Russell Cox
Analyst · National Securities. Your line is now open
Good afternoon, everyone and welcome to our fourth quarter 2017 update call. On today's call I'll begin by sharing my background and some of the reasons why I decided to join Vital Therapies'. We'll then begin with an update on our 308 Phase 3 clinical trial, and we'll discuss our R&D activities and publications. We will than review our fourth quarter financial results and we’ll finish up with questions. So for those of you who don’t know me already, I’d like to begin by briefly discussing my background. I left a great job, with an exciting company to join Vital Therapies. As Chief Operating Officer at Jazz Pharmaceuticals, I had direct responsibility for about 80% of the company, including global commercialization, R&D, manufacturing and global molecule leadership. When I started Jazz, the company generated about a $170 million in revenues, which grew to more than $1.62 billion during my tenure. Jazz has a bright future, and I wish my friends and former colleagues the best there. Prior to Jazz, I started my carrier at Genentech, where I spent 12 years. I was than fortunate to hold senior roles at Scios, which was eventually bought by J&J, and Tercica, who was bought by Ipsen. I spend many years in the role of Chief Commercial Officer and over the course of my carrier I have been involved in as many as 20 commercial launches. When I decided to take the next step in my carrier, I was looking for an opportunity that met a particular screen that I had in mind. Something next generation, either in cell or gene therapy, something in late stages of development and therefore close commercialization, something I believe is well positioned for technical and regulatory success, and it had to be differentiated and address a large unmet medical need with a strong competitive position and to be a long lived asset in order to maximize the value. After screening multiple opportunities, I thought that Vital Therapies met this screen, and for me it clearly separated itself from the other opportunities I was reviewing. I was looking for something next generation, specifically cell or gene therapy, because that is where I believe we will see the greatest innovation in the coming years. The regulatory environment is also maturing in its view of these therapies and that's been demonstrated by the establishment of new policy frameworks for approving cell and gene therapy such as the 21st Century Cures Act, and associated policy guidance that specifically address cell or gene therapy approval pathways. Just in the past years, the FDA has approved two new CAR-T products and a gene therapy product. With hundreds of clinical trials and cell and gene therapy taking place, it's arguably the field with the greatest amount of excitement and potential in healthcare. With the unique cell therapy in the late stages of development, I truly believe Vital Therapies' is in the right place at the right time. From a commercialization standpoint, ELAD is at the pivotal Phase 3 stage and we anticipate potential commercialization in 2020 in the event of positive 308 results. We've already begun working on the commercialization plan and we'll be ready to hit the ground running in the event of the BLA approval. I'm eager to put my experience of launching new products to use with ELAD. I've also had the opportunity over the course of my career to evaluate the number of opportunities in therapeutics. I've always approached these assets by trying to access our probability of technical and regulatory success. Technically the design of the 308 trial is based on a large prior dataset, and learning from an extensive subgroup analysis that have a strong medical rationale. This trial has been enrolled in a highly disciplined and timely matter. In the event of positive results, I believe the regulatory pathway for BLA targeting a less favorable [ph] indication could be quite favorable. As you know ELAD could potentially address a critical unmet need in an orphan indication in the event of positive trial results. About 80,000 people in the U.S. and Europe suffer from acute liver failure, that could be treated with ELAD. Our first target indication severe alcoholic hepatitis or sAH affects about 60,000 patients in the U.S. and the EU. Beyond sAH we have opportunities in areas like post-surgical liver failure, alcoholic [ph] overdose and Mushroom poisoning. We also believe there is a significant long-term opportunity in the rest of the world where liver failure related to hepatitis B is a real problem especially in China. From our competitive standpoint, we believe Vital Therapies' is well positioned to become the leader in a field with a large unmet medical need. Despite the considerable efforts of others, there have -- there are no other new therapeutic options for patients suffering from acute forms of liver failure in a very long time. To our knowledge ELAD is the only bio-artificial liver system in clinical development either in the U.S. or the EU. Should we be successful, we believe it would be difficult for anyone to follow behind us in a comparable approach for several years. There are some monotherapy approaches being explored at very early stages but the complex nature of this disease suggest that monotherapy would have difficulty to make any impact in an overall survival endpoint. Bottom-line, we believe you really need a cellular approach to address this disease. And now it appears there is no one else in the arena. I hope you can see the reasons why I'm thrilled to lead Vital Therapies' during this exciting time. And for that, I would like to express my deepest gratitude to my predecessor, Terry Winters, for all he's done to get Vital Therapies to this point. In my first two months, it's been obvious to me that Terry has been a wonderful leader for the company. ELAD would not be at this stage without his commitment, passion and hard work. I also want to thank our distinguish Board for their support and I look forward to working with them and the rest of the outstanding people here at Vital to hopefully transform the company into a very successful commercial enterprise. I'll now turn to an update of our 308 Phase 3 trial. Our number one priority is completing the enrollment of 308 and the finish line is now in sight. As of yesterday, we had enrolled 147 subjects and we had 43 sites open for enrolment. This compares with 118 subjects enrolled in 45 sites at the time of our last update on October 25 of last year. As you will recall, the design of 308 incorporates an event-driven feature that provides flexibility to enroll additional subjects, if necessary to help the study achieve target overall blended total of approximately 55 events at the time of data lock. As planned early in the first quarter, independent statistical experts evaluated the blended event rate from the 308 study. These experts, including Dr. Thomas Fleming of the University of Washington, who many of you know as a respected consultant to the FDA, these statisticians, including Dr. Fleming concluded that the data observed as of the year-end 2017 was consistent with the predicted event rate modeled in the original statistical plan, and would be likely to yield approximately 55 events at the time of data lock. As a result, the statisticians recommended that we will retain the original enrollment target of 150 patients. It should be noted that the data used in this analysis was blinded as to treatment arm and therefore provided no insight on the primary endpoint of the study. We are pleased that the event rate and 308 appears to be consistent with what we expected based on the original design of the trial. As a result, we continue to expect we will enroll the last patient in 308 this month. Once the last subject has been enrolled, the minimum follow-up period of 90 days begins, following which we anticipate a couple of months to lock the database and then a short period for the data to be analyzed by our independent third party statisticians. That timeline keeps us on track to report top-line results from 308 in Q3, 2018 likely in September. Before Joining Vital Therapies, one of the things I found most impressive about the company was the rigor with which the 308 trial is being conducted not only with the learnings from the 208 trial methodically applied to the 308 trial design but we also maintain the discipline to ensure that subjects enrolled met all trial criteria. In my experience this is difficult to pull off in a complex hospital based trial. We've take no short cuts and remain patient and deliberate in our execution of the trial, As you can see in the table included in this afternoon's press release based on our 147 subjects base line characteristics continue to fall within the required study range and their means remains closely aligned to those observed in the 208 reference population on which the trial design was based. I'd like to congratulate all those who have contributed to the design execution of this pivotal clinical study including our clinical investigators, and to thank the patients themselves for their participation. Now turning to our R&D work and progress with publications, we were delighted to see publication of the full 208 clinical trial results in the March issue of the Journal Liver Transplantation. The paper provides the detailed rationale for the design of our current 308 study. And this is highlighted in the accompanying editorial by Dr. Timothy Morgan of the VA Long Beach Healthcare system entitled ELAD, A Potential Silver Lining. We continue to make progress in our understanding of the mechanisms by which ELAD maybe influencing survival in subjects with severe alcoholic hepatitis. Most of the work we have reported so far has been in the laboratory looking at a variety of proteins that VTL C3A cells release under various conditions and their impact on other relevant cell types. This work has led to hypothesis of potential mechanism for action. Recently we've been analyzing clinical samples from our prior 208 studies to explore these cell based hypothesis in-vivo. We are hoping to show that changes in circulating level of these substances can be related to improvement in clinical conditions. So far we focused on three proteins produced by the VTL C3A cells. IL-1Ra, VGEF-A and soluble fats [ph] that showed activity during our in-vitro models and have also been shown to increase in 208 subject plasma samples, while in ELAD treatment. In the same samples, other proteins, including procalcitonin and ferritin, markers of inflammation endothelial 1, a marker of endothelia dysfunction have been shown to increasing concentration during ELAD treatment. Taken together, these results are suggestive of an in vivo response to ELAD treatment consistent with the in-vitro findings. In addition, we continue to study the ability of proteins and other factors produced by the VTL C3A cells to prevent cell death and reduce oxidative stress and in endothelial cells, hepatocytes and macrophages. This work has formed the basis of abstract subject for presentation at upcoming scientific conferences, including, the International Liver Conference -- Congress sponsored by European Association for the Study of Liver or EASL to be held April 11 through 15, 2018 in Paris, and Digestive Disease Week or DDW to be held June 2, through 5, 2018 in Washington D.C. These posters and associated presentations will be available on our Investor Relations website, under the section titled, Clinical Publications and Presentations by the close of each conference. While these data are preliminary, we believe they provide an encouraging insight into the potential for the VTL C3A cells to have a significant impact on key pathological characteristics of severe alcoholic hepatitis such as liver information, impaired regeneration and apoptosis. Lastly, I would like to provide a brief update on our liver profusion research program. We have extended our research collaboration agreement with Drexel University in Philadelphia and the University of Birmingham in the UK and we are continuing to pursue the potential for proteins generated by VTL C3A cells to improve the condition of marginal donor livers and thereby possibly increasing the number of organs available for transplantation. Preliminary results have shown promise and we are working to utilize a more definitive ex vivo model, to potentially demonstrate positive effects of proteins, generated by these VTL C3A cells on marginal livers. We look forward reporting more on this program in the future. I’ll now turn the call over to Mike for a discussion of our fourth quarter financial results.
