Praxis Precision Medicines, Inc. (PRAX) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. My name is Cindy Xu. I'm an associate at the JPMorgan Investment Banking team. Our next presentation will be Praxis Precision Medicines, and the presenter from the company is the President and CEO, Marcio De'Souza. With that, I'm going to hand over to Marcio.

Thank you. Thank you, Cindy. Thank you, everyone, a real pleasure being here. A lot of you here in the room and I guess on the webcast know me, so knows this is not my voice. This is my JPMorgan voice, although, I guess, a lot of people are telling me it's an upgrade to the regular one. So talk a little bit about Praxis and why this might be the most exciting thing, if not the most exciting thing, I've ever done in my life, and trust me, I did a lot of exciting things before, because we're really revolutionizing how drugs for this incredibly meaningful disease to the patients can be treated in a quite unique way and quite a meaningful way. We always say we dare for more, and I hope you're going to see, during this conversation, which I prefer to be versus the presentation during the next several minutes, why we believe that we're really going to be daring for more for patients with CNS conditions. I'm going to be making some forward-looking statements. Please refer to our SEC disclosures, and as I'm sure, you can do that to be up to speed with those. Why are we so excited maybe, first and foremost, from a value proposition perspective, and particularly for investors as we start this year on the heels of what was quite a phenomenal year last year? So we have 4 programs in late-stage development. I think, for any company out there, that would be quite exciting. It is incredibly exciting for all of us, particularly more exciting for what we're referencing here in the headline, that is those patients, right, we are bringing these therapies for. On top of that, the sum of what I would argue fairly conservative estimates for each one of those programs are bringing like over $9 billion in potential revenue. We always see, I definitely do, a way to continue to invest in innovation by bringing results for all of you as our investors and for society so we can develop more and more drugs for patients. So that is just a metric of how much more we can do throughout the years and hopefully be quite successful, all of us. This year itself, and one could argue last year, was quite meaningful as well from a number of things that happened and quite a transformation for the company, continued to advance each one of those programs in a quite meaningful way. And we're going to go through some of those milestones in the following slides, which is quite phenomenal as well since it's not only high-value, late-stage, but everything is advancing quite meaningfully as well. How can we do that? Of course, the first thing, and maybe that's what should be here in this slide, these patients are out there. They need us. The second thing is there is an incredible group of people that supports the efforts that we're doing every single day relentlessly. And we created 2 distinct platforms to deliver on this. We asked the question [indiscernible] as we're going to see in a second, how can we address that? We're agnostic to the 2 that we use afterwards, and we decide what is the best way to modulate it. From a cash perspective, we're very well capitalized. We're very disciplined on the use of capital for the company. We have been very disciplined for a long time. And that brings us generating all this value, all these programs advancing to completion of the clinical studies or NDA filing until 2028, so a very, very strong position to start and to be with right now. The 4 major principles that we utilize in the company to move these programs forward and to derisk is first looking to genetics. But instead of looking into that in a one-to-one relationship, we get inspired by genetics. And it's going to be pretty clear, why I'm saying that, later, asking what happens when there are disturbance and try to adjust our programs in relation to that; use, to its maximum, translational tools. We are very committed to be efficient and rigorous when it comes to the execution, to asking the questions, to questioning the assumptions, but most importantly, as I mentioned a number of times today already, truly patient-guided. And patient-guided oftentimes means doing things that has not been done before, because we're answering really the question for all of us that are patients at one point in our life, but primarily the people who are not in the room when we're making these decisions. So what we have right now? I'm going to spend just one second here. As you can see, it's an incredibly busy, one could call meaningful, which is what I would prefer to, but a number of assets that are incredibly high-value. There is a lot of focus on the top here of the platform, on our Cerebrum platform, which is our small molecule modulator of different targets in the brain, particularly the most advanced programs, the top 3 here, ulixacaltamide hydrochlorides for movement disorders, the first indication being essential tremor; vormatrigine for epilepsies, particularly in adults; relutrigine for developmental epileptic encephalopathies, so a very, very severe disease of childhood; and then many other indications. So I'm going to focus on the top of the funnel today because we wouldn't possibly have enough time to explore each one of them in just a few minutes. When I mentioned at the beginning that we will be progressing each one of those programs this year, I think that's -- here is the illustration, right? There's a lot of focus as we speak and a lot of conversations during this meeting in relation to the very first program. I think it's quite natural. Essential tremor, as, again, we're going to see in a minute, is an incredibly large opportunity, one that is wide open. And we are reading out 2 Phase III programs imminently, including an interim analysis for the parallel group study this quarter, so no doubt that, that would be something of focus for all of us here in this room and in the industry in general. We intend, since we expect those studies to be positive, to file an NDA this year. There is always a lot of questions about the different scenarios that can come up out of the interim. But in any scenario, as I'm sure we're going to explore, the NDA is still being filed based on the 2 studies being positive later this year. It's incredibly important for us as well. When you move into the focal and generalized epilepsy program, they're progressing incredibly well. We have the most differentiated program in focal epilepsy ever developed, and we're going to discuss that a little bit in the future of this presentation as well, and with readouts both in the first half and in the second half of the year. And as a group, developmental encephalopathy programs are all advancing quite nicely with some readouts coming up in several months as well, so very meaningful, very active number of inflection points for patients, ourselves and, particularly, investors with Praxis. We're spending a few minutes on movement disorders, right, specifically on essential tremor. Essential tremor is the most prevalent movement disorder affecting Americans. People in this room have essential tremor, I am pretty certain. And if there is no one here in this room right now, we know someone, there is someone in our households, there's someone who is our neighbor who has this condition. It's progressive, but there is no degeneration. And I would say that that's a good news and bad news. The good news is that it tends to get worse, but not necessarily. Unfortunately, there's other progressive disease with degeneration that completely destroy part of the brain. But the bad news is that it took a lot less attention throughout the years in terms of how to address that. Right now, in any point in time, in the United States, there are over 2 million patients seeking treatment. And the only thing we can offer them as a society right now for a very, very small number is a first-generation beta-blocker that barely work and works just in a very small part of that. It's a wide-open market with massive unmet needs that is robbing the ability of many patients to function every single day. And then if we transform that to dollars, at the end, since that's part of the equation as well for innovation, it's over $4 billion in total, and I would say in a very conservative way. When we designed the Phase III studies, which I'm going to discuss a little bit with all of you, the key question, and we're incredibly happy that we are aligned with the FDA on this, is how are lives of those patients affected and then we measure the way it's affected. Luckily enough, it's actually pretty simple because patients with essential tremor lose function. They lose the ability to simply grab their cup of tea or coffee and have their drink and enjoy their drink or eat by themselves or go out with their family. So the scale that is utilized in the Phase III study is based on the ability to perform tasks, incredibly easy to understand, incredibly easy to derive meaningfulness. Because one function, one point, restore one point, restore one function. If you cannot drink coffee in the morning and now you can, I doubt that any of you will tell me that that's not meaningful, because that is not only a translation for the coffee in the morning, but it's a translation for a lot of other things that you can do in your life. Why are we excited about the program moving forward? In our Phase III study, using exactly the same endpoints but a much smaller sample size, since we are trying to understand, at that point in time, what we call the Essential1, what will be the magnitude of effects that we would have with this drug? We're seeing a quite meaningful, one would argue, I certainly would, large separation between drug and placebo, and a nominally significant p-value here, as you can see in the bottom. Based on those results, we had discussions with the FDA, and we designed a very innovative Phase III program, which we have here in front of you. So let me walk you through a couple of elements of this program because I believe it's quite important to understand, considering that we have an imminent inflection here in Q1. This is the first time in neurology that 2 studies are run in parallel, truly in parallel, where patients are unaware of what study they are participating in. Patients are randomized to the study before they get rerandomized into the specific control in the study. That allows for a direct comparison throughout the study for better monitoring, for a more homogeneous patient in general. It's a very tall order. The reason why many companies don't do that is because it's incredibly difficult. We're talking about 600 patients being enrolled in a study versus 400 or 200. So it's a tall order, one that we strongly believe, and even more so today, that was necessary to continue to give us confidence as we progress with this study, because there are many things, and I know a lot of people listening to this in the room are drug developers, and you can see already the benefits of being able to monitor these studies as we go, and to make estimations and to potentially make adjustments, which we haven't made, but could have been made. But it answers multiple questions as well. What is the separation on the more classical parallel design? That is the one on the top. What happens when you keep these patients on drug and you remove the drug? That's the one on the bottom. What happens when you put them back on the drug, when you do the [indiscernible] long-term safety extension? Questions that physicians and patients grapple every single day when they are using a drug. So it's incredibly informative from a regulatory perspective and eventually from a commercialization perspective. For Essential3, we took the recruitment in our own hands. And what it generated was over 130,000 patients reaching out and going through prescreening in our prescreening system to participate in a study. I am unaware, and I would love for any of you to tell me that if that ever happened before of any condition, let alone in CNS, where over 100,000 patients have reached out to participate in a clinical study. This just shows the number of patients out there, number one, validation of the size of the market that we discussed before, but just the unmet needs. We're incredibly rigorous on how to enroll this study, and we are now at a point that we're going to be conducting this interim analysis imminently to decide whether or not we stop the study for efficacy, we continue the study as planned or, for any reason, since this is the very first Phase III study in essential tremor, if we need to make adjustments from sample size reestimation. In any of those scenarios, I believe it's a win for the fields, and it certainly is going to be a win for Praxis and all of us in this room. So we're very excited coming up later in Q1. Moving on to epilepsy quickly. It's not less exciting from science or from a business opportunity perspective. When you look into our 3 molecules in the clinic right now, and we have a number of them preclinically, and you see the numbers here by ourself in this slide, each one of them address very high unmet needs, a large number of patients in some of them, some are rare indications here, but in a very differentiated way. I think that is the most important point to highlight. There are many ways to address seizures. There are many ways to address development encephalopathies, 30 years or more of development in this space. The question that one might ask is, are we doing a good job today? And we are not doing a good job today. There are many other companies, and I applaud each one of them, advancing treatments on this area as well, and we need it. And we're certainly going to play a huge role here in addressing these markets. Vormatrigine is one of our lead assets and, arguably, the second largest indication here that we have. When you look into the profile of vormatrigine being the most selective, most potent drug ever developed in epilepsy, a lot by design, a fair bit by luck, I think we should always be a little bit humble and say, when you got lucky in certain things, we definitely got a little here, but a lot of that by design, by targeting specific properties of the channel that have not been properly targeted before. And what we see is sodium channel modulation work, but why do we have to stop treating patients with this? For multiple reasons, sometimes convenience, not the case here for vormatrigine, can give once a day. Sometimes it's too hard to titrate, not the case here, direct therapeutic levels at the first hour after dose. Sometimes for efficacy, and that is one of the biggest issues. 30% to 40% of patients with focal and generalized epilepsy failure every day. It's rotating, it's a merry-go-round of having seizures. I hope you never had one. I hope you don't know anyone who had one. It completely stopped their life on its track. It's not either fun or, most important, it's very dangerous. When you compare with drugs that are being either very successful, [indiscernible] or drugs that I expect to be very successful as the drug candidate [indiscernible] for focal epilepsy, you can see why we are so excited. We're pushing every single time in drug development for epilepsy the efficacy very, very close to toxicity. What we see with vormatrigine is quite the opposite. We can go way beyond where anyone ever been from a potential efficacy perspective without reaching the maximum tolerability or even close to the maximum tolerability. So what did we do with that? We did a lot of Phase I work, we did a lot of phase -- were in the Phase IIa study. But where are we right now? We have an energy program, I'm very excited. The person who named this is in the room here, and I'm very excited to acknowledge that as well. And we decided to do a number of things with this program. So the first one is try to get as many patients characterized before they get into the trail, and that's what EMPOWER is. EMPOWER is a way to understand a space better, and then allow them to choose to be in a clinical study. We have several thousand patients right now that raised their hands and said, "I want my seizures better characterized, and I want to think about participating in a clinical study." That, at least partially, resolved the problem of enrollment in epilepsy studies. That's at least what we are aiming for, and we believe so far have been very successful. Then we have RADIANT, which is reading out this half of the year, quite meaningful as well. It's the first time there is a combination of primary generalized and focal onset seizures in the same study, since we believe it's going to significantly address both of them, again, coming up pretty soon. And by the end of the year, we're going to have POWER1. POWER1 is your more traditional, if I may, parallel group, 12 weeks median seizure reduction, 28 days adjusted study. What we expect from this program is not what I've saying before with drugs in this space. We expect really to create a revolution in terms of how these patients are treated. We know we cannot cure this disease with those molecules, but we want to give them a chance to be there when potentially a cure is going to be available for these patients. And we believe we're going to be a lot closer than we are today after patients are taking this molecule. Moving on very quickly to relutrigine. The concept is incredibly similar. So we have one molecule that does a phenomenal job modulating these channels for larger indication, and one that we designed specifically for patients who seize continuously, 10, 20, 30 seizures per month, per day, sometimes, unfortunately, per hour. The properties are very similar, but the pharmacological properties are tailored for patients who are pediatric. They can be given orally or not orally, like through a tube. They last a very long time. So these patients, if they miss a dose, they stay on the therapeutic level, and they're, obviously, incredibly potent and [indiscernible]. We run a Phase II study, a proof of concept. And what you've seen, and just to contextualize, those 15 patients at baseline, which is only 28 days, 4 weeks, had almost 1,800 seizures. So just think for a minute, because having one seizure is 1 too many. Having 1,800 at baseline is certainly something not to joke about. And we're seeing quite unprecedented results here, 46% placebo-adjusted seizure reduction. That alone would have been incredibly meaningful. But what really humbled all of us was that 33% of those patients, in 4 months, in the 4 months of the study, became seizure-free. So imagine a family who've had 100 seizures in the previous month have 0 seizures for the following 4 months. I know most of us here are parents [indiscernible] and how meaningfully that would be. The progress that was seen is equally impressive. Looking to placebo here, de minimus, right? You can't really fake it. You can't really try to. Those kids are nonverbal. We're really seeing all of that happening. In the very first time, when you compare 1 month, just one direct month comparison, it is larger than other trials run for 12 weeks, for 3 months, for 4 months, in the very first time when you compare side-by-side with them in one of the periods on this study. But when we keep them for 9 months on drug, you see a phenomenal 77% reduction. And of course, a number of those patients are seizure-free. All of that we were expecting. I know it sounds quite extraordinary, but we were expecting. What's surprising and not surprising because we didn't think we're going to affect, but surprising because it is surprising, is to have a disease modification with a small molecule. And what we're seeing independently by caregivers or clinicians, not on the same day, not on the same room, not looking to each other and asking the questions, but independently assessing items that are incredibly important, like disruptive behavior, when our brain is on fire, when we seize a lot, we become very disruptive. And these kids, unfortunately, are, very important, improve in communication. I'm going to ask you again to image the parents that cannot communicate with their child and now can increase the communication. It's quite, quite meaningful, incredibly meaningful. Severity and intensity of the seizures, it goes with the territory. Reduced seizures, reduced severity was good to see, but it was expected. And alertness is counterintuitive because one would expect, in particularly with the drugs in development right now, that you dampen, you reduce hyperexcitability. You reduce alertness. And what we've seen is bringing these kids back, like unlocking these individuals in their body. So incredibly excited. So what do we do when we are excited? We keep going. All right. We amended this protocol. We added a registrational cohort, that's here on the top. This registrational cohort is ongoing. It's going incredibly well, I would say partially because, when you have incredible results, people get excited, they work more with you. We announced on Sunday in our press release that we intend to use the data from that study, assuming to be positive, as we are right now, to file an NDA next year for this indication. It's a good reminder that we have pediatric designation for this drug, so that gives not only the ability to give these drugs to patients, but really to help us fund the next wave of innovation as well without continual fundraising for that, so quite meaningful. But maybe even more important is that, when we looked into the mechanism, we started asking, could this work across the board in DEEs? The current definition of DEEs in the subdivisions that we all make are actually quite recent, right? We start splitting hair not that long in the past. But fundamentally, when there is dysfunction in the brain, these neurons are firing in an aberrant way, there is always one type of mechanism that is present, that is important, and it's sodium channel modulation. One could argue, and maybe some of you would argue with me, that GABAA is well on the other side, on the inhibitory part, and you would be correct, but one that we can titrate, meaning we can modulate. So what we decided after doing a lot of preclinical work was really to talk to the FDA, as we are doing as we speak, and we start a larger study in what we're calling all DEEs on phenotypically defined CEs. So we are going from a market opportunity perspective, from a few thousand patients, 5,000, 7,000 patients on the top, to 190,000 patients on the bottom in the United States alone, helping more people, generating more opportunity and revenues and investing in the next wave of innovation as well as a company. So just going to end with it's incredibly exciting. We went through about half of what we are doing right now. Everything is moving tremendously. We're very, very thrilled, and I'm particularly incredibly excited about this quarter, as we're going to be talking about essential tremor. This half, we're going to be talking about RADIANT and how we help patients with focal and generalized epilepsy in the remaining of the year, as we start to dream about really creating this fundamentally different company, CNS, and helping patients, helping our employees and helping shareholders. So thank you. Thanks for daring for more with all of us, and I appreciate your presence.

All right. Any questions from the audience?

Can you tell us what were the -- I remember following up with you before on the components of the essential tremor score. This is now a modified score. What did you take out? And what was FDA's reaction to taking them? These things, I don't know, spiral was part of it. I don't know how wedded the FDA was to spiral. I'm sure -- I think there were 3 or 4 other components, too. I just like to get a little bit more of an understanding of the new score.

Yes. Absolutely. So there are 2 major scales on essential tremor, one that we call the TETRAS-ADL, and is what we are looking to here, the activities of daily living; and the TETRAS performance scale, or PS. What we're referring to is the fields, and I mean the movement disorder physicians historically have been more prone to looking to the performance scale. And I actually think that's quite obvious because the performance scale resembles a neurological exam, like the patients, and there, it's great to assess a patient, whether or not they have essential tremor or a Parkinsonism or any other movement disorders. It's not very adequate, and I'm going to even go as far as to say it's horrible to assess progress over time. The very first discussion we had with the FDA about 2.5 years ago-or-so, we actually proposed the performance scale, like that's the prevailing scale out there, right? And the agency was quite clear with us that, that would not be equate, that we had to measure the activities of daily living, and if we so wish, we could add a few items from the performance scale. The ADL itself, and I believe that is incredibly important here, is always assess, has 12 items with a 4 dynamic range, 0 to 4. So any of our investigators right now on Essential3, on Essential1, on any other study, when they are assessing the patient have 12 items for dynamic range, 0 to 4, no impact at all and complete impacts you cannot conduct on the 4. So that's the dynamic range. The agency asked us and others in the field to, after the collection, mathematically transform the score. And I think that is a quite important notification or clarification because a lot of people think that the actually scale is modified, but one could argue that is the result of the assessments of the scale that are recalculated. The dynamic range reduced, the hypothesis being that 0s and 1s are pretty similar, so we should try to put them together, and that the social impact, which is the Item 12, is not that reliable. That was the assumption from the FDA. And while I don't believe that there is evidence, scientific evidence, for the social impact not to be relevant, that is the agreement we have with the agency, to use the 11 items from the scale in the 3 dynamic range. Quite importantly though, those results from the previous study are on the exactly same collection, protocol, training and calculation as the current study. There is no modification between the two. The 2 items that were not included here that were included in the previous study are the Items 6 and 7 of the scale, which are the Archimedean spiral. So it's the ability of patients to draw a spiral, which, for us, is actually pretty simple considering that we are normal-typical here. For patients with essential tremor, it is incredibly difficult. And we're still conducting that. It's not an end point, it's not a formal ranked end point. To answer a different question, humans, and I'm sorry for all of us limited humans in this room, we cannot discern in a dynamic range for spirals from patients in a linear scale between 0 and 4, but we believe computers can. So we're doing experiments. There was a discussion we had with the agency, it would be interesting if there is a way to discern. That is not an endpoint, a formal, ranked endpoint in the study, but it would be a good scientific question to answer. I think both ourselves, and of course, I cannot speak on behalf of the FDA, but I believe, by what they said, they agree, the handwriting sample, that was the other item, is just completely garbage and it should not be used in any study, and not garbage because the patient did or a physician, that's from an endpoint perspective, it cannot be assessed so unfortunately, may I say, because it would be good to have other assessments. So this is the endpoints that we agree with the agency that are going to be used -- is being used in both studies. Both studies being positive. In our end of Phase II, the discussion was that would be used to support the NDA that we intend to file later this year.

Other companies that are doing essential tremor, are they also doing in this new scale versus the old scale?