Chimerix (CMRX) Q2 2021 Earnings Call Transcript

Chimerix (CMRX -1.66%)
Q2 2021 Earnings Call
Aug 05, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Chimerix second-quarter 2021 earnings conference call. I would now like to introduce your host for today's call, Michelle LaSpaluto, vice president of strategic planning and investor relations at Chimerix. Please proceed.

Michelle LaSpaluto -- Vice President of Strategic Planning and Investor Relations

Thank you. Good morning, everyone, and welcome to the Chimerix second-quarter 2021 financial and operating results conference call. This morning, we issued a press release which outlines the topics we plan to discuss today. You can access the press release in our Investors section of the website.

With me on today's call are president and chief executive officer, Mike Sherman; and chief financial and business officer, Mike Andriole. Allen Melemed, our chief medical officer; and Josh Allen, our chief technology officer of Imipridones, are here to participate in Q&A. Before we begin, I would like to remind you that statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties, and other factors. These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements.

Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties. At this time, I would like to turn the call over to our president and chief executive officer, Mike Sherman.

Mike Sherman -- President and Chief Executive Officer

Thanks, Michelle, and good morning, everyone, and thanks for joining us. We've made considerable progress through the first half of 2021, highlighted, first, by the acquisition of Oncoceutics; then the initiation of the phase 3 DASH AML trial; and finally, the FDA approval of TEMBEXA as a medical countermeasure for smallpox. This last milestone marks Chimerix's first FDA-approved drug and is the first smallpox antiviral approved for all age groups, including infants. The addition of TEMBEXA to the strategic national stockpile is important for several reasons.

As we've seen with COVID, having multiple tools to counter a viral outbreak is really critical. Strains of the smallpox virus that are resistant to the currently stockpiled countermeasure, whether that resistance is engineered intentionally or occurs naturally, are not anticipated to be resistant to TEMBEXA. The reverse is true as well. In fact, the mutations required for resistance to TEMBEXA significantly weaken the virus and reduce its lethality.

And having both tablet and suspension formulations covering all age groups is also an essential enhancement to our readiness. BARDA remains actively involved in our current development contract and celebrated the approval of TEMBEXA as their 60th such approval in partnership with industries. Anticipating the RFP associated with a procurement contract, we have already completed work likely required for a response to that RFP. That puts us in a position to possibly expedite the time from RFP to contract.

We've also counted -- or I'm sorry, continued to execute the necessary steps to support the first shipment of up to $100 million of product into the stockpile. From a communication standpoint, we will issue an 8-K, so investors are notified as the RFP is posted to the government website, as is their practice. Moving now to ONC201 and particularly our work in H3 K27M-mutant glioma. In preparation for an updated efficacy analysis, including a blinded independent central review, we spent the last several weeks clearing, cleaning, and locking the databases comprising the registration cohort of 50 patients with recurrent H3 K27M-mutant diffuse midline glioma who received single-agent ONC201.

And recall that these patients represent the first 50 enrolled across five different studies who met very specific criteria for inclusion in the registration cohort. The inclusion criteria were really designed to create the most homogenous patient population and isolate the treatment effect for measurement of the primary overall response endpoint. All these patients have measurable diffuse midline glioma. They harbor the H3 K27M mutation and have evidence of progression following radiation therapy administered at least 90 days prior.

And in many cases, these patients had progressed following additional post-radiation therapies as well. We're also gathering the data associated with the handful of patients who met all of those criteria for that cohort and have disease outside the midline. This data will be evaluated by a team of blinded independent central reviewers, or BICR, and we expect to share the efficacy analysis arising from that effort in the fourth quarter of this year. Key elements of that analysis will include overall response rate as assessed by RANO criteria; the durability of those responses; and then other supporting evidence of clinical benefit, including neurological improvements as measured by performance status; and reduction in the use of corticosteroids.

We anticipate sharing the same data, along with other information, such as an ongoing natural history study, with the FDA and the EMA, which may then form the basis of an accelerated approval of ONC201. Turning now to our DSTAT program. Earlier this year, we initiated enrollment of patients in the DASH AML study, our phase 3 trial evaluating DSTAT in combination with standard chemotherapy for the treatment of AML. This multicenter, randomized, double-blind, placebo-controlled study is evaluating the efficacy and safety of DSTAT in combination with standard intensive induction and consolidation chemotherapy for the treatment of newly diagnosed AML patients.

We expect to unblind data following enrollment of the first 80 evaluable patients in this study to assess minimal residual disease and complete response rates between the study arm and the control arm. This analysis, we expect to take place in the second half of 2022. With that, I'll now turn the call over to Mike Andriole for a review of the financials. Mike?

Mike Andriole -- Chief Financial and Business Officer

Thanks, Mike, and good morning, everyone. As Michelle mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the second quarter of 2021. Starting with our balance sheet. We remain well-capitalized and ended the second quarter of 2021 with approximately $140 million in capital to fund operations.

We have several key milestones upcoming on TEMBEXA, ONC201, and DSTAT and are well funded through those milestones. Additionally, funding from a possible BARDA procurement contract could provide $80 million to $100 million annually to support our ongoing research and development programs. Turning to our statement of operations. The company reported a net loss of $17.8 million or $0.21 per basic and diluted share for the second quarter of 2021 compared with a net loss of $10 million or $0.16 per basic and diluted share in the second quarter of 2020.

Revenues for the second quarter of 2021 were $0.4 million, compared to $1.4 million for the same period of 2020. Research and development expenses increased to $13.8 million for the second quarter of 2021, compared to $8.6 million for the same period in 2020. The main driver of this increase was the addition of personnel, clinical, and development expenses, following the acquisition of Oncoceutics to support the addition of ONC201 to the pipeline. General and administrative expenses increased to $4.4 million for the second quarter of '21, compared to $3.1 million for the same period in 2020.

With that overview, I'll now turn the call back over to Mike for closing remarks. Mike?

Mike Sherman -- President and Chief Executive Officer

Thanks, Mike. As you can see, we've made meaningful progress throughout the first half of 2021. Our recent FDA approval sets the stage for a BARDA procurement contract, and the advancements we've made with our oncology program leave us well-positioned to achieve several value-creating milestones throughout the balance of this year and beyond. With that, let me turn the call over to the operator, and we can take your questions.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Naureen Quibria with Maxim Group.

Naureen Quibria -- Maxim Group -- Analyst

Hi. Good morning and congratulations on the progress, especially with TEMBEXA approval. So I was just wondering with regards to the BARDA -- with BARDA, just -- we now have a new surge in the Delta variant and so forth. So are you aware of any shift in their priorities potentially from earlier in the year?

Mike Sherman -- President and Chief Executive Officer

No. I think the short answer is that where they had a pinch has been in their contracting group. And I don't think that that has been impacted by the sort of the recent activity or the recent surge in COVID, for sure. We have an ongoing contact and communication with BARDA, just based on our ongoing kind of relationship with the development contract that exists today, and we continue to have recent conversations that support our expectation that we need to be ready to ship product into the stockpile before the end of the year.

Naureen Quibria -- Maxim Group -- Analyst

Got it. That's really helpful. And then with regards to the DSTAT program, are you actually able to comment or shed any color on the enrollment numbers and accrual rate at this point?

Mike Sherman -- President and Chief Executive Officer

Yeah. It's probably still too early to identify enrollment trends as we're still activating sites. And then I don't tend to get in the habit of getting quarterly updates on enrollment numbers, but our expectation at this point is that we would have that analysis of the 80-patient first assessment in the second half of next year.

Naureen Quibria -- Maxim Group -- Analyst

Got it. And just one more for me. With regard to the ONC201 program, there was some -- there was a presentation at ASCO on paraganglioma study, the IST study. So would we -- in addition to -- obviously, the top-line data is coming out of the registration cohort.

Will we see more from the other study [Inaudible] on that?

Mike Sherman -- President and Chief Executive Officer

Yes. So the updates from a clinical standpoint will come from really two things. One is the registration cohort, and the second I referred to was essentially this other group of patients that we're following that sort of meet all of the criteria of that cohort, except that they have disease outside of the midline structure. I would not expect an update on the paraganglioma.

We also have an ongoing trial with ONC206, and that's also probably early as that's in dose-escalation phase for updates. So those would come later.

Naureen Quibria -- Maxim Group -- Analyst

OK. All right. Thank you for taking my question.

Mike Sherman -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Joseph Thome with Cowen and Company.

Joseph Thome -- Cowen and Company -- Analyst

Good morning, and thank you for taking my questions. The first one on ONC201. I mean, we are going to see the reanalysis of the whole pivotal cohort later this year, but we have already seen a good group of patients that have had responses in the blinded review. Is there anything different, I guess, between the analysis that took place with that initial subset and that initial blinded independent review and what's going to happen later in the year that may change responses for the better or the worse? And then second, because you did mention the subset of patients that do have disease outside the midline, maybe how are you thinking about including that in the regulatory submission? And maybe from an efficacy standpoint, is there any reason why patients that have midline tumors or non-midline tumors would perform better or worse?

Mike Sherman -- President and Chief Executive Officer

Yeah. So let me handle the first question about the change in the -- or any change in the analysis, and I'll let Josh and Allen talk about the non-midline patients and how those might be incorporated, and how we anticipate that to transition to a potential label. The first question relates to the analysis of these patients. In fact, the analysis is essentially -- will be the same from a criteria perspective.

So the RANO criteria as it relates to the overall response is a very strict and well-defined criteria. The difference in what was performed previously, number one, that analysis was covering just a portion of those 50 patients. So we'll cover all of those patients in this analysis. Secondly, the previous blinded assessment was performed by a single-blinded reviewer.

This will be performed by a group of reviewers, so two reviewers with a third reviewer to adjudicate if there are any differences between those. And sometimes, it's possible with these images that you can have slightly different interpretations of the reduction. And there is a threshold of 50%, for example, that is required to be met for two successive scans. And we've talked about a couple of the patients that are both right -- just short of that 50% reduction that you could imagine could be read differently and become a response, and the reverse is true as well.

That having been said, we had our independent reviewer, as part of our diligence, look at the scans and really found very high concordance between what he reviewed and what was reviewed by the blinded independent central reviewer. And for that matter, the investigators, not only on the best response, which I think is obviously interesting and important for the overall response rate assessment but maybe as important, the over -- the time series, where you see the durability of these responses and for the patients that have responded, that response has been quite durable, a progression-free survival in those patients in excess of 15 months. So durability will be, I think, a key element of how the FDA looks at this response. Maybe let me pass it to Josh first to talk about these patients outside the midline, and then maybe Allen can address how we think about that from a regulatory standpoint and how we would submit that data.

Josh Allen -- Chief Technology Officer

Sure. Good morning, Joseph. So with respect to the midline and non-midline question, I'd like to start with a reminder that the requirement of involvement of the midline with the disease to be included in the registration cohort is really driven by a desire to select these adequately homogeneous population with respect to natural history. Subjects without midline involvement but with inclusion of the H3 K27M mutation of their disease are still regarded as a life-threatening disease that does not have proven effective treatments.

It's just that this is a relatively rare population, and the prognosis of those patients have not been adequately studied. So due to the lack of knowledge, really, with regards to natural history, those subjects were excluded from the primary registration cohort. That being said, we view those issues as distinct from whether or not the treatment effect of ONC201 extends to those patients with disease outside of the midline. And for that reason, we still included those subjects in enrollment of clinical trials.

And what you saw at ASCO was the release of those patients who meet all of the same criteria within the registration cohort, except they did not have midline involvement of disease. As you can see from the data that was reported there, we saw a similar pattern of objective response rate and clinical benefit emerge in those patients, albeit a small sample size, given that it's a rare population. We do plan to include those patients as a supplemental analysis in our NDA planning. So even though they're excluded from the registration cohort from the -- for the reasons I outlined, we do plan to present that data that would help to support a picture of ONC201's treatment effect extending to H3 K27M-mutant glioma, regardless of tumor location.

I'd like to turn it over to Allen to just comment with regards to how that would be handled and thinking about labeling.

Allen Melemed -- Chief Medical Officer

Hi. This is Allen Melemed. The only additional I'll add is a primary registration cohort will be in the midline with the other characteristics that Josh had mentioned. This will be additional supportive data for FDA to review the activity of ONC201, which, to me, will be -- we hope to be supportive data for approval.

Joseph Thome -- Cowen and Company -- Analyst

Excellent. That is very helpful. Thank you very much.

Operator

Your next question comes from the line of Soumit Roy with JonesTrading.

Soumit Roy -- JonesTrading -- Analyst

Hi. Good morning, everyone, and congratulations on all the progress. Just to elaborate a little bit more on the ONC201 data, what would be the median duration of drug you anticipate by the time you will have the database closed? And any thoughts on how you're trying to probably improve on getting more responders if you're thinking of going earlier in the line or combination trials? Any thoughts for the future?

Mike Sherman -- President and Chief Executive Officer

I'll start that, and maybe, Josh, you can chime in, too. One way -- if I understand your first question correctly about the median duration of drug, the last patients to be enrolled in that or included in that 50 cohort would be on drug for more than a year. So you're probably at that 14-plus months, so close to a year and a half. The median, I'm not sure what that is, but it's obviously far in excess of that.

And so I guess I would characterize the maturity of this follow-up as quite good. It will give us a good picture of not only responses but the durability of those responses across this cohort. And maybe let me hand it over to Josh to talk a little bit about the -- either add to that, and then we can talk about how we're thinking about the additional populations going forward.

Josh Allen -- Chief Technology Officer

Yeah. Nothing to add on the maturity of the data. I think that's well characterized. It's greater than one year for the cohort.

With respect to -- I believe the question was aimed at how to potentially improve response rates, will we potentially pursue combination therapies or earlier lines of therapy, and I think the answer is both are in the works. So first of all with regards to moving toward frontline therapy, that is supported by a subgroup analysis performed at SNO last year and released, indicating that the predictors of increased likelihood of response were in line with, number one, having smaller baseline tumor size; and number two, pertaining to patients who have not had salvage or asked the treatment at the time they've initiated ONC201, both of which point to starting therapy earlier in the course of their disease may be associated with an increased likelihood of response. Those clinical findings, in addition to the fact that ONC201 exhibits either additive or synergistic activity in preclinical models, leads one to believe that moving toward the frontline setting in this disease would make a lot of sense. To that end, our pediatric program for ONC201 study, ONC14, has already moved the drug into the frontline setting in combination with radiation.

And we've seen the safety profile of the agent be maintained in that setting. So clearly, movement toward frontline therapy in this disease is a clear direction for the molecule. In addition, the published literature shows ONC201 is synergistic with a wide variety of anticancer agents. There have been a number of investigators who have cooperatively taken on the task of prioritizing synergistic agents with ONC201, specifically entities that bind gliomas.

And we look forward to working with those investigators toward a combinatorial trial in the future that prioritizes the top hits out of that effort. One of the things when you think about this landscape and other products that are in development, including there's a CAR T specifically targeting H3 K27M, I think given the severity of this disease, the expectation is and then the hope is that there are at least one or more other drugs that can help these patients. And ultimately, one of the advantages of ONC201 is that you would expect to be able to combine it with any of those and be able to do that safely. So in a way, I don't see a substantial competitive threat.

This is a combination opportunity down the road. The other subtlety I would mention is the way this trial was designed in order to isolate the response of the single-agent ONC201 and particularly distancing the initial radiation therapy by at least 90 days. What you would expect, and most physicians will say this, they would much prefer -- whether it's in combination with radiation or even if it immediately follows radiation as opposed to waiting for these patients to progress and their disease advance, so you could see sort of a middle ground there, where you would at least move the drug closer to frontline therapy for potentially more activity. So anyway, two, I think, additional points to consider as you think about the utilization of the drug going forward.

Soumit Roy -- JonesTrading -- Analyst

Great. Really helpful. Thank you so much.

Operator

[Operator instructions] Your next question comes from the line of Maury Raycroft with Jefferies.

Maury Raycroft -- Jefferies -- Analyst

Hi. Good morning, everyone. Just a clarification on 201 analysis. You mentioned there will be a group of reviewers.

Can you elaborate on that? I guess how many reviewers will be involved? And can you talk more about how the process will work? 

Mike Sherman -- President and Chief Executive Officer

I'll give the real high level, and Josh or Allen can give a little bit more detail if it's helpful. But I think it's important to start by remembering that this RANO criteria is -- it does go beyond just an imaging assessment. It's one of the things that I think is important to remember about RANO criteria. These responses are sort of legitimized by not just the imaging response but also the clinical activity around it.

You cannot have a bona fide RANO response if there is an increasing use of corticosteroids or if there's a deterioration in the performance status. So all of those are elements of the review. In this case, there will be two reviewers that are assessing the scans and that associated data. And then where there's a disagreement, there would be a third that adjudicates that.

And that's really the preferred approach by the FDA, and that's the reason that we have the protocol structured as such. I don't know if there are additional details, Josh or Allen, that you think will be helpful to add to that.

Allen Melemed -- Chief Medical Officer

Yes. This is Allen. The only thing I'll add is we're using a vendor that has a lot of experience in doing these reviews, so we're -- period.

Maury Raycroft -- Jefferies -- Analyst

Got it. OK. That's helpful. And apologies if I missed this at the beginning of the call.

But for the TEMBEXA procurement contract, based on your conversations, do you have a sense of whether BARDA is taking a longer time because of administrative backlog? Or are there other gating factors involved that you can comment on?

Mike Sherman -- President and Chief Executive Officer

Yes. My sense is that it's an administrative issue and one that, as I mentioned, based on the conversations that we have and which are ongoing related to the open development agreement, our expectation is that we need to be ready at least for a potential shipment into the stockpile later this year. So there's been no change in terms of BARDA's enthusiasm and priority around this program. And as I mentioned in my commentary, quite the opposite.

They were celebrating this approval. It's an important one for the stockpile given the vulnerability whenever you just got one countermeasure and the possibility, and frankly, the likelihood that you'd have a resistance strain emerge. These two drugs in the stockpile are really quite complementary in a number of ways. So I think it's a dramatic improvement in the state of the stockpile when you can add this or the quality of the stockpile.

And I do think -- and I've seen quotes from -- there's been some change in leadership with new administration and just a couple of signs that this continues to be a priority. One is an acknowledgment by the ASPR leadership that they will be measured by how well this stockpile is positioned broadly, not just as it relates to COVID, number one. And number two, the draft budget as prepared by this administration called out this product, our product by name, and includes it in a way that's consistent with what we would have expected in the future budgets. And we know that they've had a funding earmarked for this for some time.

So I really don't expect that there's -- it's more a question of timing than it is a question of the --

Maury Raycroft -- Jefferies -- Analyst

Got it. OK. And that's really helpful. And maybe last question, just wondering if there's any new perspective on potential on using MRD as an elevated or prioritized endpoint in your AML phase 3.

Have you had any new conversations with regulators or even experts on the topic that you can comment on?

Mike Sherman -- President and Chief Executive Officer

I'll start that, and maybe Allen can add if I miss something. But the only thing that's really changed in recent months is the announcement by Kronos that they are using that as primary endpoint for their AML study. It's in a different patient population, so there's some differences that probably lend itself as more acceptable or potentially more acceptable as a primary endpoint. So I think there's continued momentum in that regard.

We don't really plan to have a follow-up conversation until we have some data to share with the FDA. We left the conversation with them as we got alignment on our phase 3 trial quite positively as it related to MRD to the point that we discussed the possibility of switching our endpoint to MRD. And their feedback was as long as you haven't -- as long as you're still blinded to whatever data you're including in that assessment, then that would be something that they would be open to, subject to presenting some data. So I think the strategy would be if we have some data that's meaningful that comes from that first patient cohort, one scenario is that you just move ahead with the existing trial.

And the design of that trial and MRD is a supportive endpoint instead of a primary. Another scenario is that you flip to MRD as a primary endpoint. It wouldn't really change any of the execution of the protocol, so you could do that midstream.

Maury Raycroft -- Jefferies -- Analyst

Got it. OK. That's really helpful. Thanks for taking my question.

Mike Sherman -- President and Chief Executive Officer

Thanks, Maury.

Operator

At this time, there are no further questions. I would now like to turn the call back over to Mr. Mike Sherman.

Mike Sherman -- President and Chief Executive Officer

Well, again, thanks, everyone, for joining us, and look forward to giving you important updates coming up later this year. Have a good day.

Operator

[Operator signoff]

Duration: 33 minutes

Call participants:

Michelle LaSpaluto -- Vice President of Strategic Planning and Investor Relations

Mike Sherman -- President and Chief Executive Officer

Mike Andriole -- Chief Financial and Business Officer

Naureen Quibria -- Maxim Group -- Analyst

Joseph Thome -- Cowen and Company -- Analyst

Josh Allen -- Chief Technology Officer

Allen Melemed -- Chief Medical Officer

Soumit Roy -- JonesTrading -- Analyst

Maury Raycroft -- Jefferies -- Analyst

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