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Concert Pharmaceuticals, Inc. (NASDAQ:CNCE)
Q4 2020 Earnings Call
Feb 25, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Concert Pharmaceuticals Fourth Quarter 2020 Investor Update Call. [Operator Instructions]

And now, I'd like to introduce your host for today's program, Justine Koenigsberg, Senior Vice President, Corporate Communications and Investor Relations. Please go ahead.

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

Good morning, and welcome to Concert Pharmaceuticals' fourth quarter 2020 investor update. Joining me this morning with prepared remarks are Roger Tung, our President and CEO; Jim Cassella, 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-K 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.

2020 was a year like no other. Our team stayed strong throughout the year, maintaining focus on executing on our goals. We successfully navigated through challenges unprecedented in the last century, and I'm proud of what our team accomplished to advance our business.

One major milestone of 2020 was our evolution to a late-stage clinical development company. Based on the data generated to date for CTP-543 across multiple Phase 2 clinical trials, we believe that we have a compelling and potentially best-in-class treatment for alopecia areata. We've moved to phase and are enrolling patients in our first Phase 3 clinical trial for CTP-543, THRIVE-AA1.

As a reminder, FDA has granted breakthrough therapy and fast track designations for CTP-543 based on the clinical data, the severity of alopecia areata as a disease and the unmet need to successfully treat it. We are fully committed to advancing CTP-543 to make a meaningful difference in the patient -- in the lives of patients with alopecia areata. Our current development strategy for CTP-543 is designed to support the filing of a NDA with the FDA in early 2023. Our team deserves recognition for successfully navigating our clinical trials during COVID-19.

Earlier this month, we announced top-line results from our Phase 2 clinical trial of CTP-692 for the adjunctive treatment of schizophrenia. These results were not what we hoped for or expected. The body of evidence in the field supporting D-serine as an adjunctive treatment for schizophrenia led us to advance 692 into a

Phase 2 proof of concept study. Unfortunately, CTP-692 did not meet the primary or key secondary endpoints. Our team carried out a very well executed trial, but we're obviously disappointed with the results. Individuals with schizophrenia are in need of new treatments to improve outcomes across all the symptom domains and we hope that others exploring new opportunities will have success. We do not intend to further develop 692 and will reallocate those resources to CTP-543.

As we've described in the past, alopecia areata represents a sizable market opportunity with blockbuster potential. Additionally, we have a number of pipeline candidates that we are assessing. The ongoing execution of our business, as well as our overall strategy of developing a novel compound with groundbreaking potential in alopecia areata has led us to where we are today as a late-stage development company. I'm truly excited for what 2021 has in store, and we expect to see a significant clinical progress in the year ahead. I look forward to keeping you updated as we move forward toward key inflection points in the clinic and in our business.

With that introduction, let me turn the discussion to Jim to provide development update.

James V. Cassella -- Chief Development Officer

Thanks, Roger.

I want to reiterate Roger's commentary applauding our entire team for their efforts to advance our pipeline during unprecedented times. We were able to advance our CTP-543 clinical program in alopecia areata and we completed our proof of concept Phase 2 study with CTP-692 in patients with schizophrenia.

This past November, we began enrolling patients with alopecia areata in the THRIVE-AA1 trial. This is the first Phase 3 study for CTP-543 intended to support registration. Currently, clinical trial sites in the U.S. and Canada are actively recruiting patients and we expect to continue seeing growing momentum there, as well as in the EU, where sites will be coming online soon. We also intend to initiate our second Phase 3 study, THRIVE-AA2 in the first half of this year, which will share a similar trial designed to THRIVE-AA1 with the exception that we intend to enroll fewer patients for that study. In addition, we plan to initiate some other clinical studies to support and round out our overall NDA package and to support product labeling. Data from the first Phase 3 trial is expected next year, and under our development plan, the NDA is projected to be filed in early 2023.

As Roger mentioned, we have a great opportunity with CTP-543 now in Phase 3 development. We are very excited about the progress we've made and the impact CTP-543 may have in the patient community. We believe we have the potential to offer patients a new treatment option that is clinically meaningful and differentiated from existing therapies. We will be very focused on the continued execution of the THRIVE-AA program in alopecia areata this year as we move closer toward registration.

Before we open the discussion to questions, let me turn the call over to Mark to review the 2020 financial results.

Marc Becker -- Chief Financial Officer

Thank you, Jim. As I review our 2020 financial results, please reference the financial tables found in today's press release.

Revenue was $7.9 million for 2020, primarily due to the recognition of non-cash deferred revenue under a previous agreement with Celgene.

Research and development expenses were $61.6 million for 2020 compared to $59.8 million for 2019. The increase in 2020 was primarily related to CTP-692 Phase 2 clinical development expenses. R&D expenses are expected to increase in '21 as we continue to advance our CTP-543 program toward registration in alopecia areata.

General and administrative expenses were $18.9 million for 2020 compared to $20.3 million for 2019. The decrease in 2020 is primarily attributable to lower legal fees.

Our net loss for 2020 was $74.8 million, or $2.40 per share, compared to a net loss of $78.2 million, or $3.29 per share, for 2019.

Finally, we ended 2020 with $130 million in cash, cash equivalents and investments. During the fourth quarter, we raised net proceeds of $22.5 million through our ATM. As a result, under our current operating plan, we expect our cash to fund the Company through 2021.

We are extremely pleased with the progress we have made to become a late-stage clinical company and the prospect of having our first NDA filing in early '23. We look forward to keeping everyone updated on our progress.

This concludes our prepared remarks and we would be happy to address any questions.

Questions and Answers:

Operator

Certainly. [Operator Instructions] And our first question comes from the line of Maury Raycroft from Jefferies. Your question please.

Kevin Strang -- Jefferies, LLC. -- Analyst

Hi. This is Kevin on for Maury. Thanks for taking my questions. My first question was, you mentioned that you're looking at other clinical studies to support your NDA package and product labeling. We noticed a drug-drug interaction study on ClinicalTrials.gov with Itraconazole. Are there other drug-drug interaction studies you plan on starting and running? And what are your expectations for that study?

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

Jim, could you take that?

James V. Cassella -- Chief Development Officer

Sure. Yeah. Good morning. This is Jim. So, that's right. As part of the normal NDA package, we will check the boxes on things like drug-drug interaction studies, so that we have all that information when we submit the NDA and we can provide proper guidance for the labeling. So, as we continue to progress the overall development program for 543, we will be doing those types of studies in parallel with our Phase 3, so that we will have all that information ready for the NDA submission.

Kevin Strang -- Jefferies, LLC. -- Analyst

Great. Thanks. And then just a quick one on the patent front. Can you just talk about what the latest developments are there? I think it looks like the Arthrex case will be heard in March, on March 1st. And can you talk about whether a ruling on patent 149 affects the rest of your pipeline?

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

Yes. This is Roger. Thanks for the question. So, as you indicate, the Arthrex patent is proceeding through the courts, and this, depending upon how the Supreme Court rules on it, could have either narrower or broader ramifications, and obviously, we can't comment on that until we hear what the Supreme Court's take is on it.

As far as its affect on the rest of the pipeline, every compound is a case-by-case situation. And we don't believe that specifics related to the 149 patent necessarily relate to any other patent that we have. The facts differ on a case-by-case basis and every illegal situation has to be taken on its own merits.

Kevin Strang -- Jefferies, LLC. -- Analyst

Great. Thank you, Roger. And I'll hop back in the queue. Thanks.

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

Great.

Operator

Thank you. Our next question comes from the line of Jason Butler from JMP Securities. Your question please.

Jason N. Butler -- JMP Securities -- Analyst

Hi. Thanks for taking the questions. Another one on the NDA prep activities. Can you just remind us what work you'll be doing over the next year or 18 months in terms of manufacturing and supply chain preparations for commercialization?

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

Jim?

James V. Cassella -- Chief Development Officer

Yeah, sure. Hey, Jason. A great question, because sometimes we focus on clinical, but we know that there is so many other things that need to be done. We have a great team. A lot of experience in that front. I can say that we are doing all the things that are necessary and appropriate to make sure that we have our proper API batches, registration batches, commercial activities going on, and those things are all on track.

Jason N. Butler -- JMP Securities -- Analyst

Okay. Great. And then just, Roger, in terms of thinking about the next pipeline assets, some prioritization, obviously, you're looking for things that compounds, the platform going to have the biggest clinical impact on or impact on the profile. But apart from that, what are your other factors that you're focused on? For example, does it need to have some kind of therapeutic adjacencies to, for example, alopecia, or are there other factors that you're thinking about when prioritizing the pipeline advancements?

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

Yeah. Thanks for the question, Jason. The -- clearly, one of the benefits of the product platform that we have is that there is the ability to point it in a number of different directions. We had really a unusual situation with CTP-692 and that -- it had a type of differentiation, which was profound and unusual. Unfortunately that didn't extend to the efficacy of the therapeutic modality, which is really, of course, based on the underlying biology of the compound.

But, as far as our next compound out, we are looking at therapeutic adjacency. And that wouldn't necessarily be in alopecia areata, but we are thinking very hard about the areas that CTP-543 works on immunology, autoimmune disease, inflammation and dermatology, and those are aspects that we're keeping in mind as we're thinking about the next one up.

Jason N. Butler -- JMP Securities -- Analyst

Okay. Great. Thanks for taking the questions.

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

Absolutely.

Operator

Thank you. Our next question comes from the line of Joon Lee from Truist Securities. Your question please.

Leszek Sulewski -- Truist Securities -- Analyst

Yes. Good morning. Thank you. This is actually Les on for Joon. Just quick one for me on dose selection. And -- is it possible that you can go with a different dose in the second Phase 3 study? And also the possibility to go beyond the 12 milligram? Thank you.

James V. Cassella -- Chief Development Officer

Yeah. So..

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

Jim, do you want speak to that? Yes.

James V. Cassella -- Chief Development Officer

Sure. Yeah. I think our dose selection is done. We've established the eight milligram and 12 milligram BID doses in our Phase 2 trial. Those are the doses that we brought into our first Phase 3. At this point in time, we are continuing to build the database for both safety and efficacy around both of those doses. So, we will not be changing the doses going into the second Phase 3 program.

The reason we have both of those doses is that both doses have been efficacious in safety profile that we are developing. And going with two doses into the Phase 3, as well as potentially into the commercial environment, we will have the opportunity for physicians and patients to be able to have selection of doses and customize and optimize whichever one is best for that patient. So, these are the doses that we're studying based on the data we've generated and we'll continue to have these doses in our registration package.

Leszek Sulewski -- Truist Securities -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Difei Yang from Mizuho. Your question please.

Difei Yang -- Mizuho Securities -- Analyst

Hi. Good morning, and thanks for taking my question. Just a couple of quick ones. The first one is around additional opportunities. Just for clarification, are you looking for indication expansion beyond using same 543, or are you thinking about new molecular entities?

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

Hi, Difei. This is Roger. Thanks for the question. I think the answer is both. We believe that due to its mechanism of action, CTP-543 has strong potential in other indications beyond alopecia areata and that's something that we'll be exploring more in the coming quarters.

In terms of new molecular entities, we have had for some time now a pipeline of compounds beyond the ones that we explored clinically. We now have the resources to be able to extend out our pipeline beyond CTP-543 and we intend to do so.

Difei Yang -- Mizuho Securities -- Analyst

Thank you, Roger. So, the next question is around opportunities ex-U.S. So, 543 is in late development stage. And -- how do you think about ex-U.S. opportunities on 543?

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

Well, we are going to be doing development of CTP-543 in Europe, as well as in the U.S. And we think that there are longer term opportunities for us there. As we've made clear previously, our focus is on commercialization in the U.S., but we're certainly keeping an eye on the potential for the compound outside of the U.S.

Difei Yang -- Mizuho Securities -- Analyst

Thank you for taking my questions.

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

Absolutely.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Esther Hong from Berenberg. Your question please.

Esther Hong -- Berenberg Capital Markets -- Analyst

Hi, good morning. Thanks for taking my question. So with CTP-543 moving forward in late stage phases -- program, can you discuss any pre-launch activities taking place, and any comment on commercial strategy? Thank you.

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

Hi, Esther. Thanks for the question. We're working closely both with our Board, which has several members who are experienced in commercialization and marketing of -- agents both in smaller and larger markets, as well as external advisors to put together a pre-launch plan. It's a little premature for us to be talking about it, but we're very active in that area.

Esther Hong -- Berenberg Capital Markets -- Analyst

Okay. Thank you.

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

Sure.

Operator

Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Justine Koenigsberg for any further remarks.

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

Thank you, Jonathan. And thank you everyone for joining us this morning. Please note, our next Healthcare Conference presentation will be virtually at the H.C. Wainwright and Oppenheimer Conference is next month. Details about these presentations will be available in the IR section of our website. This concludes today's call, and thank you again for joining.

Operator

[Operator Closing Remarks]

Duration: 19 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

Kevin Strang -- Jefferies, LLC. -- Analyst

Jason N. Butler -- JMP Securities -- Analyst

Leszek Sulewski -- Truist Securities -- Analyst

Difei Yang -- Mizuho Securities -- Analyst

Esther Hong -- Berenberg Capital Markets -- Analyst

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