Achieve Life Sciences, Inc. (ACHV) Earnings Call Transcript & Summary

Greetings, and welcome to the Achieve Life Sciences ORCA-3 Top Line Study Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jaime Xinos. Executive Vice President, Commercial. Thank you, Jaime. You may begin.

Thank you, operator, and thank you, everyone, for joining us. Today from Achieve, we have John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; Dr. Anthony Clarke, Chief Scientific Officer; and Rick Stewart, Chairman of the Board of Directors. The Achieve team will be available for Q&A following the prepared remarks. 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 documents available on our website and filed with the SEC concerning factors that could affect the company. Also available on the IR page of our website or by following the link provided in today's press release, you can access the slide presentation, including the top line data results that we will review during today's call. I will now turn the call over to John.

Thank you, Jaime. Good morning, everyone, and thank you for joining us. Earlier this morning, we released the top line findings from our second Phase III clinical trial, ORCA-3, further validating the efficacy and tolerability of cytisinicline in smoking cessation. Consistent with our previously announced Phase III ORCA-2 trial, ORCA-3 has produced positive results. The top line data indicate that ORCA-3 achieves statistically significant outcomes in primary and secondary smoking cessation measures, both for 6-week and 12-week durations of cytisinicline treatment. Notably, individuals receiving cytisinicline exhibited approximately a sixfold increase in the likelihood of successfully quitting smoking at the longest follow-up at 6 months compared to those on placebo. We have now seen unprecedented odds ratios in our ORCA program that have consistently been above those reported for available FDA-approved products. Furthermore, cytisinicline again showcased remarkable safety and tolerability throughout the trial with very low rates of adverse events and no new safety signals identified. We are delighted by the continued success of cytisinicline in assisting people who aspire to break free from their long-standing nicotine dependence. Thisdrives yet another significant milestone in the development of cytisinicline as an effective smoking cessation treatment. Smoking remains the principal public health emergency in the United States with over 28 million people who smoke, and globally, that number surpasses 1 billion. Shockingly, smoking-related diseases contribute to more than 8 million deaths worldwide and over 480,000 deaths here in the United States annually. Despite these alarming figures, there have been limited clinical breakthroughs over the last 2 decades. Our primary goal is to reverse this concerning trend and provide renewed hope to the millions of individuals seeking new solutions to help them quit. We are dedicated to making a significant advancement in the field and offering a new, safe and effective treatment to help people quit smoking. I will now hand the call over to Cindy, who will provide a more comprehensive overview of the recent top line results for ORCA-3.

Thanks, John. ORCA-3 was our second Phase III trial for evaluating the efficacy and safety of 3 milligrams cytisinicline dosed 3 times daily for a period of 6 weeks or 12 weeks compared to placebo. Similar to ORCA-2, the ORCA-3 study had 2 independent primary endpoints to evaluate the success of smoking cessation at both 6-week and 12-week cytisinicline treatment durations compared to placebo. For both primary endpoint comparisons, smoking cessation was defined as smoking abstinence, which was biochemically verified by low to no carbon monoxide levels during the last 4 weeks of treatment. So for 6 weeks treatment, subjects were evaluated weekly from week 3 through 6 and for 12 weeks treatment, subjects were evaluated from week 9 through 12. The corresponding secondary endpoints evaluated for continuous smoking cessation out to 6 months or week 24 of the study. So from week 3 to 24 for the 6-week arm and from week 9 to 24 for the 12-week arm. All primary and secondary analyses used odds ratios, which is a measure of the true effect of the product and its association on smoking cessation beyond what has occurred with placebo treatment and the behavioral support given within the study. The ORCA-3 study randomized 792 adult smokers at 20 clinical trial sites in the United States, with 265 subjects randomized to placebo treatment, 263 subjects to 6 weeks and 264 subjects to 12-week cytisinicline treatment. All participants received standard behavioral support during the trial. The study population for ORCA-3 was very similar to that of ORCA-2. On average, subjects were 53 years old who had been smoking for 36 years, had 4 prior quit attempts and smoked about a pack of cigarettes per day. Regarding results for 12 weeks of cytisinicline treatment, 30.3% of smokers had quit smoking during weeks 9 through 12 compared to only 9.4% of smokers treated with placebo. This resulted in an odds ratio of 4.4% with a p-value less than 0.0001, which is highly statistically significant. The secondary endpoint for continuous smoking cessation from week 9 through week 24 was 20.5% for cytisinicline treatment compared to only 4.2% for placebo. This gave an odds ratio of 5.79% for remaining a nonsmoker at 24 weeks with a p-value of less than 0.0001. After 6 weeks of cytisinicline treatment, 14.8% of smokers had quit smoking during weeks 3 through 6 compared to only 6% of smokers treated with placebo. This resulted in a odds ratio of 2.85% with a p-value of 0.0008, which again is highly significant. The secondary endpoint for continuous smoking cessation from week 3 through week 24 was 6.8% for cytisinicline treatment compared to only 1.1% for placebo. This gave an odds ratio of 6.25% for remaining a nonsmoker at 24 weeks with a highly significant p-value of 0.0006. Turning to the top line safety results in ORCA-3, we continue to see that cytisinicline is very well tolerated with low incidence of adverse events. The frequency of treatment emergent adverse events was similar in all 3 arms. The most common adverse events occurring in 5% or more of study participants were only insomnia, abnormal dreams, nausea and headache. The frequency of insomnia, abnormal dreams and headaches was only about 2% to 4% higher in the cytisinicline arm compared to placebo. Interestingly, again, slightly higher rates of nausea were reported in the placebo arm compared to the 12-week cytisinicline arm. This trial, there were no cytisinicline related serious adverse events, again, and tolerability remained excellent. In summary, we now have seen strong consistency in both the safety and efficacy results between ORCA-2 and ORCA-3, our 2 pivotal Phase III studies. Similar to what we have seen previously, cytisinicline continues to demonstrate efficacy regardless of demographics, such as age, smoking history or prior treatments. That concludes the overall view of ORCA-3 results. As these are top line results, we are continuing to analyze the data and look forward to providing additional details on our findings as we learn more. I will now turn the call back over to John.

Thank you, Cindy. We are delighted with the outcome of today's findings, as the data once again surpassed our expectations. Cytisinicline has consistently showcased impressive efficacy in aiding smoking cessation, posting remarkable odds ratios and highly significant p values. When compared to existing treatment options, such as nicotine replacement therapy, bupropion or varenicline, the ORCA program has consistently demonstrated higher odds of achieving smoking cessation. Remarkably, the 6-week treatment arm of cytisinicline also exceeded the odds ratios observed in a recent large-scale study of NRT, bupropion and varenicline in U.S. subjects despite having a treatment duration half as long. Furthermore, the safety and tolerability profile remains strong with minimal differences in adverse events observed between the active and placebo arms. Quitting smoking poses significant challenges and there is a limited selection of treatments to facilitate this process. Cytisinicline continues to stand out as a differentiated from the competition for a number of reasons, including compelling efficacy, high tolerability, shorter duration of treatment and the fact that it is naturally derived. All combined, we believe these attributes will offer renewed hope to individuals seeking to break free from smoking addiction and a compelling treatment option in a multibillion-dollar indication. With our Phase III data in hand, we will continue our partnering discussions and commercial launch preparedness. We plan to request a pre-NDA meeting with FDA with the target of NDA submission in the first half of 2024. In closing, I'd like to extend my gratitude to the study participants, clinical trial sites and the Achieve team for all their efforts to make the Orca program a huge success. With that, I'll now turn the call over to the operator for questions.

[Operator Instructions] Our first question is from Thomas Flaten with Lake Street Capital Markets.

Congrats on the excellent data. Recognizing that it's still statistically significant, the one number that stands out is the reduction in odds ratio in the 6-week primary endpoint from ORCA-2 to ORCA-3. I was curious if there's anything we should read into that? Or is that just a statistical anomaly more than anything?

Yes. It's more of a statistical kind of difference. We did see slightly lower rates in ORCA-3 and a little more variability. But remember, this is a really aggressive endpoint for 6 weeks treatment. It requires smokers basically to quit smoking within 2 weeks of treatment and not smoke a cigarette from that week 2 out to 24 weeks. So we're still very much pleased and impressed that 15% to 25% of the subjects have quit smoking in 2 weeks for this study population. And remaining with the odds ratio, especially even in this ORCA-3 with an odds ratio of 6 out to 24 weeks. So they're certainly maintaining. We did see a little more variability in the placebo rates, which actually then kind of affects the odds ratio, but highly statistically significant, and for this study population, pretty unprecedented.

Yes. And I think the other thing, Thomas, to think about there is this was a 6-week treatment arm. And when we look at the recent EAGLE study, in U.S. patients for Chantix and all other FDA-approved medications, we were getting to a higher odds ratio with half the duration of therapy. So again, I think it's pretty remarkable, albeit slightly lower than maybe what we've seen in the previous study.

Yes. And then, John, to the kind of last comment you made about business development activities. Could you maybe set up for us or contextualize a little bit, those partnership discussions that you've had? How many people have been waiting for confirmation from ORCA-3 or are there folks waiting for NDA approval? Could you maybe characterize what the breakpoints are for some of those BD discussions that are ongoing?

Yes. So we're not able to get into all the blocking and tackling and details of the ongoing discussions. But I can say there are several groups waiting and anticipating for ORCA-3 data. We've got a number of other groups that have been in the backdrop that we're now begin the process of reaching out to, to share the recent news. And so we hope to get more folks than we're already in the hopper, excited about what we have here. So that will be an ongoing process and the data we have today really kicks that off.

And sorry, just one final last one. NDA submission targeted for the first half of '24 is obviously a pretty broad window. And I'm sure there's some conservatism baked in there, but could you guide us maybe earlier versus later in that process? Or is there some data point that you are waiting for to kind of help maybe guide a little bit closer or more granularly?

Yes. So on that, it is a wide window at the moment. I think the key for us is to have a pre-NDA meeting with FDA first. And I think that will really set the stage of what that timing is going to look like in the first half of next year.

Our next question is from Fran?ois Brisebois with Oppenheimer.

Congrats on the data here. So can you just maybe touch on the importance of the 6-months duration in the secondary end point. Is that -- maybe to put into context, is that better which you -- than what you had seen in the past? Or just talk about the odds ratio all the way out to 6 months here.

Yes. So I think the duration out to 6 months, this basically shows how powerful the drug is at maintaining abstinence over an extended period of time. The Cochrane group does a lot of meta analysis, and they always look at abstinence out to the longest follow-up. So sometimes the rates will fade a bit from what we see early on. And I think what we've been seeing throughout the ORCA program is those effects being maintained, which is really critical and then seeing odds ratios really in the 4% to 6% range, which is significantly above what we see in the marketplace today. So that is an important metric.

Okay. Great. And in terms of the AEs, can you just remind us what had kind of been seen with Chantix or the generic there? And just what you had seen in ORCA-2 versus what you're seeing in ORCA-3 here on AE front?

So for Chantix, just to remind everyone. So in addition to what was a historical box warning for suicidal ideations, the #1 AE in the label is a 28% rate of nausea. And then it's double-digit rates across the board for abnormal dreams, headache and a number of other items there. So when we look at what we've seen in both ORCA-2 and ORCA-3, we only had one item touch double digits, and that was a bit of insomnia, again, not a huge leap over placebo. And then the other items in terms of nausea, headache, things like that are -- also can be considered withdrawal symptoms. So again, not a big difference between placebo and what we're seeing with cytisinicline in the active arms. And as Cindy mentioned during our prepared remarks, we've seen this trend across a number of trials where we're actually seeing higher rates of nausea in the placebo arm compared to cytisinicline. And we saw that in the 12-week treatment arm in this trial.

Yes. Clearly, nausea is not a problem with cytisinicline treatment. And with ORCA-3, we'll be looking at insomnia and abnormal dreams because for ORCA-2, it was hard to delineate what was really could be related to cytisinicline versus just a withdrawal symptom because it was higher in those individuals in ORCA-2 that had quit smoking. So it's hard to tease out whether it's due to cytisinicline or whether it's due to slightly increases because we have more nonsmokers or more quitters in our arm.

Okay. Great. And if I could sneak in a last one. There's definitely questions about your ability to attack this market. It's a very big market. But can you just maybe help us understand how there's a way to do it in a targeted fashion here?

Yes. Thanks, Frank. So I think in addition to the kind of parallel track on the partnering discussions, we do see a targeted efficient launch in this indication. While it may not be obvious, there is a high degree of efficiency in the top prescribing deciles. So the -- the top 3 deciles of Chantix prescribers are only about 7% of the physicians. So that's a group of about 11,000. And that is a group that we think is actionable with a relatively modest sales force with significant revenue potential in the $300 million to $400 million range. So there is a path. But as we stated before, we've always believed this asset is going to be best served in the hands of pharma or big biotech group that already has a primary care sales force in place.

Our next question is from Jason McCarthy with Maxim Group.

This is Joanne Lee on the call for Jason McCarthy. Thanks for taking the questions. Congratulations on the great data announced this morning. So with both the initial and now subsequent Phase III studies for cytisinicline for having yielded positive outcomes. Could you share if perhaps there are any additional insights or findings obtained from the second data set around cytisinicline that you may have found noteworthy? And then just as a follow-up, as a reminder, if there are any prerequisites such as the need to generate additional preclinical data that may be needed to move forward with the NDA submission, which you had mentioned is targeted for the first quarter?

As far as ORCA-3, I think what we're pleased with is the consistency that we're seeing with that trial with ORCA-2. So there's nothing remarkably different in ORCA-3, which actually is good. And for preclinical, no, there's no preclinical information. We pretty much have the nonclinical information. We're getting it ready for the NDA. We do have a couple of PK studies, clinical studies that we're completing for like renal impairment PK studies. A lot of information that's going to be required to at least be put into the package insert of the label to guide physicians. And so there's a couple of PK studies that we will be completing up by the end of this year, actually.

Great. That was really helpful. And then just lastly, lots of questions were asked about today's results. But if we could quickly shift gears towards the vaping program, which also reported positive data last month. Just curious about the current status for the program. When can we anticipate receiving further updates regarding the next steps for that program, specifically any development updates on the Phase III design and launch of that study.

Yes. So the vaping indication, it's still relatively fresh. We just got that top line data set about 4 weeks ago, again, with pending ORCA-3 data that was percolating in the backdrop. So we still need to spend a little bit of time digging in and run the numbers on what a potential Phase III trial would look like. And then with that likely have a conversation with FDA making sure that's an appropriate design. So we've got a little bit of work to do on that front. But as we have further updates, we'll share that with everyone.

Our next question is from Michael Higgins with Ladenburg Thalmann.

Congrats again on your fourth positive clinical trial for 3-milligram TID regimen. I wanted to follow up on the adverse events. It's a bit of a calling card for cytisinicline in the 4 adverse events that you noted that occurred at greater than 5%. We know that the rates in the 12-week arm in ORCA-3 were less than in the 6-week arm. A little bit different from ORCA-2 was slightly higher at 6 weeks -- at 12 weeks rather. Did that surprise you here with ORCA-3 that with time adverse events seem to be less? And just a follow-up to that. Are the adverse events occurring within the first few days? Did they come and go? Just trying to understand and characterize the AEs better.

Yes. I don't -- just an increase of 2% or 3% really isn't surprising. This depends kind of like when you're running the trial. So I don't think there's really anything to read into that. Thus we have looked at ORCA-2, obviously, more so than ORCA-3 since we just got the data. But ORCA-2, we did see that the adverse events really occurred within the first 6 weeks. We -- usually, they occur within the first 2 or 3 weeks. So we looked at 6 weeks versus 12 weeks, and most of them are occurring in the 12-week arm during the first 6 weeks. So they are early in that regard.

In terms of the frequency, just to follow up here, are they returning? Or is that the kind of thing that a patient is -- has and continues throughout the trial, they just have the same adverse event and they stay in the trial or is it something that kind of comes and goes?

It can come and go. For example, if you look at insomnia. If somebody reports insomnia, it goes on the adverse event, however, they report it, whether it's mild or moderate. If they -- they usually get over it. And if they come back and report it again and it's moderate versus the earlier it was mild, we always take the moderate. We always report the highest that's reported within the subject but it can kind of come and go.

Okay. That's helpful. Then just one last one here. Any updates for us now that you've got ORCA-2 and ORCA-3 finished on the dosing regimens that you plan to file on?

Well, we'll be filing for both 6 weeks and 12 weeks. And so you have to look at it as an option and flexibility for a smoker and their physician that they can look at 6 or 12 weeks. Now if a smoker actually quit smoking within 2 weeks and is a nonsmoker at 6 weeks, they don't really need to have another 6 weeks of treatment, and that's been the discussion between the smoker -- the nonsmoker at that point and the physician. However, most subjects -- most smokers will go for 12 weeks because as you can see, the more you're on treatment and you keep trying, you keep trying, you have higher quit rates or nonsmokers at the end of 12 weeks. So that's not going to be a surprise. But it gives that flexibility of 6 weeks to 12 weeks depending on what's happening with the smoker becoming a non-smoker.

That's really helpful. Maybe a question for Jaime, is when you look at Chantix and the durability of dosing, which obviously affects revenues, of course. How does the data here when compared to varenicline or Chantix, when you take a look at how long do you suspect patients will be on cytisinicline? Cindy made some good comments of efficacy at 2 weeks. Why keep them past 6 weeks? Just curious what the experience has been with Chantix?

Thanks, Michael. Yes, we know that with Chantix patients, there's a significant decline in compliance after the first month in the house. By the time they hit the third month of treatment, 76% don't actually fill that script. So we expect the side effect profile for cytisinicline is very differentiating, and we expect that people will be able to stay on therapy longer because quitting is hard enough without having side effects with the medication making it worse.

Our next question is from James Molloy with Alliance Global Partner.

Congratulations on the positive top line data. Just wondering what we should anticipate seeing in the full data set when it comes out? When -- what's the appropriate venue do you think for that data set to come out with, will it be at one of the conferences? And then what are the gating factors between now and first half '24 does seem a little bit long. I know you want to get it right on your NDA filing and it does seem a little bit longer than you might typically see.

Well, as far as the NDA, obviously, we need to take this data and put it into a clinical study report, but now we also have to take the ORCA-2 and the ORCA-3 information, make an integrated safety summary and an integrated efficacy summary. We also have the PK data to incorporate in that will be coming by the end of the year. So it's a lot -- just a lot of information to put together. So it's going to be at least 6 to 9 months. And then with the FDA, making sure that we have everything. We've started those kind of discussions with FDA in some Type C, type D meetings to get prepared for that. And so it's just a matter of time to get it all together. There's a lot of information that needs to be put together for an NDA.

And would you think it would be more -- is the PK data really more gating factor? Or is there also a thinking potential partner that may want some input into sort of the -- how the data is filed on the NDA? Or is that a separate conversation entirely?

Yes. I think from the partnership side, that would be a separate conversation depending on how activated the group is in terms of their activity and diligence with us. So that would be a separate track.

We're also kind of -- as John mentioned, timing for a pre-NDA meeting with FDA, we hope to have that certainly in quarter 3, quarter 4, but we have to get on their schedule, and they are a little bit, 4 months at least in scheduling. So that's where we'll be focused on the timing of getting that information to them and setting that pre-NDA meeting by the end of the year.

Our next question is from John Fichthorn with Dialectic Capital.

Great results. A lot of them have been asked and answered, but just as a one last thought. You said the pre-NDA meeting might take 4 months to set up. That in and of itself seems long. I think you see a lot of people wondering about the timing of this NDA submission. Why would it take 4 months for the pre-NDA is my first, and then I have a couple of quick follow-ups.

Yes, that's really more because of FDA and their workload. That's why we've been looking at getting Type C, Type D meetings on some of these questions in advance because getting a meeting set up with the FDA, given their scheduling, it's more on FDA's workload and when they can schedule it. And for a pre-NDA, we always want to have it, a telecon, so it's not written response only. So that adds a little bit to it. So it's really more for us to get the data together, get the questions that we need to have answered and then request the meeting and scheduling with them, which we hope to do in the next month.

And is there any chance you could include the V1 vaping trial in the label extension in this NDA? Or is that not a possibility?

We are including the data for safety. And it's not -- the problem is that this will be under our smoking cessation IND with just the small Phase II, we're probably going to have to do a Phase III study that will be a question for FDA. And the vaping is under a separate IND as well. It makes it a lot easier, obviously, having approval for smoking cessation, and it makes it very easy to expand the label with one Phase III study for vaping. And we'll have those discussions with FDA as soon as we can.

Right. And varenicline on the market today, does that change your strategy? How is it doing? Is Endo Pharma -- I haven't followed that, but how does that affect your thinking, if it does?

Yes. So we've been tracking the varenicline sales. For the first full annual year in 2022, it sold north of $300 million and that was with minimal to no sales and marketing expenses and at a roughly 20% discount to where Chantix, the brand left off. So the market continues to be robust. And it continues to scale up back closer to where it left off when Chantix was withdrawn. So there's still more upside there. But I think it shows that absent any large sales and marketing push, there's still a very robust market here for smoking cessation.

Excellent. And one last question. On the varenicline trials or the Chantix trials, did -- it looked like you guys had everybody complete the trial. Did they have such success or the adverse event profile such that people dropped off? I'm just curious that data didn't necessarily get teased out in the headlines.

So as far as discontinuation rates for varenicline Phase III studies, it was definitely higher than what we're seeing in ours. It was usually 35% to 45% discontinuation rate. And in those rates, 13% and 12%, those were the 2 Phase IIIs, that was due to adverse events. For our study, it's about 21% discontinuation rate, which is like half of what varenicline had. And due to adverse events, it's less than 2% -- less than 2% to 3% in both studies.

That seems like a great statistic that you should probably highlight also.

There are no further questions at this time. I would like to hand the floor back over to John Bencich for any closing comments.

Thanks, everyone, for joining us today, and I really want to thank again the Achieve team for all their efforts behind the scenes, not only bringing a strong ORCA-3 results forward, but the strong ORCA-V1 results we saw here just 4 weeks ago that allow us to expand the market into another 11 million potential subjects commercially. So overall, we continue to be delighted with where the program is ending up. We're looking forward to driving this forward to the market. So thanks again for joining us.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.