Xeris Biopharma Holdings, Inc. (XERS) Q2 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to Strongbridge Biopharma Earnings Results and Second Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Lindsay Rocco, Elixir Health Public Relations. You may begin.

Thank you and good morning everyone. We are pleased that you could join us today to discuss the positive results from the pivotal phase III SONICS study of RECORLEV second quarter 2018 earnings and corporate highlights. Joining me from Strongbridge this morning are Matthew Pauls, President and Chief Executive Officer; Dr. Fred Cohen, Chief Medical Officer and Brian Davis, Chief Financial Officer. Before we begin, I would like to remind you that during this call the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Reference to these risks and uncertainties are made in today's press releases and disclosed in detail in the company's periodic and current event filings with the US Securities and Exchange Commission. In addition, this presentation includes non-GAAP financial measures. This presentation is not intended to be a substitute for financial results presented in conformity with Generally Accepted Accounting Principles in the US. Investors and potential investors are encouraged to review the reconciliation of the pro forma financial measures included in the company's earnings release. The most directly comparable GAAP information and a reconciliation between the non-GAAP and GAAP figures are included in the company's second quarter earnings release, which has been furnished on Form 8-K. I will now turn the call over to Matthew Pauls.

Thank you, Lindsay. Good morning, everyone and thanks for joining us on this momentous day for Strongbridge Biopharma and the Cushing's syndrome community. Earlier this morning we reported positive top-line results from the pivotal Phase III SONICS study of RECORLEV for the treatment of endogenous Cushing's syndrome and we are thrilled that the study achieved statistical significance of the pre-specified primary endpoint with 30% of patients achieving normalization of mean urinary free cortisol or UFC following six months of maintenance treatment with RECORLEV without a dose increase. In addition, RECORLEV achieved statistical significance on key secondary endpoints and demonstrated safety and tolerability profile exceeding our expectations. On today's call, Fred will provide a review of the SONICS' top-line efficacy and safety results. I will then address the potential market opportunity for RECORLEV in Cushing's syndrome in the US as well as provide an update on a recent launch of MACRILEN and our continued progress with KEVEYIS. Brian will then present our second quarter 2018 financial results and we will then open up the call for questions. Over to you, Fred.

Good morning, everyone. As Matt stated, we are excited by the positive top-line results generated for RECORLEV in the pivotal Phase III SONICS study. I will review the data shortly, but before doing so, I would first like to thank all of the clinical investigators, the patients and their families, as well as the Strongbridge team for all of their hard work and commitment that allowed us to reach this important milestone today. I will begin by laying out the framework for the SONICS study to help contextualize the data. SONICS is an open-label Phase 3 study of RECORLEV as a treatment for endogenous Cushing's syndrome that enrolled 94 patients at centers across North America, Europe and the Middle East. The SONICS study consists of three phases, a dose titration phase, a six-month maintenance phase and a six-month extended evaluation phase. Each patient who was enrolled in the study started out at the same dose of 150 milligrams twice a day. Then he or she, if needed, increased the dose in 150 milligram increments until reaching normalization of urinary free cortisol or UFC or until reaching a maximum tolerated dose or until reaching the maximum allowed dose of 1200 milligrams daily. UFC represents cortisol that has been filtered from the blood into the urine. If UFC is elevated it is diagnostic for the presence of cortisol excess and blood and also serves as a marker for Cushing's syndrome progression or therapeutic response. In fact, just last month the FDA acknowledged this via published guidance listing UFC as an established surrogate marker for drugs that are intended to treat Cushing's syndrome. The maintenance phase of the study was six months in duration. The primary end-point is defined as a proportion of patients enrolled who have normal mean 24-hour UFC following six months of treatment in the maintenance phase without a prior dose increased during this phase. To illustrate the stringency of the primary endpoint definition, as well as the burden on patients participating in the study, I would like to describe the patient urine collection requirements and their criteria to be considered a UFC responder for the primary efficacy analysis. With regard to UFC collection throughout the study, patients were asked to collect at least two 24-hour urine samples every two weeks during those titration, and at least two 24-hour urine samples a month during maintenance. With regard to the criteria to qualify as a responder in the primary endpoint analysis, a patient must have met three of the following four criteria as applicable. First, a patient must have had at least two adequate baseline and six-month UFC samples available for analysis. Second, they must have had normal, in other words, at or below the upper limit of normal, mean 24-hour UFC on the basis of those adequate 24-hour urine samples. Third, they must not have increased the dose of RECORLEV left during the entire maintenance phase. And finally, for the ten patients who are enrolled that have a recent history of pituitary radiation, they must have exhibited a rebound increase in mean UFC above the upper limit of normal following a two-week minimum withdrawal period of RECORLEV at the end of the maintenance phase. As mentioned, 94 patients were enrolled. Their average age was 44. 82% were female, 49% were of childbearing potential. 96% were white; the median body mass index was 29. Importantly, 38% had a diagnosis of diabetes at baseline. 71% had a diagnosis of hypertension and 36% had a diagnosis of hypercholesterolemia. Of the 94 enrolled 77 patients completed dose titration and advanced to the maintenance phase of whom 61 completed the maintenance phase. Of the 94 enrolled 30% met the stringent UFC response criteria. When relaxing the primary endpoint requirement that their dose could not have been increased during maintenance 38% were complete UFC responders and 10% were partial responders which is the least of 50% UFC reduction for baseline, an overall month six relevant UFC response rate of 48%. Considering just those patients who entered the maintenance phase, approximately 75% achieved either a complete normalization or a partial UFC response at month six. As far as key secondary endpoints of cardiovascular risks, including fasting blood glucose, hemoglobin A1C, total cholesterol, low-density lipoprotein or LDL cholesterol, body weight and body mass index. RECORLEV demonstrated statistically significant and clinically meaningful improvements from baseline. The p-values for each of these changes from baseline were less than 0.0001. Turning to safety and tolerability. Liver tests abnormalities were among the pre-specified adverse events of special interest. Importantly, in the SONICS study there were no cases of severe liver toxicity reported; specifically there were no high GLO cases or transaminase values above 20 times the upper limit of normal. Overall, liver related adverse events of special interest were reported among 7.4% of patients enrolled. Looking at the liver function lab test data collected over the course of the study through maintenance, findings of alanine aminotransferase or ALT greater than three times the upper limit of normal were observed among 10.6% of patients, and levels greater than five times the upper limit of normal were reported among 3.2% of enrolled patients. Of relevance, when considering the potential for drug-induced liver injury, there were no patients that had a total bilirubin level more than 1.5 times the upper limit of normal at any time during the study through maintenance. In addition to liver related adverse events, adverse events of special interest also included events potentially relating to QTc interval prolongation and adrenal insufficiency. Regarding QTc interval prolongation this adverse event was reported among 5.3% of the population and was never associated with arrhythmias. Adrenal insufficiency was reported among 3.2% of the population. There was no apparent relationship between the dose of RECORLEV used and any adverse event of special interest. All of the adverse events of special interest were fully reversible and do not result in clinical sequelae. Other safety and tolerability findings based upon data collected through six-month maintenance indicated that RECORLEV was generally well tolerated. To summarize key safety findings, 12 patients or 12.8% discontinued treatment with RECORLEV due to an adverse event. For the two most commonly reported adverse events, no patients discontinued treatment due to nausea and one patient discontinued treatment due to headache. Fourteen patients or 14.9% reported one or more serious adverse event, of whom four were deemed drug related by investigators. One patient's death was reported due to colon cancer and was not considered drug related. We are committed to completing the SONICS study and estimate reporting final results in the fourth quarter of 2019. In addition, we are also actively enrolling LOGICS, our placebo-controlled double-blind randomized withdrawal study in patients with Cushing's syndrome, and expect to report top-line data in the first quarter of 2019. Excuse me, it's the first quarter for the SONICS study completion. The impressive top-line results of the SONICS study suggest that RECORLEV is an effective and well-tolerated cortisol synthesis inhibitor in Cushing's syndrome. Based upon these compelling data, we look forward to discussing the SONICS data with the FDA, and the potential for an accelerated approval pathway for RECORLEV, and also, to continuing our discussions with regulators around the world. I will now turn the call back over to Matt. Matt?

Thank you, Fred. The SONICS data are very compelling having achieved statistical significance not only on the primary endpoint measurement, but also on key secondary endpoints with a favorable safety profile including the liver. The SONICS data support our long-held view that RECORLEV deemed a new molecular entity is the better half of Ketoconazole for treating Cushing's syndrome. In parallel to running a SONICS, study we have conducted extensive quantitative and qualitative market research on Cushing's syndrome, and report-- and RECORLEV with healthcare professionals, patients and payers, one insight that has clearly emerged is that there is a large unmet medical need in Cushing's syndrome given the limited number and utility of currently FDA approved treatments and the deficiencies of off-label treatments. For example, the inability to monitor the key objectives surrogate marker, UFC, significant risks of diabetes and hyperglycemia and the potential for severe hepatic toxicity resulting in the need for weekly liver function tests. Taking into account the SONICS results and our market research, we believe, if approved, RECORLEV has the potential to become a first-line treatment for patients newly diagnosed with Cushing's syndrome, and also, could be used for patients who are not adequately controlled or are dissatisfied with their current treatment. Now switching gears to MACRILEN the first and only FDA-approved oral drug indicated for the diagnosis of Adult Growth Hormone Deficiency or AGHD, we are delighted to announce the US launch took place at the end of July. We believe MACRILEN fulfills a critical unmet medical need in the diagnosis of ADHD, a rare and endocrine condition that is often overlooked and under diagnosed. Prior to the launch of MACRILEN multiple estimates suggested that there were between 40,000 to 60,000 AGHD tests that were conducted annually in the United States. Based on our market research, we believe that the availability of MACRILEN has the potential to significantly grow the market for AGHD diagnostic testing in the near term. In executing the launch, we built out a rare endocrine commercial infrastructure with top talents from across the industry. The team has been calling on and building relationships with key pituitary centers and large endocrinology practices across the United States. On medical affairs front, we are working to increase disease awareness through ongoing relationships with key patient and professional advocacy groups as well as peer-to-peer interactions. Thus far, post-launch, the reimbursement experience has been positive because MACRILEN is viewed as a significant advancement for physicians and patients in the diagnosis of AGHD. The wholesale acquisition cost of MACRILEN is $4,500 per unit. Moving on to KEVEYIS, the first and only FDA-approved treatment for primary periodic paralysis, a rare genetic neuromuscular condition. Second quarter performance was strong with revenues of $4.3 million representing a 187% increase compared to the same period a year ago. Importantly, we continue to focus our efforts to increase awareness and diagnosis of primary-- periodic paralysis and proudly Strongbridge was recently the exclusive sponsor of an inspiring young man and his vision to bring greater awareness of diagnosis to those with PPP. Gabriel Low is a 17-year-old competitive triathlete, singer and aspiring scientist from Hawaii who was diagnosed with PPP when he was six years old a, condition he shares with his mother, Emily. Gabriel just completed his 3,000 mile plus cycling journey across the country to advocate for others with PPP and other rare diseases via a campaign entitled Ride for Rare Diseases. Before I turn the call over to Brian, I would like to provide an exciting update on our extended release veldoreotide, a preclinical differentiated next generation somatostatin analog. Yesterday, the United States Patent and Trademark Office issued a patent with claims covering the extended-release formulation and a method of manufacturing, notably this patent does not expire until February 2037. We've been very strategic thus far in our development of veldoreotide and will continue to be. Having successfully reformulated it in securing the new intellectual property, we are now in the process of framing out the necessary preclinical work, and in addition, are considering multiple pathways for development including potential co-development partnerships. Now, over to Brian.

Thanks, Matt. For the three months ended June 30, 2018, basic net loss attributable to ordinary shareholders on a GAAP basis was $2.9 million or $0.06 per share compared to a basic net loss attributable to ordinary shareholders of $30.2 million or $0.86 per share for the same period in 2017. Net loss for the three months ended June 30, 2018 was lower than the same period in 2017 primarily due to unrealized gain of $19 million on the fair value of warrants recorded in 2018 compared to an unrealized net loss of $15.2 million on the fair value of those warrants recorded in 2017. Also contributing were an increased net revenues recorded in 2018 from sales of KEVEYIS offset in part by increased operating expenses associated with the commercialization of KEVEYIS and MACRILEN, higher research and development expenses primarily associated with the continued development of RECORLEV, and higher interest expenses. For the three months ended June 30, 2018 non-GAAP basic net loss attributable to ordinary shareholders was $16.7 million or $0.36 per share, compared to non-GAAP basic net loss attributable to ordinary shareholders of $12.2 million or $0.34 per share for the same period in 2017. The increase in non-GAAP net loss was primarily due to increased operating expenses associated with the commercialization of KEVEYIS and MACRILEN, higher research and development expenses primarily associated with the continued development of RECORLEV and higher interest expense, all of those offset in part by net revenues recorded from KEVEYIS product sales. The company recorded net revenues from sales of KEVEYIS of $4.3 million and cost of goods sold of $800,000 for the three months ended June 30, 2018, compared to net revenues of $1.5 million and cost of goods sold of $400,000 for the same period of 2017. Research and development expenses were $5.5 million for the three months ended June 30, 2018 compared to $4.1 million for the same period in 2017; the increase during the 2018 was primarily due to expenses related to the RECORLEV, LOGICS and OPTICS clinical trials. Selling, general and administrative expenses were $15.2 million for the three months ended June 30, 2018 compared to $10.1 million for the same period in 2017; the increase during the 2018 period was primarily due to costs incurred to establish the commercial and corporate infrastructure necessary to support the commercialization of KEVEYIS and MACRILEN. Strongbridge had $85.5 million of cash and cash equivalents and $87.4 million in outstanding debt as of June 30, 2018 compared to $57.5 million of cash and cash equivalents and $40.8 million in outstanding debt as of December 31, 2017. The company continues to believe the combination of existing cash resources and potential additional borrowings available under its credit facility will provide sufficient cash resources under the current operating plan which includes the potential US regulatory approval and launched of RECORLEV to achieve consistent positive cash flows from operating activities. And operator with that, we are now ready to open up the call for questions.

Thank you. [Operator Instructions] And our first question comes from Hartaj Singh from Oppenheimer. Your line is now open.

Yes, hi. Thank you. Can you hear me? Great. Thank you, Matt. Congratulations on the strong results for SONICS. I just had a question on that on MACRILEN and then on MACRILEN-- on SONICS, with accelerator approval of -- what is it that sort of that you'll be looking for in terms of getting regulators comfortable with the SONICS profile and not to compare it against historical profile, so what is it the key sort one or two questions that you think regulators will be looking for or wanting to answer in order for them to consider giving you accelerated approval? And then on MACRILEN, can you just talk a little bit about the pricing and the price you put there, and also, do you think that there will be some sort of like a lag between when you-- the patient gets the test versus when actually Strongbridge actually records the writing? Thank you.

Thank you, Hartaj for both questions. I will ask Fred to opine in the first and then I will answer the macro-in question.

Hi, Hartaj. So, as you appreciate the FDA when considering drugs for accelerator approval looks at it-- looks at several factors; the most important factor, of course, is there a significant unmet medical need to warrant consideration of an accelerator approval pathway, and there are certain criteria that the FDA lists for what is that unmet medical need and the seriousness of the underlying condition. The FDA has already acknowledged to us in writing that they believe that this is a serious disease with serious unmet medical needs. So, we know that we already know what their opinion is on that front. They also look at the robustness of the efficacy results and then they also look at the totality of evidence supporting the safety and can the drug be used safely. So, in this regard we think based on the results that we've seen using the established surrogate marker of Urine Free Cortisol after six months that the results are quite robust; you saw the data, the primary endpoint was met. It was can-- it was supported by a variety of sensitivity analyses and secondary analyses, and I shared some of those with you just now. And very, very importantly, the comorbidities that are associated with Cushing's syndrome such as those that I mentioned to you, are ultimately what are responsible for the premature demise of patients with Cushing's syndrome. As we had hoped what happened when a benefit on UFC was seen, those comorbidities improved. And they tended to improve rather substantially in the overall population; we will be doing further analyses later, but, so far what we've seen, I would characterize as robust evidence of efficacy. So for all of those reasons, I believe, we have the case to make and we're going to take it to the FDA.

I'm switching to MACRILEN and the pricing reimbursement question; we did a significant amount of both quants and qualitative market research regarding pricing and reimbursement for MACRILEN, and, we landed at a price point about double where we thought we would end up because what became very apparent in this deep rich market research that we did was that the payers and physicians clearly saw and acknowledged that MACRILEN is arguably disruptive technology and fulfilling a significant need in the adult growth hormone deficiency market. So, and in fact when we-- where we landed, it was very well accepted, and it's proven-- it's really starting to prove over the last couple of weeks we are seeing good early wins on the reimbursement front. To your second question around kind of lag time, we've launched MACRILEN with a hybrid model that includes the ability and opportunity for physicians to utilize a pharmacy benefit route. So, where there's no buy-and-bill risk to, we adjudicate the claim, you don't ship the product, they administer et cetera. There is also the opportunity for institutions and/or individuals or practices to acquire and procure the MACRILEN via a buy-and-bill approach. So, again, I appreciate the question. We are thrilled with the value that was assigned by our end users and customers and accepted at the $4,500 price point.

Thank you. And our next question comes from Annabel Samimy from Stifel. Your line is now.

Hi, guys. Thanks for taking my question. Congratulations for me too; exciting data. So, I was wondering if you could-- I mean clearly RECORLEV is very efficacious and the AE profile appears acceptable, but, maybe can help put the AE profile, the liver profile discontinuation in context with ketoconazole, and maybe with other treatments right now. I know you haven't done a head-to-head, but how might this be viewed for a physician who's facing multiple options right now in the marketplace and how would it be viewed by the FDA in terms of what they've received-- in terms of packages they've been reviewing for Cushing's syndrome? Is this an improvement over the options that they have today? And sorry, if I missed the MACRILEN comments, clearly last year, what was your initial targeting strategy for MACRILEN, was it going to be just initially the endocrinologist, say you are going to take it out broader to those with traumatic brain injury? Thanks.

Thank you, Annabel. So let me-- I'll take the-- the safety related question in kind of indirect comparison. I'll let Fred talk a little bit about the AE profile, and I'll come back to the macro one, targeting strategy. So, interestingly, the data around off-label racemic mixture ketoconazole is -- it's difficult, of course, to directly compare with. It is, I think the literature is supportive of the fact that RECORLEV in a very rigorous study of a large end with 3.2%, greater than five times upper limit of normal ALT elevation, and at 10.6% of three times the upper limit of normal ALT elevation. When you indirectly compare it to the literature, it's substantially comp-- very compelling when you-- when you look at ketoconazole. Interestingly, the last drug approved by the agency was before Cushing's was about four or six weeks ago, SIGNIFOR LAR was approved for Cushing's disease, and we were heartened to see that the SONICS results actually indirectly were numerically better. SIGNIFOR LAR in their label-- in the label has a 5%, greater than five times ULN increase and approximately 14% greater than three times ULN, and SIGNIFOR LAR does not have a black box warning related to liver function. So, again, we need to do more work and we need to have the discussion with the agency, but we feel really positive and confident about the results what we saw was recorded on that front. Fred, do you want comment something? Fed, do you want to comment on?

Yes, I'll just comment at overall adverse event tolerability profile, the data are out there in the labels for our labeled-- label drugs that are used for Cushing's disease or hypercortisolemia today, and just, the best we can do is sort of an eyeball comparisons indirectly right-- it's not direct comparison, and I think you'll find when you do that-- that the tolerability profile for RECORLEV was certainly competitive. I don't want to make any sort of comparison claims, but I would say it's certainly competitive. The tolerability is very good in this study; we only had just over 12% of patients discontinuing due to adverse event across the study. So that includes dose titration phase up to 21 weeks plus; another six months of maintenance. We only had just over 12% discontinuation due to an adverse event. That, in my experience, for a disease of this severity that's remarkable. So, I was very, very heartened by what I saw on the tolerability profile, and I mentioned in the call most importantly the two most common adverse events, we only had a total of one person discontinue for either one of those and that was for headache. So, again, I think my takeaway is that the drug is tolerable and adverse events for the most part are not going to limit the uptake of therapy.

Regarding the MACRILEN question, about targeting strategy and market opportunity, so we have approximately 18 sales professionals in the field, and they are really-- there's overall there's about 5,500 or so endocrinologist in the United States. Approximately, again, and this is just an approximation but-- about 2,000 of them or so are more pituitary focused endocrinologist and our team is-- has been, prior to launch, and now of course post launch, focused on the endocrinologist that do have those 2,000 or so that have a more of a focus on the rare pituitary diseases. And importantly, they're calling on and they really have developed great relationships in the pituitary centers where there's over-- a 170 or so of those in the United States. Regarding Traumatic Brain Injury, thank you for that question as well, we think that traumatic brain injury is where there could possibly be significant market growth and opportunity given the fact that there are almost 3 million TBIs per year, and the current neurology guidelines do recommend that-- that the patients that have moderate-to-severe TBIs that they be assessed for growth hormone deficiency. There's probably, as we kind of work down the cascade, 600,000 to 700,000 eligible patients that are moderate-to-severe adults with TBIs. So we think the 40,000 to 60,000 annual assessments could grow significantly. So we think it's a real opportunity, but actually with potential big upside.

Okay. If I just go back and ask another RECORLEV question, on the SAEs, again, I might have missed it before, did you state exactly what kind of SAEs they were, and if those-- any of those had had led to discontinuation?

I did not talk about that on the call at this point. So we will be presenting further efficacy and safety information in scientific meetings throughout the remainder of the year, and including additional disclosures around the SAEs and those kinds of details. But I did disclose the materially important safety information, so.

Okay. And then, just on the SIGNIFOR you mentioned there was no black box, can you necessarily translate that to levoketoconazole given that the original compound did have a black box? Or are they strictly looking at the impact on-- on liver enzyme?

Yes, so, we don't know the answer to that, but we do think that that are-- those data are relevant to RECORLEV given the results from SONICS, but, of course we have to have that discussion with the agency and so more to come on that. But it's a good fact.

Thank you. And our next question comes from Liisa Bayko from JMP Securities. Your line is now open.

Hi, good morning. Congratulations on the data. Question for you on the metabolic parameters that you described. You have subset. Can you maybe give us a little bit more color around this kind of numerical changes you saw in some of those measurements?

So, at this point we're not going to do that. I want to save those for the appropriate forums and give my co-investigators a chance to opine on those. One of the things that we wanted to do in some of our analyses that I don't have the data yet is to look at the subsets of patients that had diabetes at baseline, hypertension and so on and so forth. But what I can say is that, again, I'll emphasize these were patients who had pretty bad Cushing's syndrome at baseline; we had very representative to maybe even over representative prevalences of diabetes and hypertension, hypercholesterolemia at baseline, and when you see changes in the overall population across the board in these markers that is very meaningful. I'll tell you the reductions, I can say that for most of the markets the reductions were more than just minor. They weren't clinically important.

And what is your plan for sort of presenting that data? Is there an upcoming conference or do you want to publish this in general, what's the plan?

Yes, both. So in the fall there are a couple of conferences that we're targeting more-- more lately as we make those announcements. We are already starting to work on publications around these data. So we do intend to get these data out in a broader sense in the public domain. Of course, we still have a lot more analyses to do; these are just the top line.

And then, I guess, towards the end of Phase II meeting with-- or end of Phase III, whatever, can you maybe talk about timing on that, and then in terms of when you say file an accelerated approval for that-- would that be before we got the LOGICS readout, just curious on your thinking with respect to that study?

Great question. So, we-- there is a lag between-- when we can pull together a package for the FDA and schedule a meeting. I think at the earliest it's safe to say it's going to be in the fourth quarter of this year, and then in terms of when we might do a finding work, I mean, that's kind of getting out ahead of ourselves at this point it really depends on the discussions of the FDA. It also depends on exactly when we finish up our analysis. To do an NDA, of course you have to have a full data package and so on and so forth. So, I suspect that in the fourth quarter we will know a lot more.

And, just a follow-up to round that out, with regard to LOGICS, we are clearly driving forward very-- very hard on enrolling LOGICS-- the role that LOGICS will play is yet to be determined just given the fact that, the recent FDA public guidance around surrogate markets and conveniently the data-- the great data we see with RECORLEV and the SONICS trial. So we are charging forward LOGICS, what the role is, it will be-- to be determined in discussions with the agency.

Okay. And then in terms of just following up on Annabel's question with respect to the black box warning and-- I mean do you see that as-- have you tested that with your target physician audience, is it-- is that faster one, they consider using this drug whether or not it has that warning like and how important is that black box absence or presence?

Yes, a great question, and thanks for that, Lisa. So, it's very interesting all of the work that we've done over the last few years, again the quant and qual researches, a significant amount, the results from SONICS actually line up much closer, very closer actually to our upside product profile versus our target product profile, and what we do know is that any black box-- the least onerous black box warning or the omission of a black box warning does make a difference, and we think really these data are going to be an important factor and have great-- impact and influence on payers. Safety to payers is mission critical across the whole category, and again, these data specifically the liver data given, the fact that they are so compelling, we think, are going to put us in a very, very spot for payers.

Thank you. And our next question comes from Esther Hong from Janney. Your line is now open.

Hi, congratulations. A few questions. So, regarding comorbidities, did any patients experience a reduction in medication, like diabetes medication? Second, on LOGICS, can you frame your expectations around the study now that you have SONICS data? And then sort on MACRILEN, expanding it into the TBI population, what needs to be done? Thanks so much.

Great. So, let me try to take the question about the comorbidities, so one of the analyses that I am very keen on doing and we did prospectively define this, by the way, is to look at what happened to diabetes medications, hypertensive medications, hypercholesterolemia medications, that was all pre-specified in the protocol under the secondary analysis of these comorbidities. Now, I don't have those data today. So, that's something that we are really looking forward to. So, for example, on blood glucose is a good example, we saw a decline in blood glucose, highly statistically significant and clinically meaningful. We also, in addition, saw a decline a medication for diabetes that just adds that efficacy picture, right. That would be sort of additive complimentary. So that is a very important analysis that I am looking forward to doing in the future. Fortunately, I don't have that for you today. So, I think your other question was about LOGICS and sort of framing out expectations, so LOGIC-- it's a great point. So we haven't fully, at this point, analyzed the SONICS data in relationship to LOGICS. We have in possession of these data for more than a couple of days at this point. But what we know is that 82% of the patients in dose titration made it into their maintenance phase. That is, they had a response. That gives us some idea of about how many patients we think will be able to get a response in the dose titration and maintenance part of LOGICS which precedes the randomization. And then in the randomization phase, it's going to be an issue frankly of just reassessing the sample size; do we have the right sample size right now? I mean that's something that we are just going to be talking about over the next couple of weeks or so with our investigators and our team here, and we'll take a look at that. But for right now we are-- we think we are in a good position.

Great. And then MACRILEN, expanding it into the TBI population?

Yes, so, with regards to MACRILEN again, we think there are strong awareness already clearly in the endocrinology community about the need to assess those with TBI-- those adults with TBI. We also think there's-- starting to be a growing recognition by the neurologists, so it's very obvious why physicians haven't really been assessing TBI patients for AGHD given the fact that they only had very onerous difficult to administer and off-label assessments like ITT and GST. We think that there is real appetite, and again, kind of a poll from the endocrinology community now given the fact that there is MACRILEN available. So, more to come on the opportunity, but we do think this is a near-term one and there are-- I'm sure that manufacturers of long-acting growth hormone treatment, they would love to see more adults diagnosed or at least tested and potentially diagnosed, which is something they really struggled with over the past many years.

Thank you. And our next question comes from Elemer Piros from Cantor Fitzgerald & Co. Your line is now open.

Yes, good morning, gentlemen. I was wondering, Fred, if you could help us understand a little bit of the patients that did not meet the strictly defined response rate, and 30% did, but 65% have actually completed the maintenance phase, indicating that their physicians and they probably saw the benefit, even if there was a partial response. What does that mean clinically, Fred?

Well, thanks for that. Yes, as I pointed out it just now is that all those who enter the maintenance, 75% actually had at least a 50% reduction from the baseline, but you made a great point, right. So 61 of the 94 who originally enrolled made it to that months' maintenance visit and presumably a lot of them beyond that, right; we don't have the final data yet for the one year, but made it to that six months' maintenance visit, there is-- there is absolutely no reason-- no reason at all why a doctor would take a patient-- people in a clinical trial for the serious disease, for that longer period of time if they were not getting clinical benefits, so, I think it is reasonable to surmise that to pay those patients we are getting clinical benefit and were tolerating the drug. How much clinical benefit? We will be examining that, right. Was it 35% reduction in UFC, what was it, and importantly, and this is a very important fact I don't have the data to share with you today, but our patients-- we had no upper limit on UFC at baseline, unlike some of these other studies that you may be reading about. So we have some patients who were very, very sick at baseline. They had UFCs more than 20 times the upper limit of normal. To normalize those patients with drugs is very, very difficult, okay. Especially with a single therapy like in this study, so a clinical benefit in those situations can be something that is not a normalization, right. It can be a profound clinical benefit. So, I just wanted to make that all clear, and again, more to come on the data side.

Yes. And there is a lot of discussion here about potential black box warning. I mean, it appears that some of us knew this as the toxicity profile of ketoconazole didn't improve much by taking out the single [Indiscernible] and I think this is probably a false view. I mean, there were no indications that someone discontinued the drug. That was-- who has experienced these ALT elevations, these were all manageable. I mean can you underscore that, Fred?

Right, so I think, yes a couple things. So, first of all you did the comparison with ketoconazole is fraud; we talked a lot about this on our Analyst Day just several months ago. So one of the things you need to keep in mind with whenever you are talking about ketoconazole, data on the liver is-- is that these studies for ketoconazole were either retrospective chart type reviews or they were registry-- they came from a registry. They do not have protocol associated with them. They do not have site monitoring from CRAs, right. They do not have pre-specified LLT monitoring at regular intervals like we had. So there is the possibility indeed the high likelihood that a lot of the abnormality is associated with ketoconazole were simply never captured, and the populations for the most part, it took them for-- to some extent were highly selected to be patients that would tolerate ketoconazole, and were not-- would not necessarily have liver problems. We allowed a wide range of patients in the study for RECORLEV, because we wanted a real-world experience. Let's talk about what we know about ketoconazole from the literature. I'll reiterate what I said at the Analyst Day. The most recent data that we had-- so I guess it's the most comparable-- the registry study in France. Patients who were naive to ketoconazole at the entry into their registry, ended up without 13% of those patients had more than five times the upper limit at normal end in ALT, okay. In the RECORLEV study, with about the same exposure interval, 3.2%, so by my maths that's less than a third, right. With RECORLEV had that-- above that clinically relevant threshold. Again, as I mentioned, for RECORLEV the changes for the most part or for the entire part were fully reversible and there were no clinical sequelae quality associated with them. I think, probably the most direct comparator we had frankly, is not ketoconazole. It's-- maybe SIGNIFOR LAR, right. So, Matt I think intimated before, it's the most recently approved drug, it was a prospectively designed clinical trial much the same way RECORLEV was, and that's a drug that's not generally considered to be at all dangerous on the liver, and yet in that study 5% of patients after seven months had greater than five times upper limit of normal ALT or AST change, and 14% had greater than three times. So both these numbers are higher than we just reported for RECORLEV, and again, SIGNIFOR LAR doesn't have any black box associated with it. Now I know we are going to be painted with the ketoconazole brush, but these are not the same drugs. They are different entities. So let me leave it at that before I pontificate any further. Thank you.

Maybe just one more from me, Fred. I know you mentioned that head-to-head comparisons are difficult, especially when there is no evidence, for example, with Korlym of improvement of UFC. But, what are some of the parameters in your study that could be used to demonstrate, whether it's a secondary endpoint or some observations to position against or in comparison with Korlym versus RECORLEV?

Okay. Great. So, of course one of the things-- once-- once we go through the regulatory process, let's say we're out on the market and we're competing, that's a different story because we'll have a wealth of information and you mentioned some are very key piece right there, as these cardiovascular risk markers that we're looking at both in the SONICS study, the long-term study and in the placebo-controlled study when we are looking at these cardiovascular risk markers, we'll just take a look at the labels of those drugs, what do they say, right? Korlym has a diabetes label, talks about that-- we'll have diabetes subsets, we'll compare and see how we did there, but in terms of the other cardiovascular risk markers, there's no benefits there under the Korlym label and the SIGNIFOR label there is no benefits there, and it worsens glucose. So, I mean to me-- yes it looks pretty good for RECORLEV.

Thank you. And that concludes today's Q&A session. I would now like to turn the call back to Matt Paul for any closing remarks.

Thank you. We are pleased on the progress of our rapidly growing rare-disease company including the near term opportunity for MACRILEN, continued strong performance of KEVEYIS. The potential for veldoreotide and, of course the tremendous RECORLEV from the SONICS study. Thank you for joining today's call, and for your continued support.

Ladies and gentlemen, thank you for participating in today's conference. This conclude today's program. You may all disconnect. Everyone have a great day.