trials costs. Research and development expenses were $22.5 million for the year ended December 31, 2019 compared with $22.4 million for the year ended December 31, 2018. Though the change was immaterial, we observed an increase in regulatory and manufacturing costs, offset by a decrease in clinical trials cost.

For the quarter ended December 31, 2019 net loss was $12 million or $0.29 per basic share compared with a net loss of $8.1 million or $0.32 per basic share for the same period of 2018. For the year ended December 31, 2019 net loss was $36.3 million or $1.06 per basic share, compared with a net loss of $31.3 million or $1.28 per basic share for the same period of 2018.

In 2019 Chiasma completed two public offerings of common stock that raised aggregate net proceeds of approximately $84.6 million. Cash, cash equivalents and marketable securities as of December 31, 2019 were $92.4 million compared with $41.7 million at December 31, 2018. We believe we have sufficient cash resources to fund our operations as currently planned through at least 2020, including key milestones such as the planned FDA approval of my MYCAPSSA, the anticipated US commercial launch and the release of top line MPOWERED Phase 3 results. However, in order to fund our operations beyond 2020, we will require additional capital. We plan to continue to explore potential financing options that may be available to us to meet our capital needs.

I will now turn the call back over to Raj.

Raj Kannan -- Chief Executive Officer

Thank you, Mark. Before opening the call to questions, I would like to make a couple of comments. At Chiasma we realized the current macro environment is challenging and volatile with many uncertainties. We are closely assessing and monitoring any impact this could have on our business and we plan to take appropriate actions where we can, to ensure Chiasma remains on track to achieve our milestones this year. Despite the current macro environment, I continue to believe 2020 is going to be a potentially transformational year for Chiasma. We are keenly focused on executing on our goals, including the potential approval of MYCAPSSA in the U.S. for acromegaly patients, followed by a strong beginning to our planned commercial launch.

This concludes our remarks. We will now open the call to your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Brandon Folkes -- Cantor Fitzgerald L.P. -- Analyst

Hi. Thanks for taking my questions and congratulations on all the progress in 2019. Can you perhaps just elaborate on the manifestering approvals required post the June PDUFA; what we should know there, what we should think about that is quite simple that you get approval and you know post that will send off key manufacturing approvals. Just any additional color will be helpful.

And then maybe just following on from that, how should we think about commercial build in 2020? I know you mentioned you had brought on some people, but additional color there would be great as well? Thank you.

Raj Kannan -- Chief Executive Officer

Brandon, this is Raj. Thanks for those questions. Could you just repeat that word about commercial in 2020, commercial what?

Brandon Folkes -- Cantor Fitzgerald L.P. -- Analyst

Quota, spending.

Raj Kannan -- Chief Executive Officer

Spend, OK, got it. So let me have Mark respond to the manufacturing approval supplements, and then I'll take the commercial question for 2020.

Mark J. Fitzpatrick -- President

Yeah Brandon, thanks. So following the anticipated approval, we expect to submit manufacturing supplements to provide for two additional API manufacturing sites that are not referenced in the resubmission. We have procured API from these two sites in the past and we are currently procuring API from both of these sites in anticipation of NDA approval. We expect to have adequate product availability to support a planned commercial launch in the fourth quarter of 2020, albeit subject to FDA's timely approval of our NDA in either of these two manufacturing supplements.

Raj Kannan -- Chief Executive Officer

And on the commercial spend Brandon, as you know, we are targeting our -- I gave you a reference before, which is we assume about 30 to 50 customer facing personnel in the organization that includes not only the sales reps, but also the case managers, the MSLs, the account managers, as well as any patient support, call center personnel that we have. So anybody who places a customer, we think it'll be 30 to 50 and as you know the endocrinology audience is quite small and we've also stated before that 90% of our patients are managed by less than 1,000 accounts. So we will always be very efficient in how we go to market in this particular therapeutic area, and hopefully our spend will be in line with other small specialty orphans rare disease launches. I hope that helps Brandon.

Brandon Folkes -- Cantor Fitzgerald L.P. -- Analyst

It does. Thanks very much.

Operator

Our next question comes from Yasmeen Rahimi with Roth Capital. Please go ahead.

Paul O'Brien -- Roth Capital Partners, LLC -- Analyst

Hi team, Paul on for Yasmeen. Thanks for taking my question today. Congrats on all the progress. Just two questions; first, just to add a little more, get a little more color regarding commercial rollout. How many sales people have been put in place so far and how many more can we expect?

And then a second question about going back to your prior comments about octreotides being well understood among current endocrinologist, if you can just talk about the key gaps in awareness that you see going forward and kind of what framework can we use to educate prescribing physicians? Thanks again.

Raj Kannan -- Chief Executive Officer

Yeah, thanks Paul. Great question. So on the first one, in terms of the sales reps, obviously we have gated that approval just as any other company would have done that. We would certainly screen and look for qualified candidates from a field perspective, but they would be only coming onboard post approval. That being said, we do have MSLs in the field. They're not sales rep in particular, but they are certainly customer facing in the sense that they would be engaging with the key thought leaders and have scientific engagement, especially on the current state of care and these potential needs in terms of what's needed from new options. So that's the first question.

The second question was octreotide in terms of key gaps and awareness. I don't believe octreotides in particular as a molecule has any gap and awareness, because remember, this is a product that is sort of the standard of care and for the last three decades physicians have been very comfortable in going to this as the preferred agent in over eight to nine out of 10 patients who have failed surgery or surgery was not an option. So to us, I think we are going to be focusing on is really putting the oral octreotide and where we're focused on education is the significant treatment burdens that patients face with the current injectables; that's the part that we're focusing on. We do not believe that we have to educate our healthcare providers on the MOA or get them comfortable on the efficacy and safety profile of octreotide itself. I hope that helps Paul.

Paul O'Brien -- Roth Capital Partners, LLC -- Analyst

Yeah. And just a follow-up. So I guess, how should we think about how to educate endocrinologist about acromegaly symptom breakthrough and how well is that understood and kind of going forward how are you guys approaching that?

Raj Kannan -- Chief Executive Officer

So, great question Paul. First, I would say that there is a definitely an increasing awareness and recognition and acceptance of the breakthrough symptoms. If we think about the patient advocacy communities, such as the one that is run by Jill Sisco, you can clearly see that the patient voice is becoming more and more vocal, especially on the breakthrough symptoms. So it's clearly much more than what we had back in 2016. We certainly are engaging with the thought leaders to be able to put that in perspective. We have certain new publications at the last ENDO that we put out, the Tulane papers that speaks to the disconnect between a physician's perception and the patient's understanding of the breakthrough symptoms and we will continue to focus on that, and that will become sort of the key to look at MYCAPSSA as not a convenience option, but an option that offers a whole lot more than just the daily dose oral route of administration.

Paul O'Brien -- Roth Capital Partners, LLC -- Analyst

Of course. Thanks so much for taking my questions.

Raj Kannan -- Chief Executive Officer

Thanks Paul.

Operator

Our next question is from Douglas Tsao of H.C. Wainwright. Please go ahead.

Douglas Tsao -- H.C. Wainwright & Co. -- Analyst

Hello guys. Thanks for taking the questions. Just first, just curious if you can provide an update specifically to MPOWERED and the potential impact of the coronavirus in term of patients being able to go in, assurances around patients having access to drug supply and making sure that they're able to make it, especially in Italy where things obviously have been dramatically locked down.

Raj Kannan -- Chief Executive Officer

Yeah, great question Doug. Let me say, overall at this time I do not believe the coronavirus has particularly impacted MPOWERED. Remember we had previously disclosed that we have completed enrollment, but I'll turn it over to Bill, particularly to talk about Italy in particular and the patients who are still in the trial in the US sites.

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

Great. Thanks Doug. So the drug supply issue is not an issue. We've got our clinical supply to finish out the trial, so we're in good shape there. The only patients still in the RCT phase, the randomized phase are in the US. We do have some ex-US patients that are in the open label, but that will of course not impact the primary endpoint. We've been working closely with the sites in the US, making sure that they have their needs met in terms of being able to see the patients. We are working toward being able where appropriate for the sites to do remote interactions, where the patients don't have a fear of going in, necessary in the hospital, that we'll get their blood draws associate with that. So we're able to do that in a way where most patients are able to come. If there is for some reason a missed data point, one of the advantages of the TWA analysis is that if one of those point or some of those points are missed, they simply get averaged out. And so the TWA is simply taking the average of the IGF-1 throughout that nine month space and if there's one miss and simply the prior one would count for two months for example.

Raj Kannan -- Chief Executive Officer

And the only comment I would add Doug is on Italy, right. We have one clinical site in Italy that has patients that have completed the 15-month trial of MPOWERED and are currently in the open label extension. So from a trial perspective, they've completed the core data that we need from a submission perspective.

Douglas Tsao -- H.C. Wainwright & Co. -- Analyst

Okay, that's fantastic. And then I guess as a follow up on the same topic, you know obviously, I think we're all hopeful that this will be you know we'll move past this by the fourth quarter, but you know to the extent that it will persist as an issue and we potentially have a situation where sales reps have limited access to doctor's offices, have you thought about sort of alternatives detailing methodologies and explored that or do you think it's still too premature?

Raj Kannan -- Chief Executive Officer

I would say, that you know digital has become sort of a centerpiece of any of our launch plans today, compared to the years before in my past when I was launching products and I think, you know we are continuing to assess our situation and potentially even shore up and strengthen our digital channels, even more so because I think many of our customers will probably end up wanting to receive messages and engage with our personnel in that matter. Not to mention that the face to face and in person interactions are still the most effective, but we are planning for alternative means. We do not know when this crisis will blow over, but that's up to anybody's guess, but we are certainly shoring up ways to engage our customers and via different channels.

Douglas Tsao -- H.C. Wainwright & Co. -- Analyst

Okay, great. Thank you very much guys.

Operator

Our next question is from Ted Tenthoff of Piper Sandler. Please go ahead.

Edward Tenthoff -- Piper Sandler -- Analyst

Thank you very much. I hope you guys are all staying safe and healthy. I appreciate the update. I apologize if I had missed this earlier in a section, but with PDUFA date scheduled, you know what are the potential areas that could be delayed on the part of the FDA. And how would a delay for a PDUFA date be communicated, just on the safe side in case they get shut down or as a matter to do the review, how should we be anticipating communication of that? Thank you guys.

Raj Kannan -- Chief Executive Officer

Yeah. Hi Ted, great question. At this time we do not have any communication from the FDA about a potential delay. As you know, we are a Class 2 resubmission which is sort of a very focused review of the efficacy and safety. There could be a potential of a site inspection and with the travel ban, we do not know at this point in time if there's any evidence in our hands that tells us that there would be a delay. We are still focused on achieving our milestone as we had planned and if we do get to learn off a wider communication from the FDA that things are going to be delayed, we'll certainly make sure that our investors are informed immediately.

Edward Tenthoff -- Piper Sandler -- Analyst

Great, makes sense. But hopefully if the reason is then hopefully it won't be too much. Thank you very much for the comments. And I guess just one other quite one, would there be any anticipation of a panel meeting? I mean as you said, agency is very comfortable, very familiar with octreotide, so should there be an expectation or not necessarily?

Raj Kannan -- Chief Executive Officer

Great question, Ted. At this time I do not believe we have any signals from the FDA that there would be a panel and from the panel, I assume this is an advisory committee. We do not know of one, we did not have one at the last time when we submitted our application. So we do not anticipate one, but that doesn't mean that the FDA does not have the right to organize one. [Technical Issues] on one, but we're certainly ready for one if one happens.

Edward Tenthoff -- Piper Sandler -- Analyst

Great. I appreciate all the answers and stay safe and healthy guys.

Raj Kannan -- Chief Executive Officer

Thank you.

Operator

Our next question is from Kumar Raja with Brookline Capital Markets. Please go ahead.

Kumar Raja -- Brookline Capital Markets -- Analyst

Thanks for taking my questions and congratulations on all the progress. With regard to the manufacturing supplement, what is going to be the difference between that two of them? Has stability studies been completed for both of this facilities, and what is the expectation in terms of site inspection? Do you think that would be required and how does that impact Q4 launch timeline?

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

Yeah. So let me just add an overarching comment. I think Mark had gone through this and thanks for the question, it's a great question. Overall I think the two supplements and from our estimation sort of definitely give that a chance to mitigate the risk if one of them is not appeased, so we are submitting two of those post-approval supplements, but for the details around the stability studies and whether they're ready and whether the FDA will insist on a site inspection, I'll turn that over to Mark.

Mark J. Fitzpatrick -- President

Sure. So we had a manufacturer that we had not submitted in NDA resubmission Kumar in December, as they had an outstanding regulatory observation and we didn't want to risk the resubmission having a setback as a result of that. So we have every reason to believe that once we submit the prior approval supplement following the NDA, which is what we plan to do, that the FDA has a PDUFA data on prior approval manufacturing supplements that run four months. If they choose to inspect they can add another two months to that is our understanding of the regulation. So we have a second API manufacturer, which has a scaled up facility which we always intended to supplement to our NDA following the PDUFA date in June. We did not want to encumber the NDA resubmission with the new site, which may have resulted in a 10 month review clock. So we believe that both of these suppliers are completely ready for the supplementation process and any inspections that may result.

Kumar Raja -- Brookline Capital Markets -- Analyst

And with regard to the MACRO registry, will this be just MYCAPSSA-treated patients or what patients would this include? And in terms of the open label expansion, what is happening? Any insights you can share in terms of what's happening with the treatment of these patients or do they continue on the drug?

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

Yeah. Thanks Kumar. So the MACRO registry is a disease state registry. There's nobody on oral octreotide. We are simply at this time assessing patient experience on standard of care and once the drug becomes available, they all have the option like anyone else would to go onto oral octreotide MYCAPSSA, and this will give us an opportunity to assess their experience before they go on the drug, after they go on the drug. So a real world baseline control study and since not everybody will probably switch over, it will give us an opportunity for a real world head-to-head comparison. So it will be very data rich, very interesting to patients, physicians, to all parties involved how this new drug that hopefully will become available, will impact the treatment landscape. In terms of the open label, we have two ongoing studies, met with patients in the open label. The CHIASMA OPTIMAL study has patience in open label, as does the MPOWERED study and always said to-date on those is the those open label portions are progressing as planned, very consistent with how we set them up.

Kumar Raja -- Brookline Capital Markets -- Analyst

And maybe a final question with regard to the label, what are the expectations in terms of the label and in terms of the label discussion with the FDA, what will be the time line for that?

Raj Kannan -- Chief Executive Officer

Hey Kumar, this is Raj, great question. In terms of the label, we expect the label to replicate sort of the experience that we've had in our clinical trials. So it'll certainly be something that our clinical trial reflected, which is patients who are on somatostatin analogs and who can tolerate them. So that would be the kind of language that we would go for, which is in line with the clinical trial results that we demonstrated. In terms of the actual negotiations with the FDA, those are usually toward the latter part of the review period. There's not specific any timelines. Usually the FDA engages with you on a label negotiation, I would say anywhere between four to six weeks but that is just a speculation on my part at this time. But that's what we would estimate in terms of starting to get engaged with the FDA on the label.

Kumar Raja -- Brookline Capital Markets -- Analyst

Okay, great. Thank you so much.

Raj Kannan -- Chief Executive Officer

You're very welcome.

Operator

There are no further questions at this time. I would like to turn the floor back over to Raj Kannan for closing remarks.

Raj Kannan -- Chief Executive Officer

Thank you, operator. I just wanted to say thank you for joining all of us here at a time that is what we would call a disquieting macro environment, but we continue to remain confident on the milestones that we have in front of us and we look forward to speaking with you again on our next quarterly update call in May. Have a good evening. Thank you.

Operator

[Operator Closing Remarks]

Duration: 36 minutes

Call participants:

Dawn Schottlandt -- Vice President, Investor Relations and Corporate Communication

Raj Kannan -- Chief Executive Officer

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

Mark J. Fitzpatrick -- President

Brandon Folkes -- Cantor Fitzgerald L.P. -- Analyst

Paul O'Brien -- Roth Capital Partners, LLC -- Analyst

Douglas Tsao -- H.C. Wainwright & Co. -- Analyst

Edward Tenthoff -- Piper Sandler -- Analyst

Kumar Raja -- Brookline Capital Markets -- Analyst

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