Achieve Life Sciences, Inc. (ACHV) on Q1 2024 Results - Earnings Call Transcript
Operator: Greetings. Welcome to Achieve Life Sciences’ First Quarter 2024 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like to hand the call over to Nicole Jones, Investor Relations. Thank you. You may begin.
Nicole Jones: Thank you, operator. Good afternoon, everyone, and thank you for joining us today. From Achieve Life Sciences, we are joined by John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; and Jerry Wan, Principal Accounting Officer. Management will be available for a Q&A session following today’s prepared remarks. Before we begin, I’d like to remind everyone that today’s conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to Achieve’s documents available on our website and filed with the SEC concerning factors that could affect the company. I’ll now turn the call over to, John.
John Bencich: Thank you, Nicole, and thanks everyone for joining us today. Today, we will review our first quarter 2024 financial performance and discuss key highlights, including reaching agreement with the FDA on the long-term cytisinicline exposure data necessary for our NDA filing. Critically for the timing of the NDA submission, we agreed on the number of subjects required with six months exposure to enable the NDA filing. Cindy will provide an update on the ORCA-OL study and discuss the status of initiation in just a moment. Concurrently with the FDA decision, we successfully secured financing of up to $124 million enabling Achieve to execute the ORCA-OL trial and provide cash runway through the NDA submission, NDA approval and beyond. The financing included participation from new fundamental healthcare investors, including our manufacturing partner Sopharma. The investor demand for the financing demonstrates the importance of cytisinicline in battling nicotine dependence and a growing confidence in cytisinicline’s market opportunity. The visibility of cytisinicline as a drug for nicotine dependence has been raised markedly during the quarter. And, as many of you will have read, the results from the Phase 2 ORCA-V1 trial of cytisinicline for vaping cessation were published in JAMA Internal Medicine earlier this week. The ORCA-V1 study included 160 adults who used e-cigarettes daily and desired to quit. There was incredible interest in this trial and has enrolled quickly in approximately four months. The results showed that cytisinicline more than doubled the odds of quitting e-cigarettes compared to placebo, with 31.8% of cytisinicline treated participants achieving continuous vaping abstinence compared to just 15.1% of those receiving placebo. As seen in our other trials, cytisinicline was incredibly well-tolerated and compliance with study treatment was exceptional. The prevalence rates of vaping continue to increase and it is estimated that 11 million adults and 2 million middle and high school age students use e-cigarettes in the U.S. alone. More than half of adults who vape have reported interest in quitting and many who tried to quit struggled to do so successfully. If approved, cytisinicline would be the first FDA approved treatment specifically evaluated and approved for e-cigarette cessation. We plan to further our discussions with the FDA on a label expansion for vaping cessation and expect to conduct an end-of-Phase 2 meeting later this year to discuss clinical requirements. Additionally, in the first quarter, we presented detailed trial results from our ORCA program at the Society for Research on Nicotine and Tobacco Annual Meeting. The ORCA-2 and ORCA-3 Phase 3 trials have consistently demonstrated cytisinicline’s efficacy in achieving smoking cessation with favorable safety and tolerability profiles. For the first time, we presented survey results from participants in our Phase 3 trials. Of the participants who responded, over 80% had been treated with cytisinicline. Of these cytisinicline treated subjects, 69% of them had successfully quit smoking and of those who did not quit completely, approximately one-quarter cut their smoking in half. These respondents attributed their success in quitting to cytisinicline, noting that amongst other things, it helped reduce cravings. Nearly all participants of the survey were willing to recommend cytisinicline to others, and notably, 86% of participants, including those who did not quit completely, showed interest in using cytisinicline again if needed. This is a great segue into Cindy’s update on the ORCA-OL trial. Cindy?
Cindy Jacobs: Thank you, John. Our focus for the first quarter has been on preparations for the NDA submission, most importantly on the initiation of the ORCA-OL study. I’m pleased to update that plans remain on-track with our guidance and we expect to begin enrollment within the next few weeks. As a reminder, the ORCA-OL is a single-arm open-label study that will collect safety data on the long-term use of cytisinicline. Our agreement with FDA is to provide safety data on a minimum of 300 subjects treated with cytisinicline for a cumulative period of six months as part of the NDA submission. Subsequently and prior to product approval, we will provide data on at least 100 subjects treated for a total period of one year. Because FDA has allowed cumulative exposure, enrolling from the pool of subjects previously treated with cytisinicline for either six or 12 weeks in our smoking or vaping cessation trial will allow us to expedite the time required to generate this long-term exposure data. We are first focusing on recruitment from those subjects who have already received three months of prior cytisinicline treatment as they would only need another three months of treatment on the open-label study to fulfill the six month exposure requirement for the NDA submission. As an update, ORCA-OL is planned to be conducted at 29 clinical sites all of which participated in our previous studies, all contracts and planning have been completed with our clinical operations’ partners and vendors. We have also completed the packaging of the drug product and are preparing for shipments to the site. Meanwhile, of the 1,700 participants from our earlier trials, the sites have been conducting outreach to more than 1,100 subjects who were previously treated with cytisinicline and are scheduling initiation visits for those who are interested. We have received feedback that there is high enthusiasm for participation from those who are eligible. Interestingly, the primary reason for not being eligible for the open-label trial is that about 25% of the previously cytisinicline treated subjects continue to be smoke or vape free, even after completing their treatment on the prior trial over one to two years ago. Even only 7% to 9% of subjects have been lost to contact or not interested, the remaining two-thirds who have been contacted want to be considered for the trial. Thus, we believe the planned enrollment should be achieved swiftly in 2024. So in summary, we are moving forward as expected and continue to anticipate an NDA submission in the first half of 2025 and look forward to providing an update in the coming weeks once enrollment has been initiated. Now, I’ll turn it over to Jerry, for a review of the financials for the quarter.
Jerry Wan: Thank you, Cindy. Good afternoon, everyone. I’d like to provide an update on our financial activities this quarter, focusing on the financing and strategic implications for our operations and then review our current financial status and forward outlook. Echoing John’s earlier points, this quarter we successfully secured a significant financial boost with a registered direct offering of common stock and a concurrent private placement of warrants collectively worth up to $124.2 million. The initial amount raised was $60 million with the potential to receive up to an additional $64.2 million upon the exercise of milestone driven warrants. This recent cash infusion ensures that we have the necessary resources to continue our clinical development plans effectively, including the pivotal ORCA-OL trial and our anticipated NDA submission. As of March 31, 2024, our cash, cash equivalents and restricted cash were $66.4 million. Looking forward, we anticipate that the initial net proceeds from this financing will sustain our operations well into the second half of 2025. If the milestone driven warrants are fully exercised, we anticipate it will extend our financial runway into 2026 and through potential approval of cytisinicline in the U.S. In regards to our Statement of Operations, total operating expenses in the first quarter of 2024 decreased to $6 million as compared to $8.6 million for the same quarter of 2023. The company incurred a net loss of $6.5 million for the quarter ended March 31, 2024, as compared to a net loss of $9 million for the same quarter of 2023. We expect our operating expenses and net loss to increase over the coming quarters as we initiate the ORCA-OL study. In summary, this quarter has strengthened our position both financially and strategically. With a strong cash position and a clear path forward, we are well-prepared to meet our upcoming milestones and continue our journey towards bringing cytisinicline to market. That concludes my update. I’ll now turn the call back over to John, for closing remarks.
John Bencich: Thank you, Jerry. We’ve had a dynamic start to 2024, advancing FDA discussions on NDA submission requirements and securing capital to provide resources for the execution of those required activities, in particular for the ORCA-OL trial. The recent positive reception of our clinical data published in JAMA and presented at SRNT not only reinforces the scientific validity of our findings, but also highlights the medical community’s recognition of cytisinicline as a potentially promising treatment for smoking and vaping cessation. Smoking remains the leading cause of preventable death, killing more than 8 million people globally each year, with nearly half a million of those deaths in the U.S. Smoking and exposure to secondhand smoke contribute to various cancers, as well as other pulmonary and cardiovascular diseases, creating devastating consequences to patients and their families. Cytisinicline’s future role in disease reduction is perhaps highlighted by chronic obstructive pulmonary disease, or COPD, a lung disease primarily caused by cigarette smoking. According to the CDC, 38% of the nearly 16 million U.S. adults diagnosed with COPD report current smoking. COPD is the sixth leading cause of death in the U.S. with estimated annual patient related costs of $31 billion which is expected to nearly double by 2029. Providing people with better options to quit smoking has the potential to reduce overall rates of COPD and offset the associated rising costs in the future. Additionally, smoking is a major cause of cardiovascular diseases such as heart attacks and stroke. According to the American Heart Association, cardiovascular disease accounts for about 800,000 U.S. deaths every year, making it the leading cause of all deaths in the United States. Of those, nearly 20% are due to cigarette smoking. These statistics and the importance of disease reduction validate the urgent need for effective cessation treatments, particularly as there has been no new approved smoking cessation agents in nearly 20 years and currently no FDA approved treatment for e-cigarette cessation to mitigate the broad public health impacts of smoking and vaping. It is clear the complexity of nicotine dependence increases healthcare costs and necessitates specialized interventions. We believe cytisinicline can play a critical role in this preventable health crisis and help achieve better long-term outcomes for patients. For the balance of 2024, our priorities are clearly defined. We will continue our focus on initiation and completion of enrollment of the ORCA-OL study, continue preparations for the NDA submission for smoking cessation and obtain further FDA guidance for expansion into e-cigarette cessation indication. In closing, I want to express my gratitude to our shareholders for your continued support and the dedication of our trial participants and their healthcare providers. We remain committed to providing a new therapeutic option that can significantly impact the lives of those affected by nicotine dependence. Thank you again for joining us today. We are eager to continue our progress and we’ll now open up the line for questions.
Operator: Thank you. The floor is now open for questions. [Operator Instructions] Today’s first question is coming from Thomas Flaten of Lake Street Capital. Please go ahead.
Thomas Flaten: Hey, good afternoon. I appreciate.
Operator: One moment please. Thomas, please go ahead.
Thomas Flaten: Sorry about that. Cindy, I just wanted to confirm with you, the mention you made about the 29 sites and the status of contracting. I was confused. Are all those sites under contract and ready to enroll or was the contracting comment related to the other vendors that you’re using?
Cindy Jacobs: No. Those sites are finishing up their contracts. They’re going to be ready to go, to roll all of them within the next couple of weeks.
Thomas Flaten: Great. And then, the 1,100 subjects, just so I understood, that’s two-thirds of the 1,700 you’d previously identified and about 25% of those 1,700 were smoke or vape free and the rest were lost to follow-up or not interested. Did I catch that math correctly?
Cindy Jacobs: Yes. But, what we’re doing is, we’re still getting contacting all of the 1,100. So, those that we’ve contacted which is getting close to almost most of them, yes, so we’re just as each week we go, we’re contacting more subjects. And, so those are the numbers as we get contact with those subjects. About 20%, 25% are not eligible because they’re smoke or vape free, which is very pleasing actually for us. And then, there was only about 7%, 9%, maybe 10%. Again, the numbers keep rolling in during the week that either they’re lost to contact or they’re not interested. So, yes, we are consistently about two-thirds of individuals we’re calling are interested in participating and are making contact obviously with the sites for screening.
Thomas Flaten: And then, just from a statistical perspective, if you’re starting with the group of 1,100, do you feel comfortable that from that 650 of them will be able to actually enter the study?
Cindy Jacobs: Yes. But, we’re also going to open a few spots to placebo subjects on those studies to increase our overall numbers of exposed subjects for the integrated safety summary.
Thomas Flaten: Got it. Appreciate it. Thanks for taking the questions.
Operator: Thank you. The next question is coming from Michael Higgins of Ladenburg Thalmann. Please go ahead.
Michael Higgins: Thanks, operator. Hi, guys. Thanks for taking the questions. Congrats again on the solidified balance sheet, agreements with the FDA, progress on enrolling ORCA-OL. Regarding that latter, just a follow-up from the prior question, just want to understand, of the two-thirds or so, of the 1,100 that you reached out to, it sounds like from the comments that all of them are willing and interested to come back into the study. But, have you gotten any more granularity as to what percent of those that you think will actually reenter the study and get back on cytisinicline? Thanks.
Cindy Jacobs: Yes. We won’t really know that until the screening process starts and they go through the inclusion and exclusion criteria. But just on that note, they’ve already been through the inclusion exclusion criteria on the prior trials and we’ve loosened it up for the open-label study. So, we don’t think the screening failure rate is going to be high, let’s put it that way.
Michael Higgins: Okay. And then a follow-up in your comment about the placebo patients re-enrolling these patients now with the expectation that they would go right into cytisinicline, how do you handle the potential for those going on placebo and how many in ORCA-OL would be on placebo?
Cindy Jacobs: And, there will be no one, in the open-label study on placebo. These are prior subjects who were on placebo in the previous trials, and they would be seeing cytisinicline for the first time and that would increase our overall exposure of individuals with cytisinicline overall.
Michael Higgins: Okay, makes sense. I thought maybe you were dosing them placebo all of a sudden.
Cindy Jacobs: No, no.
Michael Higgins: So, got it. And then, you mentioned going after those that have been treated for three months. What is your number? How big is that pool? How many have been treated for three months?
Cindy Jacobs: I don’t have the exact numbers that have been called and that they’re currently interested. Those are the things that we’re going to be monitoring as they come into the trial and start getting treated. We have already a link that, it will link their prior treatment to the treatments that they’re getting in the open-label, so we can monitor the overall exposure level as we do the study.
Michael Higgins: Okay, makes sense. And then, thank you, Cindy. John, one for you here before I go is, in your partnering discussions, we’re seeing increasingly it seems, Pfizer, Eli Lilly and others, big and small have been leveraging these virtual physician connections and the direct drug shipments to patients approach. How has that development affected your partnering discussions because it’s, I did, I can just see it coloring the partner that you’re most interested in working with, but just curious your feedback on that? Thanks.
John Bencich: Yes. Thanks, Michael. So, not able to comment on any specific discussions that are ongoing, but I will say kind of the new digital techniques and virtual techniques that are being utilized today and have come into effect over the last five or so years, in particular during the pandemic, are key attributes that we’re looking for. We think those are the right approaches to really move the needle moving forward in this category and I think this will only continue and I think the tailwinds from some of the larger pharmas that have gotten involved in other similar indications, call it think obesity, diabetes, areas like that, where finding a way to get the awareness out is critical. We think those are great sort of tools that will be used as we think about cytisinicline launching.
Michael Higgins: Yes, I think it’s a real win real win at your back as you’re partnering here. So, great to see it all happen. I appreciate it. I’ll jump back in the queue. Thanks, guys.
Operator: Thank you. The next question is coming from Frank Brisebois of Oppenheimer. Please go ahead.
Unidentified Analyst: Hi, this is Dan on for Frank. Thanks for taking our questions. Regarding the 29 sites, do you expect a certain subset of them to be high enrolling sites based on any factors or do you expect, sort of, equal distribution across the Board, any insights you can share based on the previous enrollment rates that you saw at these sites from the previous trials?
Cindy Jacobs: Yes. So, obviously these sites because of whatever their enrollment was on the previous study, there were some that were high enrollers than others, then they are using the basically those subjects coming back in. Of the 29 subjects, the 29 sites, these are all sites that did very well in the previous studies, not only in, getting subjects enrolled, but also the data management. So, although obviously there’ll be differences in the sites due to their prior enrollment, we expect all sites to be up and running quickly with the subjects already contacted.
Unidentified Analyst: Great. And, just one quick follow-up. Could you remind us the, what the frequency of visits and follow ups is on this trial?
Cindy Jacobs: Yes.
Unidentified Analyst: And in particular, any potential challenges you foresee in terms of patient compliance or monitoring in this trial versus the Phase 3s?
Cindy Jacobs: No, and in fact the Phase 3s were weekly clinic visits, during the 12 weeks treatment and the open-labels, it’s monthly treatment, visits or in clinic visits. So, that actually is 12 visits basically spread over the year. So, it’s not onerous as far as the clinic visits. As far as the drug accountability, a lot of this, the same processes and procedures are in place to monitor drug accountability. I think, as far as the compliance of the subjects on the study, the commitment of the subjects, they will know what is being asked to them by the time they get through the screening and the informed consent form. And, that’s important, as well as the commitment and the protocols, with the company and the sites to help them quit and stay smoke and vape free during this study. So, I think the compliance for staying on the study will be there on the commitment of both sides, the subject as well as the sites and the company.
Unidentified Analyst: That’s very helpful. Thanks for taking our questions.
Operator: Thank you. The next question is coming from John Vandermosten of Zacks. Please go ahead.
John Vandermosten: All right. Thank you, and good afternoon, John, Cindy and Jerry. I was looking at some of the vaping trials that are out there. There are a bunch of them and they’re probably in a bunch of different levels of seriousness. Some are using cell phones with teens to help them stop vaping and some are using, varenicline to measure that. And, I’m wondering just in your time at SRNT and maybe some of the other conferences and just looking around, poking around, what if there are any serious other vaping trials that are going on that you’ve seen out there?
John Bencich: Yes, John, thanks for the question there. Something we continue to monitor in terms of what else is happening out in the landscape. But, I think with respect to vaping and frankly smoking cessation overall, we’re just not seeing any real serious studies being run at the moment. We did see another readout from a vaping trial at SRNT, but it was significantly smaller and less controlled than what we just published earlier this week with ORCA-V1. So, something we continue to monitor, but there really isn’t anything else going on that we see as really moving the needle in this space.
John Vandermosten: Okay. Was that in varenicline or was that some other product that’s used?
John Bencich: It was a varenicline trial and again, most of what’s being done out there is academic-driven and not, I would say, company-driven that would actually lead to an indication for vaping.
John Vandermosten: Okay, great. That’s all for me. Thank you.
John Bencich: Thanks, John.
Operator: Thank you. The next question is coming from Ilya Zubkov of Freedom Broker. Please go ahead.
Ilya Zubkov: Good afternoon. Thank you for taking my question. You’ve mentioned that patients who have taken the drug in the previous studies for at least three months can only take the drug for three plus months in ORCA-OL to get into the statistics for NDA? Correct me if I’m misunderstood. My question is, does it matter how long ago these patients finished taking the drug in the previous study to include already achieved duration of taking to final exposure?
John Bencich: Yes. So, what the FDA is looking for is cumulative treatment. So, it doesn’t have to be continuous, which I think is what your question is getting at. So, if someone saw six or 12 weeks of drug two years ago and they get incremental three months today, we would just add that total exposure together. So, as we bring in the patients, whether they were six weeks, 12 weeks of exposure previously, we’ll just start adding the incremental exposure as part of the OL trial together until we get those 300 subjects that have been treated for six months, cumulatively.
Ilya Zubkov: Okay. Thank you. And, one more from me, please, regarding possible label extension for e-cigarette cessation. Do you expect FDA to require separate long-term safety data beyond 12 weeks in the population of e-cigarette smokers?
John Bencich: Yes. Good question. So, as part of our discussion with FDA around the open-label trial, they indicated that this study, one, would be needed for both a smoking indication and a vaping indication. But, I think the key piece here is that this trial we’re running now will work for both. So, we will not have to run a separate longer-term exposure trial for a vaping indication, which is why we are allowing both subjects from our smoking trials as well as the vaping study into this new trial.
Ilya Zubkov: Great. Thank you, John.
John Bencich: Yes. Thank you, Ilya.
Operator: Thank you. That brings us to the end of the question-and-answer session. I would like to turn the floor back over to Mr. Bencich, for closing comments.
John Bencich: Thanks, Donna. We’ve made tremendous progress this year and look forward to providing additional updates as we proceed, in particular in the coming weeks as we look to initiate enrollment in the ORCA-OL trial. So, thanks again everyone for joining us today, and for your continued support of Achieve.
Operator: Ladies and gentlemen, this concludes today’s event. You may disconnect your lines and log-off the webcast at this time and enjoy the rest of your day.
