Santhera Pharmaceuticals Holding AG (SANN.SW) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Santhera Pharmaceuticals Regulatory Update Conference Call. I'm Alessandro, the Chorus Call operator. The conference must not be recorded for publication or broadcast. This conference call may contain certain forward-looking statement based on current assumptions and forecasts made by Santhera Pharmaceuticals. Such statements involve certain risks, uncertainties and other factors which could cause the actual results, financial condition, performance or achievements of Santhera Pharmaceuticals to be materially different from those expressed or implied by such statements. These factors include those discussed in the comprehensive risk factor disclosure on the company's website at www.santhera.com. Santhera disclaims any obligation to update any forward-looking statement. The conference may be downloaded on Santhera Pharmaceuticals during the 2 weeks following the call. At this time, it's my pleasure to hand over to Mr. Dario Eklund, CEO. Please go ahead, sir.

Thank you, Alessandro. Good afternoon and good morning, everyone. Thanks for joining this call today to discuss the clock stop extension, the SIDEROS interim analysis and the resulting new regulatory and launch time lines for our lead product, Puldysa in DMD. Here with me today are Andrew Smith, our Chief Financial Officer since April; and Shabir Hasham, our Global Program Leader for Puldysa. You have probably already read our press release of today, so I will be short to leave time for questions. I'd like to start with a brief review of the regulatory process for Puldysa in DMD. At Day 150, regulatory feedback indicated that approval for our conditional marketing authorization application for Puldysa in DMD was possible. The remaining questions were related to a planned confirmatory study to be conducted post-approval; the positioning of the ongoing study, SIDEROS; as well as the exact wording of the indication. The rapporteurs concluded that although data are not all encompassing, the conditions for CMA, or conditional marketing authorization, were fulfilled. At Day 180, however, we were informed that some member states were still in doubt and looking for further clinical efficacy data to support results of our pivotal Phase III DELOS study to further substantiate the benefit risk ratio of Puldysa. In parallel and independent thereof, our large SIDEROS study hit an important milestone. Approaching full enrollment with SIDEROS in recent weeks, we performed a predefined sample size reestimation. This was foreseen in the study protocol to reconfirm that we had enough patients to end recruitment. We reassessed the statistical parameters, such as variability, to determine the power of the study. What does this mean? Variability is a measure of how consistent the changes from baseline to an endpoint are between patients. Low variability contributes to good statistical power, but it doesn't predict if there is a treatment effect or not. Power, in turn, indicates the likelihood to detect the treatment effect with statistical significance if there is an effect to be found. Our assessment showed that the SIDEROS study was very well powered at 99%. This means that the chances to misdetecting a treatment effect, if there is such an effect, are only 1% or less. The strong power of the study led us to investigate the potential of conducting an interim analysis. Because this was not planned at the outset, we first will need to amend the protocol, which has to be approved by the regulators in the U.S. and the European Union. This process is currently ongoing. And if we get approval to conduct an interim analysis, we will go ahead with it. Now you might wonder what one has to do with the other. Our CMA application includes data obtained with Puldysa in DMD patients without glucocorticoid comedication. The SIDEROS study, in contrast, investigates the efficacy of Puldysa in DMD patients who are taking concomitant glucocorticoids. Although the DMD patient populations are not identical in our application for CMA and in SIDEROS, it became clear that because of the evolution of the disease and similar respiratory function decline patterns, it would be beneficial to include the data of a SIDEROS interim analysis. If positive, and included in our Day 180 answer, this would substantially strengthen the conditional marketing authorization application data package. On that basis, we approached the rapporteurs with our intention to perform an interim analysis and to make the results available to CHMP as part of our answers to the Day 180 questions. In doing so, we felt that SIDEROS could represent the additional data that some CHMP member states were looking for. Yesterday, the CHMP followed our arguments and granted a prolonged clock stop. During this extension, we will perform the interim analysis and submit the data with the CMA application package currently under review to support the benefit risk ratio of Puldysa. Let me explain to you how this interim analysis will be conducted. The objective of the interim analysis is to investigate if the SIDEROS study could be terminated early to so-called overwhelming efficacy. Following approval of the protocol amendment, the independent Data and Safety Monitoring Board, DSMB, will perform the analysis by estimating the treatment effect, the confidence interval and p-value. The treatment effect is defined as the difference between treated and placebo arms measured as forced vital capacity as percent predicted. In this interim analysis, overwhelming efficacy is defined if a treatment effect is observed with high statistical significance. Subsequently, the DSMB will make a recommendation to Santhera based on these data, such as to stop the study early or continue as planned. Only the DSMB has access to the unblinded data. All other parties, including Santhera, remain strictly blinded. This way, we can preserve the integrity of the study. If a recommendation is made to terminate the study early for overwhelming efficacy, then the DSMB will share the data for the primary endpoint with Santhera, and we will forward this limited information to the CHMP. If a recommendation is made to continue the study, no data is shared and the study continues as planned. The data will be substantial since SIDEROS has been going on -- ongoing for nearly 3 years and we have a lot of data points. Out of the 255 patients enrolled so far, 126 patients have already completed 18 months of treatment and have continued into the long-term extension study, and 171 patients have completed 12 months of treatment or more. Before I conclude, let me share with you the effect that this has on our time lines for Puldysa. The clock stop extends the review period by up to 5 months, and we can expect an opinion from the CHMP in the fourth quarter of this year of 2020. What is essential is that, and always subject to a positive outcome of the interim analysis, we will have added a very large amount of data with Puldysa in DMD. This should significantly help to increase the probability of approval of our application for CMA in the European Union. All in all, subject to approval, first launch, which is planned for Germany, will shift from quarter 4 of this year to quarter 1 of 2021 next year. What does this mean for subsequent submissions? In the U.S., SIDEROS is a pivotal study for our regulatory filing with the FDA for Puldysa for patients with DMD, both glucocorticoid users and nonusers. A positive interim analysis and a subsequent early termination of SIDEROS could speed up the time to regulatory submission to Q2 of 2021 or by about a year compared to previous guidance. This means that under this scenario, we could launch in the large U.S. market as early as 2022, the first part of 2022, a year earlier than previously planned. In Europe, the filing of a Type II variation to expand the indication and include DMD patients using glucocorticoids could also be accelerated by 1 year, bringing forward this submission to Q2 of 2021 and the launch of a broader label in Europe in early 2022. Being able to include the patients using glucocorticoids in Europe would more than double the market opportunity for Puldysa in that territory. So with this, I'll close my summary, and thank you for your attention. I'll now hand over to the call operator for some more questions.

The first question comes from Bob Pooler from ValuationLAB.

Dario, I have few questions, if I may. On the interim analysis from SIDEROS, when do you expect the top line or the interim results to become available? And how is that process really going with also the authorities that have to approve the analysis?

So the time lines are that we expect to have a CHMP opinion in Q4, which means that we will likely have the data from the interim analysis ready for submission to the CHMP in early Q4. The next couple of months are going to be absorbed by these protocol amendment discussions. The actual interim analysis itself by the DSMB is probably not going to take more than a couple of weeks. But we have planned relatively generously for the period leading up to the DSMB interim analysis given that under COVID things may take a little bit longer with the regulatory authorities.

Okay. But actually, if you look at the launch, given the time you've just given, the launch in Germany, the first EU launch would be only delayed by roughly a quarter. So in fact, that's probably a very good trade-off of having good data there. Just on the time lines there, if positive, you mentioned the EU and Germany, but also the U.S. following there. Is there also a potential for, for instance, a pediatric priority voucher as well?

Yes. Good point, Bob. I mean the submission in the U.S. is eligible for a rare pediatric disease priority review voucher. So once we submit and get approval in the U.S., assuming that we do get approval, we would be -- we would qualify for one of those pediatric review vouchers, which -- they are sellable and they -- their value typically is somewhere between $80 million and $140 million based on the most recent transactions. So if we were to be eligible for such a voucher, which is likely upon approval, that would certainly be a big boost to our financing.

Okay. And then just on the EU. So now the conditional approval is based on those patients not on steroids. But the patients on steroids, so that would be, the approval, early 2022, and that's roughly 60% of the patients actually treated, I believe.

Yes. So the launch would be in early 2022 of the broader label. If we get a CMA, we would get the approval for the non-glucocorticoid users in Q4 of this year, which would mean a launch in Q1 in Germany next year. And then the Type II variation would probably allow us to get an approval for the broader indication at the end of next year with a launch again Q1 the following year. You're right, the market for the glucocorticoid users is larger than the market for the non-glucocorticoid users, so approximately 60-40. So it would -- the opportunity that present itself with the shortened time lines is not insignificant in terms of value creation.

Yes. Just the implications, because now that's been delayed, the potential conditional approval in Europe, what are the implications for the fund raise, which was initially planned in Q3 following, let's say, a conditional approval in Europe? And how is it with the funding of the ongoing projects as well?

It gives me an opportunity to introduce Andrew Smith to the listeners today. He's our new CFO since April. So I'll pass this virgin question over to him to answer.

Okay. Thank you, Bob. I think the first point to reiterate is that delay represents a positive value opportunity for the possibility of shortened time lines, approval in the U.S. and expanded label in Europe. But as you say, it does increase the pressure, short-term funding pressure, running up to the anticipated approval. As you know, recently, we announced a standby equity distribution agreement, which has been ongoing and helping to address the short-term runway. And in the longer term, we can expand that, if required. And also in the meantime, we continue to engage those key stakeholders who have been supportive of the company and remain supportive of the long-term value prospects. So I mean, between those, we remain confident in our ability to raise the appropriate funding and look forward to updating you in due course.

Okay. Just my one final question. Q4 is also the VISION-GMD trial, vamorolone in DMD. How is that progressing, also in light of the COVID-19, of course?

So that study is being conducted by our partner, ReveraGen, and it's also nearing its end. My last information is already a few weeks old, but I think they had 102 or 103 patients enrolled out of the target 120 patients. They had a few dropouts. They may have to recruit a few more than 120, but the recruitment for that study has kicked in again. Many of the states in which the study is being conducted in the U.S. are opening up as well as some of the countries where the study is being conducted are opening up. So patients are, again, able to go to screening and able to be recruited. The exact timing of when that study will close is still open. The original plan was to close the study in Q4, get top line results in Q4. It may still do that, but it may also slip into early Q1.

Yes. So yes, I'm sure with the COVID-19, it's very difficult also with the patient recruitment. So that's quite understandable. Fingers crossed for positive interim results for the SIDEROS trial.

Thank you very much, Bob.

The next question comes from Barbora Blaha from Crédit Suisse.

Dario, so a few questions were already clarified, but one remaining. The CHMP decision in Q4 is then only for the patients on -- not on steroid, right?

That's correct.

And if you add this data from SIDEROS' trial, do you only add the data from patients which were not on steroids? Or what kind of data do you add there? Can you just extract a certain patient group? Or how does this work?

No, it's a good question, Barbora. The SIDEROS study is only in patients with glucocorticoids. So DELOS study, which has so far been submitted, is in non-glucocorticoid users and the SIDEROS study is exclusively in glucocorticoid users. The patient populations are somewhat different from that perspective. However, all the data that has been generated suggests that taking glucocorticoids doesn't really impact the decline of the respiratory function when the respiratory function decline has started. Using glucocorticoid delays the start of the respiratory function decline by about 3 years. But once these patients pass the 80% of predicted point, the decline for a patient who has taken glucocorticoids versus those that haven't, the decline is colinear. So while it's a different population, it does add to the evidence that is in the hands of CHMP. And given that some CHMP members were looking for additional clinical data or a confirmation of clinical effect, this study and the interim analysis thereof would provide that additional clinical evidence that the drug actually works in these patient populations.

And did you already check with CHMP that you are allowed to add this patient group to show clinical evidence? Or this is still to be decided by CHMP?

So we had -- when we decided to do the interim analysis, this was not related to the CHMP process initially. We then reached out to the rapporteur and the co-rapporteur to share with them our plans to do an interim analysis and to ask them whether they think this analysis, if successful, would be something that we could include in the Day 180 response package to the CHMP. They like the idea. They were supportive of the idea. And they took it to a full CHMP meeting which has taken place this week. And we learned late last night that the CHMP, as a whole, has also endorsed that path forward. So they also think it's a good idea. So we have CHMP agreement to do -- conducting this interim analysis. And while they always retain the right to their own decision at the end, it certainly is a very promising sign that if the interim analysis would be overwhelmingly efficacious that this data would probably tilt the scale quite substantially with the CHMP.

The next question comes from Olav Zilian from Mirabaud.

Just for clarification, so in case the Data and Safety Monitoring Board sees evidence for overwhelming data, according to the interim analysis that remains blinded to the world outside, would this allow, just for clarification, the completion of the trial at this point in time and then the full disclosure of the data? Or would the trial then, nevertheless, continue in a blinded version?

There's essentially all of 3 paths that this interim analysis can take. It can take 1 of the 2 extremes. Which one extreme is it shows futility, which means the drug does not have effect and in which case the case would -- the study would be closed. It could also show overwhelming efficacy, which would mean that the study would also be closed, but this time, because it will be unethical to continue patients under placebo given the difference between the 2 groups is so clear. Or the third path forward which would mean that there is neither 1 of those 2 extremes, which could still mean that the study is on track, and it's going to have a very positive readout, but it needs to continue because there's neither 1 of those 2 extremes. And if the study needs to continue, it will continue. And the patients, the last patients who have been recruited probably in these days right now are still going to have to complete 18 months in the study, which means that the study will have its final readout in Q4 of 2021. That's one of the reasons why we have looked at the interim analysis as well because being able to close the study this year versus end of next year saves us that 1 additional year. But to be specific, the study would continue, which is why we're doing the study in a blinded fashion through the DSMB in order to not compromise any integrity of the study in case it needs to continue.

Brilliant. So then the follow-up question would be, so in the absence of futility, but overwhelming efficacy not evident at this point in time, so the study will continue. Would simply that particular fact also substantially support the review at CHMP? So addressing concerns raised in the later round of the Q&A, the 180 stop clock?

I'm not sure I understood the question.

So the -- in the later round of questions you have received, there was the request for further data substantiating the package you have under review. And now futility being absent, would this be answering that extra demand for supportive data?

Okay. I see what you mean. Yes -- no, no. Futility being absent, still wouldn't report -- wouldn't satisfy the need of the CHMP because we would continue the study. And continuing the study means that the study may be successful, but it may also not be meeting its statistical significance at the end. So it's unknown at that point if the study continues whether the study will be successful or not, so it wouldn't suggest an additional clinical efficacy for the product. The only thing that would do so is a high statistical significance in that interim analysis.

Okay. Understood. So then in financial terms, what is then the increase in your net present value as you will advance the approval across all indications, be it on or without steroid by 1 year? A question to the CFO, by how much would your valuation then increase for the project?

That is not something that we would put forward right now. And I think we -- one, we need to evaluate the various paths forward. But also, I think, to project our valuation forward is something I think you may be doing based on our expectations.

And can you comment on your expectations, please?

Not at the moment. We're not giving guidance on this at the moment.

I think everybody would agree that if you can shave off a year to market in the U.S., the largest market with the most attractive prices, as well as a year for the larger -- or the expanded indication in Europe, then a few months' delay in the CHMP process is a small price to pay. And I didn't mention the year -- the pediatric review voucher coming in potentially a year early as well.

The next is a follow-up question from Bob Pooler from ValuationLAB.

Dario, just to follow on from Olav on the SIDEROS interim analysis being inconclusive and continue, what impact does it have on the CHMP opinion then for the patients, not necessary? So basically the conditional marketing approval for Europe, would you continue with that for the review because they are still different patient group

So if I understood your question correctly, if the study continues, there's neither futility nor overwhelming efficacy, what would we do. Well, we would be back in the same point where we are today. I mean we -- the Day 180 questions, we could have pursued and gone to -- pursued answering the questions and then potentially gone to an oral hearing, an oral explanation. Not knowing the odds of success or failure there, we felt that at this point in time, given that we're doing the interim analysis anyway, we might as well wait and see if that interim analysis can add to that package because that would increase our chances of success markedly. We don't know what the chances of success are right now and we don't know what they would be with the additional data, but we do know that it's going to be significantly higher. And should that data not be available at the end of this process, we would just basically go back at the same way as we were planning to originally to the CHMP with the existing data package and trying to answer the open questions to our best ability.

Okay. So yes, it's really actually improving the success rate by adding that data. And if you don't have the data yet because the study continues, then you would just go on as planned. And again, fingers crossed for a positive interim analysis.

Thanks a lot, Bob. Thank you.

We have no further questions at this time.

Okay. Well, then I just want to thank everybody for your interest in Santhera and being on the call today. Friday afternoon is never an easy day, so I appreciate your attention. And I look forward to speaking to you soon and maybe see you all soon as well. Have a nice weekend. Bye.

Bye-bye.