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Concert Pharmaceuticals, Inc. (NASDAQ:CNCE)
Q3 2020 Earnings Call
Nov 6, 2020, 8:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Concert Pharmaceuticals' Third Quarter 2020 Financial Results Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today Justine Koenigsberg, Please go ahead.

Justine E. Koenigsberg -- Senior Vice President, Corporate Communications and Investor Relations

Good morning and welcome to Concert Pharmaceuticals' third quarter 2020 investor update.

Joining me this morning with prepared remarks are Roger Tung, our President and CEO; Jim Casella, our Chief Development Officer; and Marc Becker, our CFO. We will also be joined by Nancy Stuart, our Chief Operating Officer for the Q&A portion of the call.

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 D. Tung -- Co-Founder, President and Chief Executive Officer

Thank you, Justine, and good morning.

While 2020 may not be the year we in anyway imagined, it has been an important and productive year for the advancement of Concert's pipeline. Amidst all that our employees have done over the past months supporting their families and communities during the pandemic. I am proud that our team has swiftly adapted to keep our pipeline efforts on track. Our focus this year has been the advancement of our two proprietary clinical candidates with one now having entered Phase 3 testing, and the other with Phase 2 data expected in the first quarter of 2021.

Earlier this week, we began the first Phase 3 for CTP-543 which has the potential to be one of the first FDA-approved treatments for alopecia areata. This trial is designed based on strong clinical data generated today. Our first Phase 3 study will evaluate 8 milligram and 12 milligram twice-daily doses of CTP-543 compared to placebo for 24 weeks, and approximately 700 adult patients with moderate to severe alopecia areata.

We are pleased that the FDA is recognized the serious nature of alopecia areata as a disease as well as the promising data, we have generated in our clinical studies by crunching CTP-543 Breakthrough Therapy and Fast Track Designations. Our team at Concert is laser-focused on improving patient care with what we hope will be one of the first and potentially the best FDA-approved treatment for alopecia areata.

Let me turn known to our second clinical program, CTP-692 for the adjunctive treatment for schizophrenia. I'm very pleased to report that, despite COVID-related disruptions and trial recruitment across the industry, in September we successfully completed enrollments in the CTP-692 Phase 2 trial, well ahead of the year end timeline we projected in spring after the pandemic's outbreak. We're excited for the expected completion of the trial and its readout in the first quarter 2021 which will allow us to assess the potential of CTP-692 to address a range of symptoms of schizophrenia and hopefully offer an important new therapeutic modality to patient care.

In sum, we have a lot of exciting activities on our plate as we close out the year and move into 2021. For CTP-543 first Phase 3 trial is now under way and we are preparing to begin the second pivotal trial in alopecia areata patients in the first half of next year. For CTP-692, we expect to report data from the Phase 3 trial in schizophrenia patients in the first quarter of next year. Our team is unwavering in its commitment toward clinical programs and we look forward to keeping you updated on the progress.

I'd now like to turn the discussion to Jim for more detail on the pipeline.

James V. Cassella -- Chief Development Officer

Thank you, and good morning.

As Roger mentioned, a key event for Concert over the last several months was readying CTP-543 for the pivotal Phase 3 program. We have named our Phase 3 studies THRIVE-AA, signifying that we believe that bringing an FDA-approved medicine to patients with alopecia areata will help them thrive and potentially overcome the burdens of the disease that patients experience on many aspects of daily life. This unmet need for a treatment for alopecia areata is one reason why CTP-543 is designated in the FDA Breakthrough Therapy, and we are excited to be embarking on the Phase 3 pivotal program.

THRIVE-AA1 is the first of two studies in the Phase 3 program for CTP-543. The THRIVE-AA1 study design will evaluate 8 milligram and 12 milligrams of CTP-543 twice-daily for 24 weeks. The primary endpoint is the percentage of patients who achieve a SALT score of 20 or less. This measure has been reported by patients and alopecia areata experts to represent a clinically meaningful treatment effect by leveraging the results from our earlier Phase 2 studies and feedback from the FDA, we believe we have a well-designed Phase 3 program.

Besides our patient relevant primary endpoint, the Phase 3 studies will employ important secondary endpoints addressing other aspects of alopecia areata, including patient reported satisfaction and impression of improvement, levels of depression and anxiety in assessment of eyebrows and eyelashes. We recently conducted a very successful virtual investigator meeting and with the advanced site start-up activities and training and certification of raters, we were able to start enrolling patients into the trial almost immediately following the investigator meeting. We expect it will take about a year and a half to two years to enroll and complete this first Phase 3 study.

As that study progresses, the second Phase 3 study called THRIVE-AA2 is planned to begin in the first half of 2021. It's our expectation that positive results from THRIVE-AA1 and THRIVE-AA2 studies would support filing an NDA with the FDA in early 2023, positioning CTP-543 to potentially be one of the first FDA-approved treatments for alopecia areata. We are very motivated and excited with the initiation of this Phase 3 program to bring this new potential treatment to the alopecia areata patient community.

In the realm of medical meetings and publications, we continue to engage with the treatment community about CTP-543 and needed progress in the treatment of alopecia areata. For example, last week we had the opportunity to present initial findings from the ongoing CTP-543 open label extension study during the late-breaking news session at the virtual EADV meeting. Currently, approximately 130 patients have been dosed with CTP-543 for at least one year in this continuing study. Treatment with CTP-543 and the extension study continues to be generally well tolerated with adverse events consistent with those reported in the Phase 2 studies. Importantly, SALT scores assessing hair regrowth were maintained or improved in the vast majority of alopecia areata patients who continued in the extension study.

An additional example of how we are contributing to the alopecia areata field is our recent publication in the Journal of Investigative Dermatology that was published in October. The paper reports on results from a survey designed to understand the burden and everyday experiences of patients living with moderate to severe alopecia areata. The results show that patients with alopecia areata suffer a significantly increased burden of illness including a negative impact on many aspects of daily life, extending far beyond cosmetic concerns. The disease carries a considerable psychosocial burden that is devastating and emotionally draining for patients. This publication provides context for the need for a new treatment for alopecia areata as we hope to advance to a new era whereby patients will have access to effective treatments. Our efforts to support alopecia areata awareness through the month of September which is its designated awareness month, have also helped to put a spotlight on the disease and our work to develop a new treatment. These efforts along with new findings as described in the paper I just mentioned, continue to strengthen our involvement in the alopecia areata community and show our commitment to communicating about alopecia areata as a serious medical condition.

Let me wrap up with a brief overview of our progress with CTP-692 our candidate for adjunctive treatment of schizophrenia. For the Phase 2 trial of CTP-692 in schizophrenia, our team rapidly developed and implemented strategies to minimize disruption in recruiting and enrolling patients in the trial. I am very pleased to say that enrollment is now complete. We randomized 325 patients into the trial across 25 sites in the US. CTP-692 represents an entirely new approach to potentially treat schizophrenia, a disease that continues to have significant unmet needs for many patients. With CTP-692's unique mechanism of action targeting the neurotransmitter D-serine, it offers the potential to more broadly treat the symptoms of schizophrenia. In our clinical program, we are initially developing CTP-692 as an adjunctive therapy, added to standard of care antipsychotic medicines with the potential to improve positive and negative symptoms, as well as cognitive function in patients with schizophrenia. As a reminder, the treatment duration in the study is 12 weeks. Based on this trial design, we expect to report topline data for CTP-692 in the first quarter of 2021.

I would now like to turn the call over to Marc, who will provide a financial update.

Marc Becker -- Chief Financial Officer

Thank you, Jim.

As I review our third quarter 2020 financial results, please reference the financial tables found in today's press release. Revenue was $1.5 million for the third quarter of 2020 due to the recognition of non-cash deferred revenue under a previous agreement with Celgene. Research and development expenses were $16.3 million during the third quarter of 2020 compared to $13.5 million during the same period in 2019. The Q3 2020 increase was primarily related to CTP-692 Phase 2 clinical development expenses. On a year-to-date basis, the increased spending on CTP-692 was largely offset by decreased spending related to CTP-543, and external expenses for other programs. However, as we close out 2020, we do expect R&D expenses to increase as we continue our Phase 2 trial of CTP-692 for schizophrenia and conduct our Phase 3 trial of CTP-543 in alopecia areata.

General and administrative expenses were $4.5 million during Q3, 2020 compared to $4.7 million for the same period in 2019. The Q3 '20 decrease is attributable to lower legal and professional fees. Our net loss for Q3 2020 was $18.9 million or $0.60 per share compared to a net loss of $17.2 million or $0.72 per share during the same period in 2019.

Finally, we ended the third quarter of 2020 with a $124.2 million in cash, cash equivalents and investments. Under our current operating plan, we continue to expect our cash to fund the Company into the second half of 2020. The team has executed well across both our programs and we are well positioned to advance the pipeline in 2020. Both programs, CTP-543 and CTP-692, represent sizable opportunities with the potential to address significant unmet needs for patients.

This concludes our third quarter financial review. We would be happy to take any questions at this time.

Questions and Answers:

Operator

[Operator Instructions] And our first question coming from the line of Joon Lee with Truist Securities. Your line is open.

Les Sulewski -- Truist Securities -- Analyst

Good morning. This is Les on for Joon. Congrats on the quarter and the recent -- congrats on the quarter and the recent progress, guys. My first question is regarding the first Phase 3 trial study. Have you disclosed the powering of this trial? And if so, can you just remind us what that is? And then second, what is your strategy around data disclosure for that? Would you topline the studies both as they are done or pull them together or topline together? And I have a follow-up on that.

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

Thanks. Jim, can you address that?

James V. Cassella -- Chief Development Officer

Sure. Yeah. Hi, Les. So, Jim Casella here. So, in regards to the powering, we are well-powered for both doses using the SALT 20 primary endpoint. We were able to do that powering based on the Phase 2 studies that we've conducted to date. So again, we're very well powered there in 90% or better range. In terms of the data disclosures, there's no interim analysis plan for the studies, but THRIVE-AA1 our first study that we've initiated will report out in complete before the second study because there's going to be a lag between THRIVE-AA1 and THRIVE-AA2. So, we haven't discussed in full details the disclosure of data, but they more than likely will be reported out separately.

Les Sulewski -- Truist Securities -- Analyst

Got it. That's helpful. So, my follow-up question is regarding patents. So, Incyte announced there will be challenges at the 659 patent. What is the relevance of this patent? What is your approach in the defending this? And on the new 338 patent, can you just remind us how strong it is? And what is -- is it also has a risk of being challenged? And then lastly, what are the next steps for the 149 patent? Thank you.

James V. Cassella -- Chief Development Officer

Sure. So, the 659 patent is -- there has been a PGR that's been requested by Incyte for it, which is a post-grant review. And that is a request that has to be considered by the patent office. And the resolution of the request in terms of whether it should be the PGR or not will not actually be determined until probably the second quarter of next year. The 338 is not actually a patent, that's an application. So, I really have no comments on that, and that will determine whether or not that becomes grant status patent in the future. 659 is a pattern which covers the pharmaceutical composition and specific dosing strengths of CTP-543 for the treatment of alopecia areata, as well as the use of 543 so the treatment of hair loss including alopecia areata.

Les Sulewski -- Truist Securities -- Analyst

Thank you. That's helpful.

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

Sure. You're welcome.

Operator

And our next question coming from the line of Jason Butler from JPM Securities [Phonetic]. Your line is now open.

Jason Butler -- JMP Securities -- Analyst

Hi. Thanks for taking the questions. A couple on the CTP-543. So first of all, regarding the ongoing COVID pandemic, can you talk about mitigating factors you built into the study protocol for THRIVE to minimize enrollment and trial conduct interruptions? For example, can any of the clinical visits be conducted via telemedicine? And then, in terms of the long-term data in the OLE, are there any measures of depression and anxiety that you've looked at in the OLE or any anecdotal feedback from physicians or patient medical records on those symptoms? Thanks.

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

Thanks for the question. Jim, can you please address this?

James V. Cassella -- Chief Development Officer

Yeah, absolutely. Hey, Jason. Thanks for the question. So in terms of COVID, we do have experience now, unfortunately, dealing with COVID in our clinical trials, because we had our open-label extension study running during the entire course of the pandemic so far. So, we were able to implement all the strategies and tactics that we needed in order to provide for keeping patients stocked with drug and doing remote visits of certain things when necessary. So, we're able to bring all that knowledge and resources and tactics into the Phase 3 program. So, I believe that we're well positioned to deal with that. And to directly answer your questions, there are some remote visits that are possible through telemedicine. We have remote capabilities for delivering drug directly to patients. So, I think we've covered all the bases there as we embark on now the Phase 3 program.

In terms of direct assessment of depression and anxiety in our Phase 2 program, we have not done that nor do we have that directly in our OLE study. However, as you'll notice in our Phase 3 program and THRIVE-AA, we are using the hospital anxiety and depression scale. So, we will be assessing baseline and throughout the course of the program anxiety and depression. And of course, we know from the literature, as well as our recent publication that appeared in the Journal of Investigative Dermatology where we with some of the KOLs in this space investigated through survey, the burden of illness in alopecia areata, and we know that through that survey, anxiety and depression and psychosocial aspects of alopecia areata are prevalent in the population.

Jason Butler -- JMP Securities -- Analyst

Great, helpful. And if I can just squeeze in a quick one on 692. For the Phase 2 population, any comment on expectations for the number of prior antipsychotic medicines the patients will have been treated with in the study?

James V. Cassella -- Chief Development Officer

Yeah. So, there's a very specific requirement that they can only be on one anti-psychotic medicine in addition to 692.

Jason Butler -- JMP Securities -- Analyst

Great. Thanks for taking the questions.

James V. Cassella -- Chief Development Officer

Sure. Thanks, Jason.

Operator

Our next question coming from the line of Maury Raycroft from Jefferies. Your line is open.

Kevin Strang -- Jefferies -- Analyst

Hi, thanks for taking my questions. This is Kevin Strang on for Maury. Just a couple of quick ones. For the 692 to topline update next year, can you just provide some color on what we can expect in that readout and whether it would be at a medical meeting? And then, when are you planning to have an ERP 2 meeting and when can you expect to potentially initiate a pivotal Phase 3?

James V. Cassella -- Chief Development Officer

Sure. Hi, Kevin.

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

Hi, Kevin. Thanks for the question. Go ahead, Jim.

James V. Cassella -- Chief Development Officer

Sure. So, hi, Kevin. Thanks. So in terms of data, we're expecting that we'll be able to release the primary efficacy and safety data when we report results, at some point we will cover the more comprehensive package in a medical meeting, but I think you can anticipate that we would be releasing the data when it's available in Q1. In terms of ANDA Phase 2 meeting, we're planning for a success. We believe that this Phase 2 trial is sufficient for us to accurately and appropriately design a Phase 3 program and bring our Phase 2 data to the FDA and in an ANDA Phase 2 meeting. So once we have our data all wrapped up and safety and efficacy data, we will plan on having an end of Phase 2 meeting as soon as we can with the FDA.

Kevin Strang -- Jefferies -- Analyst

Great. Thank you. And then, just one more quick one in terms of the data that was reported at EADV. So, can you just provide some color on the SALT score differences between the 2001 studies and the 2002-2003. And whether there were any outliers in the data at EADV and any background characteristics that could have predicted that or added to that?

James V. Cassella -- Chief Development Officer

Sure. So, I think the one thing that became very clear with the EADV presentation is the consistency and stability of the data, both on the safety side and on the efficacy side as we move from the Phase 2 program into the open label extension where we have patients that have been more than 130 patients have been on drug for a year now. I think when you look at the 2001 and 2003 study where we showed the 12 milligram BID dosing, we have remarkable consistency even though those studies were done at different times and the 2003 study included Canadian sites. We have baseline characteristics across all the Phase II studies where baseline SALT score was in the mid-80s or so. And very good consistency on where the average ends up at week 24 with approximately SALT scores around 40 for the 12 milligram BID dosing. I think there is a lot of consistency in the demographics and baseline characteristics of all of our Phase 2 studies. And I think the shape of the curves for the two studies that look -- that we showed for the 12 milligram BID dosing group looked remarkably consistent and similar.

And then, as we go into the open label extension study, the highlight of that efficacy data was that it was stable or even improving as we showed with the 2003 dataset more clearly. So, I think there is a lot of consistency there between the basic effects that we saw in the Phase 2 studies, as well as the consistency of those effects carried into the OLE and outwards up to another six months of dosing beyond the 24-week initial period.

Kevin Strang -- Jefferies -- Analyst

Great, thanks. Appreciate the color and I'll hop back into queue.

James V. Cassella -- Chief Development Officer

Sure. Thank you.

Operator

Thank you. And our final question is from Difei Yang at Mizuho. Your line is now open.

Difei Yang -- Mizuho -- Analyst

Hi, good morning, and thanks for taking my questions. Just two questions. The first one is on CTP-543. Given the evolving competitive space, would you share with us your high level thinking about pricing? I know it's a couple of years down the road, but it would help us to model out the forecast. And then secondarily on CTP-692, Jim, would you remind us what's the typical placebo response for schizophrenic patients based on the PANSS score? Thanks.

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

Hi, Difei. Thank you thank you very much for the questions. With respect to the first question, the pricing, at this point, of course, we are waiting to see the actual effect of CTP-543 in the Phase 3 and the completion of our commercial analysis. In terms of our pricing of JAK inhibitors in terms of logical autoimmune conditions, that has been ranging from the mid-$20,000 to mid-$40,000 per year and we would expect to be within that inflow. Jim, could you address the second question?

James V. Cassella -- Chief Development Officer

Sure. Hey, Difei. How are you? So, in response to your question about placebo, looking at the schizophrenia ligature, and specifically looking at the PANSS total score, I mean we were a little conservative and we had anticipated about a 10-point placebo response. And so, I think given that -- that number is clearly out there, but I think the important point to consider for our trial is that we powered for a 5-point difference from whatever the placebo response is. So, again, our powering is based on a delta of 5 points from that placebo response, but for the sake of powering, we had assumed a conservative 10-point change in PANSS for placebo.

Operator

And I'm not showing any further questions at this time. I would like to turn low call back over to Justine Koenigsberg for closing remarks.

Justine E. Koenigsberg -- Senior Vice President, Corporate Communications and Investor Relations

Thank you. We'd like to thank everyone for joining us this morning, and we look forward to keeping you updated on all of our pipeline progress. For those interested, we will be participating at the Stifel and Jefferies healthcare conferences later this month and we hope we will have the opportunity to meet with many of you there. This concludes today's call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 29 minutes

Call participants:

Justine E. Koenigsberg -- Senior Vice President, Corporate Communications and Investor Relations

Roger D. Tung -- Co-Founder, President and Chief Executive Officer

James V. Cassella -- Chief Development Officer

Marc Becker -- Chief Financial Officer

Les Sulewski -- Truist Securities -- Analyst

Jason Butler -- JMP Securities -- Analyst

Kevin Strang -- Jefferies -- Analyst

Difei Yang -- Mizuho -- Analyst

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