Achieve Life Sciences Q4 2022 Earnings Call Transcript

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March 16, 2023

Key Takeaways

  • Phase 3 success: Achieve completed its first Phase 3 ORCA-two trial for smoking cessation with highly positive efficacy and safety results, confirming cytisinicline’s potential as the new gold standard for nicotine dependence.
  • Early enrollment completion in the Phase 2 ORCA V1 vaping cessation trial, driven by strong site and participant enthusiasm, with top-line results expected in Q2 2023.
  • Financial position strengthened by a November 2022 private placement of ~$17.9 million, boosting cash to $24.8 million and providing runway into late 2023 despite increased net losses from trial investments.
  • Commercial strategy focuses on partnering with a major pharma for primary care distribution, targeting the top 30% of prescribers for an initial ~$300–400 million market opportunity before broader rollout.
  • Regulatory preparations underway, including hiring a full-time NDA expert, with an NDA submission for cytisinicline anticipated in the first half of 2024 pending Q2 trial outcomes.
AI Generated. May Contain Errors.
Earnings Conference Call
Achieve Life Sciences Q4 2022
00:00 / 00:00

There are 7 speakers on the call.

Operator

A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Nicole Jones with CG Capital. Please go ahead, Nicole.

Speaker 1

Thank you, operator, and thank you to everyone for joining the call. Today from Achieve, we have John Vincich, Chief Executive Officer Doctor. Cindy Jacobs, President and Chief Medical Officer and Jerry Won, Principal Accounting Officer. Achieve Management will be available for Q and A after the prepared remarks. I'd like to remind everyone that today's conference call contains forward looking statements based on current expectations.

Speaker 1

These statements are only predictions and I'll now turn the call over to John.

Speaker 2

Thank you, Nicole, and thanks, everyone, for joining us today. In 2022, we achieved significant milestones that were crucial to advancing cytisinicline and to meeting our key objectives We are proud to have executed successfully on numerous critical activities, including the completion of our first Phase 3 trial for smoking cessation, which yielded highly positive efficacy and safety results. This outcome confirmed our belief that our new cytisinicline dosage and regimen has the potential to become the new gold standard for treating nicotine dependence. We secured grant funding to initiate our first vaping cessation trial, which exceeded our expectations in completing enrollment early Due to the great enthusiasm at the sites and with study participants who wanted to quit vaping. We also strengthened our intellectual property position, Concluding the year with a total of 15 granted patents and 46 pending patents, including expirations extending out until 2,042.

Speaker 2

Along with our partner So Pharma, we completed the build out of a new API facility, expanding our global manufacturing capacity to meet expected commercial requirements. In 2002, we also engaged in numerous productive strategic discussions with potential partners. And finally, we secured capital to ensure completion of our upcoming development milestones. We take great pride in completing these critical activities With a team of only 20 full time Achieve employees. These accomplishments speak greatly to the expertise of our team in the various roles report, we continue to receive from our external stakeholders.

Speaker 2

We made significant progress in 2022 And now we look forward to the year ahead, which promises to be even more exciting. With that, our focus turns to the upcoming milestones and priorities for 2023. Next quarter, we will have 2 trials reporting top line results. 1st, ORCA V1, our Phase 2 trial for nicotine vaping cessation Followed by ORCA-three, our 2nd Phase 3 trial for smoking cessation. Beginning with ORCA V1, In approximately 4 months of initiating enrollment, ORCA V1 had randomized 160 adult users of nicotine e cigarettes across 5 clinical trial sites.

Speaker 2

Partially funded through grant support from NIDA and NIH, ORCA V1 aims to explore this population for chooses. First, we believe that cytisinicline will be as effective in vaping cessation as it is in smoking cessation, given its mechanism of action on the nicotine receptors in the brain. And second, there is a significant and growing unmet need in this area. Our clinical trial findings thus far demonstrate that cytisinicline significantly improves smokers' chances of overcoming their addiction to nicotine as compared to placebo. We believe this effect will be applicable to other modalities of nicotine administration more broadly, including vaping.

Speaker 2

Additionally, we have demonstrated that cytisinicline has a very well tolerated side effect profile, which may be particularly important for treating treatment compliance and ultimately successful outcomes. The use of e cigarettes, in particular among adolescents, is a growing concern. According to data released by the CDC in November 2022, Approximately 2,500,000 high school and middle school students in the U. S. Were using e cigarettes.

Speaker 2

It has also been reported that adolescents who use e cigarettes are 7 times more likely to try combustible cigarettes in the future. Our vaping study ORCA V1 focuses on adult users of e cigarettes, of which there are an estimated 9,000,000 in the U. S. Alone. While we are not currently seeking a pediatric indication, it may be a potential consideration for future research, presenting another chooses to make a significant impact on public health.

Speaker 2

The ORCA V1 trial will be important in showing the effects of cytisinicline treatment We will learn a lot from the results of this trial. Similar to the smoking cessation trials, the primary endpoint is biochemically verified continuous abstinence during the last 4 weeks of treatment. However, in these trials, the biochemical verification is based on systemic cotinine levels, which is a metabolite of nicotine. The last subject of ORCA V1 received their final dose in February And the last subject visit was completed earlier this month. As previously stated, we are on track to report top line results in the 2nd quarter.

Speaker 2

Also expected next quarter are results from our 2nd Phase 3 trial of cytisinicline for smoking cessation. The ORCA-three trial randomized 792 subjects across 20 clinical trial locations in the U. S. We announced in January that the last ORCA-three subject had been dosed. ORCA-three mirrors our previous Phase 3 ORCA-two study In evaluating efficacy, safety and tolerability of 3 milligrams cytisinicline dosed 3 times daily For either 6 or 12 weeks compared with placebo.

Speaker 2

Subjects are being monitored through 24 weeks post randomization Each treatment arm will be compared independently to the placebo arm And the trial will be determined to be successful if either or both of the cytisinicline treatment arms show a statistical benefit compared to placebo. Similar to ORCA 2, ORCA 3 was designed with approximately 95% power to be able to demonstrate a continued The ORCA-three trial aims to replicate the positive results observed in the ORCA-two trial, which continue to be well received and have been submitted for publication. Earlier this month, additional analyses from Orca 2 were presented by Doctor. Nancy Rigotti at the Society For Research on Nicotine and Tobacco Annual Her presentation highlighted the successful abstinence rates observed by smokers who received cytisinicline compared to placebo. The abstinence benefit was observed in subgroups of smokers who received cytisinicline regardless of age, gender, smoking history, Previous quit attempts or prior treatments.

Speaker 2

Point prevalence data was also presented and provided additional insights on the Consistent abstinence behavior at multiple time points throughout the 24 week study. Subjects who received cytisinicline demonstrated Due to this study being under review for publication, we are not able to provide more specific details outside of the Medical Congress. However, these data continue to affirm our belief in the potential of both 6 12 week dosing of cytisinicline for a wide demographic of smokers who are at various stages of their quit journey. Moving beyond the highly anticipated trial readouts, our Our team is also fully engaged in preparations for cytisinicline new drug application or NDA filing in the U. S.

Speaker 2

To lead and organize this process, we have recently hired a full time regulatory team member who possesses significant experience with NDA filings. With a robust amount of data in hand, particularly non clinical, we are beginning to draft select sections of the NDA while we await final clinical data. At this time, I'd like to turn the call over to Jerry for our financial update.

Speaker 3

Thanks, John. As of December 31, 2022, The company's cash, cash equivalents, short term investments and restricted cash were $24,800,000 as compared to $18,200,000 as of September 30, 2022. The increase in cash over the prior period was due to our private placement, which closed in November 2022, providing incremental net proceeds of approximately 17,900,000 As stated at the time of the financing, we continue to believe our current cash balance is sufficient to provide runway into late 2023. Now turning to our statement of operations. The company incurred a net loss of $11,200,000 for the quarter ended December 31, 2020 is interested, as compared to a net loss of $7,200,000 for the same quarter of 2021.

Speaker 3

Total operating In the Q4 of 2022 increased to $10,900,000 as compared to $7,100,000 for the same quarter of 2021. Operating expenses increased for the quarter ended December 31, 2022 as we fully enrolled in both the ORCA-two Phase 3 trial and the ORCA V1 Phase 2 trial. We anticipate our operating expenses to remain elevated during the Q1 of this year And then decline in the Q2 in line with completion of both the ORCA-three and ORCA V1 trial. As a reminder, Approximately half of the costs from the ORCA V1 trial are expected to be funded through a grant from the NIH. That concludes my financial remarks.

Speaker 3

I will now turn the call back to John.

Speaker 2

Thanks, Jerry. To wrap up, we made great strides in advancing cytisinicline in 2022. The months ahead promise to be even busier and more exciting for Achieve. We will maintain focus on delivering top line results from 2 important trials during the Q2 of this year, continuing our preparations for the NDA and furthering partnering discussions once data is in hand. Like many of you, we have faith in the potential of our product to make a significant impact in the lives of smokers who are struggling with nicotine dependence And searching for alternative solutions.

Speaker 2

The impact of smoking affects 1,000,000 each year, resulting in over 400,000 deaths in the U. S. Alone. Approval of cytisinicline would introduce the 1st new treatment option in nearly 20 years with the potential to positively transform the lives of 1,000,000. We remain committed to advancing our mission.

Speaker 2

We look forward to sharing our data results with you soon and sincerely appreciate your ongoing support. Thank you for joining us today and we'd now like to open the line for questions. Operator?

Operator

Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Thomas Flaten from Lake Street Capital. Your line is now live.

Speaker 4

Great. Thanks for taking the questions. John, I was wondering if you could maybe map out for us what a realistic timeline assuming no unexpected wrinkles from data readout on ORCA is ready to NDA submission.

Speaker 2

Yes. Thanks, Thomas. So as we outlined on the call today, we're looking at Both Orca V1 and Orca 3 results here in the Q2. And as we've guided, Orca V1 is going to be the first that comes online, and that's likely first half of the second quarter, if we're going to parse things out, and then Orca 3 coming in The second half of Q2. I think once we get that's just top line data results.

Speaker 2

Will still need to get the rest of the data pulled together behind the scenes as we kind of march things forward to NDA. But right now, we're looking at first half of twenty twenty four for NDA submission. And that's something we'll continue to interrogate in terms of further refining those timelines.

Speaker 4

Got it. And then with respect to the debt you have coming due in December and particularly in light of everything that's happened over the last week or so with SVB, any thoughts On your ability to maybe move that out to the I think the contract or the agreement allows for that to be bumped out a year, if I'm not mistaken, any thoughts on that?

Speaker 2

Yes. So obviously, the situation with SCB continues to evolve, but what we know as of today is that all of our deposits, 1st and foremost, are 100% backstopped by the Fed and the FDIC, which As you rightly call out, we do have the ability to extend the maturity by 1 year based on discussions with the bank and internal approvals, but that's something they have been

Operator

open to

Speaker 2

and I think we'll continue those dialogue. And from everything we're hearing, Including early this week, the bank continues to operate as it did before the disruptions over the weekend. So, we haven't seen any interruptions in terms of our ability to access our cash and everything we're hearing is that on the credit side of the bank, everything is proceeding as well. So I think we'll continue the discussions that have been ongoing with SVB previously.

Speaker 4

And then one final one, if I might. And I know we're a ways away from it, but anything kind of critical path item with respect to So Pharma being ready for potential FDA inspection post NDA submission, are they moving along your timeline? Are already ready, just some sense of their status with respect to their new facility.

Speaker 2

Yes, great question. So we continue to work hand in hand with So Pharma, in the early part of this year, we've already completed another mock FDA inspection of the facility out there in Sofia. And so, they continue to make progress and we'll continue working with them as we march forward to an NDA submission and A likely FDA inspection. So that work will continue, but we are encouraged by what we're seeing there And we'll continue to work with them to make sure that they're ready for an FDA inspection down the road.

Speaker 4

Excellent. Appreciate taking the questions. Thanks, John.

Operator

Thank you. Our next question is coming from Michael Higgins from Ladenburg Thalmann. Your line is now live.

Speaker 5

Hey, guys. Thanks for taking the questions. Congrats on completing enrollment 2 studies at once. Looking forward to seeing the data. Question for you guys and Cindy if you're available.

Speaker 5

Since 2018, you've had an agreement with the FDA on subacinaclin's pediatric study plan. Since obviously vaping has become more important as you have OrcaV-one results coming up next quarter, just curious if the agreement with the FDA on your pediatric plan has changed in any way, if you still expect to get a 6 month extension following approval? Thanks.

Speaker 2

Yes. Thanks, Michael. I'll hand that one over

Speaker 3

to Cindy.

Speaker 1

No, it has not changed in regards to approval with our indication of smoking cessation. I'm sure that, that will have follow on discussion, but not for smoking cessation at this time.

Speaker 5

Okay, very good. And a question for Jaime, if available or John, maybe you can help too. Anything notable you're seeing in generic Chantix products out there ahead of

Speaker 1

Go ahead. Yes.

Speaker 2

I was just going to say, just with respect to generic sales, as I think we've been updating folks over the course of 20 22, we did see Endo's year end earnings results and they had over 300,000,000 of generic Chantix sales for year end 2022. So I think it continues to demonstrate Just how robust this market remains and that's with virtually no sales and marketing expenses That they're deploying there, just a pure substitution play. And that's only about half of the unit sales that Pfizer was making with Chantix before it was withdrawn. So I think overall, we're encouraged from what we're seeing on the generic side. And Jamie, feel free to jump in with anything else you'd like to add.

Speaker 1

No, I think you covered it. Thanks, John.

Operator

If I could, just

Speaker 5

a quick follow-up. If the unit sales are roughly half of Pfizer's, where do you think those patients are going? Are they just not is getting the treatment that they did prior?

Speaker 2

Yes. I think our inclination is that when Pfizer was having issues with the fracturing and carcinogen problem with Chantix, there was a number of docs that just frankly stopped writing. And I think What we have heard from Endo is that they are going to be back out into the market with a bit of reminders that there is a product back available wants to see if they can start to penetrate those 50% that did drop off with the manufacturing issue.

Speaker 5

Interesting. Appreciate it. Thanks, guys.

Operator

Thank you. Next question is coming from Francois Brisebois from Oppenheimer. Your line is now live.

Speaker 6

Hey, John. Thanks for taking the questions. Just in terms of e cigarettes will be coming out first. You talked about the mechanism of action is making you comfortable that cytisinicline should work as well or at least should work in e cigarette users. In terms of odds ratio, I guess the question is, do you think it should work as well or any just any more color on

Speaker 2

Yes. Thanks, Frank. So, I mean, just to remind everyone, the mechanism for cytisinicline is is specific to the nicotine receptors in the brain, so we do believe there should be broad applicability across Smoking, vaping, chewing tobacco, snooze, kind of any form of nicotine addiction. I think when we look at e cigarettes in particular, I think it is difficult to triangulate exactly whether we should expect lower or higher odds ratios there. This is our first foray into this segment.

Speaker 2

And I think we often hear from our thought leaders and key opinion leaders around the difficulty of getting off of these products. And I think our inclination is likely that it could be a bit more challenging just given the ease and accessibility of Basically consuming more nicotine in a simplified manner than what you see with traditional cigarettes. But I think that's kind of the beauty of this trial. It will give us a firm best baseline of how we would need to power future trials in this category. So, I think any activity here is going to be positively received.

Speaker 2

And I think were over an odds ratio of 2, which is what we see with existing smoking cessation products as kind of the minimum entry point, I think anything there or above would be consider to win in this category.

Speaker 6

Okay, that's helpful. And then maybe on the commercial front, In terms of it's a very large market. You talked about partnering discussions, but is there any way to attack this market By yourself or is like I guess what I'm asking is, are the prescribers kind of concentrated in certain areas where a certain amount of prescribers actually do most of the market and it's approachable or is this just too big to take on alone?

Speaker 2

Yes. Thanks for the question, Frank. So, our belief has always been that this product is best suited in the hands of a pharma or large a Biotech group that already has an existing primary care footprint in place, and I think that's something that we have been in discussions with potential partners and that will continue with data. We think that the data sets in Q2 are going to be instrumental in furthering those discussions. With that being said, if this is in our hands, as we get to market, we do see a real opportunity to move moves this ahead in an efficient cost efficient manner.

Speaker 2

And there is, I think, as you're alluding to, Quite a bit of efficiency at the top 3 deciles. So if we look at kind of this category overall, 30%, at least looking at historical Chantix scripts were being written by about 7% of the physicians In this category are about $11,000 and we think that's an addressable segment to go after. And just looking at that alone would be $300,000,000 to $400,000,000 opportunity before reinvesting and expanding beyond that. So we do think there is a path, but at the end of the day, we think this is best suited in the hands of a large pharma.

Speaker 6

Understood. All right. Thank you very much, John.

Operator

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.

Speaker 2

Great. Thanks, Kevin. Thanks for everyone for joining us today. We appreciate all the support over 2022, we're very excited about what's ahead of us and we look forward to bringing further updates as we move into the 2nd quarter and drew both ORCA V1 and ORCA III top line results. So thanks everyone for joining us today.

Operator

Thank you. That does conclude today's teleconference and webcast. You may

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