DURECT Corporation (DRRX) on Q2 2021 Results - Earnings Call Transcript
Mike Arenberg: Good afternoon, and welcome to our Second Quarter 2021 Earnings Conference Call. This is Mike Arenberg, Chief Financial Officer of DURECT Corporation. I will provide a brief review of our financial results, and then Jim Brown, our President and CEO, will provide an update on our programs. We will then open up the call for a question-and-answer session. Before beginning, I would like to remind you of our Safe Harbor statement. During the course of this call, we may make forward-looking statements regarding DURECT’s products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading Risk Factors. Jim Brown: Thank you, Mike, and hello, everyone. Thank you for joining us today. We made good progress in the second quarter of 2021. We’re enrolling at a good rate in AHFIRM, our Phase 2b study of DUR-928 in patients with severe alcohol-associated hepatitis. We made excellent progress in opening additional clinical sites in the U.S. with the addition of seven new clinical sites since our last earnings call. We now have 26 sites enrolling for AHFIRM, which represents 75% of our goal for U.S. sites. We’re also closing in on getting clinical sites up and running in Europe, the United Kingdom and Australia. We presented the DUR-928 program at the Epigenetic Therapeutic Targets conference, and additional DUR-928 clinical data in two posters at the EASL International Liver Conference. And we’re in negotiations with potential partners for POSIMIR. Operator: Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question. Kristen Kluska: Hi. Good afternoon, everybody. Thanks for taking the questions. The first one here was just based on some of the comments you made that the trial is going faster than your internal projections. I just wanted to see, if you could elaborate for us what some of these factors might be. Were your estimates, for example, conservative to consider some impact from COVID-19 hospitalizations? Is it in part driven by the number of cases in general being on the rise or any other factors that you could potentially point to this trend? Jim Brown: It’s very interesting. Yes. We -- first of all, COVID definitely has an impact. And there’s no ignoring that, and the continuation of COVID continues to have an impact on sites. We have -- as we said, we have certain sites that are enrolling at a rate that is faster than we had originally projected, and then, we have other sites that are coming up more slowly. And it’s going to be a balance of these as we go forward in time that will define whether or not we’re able to complete the trial early on. Right now, at this point in time, what we’re saying is we’re going to give an update on that in the future. But the update will come after this delta wave has passed, and when the hospitals have had three or four months of more normalcy. And Norman also on the call, so I guess, I’ll let him maybe speak to that as well. Norman? Norman Sussman: Yes. Thanks. Hi, Kristen. Yes, I agree with what Jim said. The COVID had this very sort odd effect that increased drinking, there were much higher incidence of people getting into trouble with alcohol, but then also it affected both the availability of beds and the availability of research staff. So, many times research staff were not considered essential and therefore not allowed in. And that was improving, but we’ll have to wait and see what effects this delta wave has, and whether the hospitals will start to, again, block non-essential personnel from coming in. Kristen Kluska: Thank you. And then, there was an accepted article that was published in Hepatology this week that looked at the impacts of COVID-19 on liver transplants and alcohol-associated liver disease, including severe AH. A one of the findings there was talking about just the number of waiting -- waitlist periods for liver transplants in that AH and ALD have been the biggest drivers here, especially after COVID-19. And I also know this year at EASL, there was a lot of presentations looking at different steroid and antibiotic regimens as well. So, I just wanted to get your thoughts. I know you’ve talked about this a lot in the past. But, just how does it reinforce the level of unmet need for you when hearing about studies like this and other ways that physicians are looking to treat their patients right now? Jim Brown: Yes. I think that’s another question for Norman. Norman Sussman: Yes. It’s very good. And I see I’ll have to make sure I always stay up to date on my journals, in case you ask the question. Yes. So, what we are -- what we’ve seen is -- and in fact, the data for 2020, I think we just published is the annual UNOS and SRTR report shows a continued decline in hepatitis C and a continued increase in the undefined, which is mostly NASH and non-alcoholic fatty liver disease, sort of neck and neck with alcohol. Alcohol includes both, chronic alcohol with cirrhosis and acute AH. And if you survey across the country, transplant centers, there’s quite a wide range of responses from people saying, we will transplant people who have only very recently stopped drinking to some people having fairly stringent criteria about when to admit, that is still shaking out. So, there’s quite a lot of variation across the country and also in our sites. Some of our sites are saying we won’t translate anyone with AH, if they haven’t seen abstinence for some period of time, and others are saying we’ll transplant them and then try to deal with on the back end. There was a very nice publication by Brian Lee on the outcomes and on post-transplant drinking, serious drinking turned out to be about a 10% or 11%. But the one in three years survival were comparable to any other indication for transplant. Kristen Kluska: Thank you. And then, the last question I have is, I know that AH is the main priority for the Company. But, now that it’s been a few months since the detailed MLA has been published and you’ve been at some conferences, including one that’s particularly related to epigenetic therapies. Curious if any experts that you’ve engaged with or others have highlighted other potentials that they see for either DUR-928 or this concept in general? Thanks, again. Jim Brown: Sure. No, there’s definitely a lot of interest in this. When I think about -- it’s interesting to having had an opportunity to participate in that epigenetics conference. The vast majority, almost all of the effort in the utilization of the epigenome in medicine today is in the realm of trying to find a way to disrupt the epigenome cancer cells, which is a wonderful thing. And they’ve gotten some really good results in helping patients, especially with these horrible diseases like AML and others. But the other side of that coin is to try and amend and help the cells by virtue of supporting the epigenome, which becomes dysregulated in disease, and we have that opportunity with DUR-928. It’s an extremely complex place to be and that there are there are literally millions of sites of methylation. We’re so fortunate that we have a naturally occurring molecule and we understand how well it works. And we understand the thousand genes that it turns on and turns off. And so, that gives us an insight that is way ahead of anywhere else and to try and to produce that de novo would be -- it may take, many careers to bear many lifetimes to be able to do that. And at this point with our capacity from ability to deal with data. So, we’re really fortunate that we have that kind of insight and that has opened the door for a number of potential diseases. Sorry about the long winded introduction. At the end of the day, we are talking to people we have a number of indications we’re evaluating. It was really nice to see the additional NASH data we published on the insulin improvement and insulin resistance, as well as the improvement in those markers of fibrosis that certainly shows the 928 great potential I believe in NASH. But then there are a number of other key indications and some product indications that we’re also pursuing. So, the company is going through an evaluation process to select our next 928 efforts beyond what we’re doing in AH and NASH to put into the clinic. And so, we’re very fortunate to have the opportunity that we have in front of us. Operator: Our next question comes from the line of Francois Brisebois with Oppenheimer. Francois Brisebois: I was just wondering, on the -- I know, not much is to be shared on potential partnerships. But are we still thinking that a partnership came around for POSIMIR that it would be ready -- that the partner would be ready to launch by the end of this year, whether or not he launches by then? And in terms of potential label expansions above and beyond what is currently on the label? Any thoughts about, would a partnership want to see that expansion prior to a partnership, or is this something they would be willing to do? Any color you can give on, if the label maybe had hernia in it, or a label expansions -- just the size of the market with the current label right now would be very helpful. Thank you. Jim Brown: Mike, do you want to address that? Mike Arenberg: Sure. Yes, I think, the first question about will partner still be able to launch by the end of the year, we think that’s still possible. Part of the challenge is commercial manufacturing has been a little bit delayed. So, the timing of getting commercial supplies maybe is going to be a little tight to get something out by the end of the year. And also sort of up to the partner, whether they would want to launch something late in the year or wait till the start of the next year. So, could happen either way. And then, the second part of your question about label expansion. I think certainly, all the partners we’re talking to recognize that the massive potential of getting labeled expansion was a means to grow the opportunity. And so I think, once we put a partnership in place, it is likely that the partner will take the lead on working towards that label expansion. Francois Brisebois: Okay, great. And you mentioned Fast Track designation for alcoholic hepatitis. Any potential for -- what would it take to potentially see breakthrough therapy designation and any potential on timing there, is this something that we wouldn’t expect ahead of data? Jim Brown: Yes. I think what you need for breakthroughs, you need control data. And so, you will need data from AHFIRM to be able to do that. If AHFIRM is statistically significant, then that will bring breakthrough with it, because we’ll have this acute unmet need. The certain of the patients die 90 days, no treatment out there that is effective today. And if we have those kinds of data, then I think there’s a very good chance we will get breakthrough. Operator: Our next question comes from the line of Ed Arce from H.C. Wainwright. Thomas Yip: Good afternoon, everyone. This is Thomas Yip asking questions for Ed. Congratulations on all the progress made so far in 2021. So first, good to hear clinical sites for AHFIRM run up in the U.S. And as you mentioned, we’ll just have to wait till the delta variant cools down a little bit, for more details. But so far, what geographical areas would you say are stronger than the others? And also, can you remind us what your target patient number per site is? Jim Brown: We don’t have a target patient number per site. There may be at some point if certain sites enroll at dramatically high rates, we may put a cap on them. But we don’t have a minimum number, though. As with any clinical trial, there are always sites that perform better than others. As far as geographic distribution, I think Norman could speak much better to that across the U.S. Norman is there… Norman Sussman: We have very specifically tried to cover all the areas partly because they are big -- most of the centers are transplant centers, and so that’s where the highest density of alcohol-associated hepatitis is found, and also the most experienced investigators. And so, we have tried to cover most of -- I would say that tried to cover the whole country. It just happens curiously that our highest enrolling sites are in the Midwest and the East Coast. And some of the West Coast sites have taken a little longer to come up. I don’t expect that to last. But, we’ve chosen sites with a specific goal of having a diverse population. And by geography, certain sites see certain kind -- certain racial groups more commonly than others. And so, we’re hoping that the trial will end up being very well-balanced both geographically and by race and ethnicity. Thomas Yip: Makes sense. Thanks for the details for the U.S. sites. Perhaps for ex-U.S. sites, in the AHFIRM that are opening later this year, what are some steps before they can fully open and are we targeting kind of the same diverse patient demographic for these sites as well? Jim Brown: So, the sites are going to be UK, the EU, and Australia. So, Australia has, I would say, a relatively homogeneous population, but we are going all the way across the country because they’re big sites on the east and the west side of Australia, mostly along the southern edge. In UK, we have about five sites, I think we’ll expect to see a fairly uniform group there. And then Europe tends to be more uniform than the U.S., but we have targeted, I think it is four countries. And then, the question -- the answer to your question is, all of these have national committees that require approval. So, we are working through those at the moment. And I think we’re making pretty good progress on getting the necessary approvals. So, that includes both, the regulatory -- the competent authorities and the review -- the ethics committees. Thomas Yip: Got it and understood, look forward to that. Perhaps one final question regarding POSIMIR. Is there an internal date that you have so far that will make it possible to launch POSIMIR in the U.S. with a third-party sales organization? Jim Brown: Well as Mike was saying, the manufacturing is going on kind of independent of the negotiations. But I don’t -- there’s going to definitely be a date by which it doesn’t make sense. But, I don’t know, Mike, what your thoughts are there? Mike Arenberg: Yes. We don’t have a drop dead date. But part of it depends on the partner, right? Different strategies and capabilities in place with existing sales forces and such. So, we don’t have a drop dead date for getting it this year. But thankfully, the most important thing is getting it with the right partner and in combination with the right strategy to expand the label. So, that’s more important than arbitrary deadline at the end of the year. But obviously, we’re hoping to do it sooner than later. But getting the right partner and the right strategies in place is the most important piece. Jim Brown: I think that’s -- I just want to emphasize what Mike said. I think getting the expanded labels is really crucial to increasing the opportunity. Thomas Yip: Right. Yes, that makes a lot of sense. Okay. Well, look forward to the progress for the second half this year. Thanks again for taking our questions. Jim Brown: Sure. Operator: That concludes our question-and-answer session. I’d like to hand the call back over to Mr. Jim Brown for closing remarks. Jim Brown: With that, we want to thank you for your time today. And as always, we’re available. So, please reach out if you have any further questions. Thank you so much and take care. Operator: Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.DRRX Ratings Summary
DRRX Quant Ranking
Related Analysis
DURECT Corporation Shares Up 5% Following Q4 Results
DURECT Corporation (NASDAQ:DRRX) shares were trading 5% higher Tuesday afternoon following the company’s Q4 results, with EPS of ($0.03) coming in better than the consensus estimate of ($0.05). It’s important to note that the company remains far from earnings and much more of a development story at this stage, as it stays on track in its potentially pivotal P2b AHFIRM trial for AH with enrollment going steady.
Analysts at Oppenheimer provided their views on the company following the quarterly earnings. Despite the earlier pandemic-related challenges, the analysts said they are encouraged by the pace of enrollment with over 100 patients dosed, and 51 clinical sites currently enrolling patients. In addition, the company's Posimir partnership continues to make progress as the first sale of Posimir is still expected in Q2/22. The analysts maintained their Outperform rating and $6 price target on the company’s shares.
DURECT Corporation Shares Up 5% Following Q4 Results
DURECT Corporation (NASDAQ:DRRX) shares were trading 5% higher Tuesday afternoon following the company’s Q4 results, with EPS of ($0.03) coming in better than the consensus estimate of ($0.05). It’s important to note that the company remains far from earnings and much more of a development story at this stage, as it stays on track in its potentially pivotal P2b AHFIRM trial for AH with enrollment going steady.
Analysts at Oppenheimer provided their views on the company following the quarterly earnings. Despite the earlier pandemic-related challenges, the analysts said they are encouraged by the pace of enrollment with over 100 patients dosed, and 51 clinical sites currently enrolling patients. In addition, the company's Posimir partnership continues to make progress as the first sale of Posimir is still expected in Q2/22. The analysts maintained their Outperform rating and $6 price target on the company’s shares.
