Analyst Conference Summary

conference date: May 9, 2018 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2018 (Q1, first quarter 2018)

Forward-looking statements

Overview: Clinical-stage company continues to develop its pipeline.

Basic data (GAAP):

Revenue was $32.4 million, up sequentially from $10.0 million and up from $12.7 million in the year-earlier quarter.

Net income was $4.1 million, down sequentially from negative $4.1 million, and down from negative $7.1 million year-earlier.

Diluted EPS was $0.15, down sequentially from negative $0.64, and down from negative $0.32 year-earlier.

Guidance:

None

Conference Highlights:

2018 and 2019 will be data-rich years.

Most revenue in the quarter was from a milestone payment due to an accounting change.

The Phase 2 part of the CARDINAL trial of bardoxolone methyl for CDK (chronic kidney disease) caused by Alport Syndrome was statistically significant. The Phase 3 part is enrolling, completion expected in 2018. One year data could support accelerated approval by the FDA. One year eGFR data from the Phase 2 trial should be available in Q3. Phase 3 data should be available in the second half of 2019. Partner Kyowa Hakko Kiri plans to initiate a pivotal Phase 3 trial in diabetic CKD in Japan during 2018.

A Phase 2 study (PHOENIX) of bardoxolone methyl for CKD from four rare causes is expected to complete enrollment in 3 cohorts by end of May. Data from at least some cohorts should be available in the Q3 2018. Full primary endpoint data from the focal segmental glomerulosclerosis cohort is expected to be available in H1 2019.

Omaveloxolone for Friedreich's ataxia is in a registrational trial (MOXIe). The mFARS score has been accepted by the FDA as an endpoint that would support accelerated or full approval. Topline data should be available in the second half of 2019.

CATALYST Phase 3 data for bardoxolone for CTD-PAH (connective tissue disease associated pulmonary arterial hypertension) is expected in the first half of 2020, a delay due to sample size recalculation to 200. Primary endpoint is 6-minute walk distance.

Cash ended at $105.9 million, down sequentially from $129.8 million. Cash plus an expected milestone payment from Kirin should last into the second half of 2019.

Operating expense of $28.1 million consisted of $21.4 million for R&D, $6.6 million for general and administrative, and depreciation of $0.1 million. Other expense $0.2 million.

Q&A:

12-week Phoenix data at ERA? We think the amount of data will be sufficient to make a reasonable assessment of how the drug is behaving. We are looking for a significant improvement from baseline for biomarkers.

Prior trials 12-week data has been predictive of 1 year data for the biomarkers. We have shown durability through 9 months. Data will help us design a subsequent trial.

We believe the bardoxolone message is getting out to KOLs (knowledge leaders). The information is in the scientific literature now, and is driving enthusiasm for the Phoenix study.

The sample size analysis was not done by the DSMB. It was an independent statistician. So the data remains blinded.

Any decisions yet on indications based on Phoenix data? Can't comment on data yet. We are looking for activity of a large magnitude change at week 12. We do have to balance unmet need, safety and enrollment. But all the indications are attractive to us. We will use the data to triage the regulatory interactions.

Phoenix type program in Japan? Kiri is including Type 1 and Type 2 diabetics. Cardinal trial is enrolling in Japan. We believe they could have interest in these additional indications, and might join us in a global Phase 3 trial.

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