Good day ladies and gentlemen and welcome to the Catabasis Pharmaceuticals' Q1 2017 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

I would now like to introduce your host for today's conference, Ms. Andrea Matthews, Executive Director of Corporate Affairs. You may begin..

Thank you Vicky. Welcome to today's Catabasis Pharmaceuticals' conference call where we will provide a corporate update and review our first quarter 2017 financial results. With me today are Jill Milne, Chief Executive Officer, Joanne Donovan, Chief Medical Officer, Ted Hibben, Chief Business Officer and Andrew Nichols, Chief Scientific Officer.

We issued a press release after the market closed today summarizing our corporate update and our Q1 2017 financial results which we will reference on today's call. This press release is available on our website.

I would like to note that during today's call, we will make statements related to our business based on current and future expectations that may be considered forward-looking statements under federal securities laws.

Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties, including those that were discussed in our most recent quarterly report on Form 10-Q, which we filed this afternoon with the SEC and is also available on our website.

Such statements represent our judgment as of today and Catabasis undertakes no obligation to publicly update any forward-looking statements except as required by law. With that, let me pass the call over to Jill Milne, Chief Executive Officer, who will provide the corporate update.

Joanne Donovan, our Chief Medical Officer, will then provide an update on our clinical programs for edasalonexent and will be followed by Andy Nichols, Chief Scientific Offcer, who will provide an update on research and our preclinical program. Jill will then wrap things up with the financial update.

Jill?.

Thank you Andrea. Good afternoon everyone and thank you for joining us today for our update on first quarter 2017 financial results and recent business progress. We continue to make progress toward our mission to bring life changing therapies to patients affected by rare diseases.

In the first quarter of 2017, we made important advancements in our portfolio, including encouraging results in our edasalonexent MoveDMD trial and good progress in our rare disease pipeline. We are excited about our lead candidate edasalonexent's potential as a novel treatment for Duchenne muscular dystrophy.

We believe Edasa has the potential to be effective, regardless of the underlying mutation and both as monotherapy and in combination with dystrophin targeted therapies. In 2017, we are focused on advancing edasalonexent in further developing a strong pipeline to drive long-term sustainable growth.

On today's call, we will discuss relevant recent advances in our edasalonexent program and will highlight the progress in our rare disease pipeline programs. Our goal with Part B of the MoveDMD trial was to run a relatively short, placebo-controlled trial with 30 boys and best serve the DMD community.

The primary endpoint for Part B of MRI T2, an exploratory early biomarker, was not met. However, we believe the functional assessments are the most relevant for our Duchenne program going forward as they have precedence as endpoints in pivotal trials in Duchenne and are known to be clinically meaningful.

We have now completed two prespecified analyses of functional assessments from Part B of the MoveDMD trial. We believe the data to-date are compelling showing consistent improvements across functional assessments in boys after 12 weeks of treatment with edasalonexent.

In our first prespecified analysis, we compared 12 weeks of edasalonexent treatment to 12 weeks of placebo and saw numerical improvements in all six functional assessments at the higher dose as we reported in January 2017.

We recently completed a second prespecified analysis in which we compared rate changes in functional assessments in boys during 12 weeks of edasalonexent treatment to the changes in the same boys off treatment prior to part B dosing, adjusted for the different time periods.

The results from this analysis showed that 12 weeks of Edasa slowed the rate of decline in function by at least 45%. These results are consistent with the numerical improvements observed in the same functional assessments with the first prespecified analysis.

We are encouraged to see the swelling of disease progression as evaluated by these functional assessments and in some assessments improvements with Edasa. Importantly, we see improvements in the integrated global functional assessments, the North Star Ambulatory Assessment and the PODCI in addition to the shorter individual time function tests.

We believe the two prespecified comparisons of the Part B data are highly relevant, useful and well-controlled comparisons. The consistency of improvement seen in boys treated with edasalonexent strengthens our confidence in the edasalonexent's potential as a novel treatment for boys with DMD.

In the third quarter of this year, we plan to report interim results from the open label extension portion of the trial, Part C, evaluating edasalonexent after 24 weeks of dosing. In Part C, we will gain information on key functional assessments as well as on longer term safety and tolerability.

Part C is an open label trial and was not designed to be powered for statistical significance. In addition to Edasa, we also advanced our work on other rare disease pipeline programs focused on cystic fibrosis and neurodegenerative diseases such as ALS and Friedreich's ataxia. And Andy will provide a more detailed update.

Partnering is a priority for Catabasis this year. We are evaluating partnership opportunities that would allow us to build and enhance the value for portfolio in 2017 and beyond. I will now ask Joanne Donovan, our CMO, to provide an update on our edasalonexent clinical program..

Thank you Jill and good afternoon everyone. Edasalonexent is an oral small molecule we are developing as a potential disease modifying therapy for all patients affected by Duchenne, regardless of their underlying mutation.

We designed edasalonexent to inhibit NF-kB, a protein that is activated in Duchenne and which drives inflammation, fibrosis, muscle degeneration while suppressing muscle regeneration.

We are currently evaluating edasalonexent in our MoveDMD trial, designed to collect a large amount of data on edasalonexent's effects in boys aged four to seven affected by Duchenne. The trial is progressing as planned.

Part B of the MoveDMD trial, you will remember, was the placebo controlled portion of the trial and we are encouraged by the consistent improvement seen in patients functional assessments after 12 weeks of edasalonexent.

We have also presented these results at two scientific conferences and have received encouraging feedback from experts in the field. In the third quarter, when all boys have completed 24 weeks on edasalonexent, we will provide interim results from the open label extension.

With close to 20 patient years of treatment with edasalonexent, there have been only four boys who have discontinued from the MoveDMD trial, none of whom discontinued due to adverse events. We now have IRB approval to transition all boys in Part C receiving 67 milligrams per kilogram per day to the 100 milligrams per kilogram per day dose.

This is a testament to the good safety profile as no safety signals have been seen in Part B in the boys at either the 67 or 100 milligrams per kilogram per day treatment group and this allowed us to move all boys to the higher dose.

Additionally, we have submitted an amendment for IRB approval to enable boys in Part C to start taking Exondys 51, while remaining in the MoveDMD trial, if they are amenable and it is recommended by their physician. Andy will speak shortly about the supporting preclinical results for this potential combination.

We will continue to follow these boys to evaluate safety as we learn more about the potential of combination therapy. In part C of the trial, we are evaluating the potential benefits of edasalonexent by measuring the same functional assessments as were measured in Part B.

These functional assessments are known to correlate with disease progression and future loss of milestones such as the ability to walk.

The functional assessments in the MoveDMD trial include three timed function test, before stair climb, 10 meter walk/run and time to stand as well as the NORTH STAR AMBULATORY ASSESSMENT and pediatric outcomes data collection instrument or PODCI.

The PODCI is a questionnaire for parents that asks about observations of their sons' daily activities such as the ability and ease to perform functions at home for example, putting on a coat, walking the block, climbing a flight of stairs.

These are remarkable and courageous young boys and I want to take the opportunity to thank all the boys and their families for their participation in the MoveDMD trial. We appreciate the continuous support from the patients' families as reflected by the sustained participation in Part C to-date.

We also want to thank the Duchenne community and the dedicated clinical trial site staff for their commitment and enthusiasm for the program. The enduring support that we have received from advocacy groups has greatly helped us with the MoveDMD trial.

I will now ask Andy Nichols, our CSO, to provide an update on research and our rare disease preclinical programs..

Thank you Joanne and good afternoon everyone. I am going to speak to our research and drug discovery efforts, which are focused on product candidates developed in-house at Catabasis using the proprietary SMART linker drug discovery platform.

As was mentioned during our earnings call in March, we have seen some promising early results from our joint research collaboration with Sarepta.

The collaboration was established to explore a potential combination drug treatment approach for DMD and we have demonstrated increased dystrophin protein expression with an exon-skip modality in combination with edasalonexent in the MDX mouse model of DMD. The companies believe that these results warrant further research.

External researchers have previously reported that activated NF-kB can suppress this rogue dystrophin expression by the regulation of microRNAs in muscle cells and this could be the mechanism by which edasalonexent was observed to increase dystrophin expression when combined with a dystrophin skipping agent.

Therefore, edasalonexent may have the ability to increase dystrophin expression independent of how the dystrophin is produced. While we are currently developing edasalonexent as a monotherapy for DMD, we also believe that it has potential as part of a combination approach with therapies that target dystrophin.

As Jill shared, we made good progress on our rare disease pipeline programs in the first quarter. I will focus on our CAT-5571 program and its potential dual benefit in cystic fibrosis. CAT-5571 activates autophagy, a process that maintains cellular homeostasis and host defense mechanisms and which is known to be impaired in cystic fibrosis.

We have shown that CAT-5571 enhances cell surface trafficking and function of CFTR in combination with lumacaftor and ivacaftor in sells with the homozygous DeltaF508 mutation which is the most frequent CFTR mutation and which is present in more than 85% of patients in the U.S.

These data were published earlier this year in the Journal of Medicinal Chemistry. Importantly, we have also shown that CAT-5571 enhances the clearance of Pseudomonas infection in preclinical models of CF.

We have an upcoming presentation at the European Cystic Fibrosis Conference next month where we will show the effect of CAT-5571 on the clearance of intracellular bacterial pathogens that are present in CF and this may represent a potential novel approach for treating cystic fibrosis.

We are continuing preclinical evaluation of CAT-5571 in animal models of CF and are conducting IND enabling activities. If successful, we expect to initiate a Phase 1 trial with CAT-5571 in 2018. In our CAT-4001 program for rare neurodegenerative diseases such as ALS and Friedreich's ataxia, we continue to conduct preclinical activities.

In these programs, a SMART linker drug discovery platform has enabled us to engineer conjugates to target intracellular biological pathways in a novel way that results in product candidates with patentable compositions of matter and methods of use. I will now turn the call back over to Jill for a review of our first quarter financials..

Thank you Andy. Turning to our financials. Our first quarter 2017 press release provides the details. So I will provide a brief summary. As of March 31, 2017 we had $31.8 million of cash and cash equivalents.

We expect our cash and cash equivalents as of April 30, 2017 to be able to fund operating expenses, debt service and capital expenditure requirements based on our current operating plan for at least 12 months from today. This is well beyond the upcoming MoveDMD results when we will determine the next steps for the development of edasalonexent.

In the first quarter of 2017, our net cash used in operating activities was $8.1 million. Our R&D expense was $5.4 million in Q1 2017 compared to $6.4 million in Q1 2016, a decrease of $1 million. The decrease in research and development expenses was primarily attributable to the completion of certain clinical activities.

Our G&A expense was $2.4 million in the first quarter of 2017. Our operating loss was $7.8 million in Q1 2017, a decrease of $1.4 million versus Q1 2016. Our net loss was $7.9 million or $0.41 per share in Q1, a decrease by $1.5 million compared to our net loss in Q1 2016.

For the first quarter, we had weighted average common shares outstanding of 19.1 million. Additional financial information is available in our 10-Q, which we filed earlier today with the SEC. At Catabasis, we are focused on tackling tough medical challenges not on incremental improvements in care.

Advancing novel science and developing groundbreaking new medicines means the path is often not a straight line from discovery to approval. I am proud of what we have accomplished so far this year and look forward to continued progress and learnings as we gather additional information from our MoveDMD trial.

We are excited about the potential of edasalonexent as a treatment for Duchenne muscular dystrophy. We believe the data to-date are compelling showing consistent improvements across functional assessments in boys after 12 weeks of treatment with edasalonexent using two different prespecified analyses.

The trial is progressing well and we look forward to sharing interim results from Part C of the trial in the third quarter. In Part C, we will gain information on key functional assessments as well as on longer term safety and tolerability.

Our next steps for the clinical development of edasalonexent will be informed by these data and in consultation with our study investigators. In the first quarter, we also made good progress across our rare disease pipeline, advancing our programs in cystic fibrosis and neurodegenerative diseases.

And importantly, we are in a strong position financially to support these activities with more than a year of capital on hand. I would like to thank all of those who continue to support our efforts to bring life changing therapies to patients affected by rare diseases.

This includes our dedicated employees who work tirelessly to discover and develop groundbreaking new medicines and the brave and inspiring boys in our trial and their committed families and physicians. With that, I will ask Vicky to open up the call for your questions. Vicky, can you please repeat the instructions and poll for questions? Thank you..

[Operator Instructions]. Our first question comes from the line of Phil Nadeau with Cowen and Company. Your line is now open..

Good afternoon and thanks for taking my question. I guess the first question on dose of Edasa. You mentioned all the patients are moving to the higher 100 milligram per kilogram per day dose.

Is there an opportunity to dose increase even further? Can you remind us how high the dose has been pushed preclinically or what the equivalent would preclinically?.

Joanne?.

Hi Phil. Thanks for the question. This is Joanne. We have safety data, preclinical safety data that supports our doses and comfortably. So what we have looked at in this study is up to 100 milligrams per kilogram. We certainly have thought about that and we don't have plans at this point to change the dose..

Okay. Great.

And then same question, on the Q3 data release, what measures do you think you would have ready to disclose at that time? Will we get as many of the secondary endpoints as we have now from Part B? Or will it be a very limited subset of those measures?.

Yes. Thanks Phil for the question. So for the Part C interim update, we will provide data on the functional assessments that we are looking at in Part C, which include those that were also looked at in Part B..

Okay. Great.

You think you have all or most of them ready to go with the interim update?.

With regard to the functional assessments? Yes..

Yes. Okay. And then last is just brief questions on the financials.

The expenses that you had in Q1, is that a decent run rate for the rest of the year? Or do you anticipate the expenses growing or decreasing?.

Yes. We think that is going to be a consistent run rate through the rest of the year..

Got it. Okay. Thanks for taking my questions..

And our next question comes from the line of Joel Beatty with Citi. Your line is now open..

Hi. Good afternoon and thanks for taking the questions. My first question is, on your recent presentations at medical meetings showed rate of decline of the functional endpoints slowed during treatment compared to the other treatments we had before.

So the question is, would you be able to show the same analyses in the Part C patients that have moved from placebo previously into starting drug in Part C?.

Yes. It is a great question, Joel. I will start and let Joanne add in at the end if she wants to. So what we will be at in Part C, really stands Part C really, since Part C is an open label extension and the placebo does not extend in Part C.

What we will be looking at are the functional assessments and looking for a numerical separation from the control period, keeping in mind that these boys, of course, have aged over the time course of the MoveDMD trial. And so you, at best we have to extrapolate out that control through this period..

But as you say, we have an addition to the 16 boys that moved from Part A to Part B, then we have additional boys who were on placebo. So for the majority of boys, the vast majority of the boys in this study, we will have a control period to compare to.

And we will be comparing not only the patients that have a control period to what's happened on treatment, but we will also be comparing the larger group of boys, all the boys to that period in which we can look at disease progression. And that's an important feature of the study..

Okay. Great. And then one other question related to the data you presented at AAN, the preclinical data that showed an increase in the dystrophin production when combined with an exon-skipping agent from Sarepta.

Is this something you plan to test in a clinical trial?.

So we are going to be including. There are boys in the current study that are eligible for Exondys 51. And so we will be allowing them to continue in the study and continue to take edasalonexent while starting on eteplirsen.

And it is something that we are also planning in future studies because of the potential benefit of edasalonexent not only as monotherapy but as combination therapy in dystrophin focused therapy..

Great. Thank you..

We are very excited about that..

And our next question comes from the line of Liana Moussatos with Wedbush Securities. Your line is now open..

Thank you for taking my question. It's [indiscernible]. After we see the 24 weeks treatment in Q3, before you mentioned that there would be a look at 36 weeks. Is that still going to happen? And will that be in Q4 or Q1? Then my second question has to do with partnering in 2017. What are you looking to partner? And third question has to do with Part C.

The percent of boys that have already started at 67 milligrams, how long were they treated on that dose and what percent, you see where I am getting at, what percent are there of all of them moving up to 100?.

Yes. Great questions, Liana and thanks for them. I will start and hand it over to Joanne. So for the 36 weeks data and beyond from the Part C of the trial, that will be three months post the 24 weeks data. And what our intention is, is to continue to present the open label data at scientific conferences throughout this year and then next year.

So you will be hearing more about that. In terms of partnering, we are looking and discussing partnerships around our platform technology as well as product candidates in our pipeline and we hope to have more to talk about in the future about this.

And maybe I will let Joanne talk about the percent of boys on 67 in Part C and those who have transitioned..

So originally, half the boys were on 67 and half of them were on 100. All of the sites have the amendment approved and just about all of the boys have moved up to 100 milligrams per kilogram per day. Some of the boys started in the extension study as early at last July when we announced it.

And some of the boys started in the extension study as recently as January. So it is a range of dates in terms of how long they had previously been on edasalonexent. We did extend the study an additional 24 weeks to make sure that we do have enough time to observe the boys on 100 milligrams per kilogram dose..

Is that the reason why the original guidance was Q2 for the interim look for 24 weeks and now Q3?.

So what we decided to do was to make sure that we had all of the boys having reached 24 weeks. We finished the study, the last boys were enrolled. We announced the beginning of October. So the boys in that last cohort who were in placebo didn't start their initial 24 weeks until the beginning of this year.

So we are waiting until we have the entire cohort at 24 weeks. And so there are some last minute ones that came in, the placebos that came in last into the study. And that's why it's taking us longer to get to everybody having the full 24 weeks and giving you a robust data package..

Thank you very much..

Our next question comes from the line of Hartaj Singh with Oppenheimer. Your line is now open..

Yes. Thank you for the questions. Just had a couple of questions. One is just a follow-up on some questions officer earlier on the third quarter look at the 24 weeks. You had mentioned that there are boys that have been on drugs through the 12 week period and then there were boys that were on placebo.

So they all sort of form a self control against themselves when you look at 24 weeks.

Is that correct? Am I thinking about it the right way? So you will potentially when you give the third quarter update, you will have one pool of just reporting the boys? Or will there be two different pools, one just boys that have been on drug completely and one another where there will be boys against themselves, self control b basically?.

So this is Joanne.

When we look at the analysis, we will be looking at their first 24 weeks on edasalonexent, whether or not they started on it at the beginning of Part B or the beginning of Part C and we will be comparing those data to the entire group who had an off treatment period, including the 16 boys from Part A as well as the additional boys who had placebo period in Part B.

So we will be looking at that entire group which is, as I said, the vast majority of the boys in the study have a off treatment period to compare to..

Got it. Thanks Joanne.

And then just on that to follow-up, when we look for the third quarter, the press release or the presentation, are you going to be focused on these functional assessments? Will you be presenting them as absolute improvements? Or as percentage improvements? Or both?.

Thanks for the question. What we will be looking for is a numerical separation from the treatment period for 24 weeks compared to the extrapolated control period. And really since there is no good control in the open label extension, a direct control, that is how we will assess whether there remains a separation between those two groups..

Great. That's very helpful, Jill. And just one last question and this is on actually the cystic fibrosis project. I just wanted to, you had mentioned that you are going to sort of preclinical activities and then going to IND enabling activities.

Can you just specify very quickly, what is sort of the hurdle that will take you from preclinical to IND? And then how quickly could that get in the clinic? I know you are aiming for 2018, but could that be earlier in 2018 or later in 2018? And thank you..

Yes. Thanks for the question. So as we said, we are actually running IND enabling studies at the moment. We continue to characterize CAT-5571 in animal models for cystic fibrosis. But that's where the characterization is as opposed to decision making full moving the molecule forward through IND enabling studies which are currently ongoing..

Got it. Fantastic. Thank you very much..

And I am showing no further questions at this time. I would now like to turn the call back over to management for closing remarks..

Thank you Vicky. Thank you all for joining our call today and for your continued support. We look forward to speaking with you again soon and keeping you updated on our progress throughout the remainder of the year. Have a good evening.

Andrea?.

That concludes today's call. A webcast replay will be available for 90 days via the Investor Relations page on our website at www.catabasis.com. Thank you..

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