Trevi Therapeutics, Inc. (TRVI) Q2 2022 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Trevi Therapeutics Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. Various remarks that management makes during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's most recent quarterly report on Form 10-Q, which the company filed with the SEC this afternoon. In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so even if its views change. I would now like to turn the conference over to Jennifer Good, Trevi's President and CEO. Please go ahead.

Good afternoon. And thank you for joining our second quarter earnings call and business update. Joining me today on this call are Lisa Delfini, Trevi's Chief Financial Officer; and Dr. Bill Forbes, Trevi's Chief Development Officer. Lisa and I have some prepared remarks, then the three of us will be available for questions at the end. This has been an exciting year for Trevi and the second quarter was no exception. After reporting out positive interim cost data in the first quarter, in the second quarter we read out our prurigo nodularis trial, or PN, which was also statistically significant. We believe this was an important validation of the unique mechanism of Haduvio, which works both centrally and peripherally and is important in the conditions we have targeted. Cough and idiopathic pulmonary fibrosis, or IPF, and pruritus and PN represent some of the most severe aspects of these diseases. And we believe there is a potential opportunity to affect the underlying disease in both of these conditions. For example, we were able to show the healing of the excoriations on the PN trial with 55% of Haduvio subjects showing at least a one-category improvement in the five-point Prurigo Activity Scale versus 38% on placebo with a p-value of 0.006 at week 14. Let me now provide you with an update on both development programs. Beginning with chronic cough and IPF, we are very excited to be moving forward in this indication. Haduvio is the lead therapy in development for cough and IPF and is the only one to have shown positive results in a blinded study. Cough represents a significant unmet need for IPF patients as the majority of these patients report cough as one of their most bothersome aspects of their disease. In the next study, we also plan to assess other elements of the underlying disease to see if cough reduction has an impact on health outcomes. As I mentioned, we reported highly statistically significant results in the first quarter in the interim analysis of this trial. Since proof-of-concept was established, we worked with our sites to close enrollment early and finish the study. At the interim analysis, we reported data on the 26 subjects who had completed at least treatment period 1, the full analysis set; and 18 subjects who had completed the full crossover of both treatment periods in the trial. For the complete trial, we ended up with 38 subjects enrolled. We are waiting for the full data set on all subjects in the trial as well as the unblinded safety results and expect to announce results on the full set of subjects this quarter. We will also be presenting data from both the interim and full data set for cough at medical meetings this fall, beginning with the European Respiratory Society meeting in Barcelona in September, where our interim data was selected for oral presentation. We have also been actively planning and preparing for the next study in cough. We have engaged our CRO partner, are identifying countries and sites and are working on a protocol that we intend to discuss with the FDA at a meeting scheduled this quarter. We will keep you informed when the study design is finalized and provide guidance to you on timing for the trial and results. Our other target indication is for the treatment of prurigo nodularis, which is a serious and debilitating disease characterized by papules and nodules on the skin as well as incessant and severe itching. We believe PN due to the refractory nature of the disease is neurologically mediated and potentially aligns well with the neuronal mechanism of Haduvio. Most of these patients have already tried and failed topical treatments. And we believe future patients will be eligible for an oral therapy like Haduvio before turning to biologics. As previously mentioned, we reported out positive data at the end of the second quarter in the Phase 2b/3 PRISM trial in PN. The trial achieved statistical significance on the primary and all key secondary endpoints. At the time we reported out the top line data, we did not yet have the final key secondary endpoint, which was the PROMIS sleep scale. We are pleased to report that the PROMIS sleep scale also supported the overall positive results with Haduvio subjects experiencing significantly greater improvements in the PROMIS scale versus placebo with a p-value of 0.0002 at week 14. The first assessment of PROMIS was made at week 6 of the trial, which also showed a statistically significant improvement. So we are pleased that the primary and all the key secondary endpoints were positive and that Haduvio demonstrated an early response. This data has been accepted for oral presentation at the European Academy of Dermatology and Venereology in September, which I plan to attend if any of you will be there. The next steps for the PN program include completing the one-year open-label extension study. The last patient is scheduled to complete one year in January of 2023. In parallel, we will continue analyzing the blinded data and preparing a request for an end of Phase 2 meeting with the FDA. It has been a busy year at Trevi. And the trial data has positioned us well for potential growth in these two important indications along with other potential life cycle management opportunities. As a reminder, this quarter, we will have the full CANAL data for cough and IPF, FDA meeting on cough and IPF and an R&D Day later in the quarter to outline the going forward strategy and development plans. I will now ask Lisa to review our financial results and then we will open it up for questions.

Thank you, Jennifer. And good afternoon, everyone. As a reminder, the full financial results for the three and six months ended June 30, 2022, can be found in our press release issued ahead of this call and in our 10-Q, which was filed with the SEC today after the market closed. In the second quarter of 2022, we reported a net loss of $8.1 million compared to a net loss of $9.8 million for the same quarter of 2021. R&D expenses were $5.1 million during the second quarter of 2022 compared to $6.5 million in the same period of 2021. The decrease was primarily due to reduced purchases of clinical trial supplies and clinical trials subject to recruitment costs, a reduction in our use of consulting services and the nonrecurrence of professional recruiting fees related to hiring in the prior year period. G&A expenses were $2.7 million during the second quarter of 2022, which was flat compared to the same period of 2021. As I discussed on last quarter's call, in early April we raised approximately $55 million through the sale of common stock and prefunded warrants. The offering was priced at the market with no warrant coverage. With more cash on hand and interest rates rising, we are now investing our cash in the portfolio of high credit quality marketable securities to provide interest income. We also received proceeds of $5.9 million in the second quarter related to the exercise of warrants that were originally issued in our October 2021 private placement. Our cash, cash equivalents and marketable securities balance at the end of June was $78.9 million. We received another $4.1 million in proceeds also from the exercise of warrants that were issued in our October 2021 private placement in July. So we end July with cash, cash equivalents and marketable securities balance of approximately $79.8 million. This gives us cash runway into Q4 of 2023 to fund our ongoing operations, including completing the open-label extension of the PRISM trial, like Jennifer referred to, and preparing for the end of Phase 2 meeting with the FDA and planning for and conducting our next trial for chronic cough in IPF. In addition, we currently have approximately 11 million warrants still outstanding, which can provide us up to $15 million in proceeds if exercised. With the $55 million raise in April, our cap table has gotten a little more complicated so I wanted to lay it out for you. As of today, we have 42.8 million shares outstanding. In the April private placement, we also issued 24.4 million prefunded warrants. They are called prefunded warrants because substantially all of the strike prices paid at the time they are issued. So while they're not legally outstanding, they're required to be included in our calculation of weighted average shares outstanding and basic and diluted loss per share. Also, as I mentioned before, we have approximately 11 million in warrants outstanding from our October 2021 private placement and 4.1 million stock options outstanding. So our fully diluted shares outstanding is a little over 82 million. We continue to pay down our term loan and the principal balance is now under $11 million. In closing, we're excited about the recently reported data in PN and the strength of our balance sheet to continue executing on our plan. This concludes our prepared remarks. I will now turn the call back over to the operator for Q&A.

Thank you. We will now being the question-and-answer session. [Operator Instructions] Our first question comes from Annabel Samimy from Stifel. Please go ahead.

Thanks for taking my questions. So I was just curious if you had any ideas, I realize it's a little bit too early. You still have to report out the final data for the chronic cough. But do you have any idea of what a Phase 3 might look like, based on what others have done in, say, idiopathic or refractory chronic cough and how large it might have to be? And then with regard to the PROMIS scale, can you just remind us what's in the PROMIS scale just to get a sense of the meaningfulness of that endpoint? And then finally for PN, so I guess there's now a couple of additional targeted antibodies that have been – have read out. Obviously, Dupixent has filed and they're awaiting a PDUFA for PN. And then Galderma has no – sorry, I've forgotten the name suddenly but their program is in the second Phase 3 trial. And I realize that you're in oral and you might come ahead. But what's your suspicion as to how that development landscape or competitive landscape might shape out? Could it raise awareness for PN? Or could it hinder your opportunity in PN? So I just want to get a sense of how you're thinking about it as it's starting to heat up in this space. Thanks.

Thank you, Annabel. Bill, do you want to take the first two on trial design and the PROMIS scale and then I can talk about the competitive landscape?

Yes. Sure. Hi, Annabel. Thanks for the question. I'm going to start with [indiscernible], although you started with [indiscernible] which is our next study in IPF. But let me just kind of give a little bit of a description with the PROMIS scale. And just to kind of back up a little bit, as you know, we had three key secondary endpoints in PRISM. And obviously, the ItchyQoL and the Prurigo Activity Scale were read out previously as Jennifer noted. And so now here we've got the PROMIS, which is the sleep disturbance. That was the short form that we use. So there's eight questions in it. And this questionnaire was really developed as a general tool for assessing sleep in controlled clinical trials. And so we utilize it here. Essentially, as I said, eight open-ended statements with really five options. And the options range from very poor to very good or not at all to very much. And so the questions are really around sleep and sleep quality. And so I think hopefully, that helps you a little bit on the PROMIS side. Of course, it was statistically significant at six – I'm sorry, at months one, two and three of fixed dose. So we were very happy to read those out. CANAL, obviously you're right, we've got some data coming out still. But given the strength of the data that we have, we're not expecting to see much difference. Although we will be able to read out some new data. We'll take a look at the 24-hour data as well as the data that we've reported out earlier. And you can expect about a 50% increase in the amount of data that we'll have in that new readout. Going forward into [indiscernible] what we've conveyed to the FDA in anticipation of a meeting coming up is that we would like to do a six-month study with three treatment groups. So we'll take – look, right now we're looking at primary endpoint using the digital cost monitor at weeks two, four and then monthly after that over the six months. We'll probably put the primary endpoint early at one month. But of course, since we'll be getting additional data in subsequent months, we'll have that information as well as far as durability. And I think the question that we often get is why do a six-month study because obviously, it doesn't take very long for the onset. Well, the onset of effect using nalbuphine is very rapid. So the goal on the six months is to collect important safety information that we believe will benefit the understanding of how nalbuphine may affect these patients. And you can imagine along the lines of things like FVC but also hospitalization for respiratory causes are things that we're interested in. It allowed us to go out six months in twoactive doses. That will give us about 100 patient exposure years. So we'll be able to accumulate enough safety data in this population to really have a firm understanding of the safety and, of course, the efficacy in it. So hopefully, that helps you, Annabel.

Yes. That was very helpful. Thank you.

Do you want to handle the…

Yes. No, happy to do that, the competitive landscape. So Annabel, you've been following us long enough to know we came to a fork in the road around UP or PN. And we actually chose largely because of the biologics in the space and sort of what we felt they would be able to help develop the market. Also, the pricing would be set at a good level, I think, to reflect the disease state. And so we've always known they would be there. I think if you ever talk to dermatologists, there's also sort of a treatment paradigm they follow, which is topical to oral to biologics. So not everybody is going to always follow that but, I think, that there is a big unmet need in that oral systemic piece of this whole equation. So I think overall, it's positive. We obviously knew they were there, both dupi and nemolizumab, which is the one you were forgetting. So no, it's not – I think it actually helps overall in the market. No, I know it's a hard one to remember. And we think we can compete. If you look at the dupi data sort of the weak three months, which is sort of where we read out, we're sort of in the same swim lane on delta. They then reported out a six-month trial, which gets a lot bigger. And I think that's sort of the hallmark of this disease. You're trying to break that itch scratch cycle. And overall nodules heal, which you're seeing already in three months. And over time, it's really – there's really an exponential effect. So as Bill is able to open up the open-label extension data, hopefully, we'll be able to share more of sort of the impact of that longer term.

Perfect, thank you.

Yes, thank you.

Our next question comes from Serge Belanger from Needham & Company. Please go ahead.

Hi, good afternoon. Just a couple of questions for us. I guess first on the cough indication, just curious what your current thinking is about exploring indications beyond IPF cost and if that's something you plan on discussing with the agency at the upcoming meeting. And then on PN, I think, you have another FDA meeting for that indication. Just curious what the goal will be for that specific agency meeting. Thanks

Yes. So each of those points. As far as cough, we are looking at other indications beyond IPF. That's not something we'll discuss with the agency in our meeting. We're really going to stay focused on that program and lock down and get agreement there. We are having some discussions internally over the summer. And it's why we are – I mentioned in my comments, we will have an R&D Day in probably the latter half of September, where we can clearly lay out the development strategy around the indications, and time lines, and sort of trial guidance, et cetera. So Serge, look to that where we'll be sort of clear beyond IPF if we're going to pick up any other life cycle management opportunities. As for PN, you're right, we still have actually our end of Phase 2 meeting ahead of us. So we'll take advantage of that. That's a major meeting. We'll take in the data, go over it with them, talk about what we hope is our last pivotal trial to be able to get approval. So it's been a while since we've checked in with the agency around that program. But I do think a lot of that's gelled with the other competitors in the space.

And at this point, for the PN program, do you still expect only one additional Phase 3 trial would be needed, correct?

Yes. I mean Bill, do you want to answer that?

Yes. No, that's the expectation. We always like to be opportunistic. But I think guiding everybody to one more trial is the most appropriate thing to do here. I think everybody has had a chance to look at the data. It's certainly strong. There's a lot of quality data in there. But I think for this – for that indication, doing another study makes sense.

Okay, thank you.

Thank you, Serge.

[Operator Instructions] Our next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. Just wanted to ask in terms of timing expectations. I know it's a bit early, and we'll try to be patient for the latter September R&D Day. But any sense of kind of timing on the start of next studies in both indications as we get into 2023? Thanks.

Yes. So Leland, on IPF-cough, which we've been sort of more hustling on and getting things done, we're looking to try to start that in the first half of next year. PN, we're still accumulating all the data and have to request our FDA meeting and we're sort of doing all that in parallel. So we don't have enough visibility on that one yet to probably give good guidance. But IPF-cough, we are moving towards trying to start that in the first half of next year or earlier.

Okay. Great. And then one more question. Just as we – as you think strategically about sort of the high-class problem you have with these two indications available for Haduvio, anything that you can share in terms of your thought evolution with respect to prioritization of one over the other? Or do you really see the two marching forward kind of alongside each other as you head into steps for approval? Thanks.

Yes, it's a good question, I mean something you always have to be mindful of. There will be a little bit of a cadence that has to go on. But I will say for instance in PN, this is a space we know well. We've been doing trials here, protocols kind of mapped out. We've got our CRO partners in place. So that should move along. Our Clin Ops team is kind of all over that. IPF-cough got a bit of a jump on it because of the interim data. So we'll sort of naturally schedule things out and find our way. But I would think largely, and Bill, I'll let you comment on it, too. I think largely they should be able to move along roughly in parallel.

Yes. I think that's going to be the trick, it’s trying to keep things going in parallel.

Great. Thanks very much for taking the questions.

Yes, thank you, Leland.

The next question comes from Nathan Weinstein from Aegis. Please go ahead.

Hi Jennifer, Lisa and Bill thank you for taking my questions. I had two questions. One was a follow-up on PROMIS with regards to sleep. And can you just help us think about this from the perspective of patients and feedback you've heard from doctors? How do the patients manage sleep? Do they have trouble with sleep in the PN indication? That's the first question.

Hey Bill, do you want to take that or you want me to take it?

Yes. No, I've had some conversations with some of the investigators on this one. And as you can imagine with something that has a severe itch with it, sleep disturbance is extremely high on the list of things that they want to be able to handle. You can imagine how anxiety ridden these poor patients are, having to itch all day long and then, of course, to not be able to sleep. So we're excited about the sleep component of it. I think to be able to move the scales in the way that we've been able to do shows that it's a clinically meaningful kind of improvement, we believe, at this point with the PROMIS. We're still shopping it around to some of the investigators and the thought leaders but we're happy with it.

Great, thank you. It makes sense. And then just one follow-up and that's on the CRO partner engaged for the next cough trial. Just a reminder for me if you don't mind. Is it the same CRO you've been working with? And then on the trial sets, will there be significant overlap with where you've enrolled historically?

Yes. So CRO partnering, we're under CDA so I can't disclose it but it is a partner we worked within the last round of trial. So they have been terrific. So that's good, kind of an easy start. And as for sites in PN, definitely will be overlapped with sort of the sites we ran before. In cough, we'll have – we'll go back to the UK as one of our countries. But recall, we only ran that in the UK. So we're going to have to now broaden out into the U.S., and we're looking at other country opportunities as well. .

Got it. Thanks. And congrats on a very strong first half to the year. And we're looking forward to the back half.

Thank you, Nathan.

I'm not showing any further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to Jennifer Good for closing remarks.

We would like to thank everybody for participating in today's call. I hope you all enjoy the rest of your summer. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.