Achieve Life Sciences, Inc. (ACHV) Q1 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing-by. Welcome to the Achieve Life Sciences First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Jaime Xinos, Executive Vice President of Commercial. Thank you. Please go ahead.

Thank you, Charlotte, and thanks, everyone, for joining us. On the call today from Achieve, we have John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; Jerry Wan, Principal Accounting Officer; and Rick Stewart, Executive Chairman of the Board of Directors. 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 filed with the SEC concerning factors that could affect the company, copies of which are available on our website. I'll now turn the call over to John.

Thank you, Jaime. On today's call, we will review the progress we've made on the Phase III trial and other NDA enabling activities and provide an update on our Q1 financial results. Let's begin with ORCA-2. As a reminder, ORCA-2 is a double-blind, randomized, placebo-controlled Phase III trial that is currently enrolling 750 adult smokers across 17 locations in the US. The trial is designed to evaluate the safety and efficacy of 3-milligram cytisinicline dosed three times a day over a period of six and 12 weeks versus placebo. Participants are being randomly assigned to one of three arms and receiving either 12 weeks of placebo, 12 weeks of cytisinicline or a combination of six weeks of cytisinicline followed by six weeks of placebo. After the 12-week treatment period, subjects are followed monthly out to 24 weeks. Behavioral support is being provided to all subjects throughout the study. There are two independent primary endpoints that will evaluate the rate of smoking abstinence of cytisinicline compared to placebo at the end of both six weeks and 12 weeks of treatment. ORCA-2 will be successful if either or both of the cytisinicline arms show an efficacy benefit over placebo. We are pleased to share that ORCA-2 has reached over 80% of the 750 subjects enrollment target, and we look forward to completion of enrollment by the middle of the year. As we discussed on our last call, we experienced slower than anticipated enrollment during the initial months of the study, which was primarily due to the pandemic and participants reluctancy for in-person site visits. In response, we implemented numerous recruitment initiatives to increase the pipeline of potential subjects to be screened and successfully assisted the site's in finding qualified subjects for the trial. We also onboarded two new clinical sites in Atlanta, Georgia and Evansville, Indiana, bringing the total number of sites in the study to 17. We are pleased to see the additional recruitment support the new sites have resulted in increased randomization, and we remain on track to completing enrollment by the middle of this year. Additionally, regarding our Q2, we have completed two data safety monitoring committee meetings. The committee reviews general safety data and oversees the conduct of the trial. In both meetings, they did not identify any safety concerns nor any study conduct issues and recommended that the study continue as planned. Overall, we are pleased with the progress of the trial to-date and the efforts being made by our clinical trial sites across the US. As a reminder, the company will remain blinded, until the completion of all study follow up evaluations and until the database has been finalized and locked. We look forward to providing further updates on ORCA-2 when enrollment is completed. Additionally, we have continued to make great progress on numerous non-clinical NDA enabling regulatory requirements. We have completed and submitted to FDA both of the required long term chronic toxicology studies. In addition, we are also near completion of one of the two required carcinogenicity studies and have completed a special protocol assessment with the FDA for the second required study. By next year, we expect that all required non-clinical toxicology studies for an NDA will be completed. Also, in the first quarter, we had two important cytisinicline studies published in leading peer reviewed scientific journals. First, the results from Achieve Phase 2 ORCA-1 trial, demonstrating superior quit rates for cytisinicline compared to placebo and impressive safety responses was published in nicotine and tobacco research. As a reminder, this study was instrumental in the selection of the 3 milligram dose and 3 times a day administration that we have taken forward into Phase 3 development. Additionally the New Zealand RAUORA study showing improved efficacy and lower rates of adverse events when comparing cytisinicline to CHANTIX was published in the journal addiction. We expect additional efficacy analysis from RAUORA, in the coming months and look forward to sharing that with you when available. Finally, this quarter we announced the appointment of 2 new Directors to Achieve Board. Dr. Bridget Martell and Dr Cindy Jacobs. Dr Martell is Board certified in both internal and addiction medicine and is an experienced executive leader in the pharmaceutical industry. Dr. Jacobs serves as Achieve’s President and Chief Medical Officer, and in addition to her board duties, will continue in her current role, leading Achieve’s regulatory and clinical development efforts. The appointment of Dr. Martell and Jacobs strengthens both our Board diversity, as well as our clinical and regulatory expertise. At this time, I'd like to turn the call over to Jerry to discuss our recent financial results. Maybe having an issue with Jerry's connection, so let me jump in. I'd like to provide an update on our cash balance as of March 31, 2021 and our operating expenses for the first quarter of 2021. As of March 31, the company's cash, cash equivalents, short term investments in restricted cash were $29.6 million compared to $35.9 million as of December 31, 2020. We believe our cash balance is sufficient to provide runway into the middle of 2022. Turning to the statement of operations, the company incurred a net loss of $8 million for the quarter ended March 31, 2021 as compared to a net loss of $3.3 million for the same quarter of 2020. Total operating expenses in the first quarter of 2021, increase to $8 million as compared to $3.4 million for the same quarter of 2020. As expected and highlighted during our call in March, operating expenses were elevated in the first quarter as enrollment in the ORCA-2 trial increased. We anticipate our operating expenses to remain elevated during 2021, as we continue to execute on the ORCA-2 trial. In closing, we continue to make excellent progress on advancing cytisinicline through the required clinical and regulatory development process. In the first quarter, we saw significantly increased interest in momentum in ORCA-2, and look forward to the completion of enrollment in the middle of this year. Additionally, we continue to execute on the required NDA-enabling activities and publication of key data to expand awareness of cytisinicline’s potential across new audiences. That concludes our prepared remarks. Thank you again for joining us. We will now open the line to questions. Operator?

[Operator Instructions] Your first question comes from Michael Higgins. Your line is now open.

Thanks operator and congrats guys. Great to hear of the 80% enrollment. Looks like you're on track for mid-year enrollment. Just want to ask that, if I could on that pace. Typically you see kind of a hockey stick shape on the enrollment. However, with smoking cessation January and New Year's resolutions are so impactful. Can you comment on the recent trends, the recent pace of that enrollment? Thanks.

Sure. Thanks Michael. Yes. I think in terms of enrollment, we actually didn't see that uptick like we had anticipated out of the gate in the first part of the year. We actually saw that uptick really happened kind of late February into March and April. And so what we continue to see on the ground is encouraging and more in line with where we had anticipated to be a bit earlier in the year. So I think everything we're seeing continues to indicate we're on track for completing enrollment in the middle of the year.

That's great. And then just maybe more of a comment possibly, but just few weeks ago, JAMA had a publication about COVID, the "Lost Year" for Smokers Trying to Quit. North American Quitline had a publication out in March, saying the calls dropped significantly last year. So it seems like people were smoking quite a bit. This has been a topic the last six plus months or so, we've talked about is trying to get a handle on that and there's anecdotal that was suggested, it's reduced a bit and maybe the smoking rates were up a bit rather. Has that impacted enrollment in any way? And what do you think of that when you think of the market opportunity?

Yes, I think, overall the market opportunity hasn't changed for us. I think the pandemic has created some challenges that we saw in the trial. And I think that's really been the result of people being more reluctant to leave their homes. So we clearly saw that. I think that's played out across the space as people have been more reluctant to go into make quit attempts or to even access some of the behavioral support that's available. But I think to your point, we may very well see an uptick in the number of smokers when 2020 is reported. So I think it's been an unusual year. It’s clearly a great time to quit because of the pandemic, which is the respiratory disease, and we know that smokers have worse outcomes, if they do get the virus. But I think it's been a challenging year for people to actually make those quit attempts.

Yeah. No, that's, I think, well said. And then just to switch it up a bit, but also kind of a topical story as we've seen the last few weeks and months, the current administration being much more aggressive against smoking, some of the products that are out there, et cetera. I'm wondering if that is going to have any impact on the potential for an e-cig study to have that funded by NIH and others, because this administration seems to be a bit more aggressive about kind of attacking so to speak the cigarette industry. Any updates on that from us guys? Thanks.

Yeah, on the e-cigarette grant application, we don't have any update to provide yet. We still remain on track for getting an answer back by the end of this quarter. So that's something we continue to be excited about because that's a segment of the market that's grown leaps and bounds over the last 10 years, where we think there's a real opportunity to go to market and make a difference there. So hopefully this administration is providing some additional support internally behind the scenes, but it's always a difficult thing to actually monitor from the outside. So, we remain hopeful and we'll keep everyone posted.

That's great. We'll stand the silence here hoping for the best there too. One last question. You mentioned a Bayesian analysis, actually I think I read this in a press release, a Bayesian analysis the primary efficacy outcome designed going. Any updates for us as to when we'll see more from Dr. Walker study?

Yeah. We're still waiting on that as you are. And I think it's something that we would expect to see in the second half of this year. So I think as soon as we get additional details on that, we'll be happy to share with everybody.

Thanks for all the feedback. Thanks guys.

Thanks Michael.

Your next question comes from Frank [indiscernible].

Yeah. Thank you for taking the question. Just a quick one here. Just wondering, John, is there any thought about doing another head to head trial here with CHANTIX, or is the safety potential advantages here enough to give this a good commercial push?

Yeah. Thanks for the question, Frank. From our perspective, the going in position has always been a product with at least as good of efficacy, as the market leader with significantly better safety and a shorter course of treatment is going to be sufficient to garner market share in this indication that we continue to get more data points both from RAUORA and we'll get obviously further data points out of ORCA-2, now that could potentially set up a future head to head trial against CHANTIX, that we would run. I think at the moment, we don't see that is something that's going to be commercially necessary obviously helpful, if we were to do it. But I think for us, the current planning remains the same, which is, placebo controlled trials to get this thing to approval.

Okay. Great. Thank you. And then in terms of the timing so middle of the year complete enrollment, can you just remind us between completion enrollment data, what's that timeline like? And then when you added sites here. Is there any issue in a trail like this with added variability between sites or is that not a big issue here?

Yeah. Thanks for the question, Frank. I'm going to turn this one over to Cindy to take that.

Sure. First for the timing, enrollment by mid of the year would put that all subjects would be completing the six months follow up by the end of the year. Obviously, then we need time to close and lock the database and analyze, so will be close to the end of the first quarter, beginning of the second quarter, most likely. As far as the two sites, no, we don't think adding two sites, so the total is now 17 instead of 15. We'll have that much effect on the variability. Most of the sites are at least doing 30, 40 subjects, so there are a few sites of doing better than others than some that are just going to be doing 30 or 40. So, it will be a good distribution between the 17 sites.

Okay. Great. That's it for me. Thank you very much.

Thanks, Mike.

Your next question comes from Vernon Bernardino.

Hi, guys. Thanks for taking the question and congrats on the progress so far. John, I was just wondering if you could remind us the makeup of the clinical sites, what kind of sites are they?

Yeah. So these are predominantly professional clinical trial centers. We've got two academic centers as part of those 17 ASU as well as Harvard & Mass General. But otherwise these are professional sites that have -- at least some experience in smoking cessation programs in the past with behavioral support counselors on staff. So that's the mix of sites that we're using.

Okay. And I missed it, what is the cessation of the cytisinicline?

So currently, I believe all, Cindy, you can correct me, but I think we don't have any duplicate centers across the state. So we're really across 17 different states, so they are geographically dispersed really across the US with a growth of focus perhaps through the South and up to eastern seaboard.

I mean, predominantly in major cities.

Yeah, not necessarily all major cities. They're around urban centers, but not necessarily large cities.

And then my last question was, again, if you could remind us, is the most periodic ways that the clinical trial sites interact with the study participants?

Cindy, you want to take that one?

Are you saying as far as once they’re in the study or are you talking screening?

Once they're in the study because wondering how closely those participants are monitored?

Sure. They come in weekly into the clinic while they're on treatment, and then afterwards they come in monthly for follow up and completing at six months.

And anecdotally, sorry my follow up. Are you seeing any change in their behavior because of the pandemic and the restrictions, as far as their monthly visits?

No, I think that's where we had a slower enrollment at the beginning in January and February because subjects were not willing to come weekly into the clinic. We’ve definitely saw that easing up in March, April, and then this month. So that has been a lessening of an issue as far as the weekly clinic visits for the first 12 weeks.

So other than their hesitation, you're satisfied so far with their participation in the study?

Right, because when we sign the informed consent is pretty clear all the -- all that they're expected to come in and do as far as testing and their parts. So in signing that consent form it's laid out exactly when they come in and what is happening.

Okay. Okay. Thank you for taking my questions and the insight into the study. Appreciate it.

Thanks, Vernon.

Your next question come in from the line of Ted Yu. Your line is now open.

Thank you very much. Hello John and team. This is Ted Yu, fitting in for John Vander today. Thank you for taking my question. During the last update, Achieve indicated that it was seeking non-dilutive funding to support a trial in vaping. Any advancements on that front?

Yeah. Thanks Ted. Yeah, we're still waiting for feedback. This is a you know a grant application, we submitted the very end of last year and based on the timelines we're expecting to get an answer back by the end of this quarter, so stay tuned on that front.

Okay. Best of luck on that. And just out of curiosity, how large is the vaping segments of nicotine users -- are the majority of nicotine users still smokers or are they starting go 50/50 or what does that breakdown look like?

Yeah, good question. So, we look at the rates of smoking in the US combustible cigarettes that is, it's been roughly 14% of the population, it actually hasn't shifted in over 3 years since 2017, the number of smokers has remained flat at roughly 34 million. Now over the last decade we've seen an expansion of the market with e-cigarette use, and recent estimates we've seen are upwards of 14 million US e-cigarette users. Now some of these do overlap. We do know that a number of folks that have moved over to e-cigarettes, weren't able to quit smoking. And now they're dual using both products, where you've got a handful of folks just using e-cigarettes alone, as well as a large segment of youth who have picked up those products in large part because of the popularity up products like Jewel. So, I think overall there's been, what I would call a likely market expansion, compared to where we were three or four years ago, so it hasn't been, you know, an erosion. There has been some shifts, but I think largely it's expanded.

Okay. So it does sound like many of the e-cigarette users actually just added to the population of nicotine users. Okay, well thank you very much. That does it for me today.

Thanks Ted. Appreciate it.

[Operator Instructions] There are no further question at this time. I will now hand the call back to John Bencich for closing remarks.

Charlotte, thanks everyone for joining us today. We appreciate everyone's continued support of the company, it's been an exciting time as we've been moving forward with enrollment. Look forward to completing that here in the middle of the year, and continuing to provide updates to everyone as they come in. So thanks again for taking the time.

This concludes today's conference call. Thank you for participating. You may now disconnect.