Good day, ladies and gentlemen. Welcome to the Q4 2017 Catabasis Pharmaceuticals' Earnings Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference. Ms. Andrea Matthews. You may begin..

Thank you, Bruce. Welcome to today's Catabasis Pharmaceuticals' conference call where we will provide a corporate update and review our fourth quarter and full year 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 Q4 and full year 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 uncertainties related to the final trial design of our planned Phase 3 trial in DMD availability and timing of topline results from this trial, and our ability to obtain financing on acceptable terms in a timely manner to fund the certain development activities for the trial.

And other factors 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 a corporate update. Joanne Donovan, our Chief Medical Officer, will review our clinical programs for edasalonexent and will be followed by Andy Nichols, our Chief Scientific Officer, who will provide a preclinical update.

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 fourth quarter and full year 2017 financial results and an update on progress so far in 2018. 2018 was a year of considerable progress in learning at Catabasis.

We executed against a number of significant milestones most notably setting the stage should advance our first program into Phase 3 development with edasalonexent in Duchenne muscular dystrophy. Edasalonexent has the potential to be a foundational disease modifying therapy for patients with Duchenne muscular dystrophy.

We continue to build on the strength of the edasalonexent program with consistent and encouraging data reinforcing the potential of edasalonexent for all boys regardless of mutation from initial diagnosis and continuing over a patient's life time.

Edasalonexent has importantly shown potential as a monotherapy and in combination with other treatments including dystrophin targeted therapies.

Additionally in 2017 we made progress in our discovery programs and early stage pipeline and are now preparing to move CAT-5571, a potential oral therapy for cystic fibrosis into clinical development based on positive pre-clinical data.

Thank you to all of our employees for helping us achieve these important goals in 2017 and for getting us one step closer to realizing our vision of improving the lives of those affected by rare diseases.

Turning to work edasalonexent program throughout the year we gained valuable insights from our MoveDMD trial and discussions with physicians and families that have guided our Phase 3 development plans.

Following more than a year of treatment edasalonexent has substantially slowed disease progression compared to control in this otherwise inevitably progressing disease.

As a reminder symptoms of muscle weakness are seen in boys with Duchenne often before their age four and by age 12 boys are often non-ambulatory, slowing down this predictable course of muscle degeneration and weakness is the primary concern for boys, families and physicians.

We were very pleased to present additional data earlier this week on edasalonexent as well as new independent natural history data at the Muscular Dystrophy Association clinical conference that further support the potential of edasalonexent as a foundational therapy in Duchenne.

I will now turn the call over to Joanne Donovan, our Chief Medical Officer who will review the edasalonexent MoveDMD data for more than a year of treatment as well as the information presented earlier this week at MDA and our Phase 3 plans.

Andy Nichols our Chief Scientific Officer will then review the preclinical results that were generated with edasalonexent last year and provide an update on our CAT-5571 program in cystic fibrosis.

Joanne?.

Thank you, Jill. Thank you Jill and good afternoon everyone. Last month at the 16th International Conference and to Duchenne and Becker Muscular Dystrophy we presented data for more than a year of edasalonexent treatment in the MoveDMD trial.

I will provide an overview of these results today and we'll also share the preparations that are well underway for our Phase 3 registration trial. We were delighted to see long term consistency of effects of edasalonexent with a preservation of muscle function in boys with Duchenne over the course of more than a year of treatment compared to control.

And as we look at the potential edasalonexent as foundational therapy over the life time for a Duchenne patient we are pleased to see that it continued to be well tolerated with a favorable safety profile. In the MoveDMD trial we enrolled boys aged four to seven who were not on corticosteroid.

In the trial we measure changes in functional abilities over a period prior to the Phase 2 treatment period and pre-specified our analysis plans to compare the rates of change during this control period to the treatment period on edasalonexent.

We measured four assessments of muscle function that reflect everyday activities that are appropriate for 4 to 4 year old boys. The assessments where the time function tests, 10 meter walk run, four stair climb and time to stand as well as the Northstar ambulatory assessment, a composite measure designed to specifically for Duchenne.

I will now walk you through the results of each of the assessments following 48 atopic dermatitis 60 weeks of edasalonexent treatment which are consistent with what we saw at earlier time points. As a reminder these results are for boys that received 100 milligrams per kilogram of edasalonexent throughout the entire treatment period.

Across every measure the rate of functional decline in boys not only slowed but in fact stabilized through 48 and 60 weeks of treatment compared to control. Remember these boys were declining as expected during the off treatment control period on all four of the assessments of muscle function.

This is an incredibly promising result and [indiscernible] talked to about the data interpret them as edasalonexent substantially slowing the progression of Duchenne in the boys.

As you will recall the Northstar ambulatory assessment is a validated composite measure of 17 physical function test including the ability to stand or walk run or hop on one leg with each activity assessed by a clinical evaluator. The annualized rate of decline was about four point per year.

Just as we saw at 24 and 36 weeks following 48 and 60 weeks of treatment the rate of decline stabilized compared to control. Some of the boys even gained new abilities that they did not have during the control period being able to run or jump. You can imagine the incredible impact this has on the boys and their family.

Based on discussions with the FDA we plan to use the Northstar test as our primary endpoint in the upcoming Phase 3 trial, for the 10 meter walk-run boys experienced an 18% annualized rate of decline in speed during the off-treatment control period while on edasalonexent the boys speed was maintained.

The average speed to perform the four stair climb and time to stand also showed a slowing in the rate of decline over 60 weeks of edasalonexent treatment as compared to a 23% annualized rate of decline in speed for the four stair climb and a 35% annualized rate of decline in time to stand during the off treatment control period.

As seen in third party natural history of Duchenne boys not on steroids that I'll discuss in a minute boys at the same ages as in the off treatment period controlled period of our study follow it to predictable and steady decline across the path of their muscle function.

Therefore the consistent slowing of the progression through more than a year of edasalonexent treatment across all these well accepted functional assessment, it's very compelling and encouraging.

Supporting these results we also thought significant changes in muscle health over this longer treatment period that are also consistent with positive edasalonexent treatment effects. Four muscle enzymes were measured in the MoveDMD trial that are known to increase following muscle damage.

Following treatment with edasalonexent the levels of all four enzymes showed statistically significant decreases compared to baseline through 60 of treatment suggesting a decrease in muscle injury and an improvement in muscle integrity.

And as we reported last month c-reactive protein or CRP there is a statistically significant decrease after 36 and 48 weeks of treatment consistent with the results we thought after 12 and 24 weeks of treatment.

CRP is well characterized blood test marker that provides a global assessment of information and is known to be elevated in boys affected by Duchenne. The significant decrease observed in the CRP supports biological activity of [indiscernible] in addition by edasalonexent treatment decreasing inflammation.

We also have an update on the boys who are receiving EXONDYS 51 treatment while continuing edasalonexent in the ongoing MoveDMD open label extension. We're evaluating safety and learning more about the potential of combination therapy.

At this point we have more than six months of data in combination and we've continued to see a good safety and tolerability profile. We presented additional data earlier this week at the 2018 Muscular Dystrophy Clinical Conference.

Edasalonexent continues to be well tolerated with no safety signal observed to-date in the MoveDMD trial now with over 35 patient years of paediatric exposure. There are boys in the MoveDMD trial that have been on edasalonexent for close two years. Most adverse events have been mild in nature with no edasalonexent related serious adverse events.

The safety profile is key as we view edasalonexent as a potential lifelong foundational treatment used as both monotherapy and in combination with other therapies.

We've seen additional observation suggesting that edasalonexent may have benefits on the heart, boys with Duchenne in the age range of those in our study typically have resting tachycardia, a heart rate that exceeds the normal resting rate. Tachycardia is the first cardiac manifestation in boys with Duchenne.

This elevated heart rate was observed in boys in the DMD trial both while boys who were receiving placebo and as well as during the off treatment controlled period and we're excited that new data show that the heart rate of boys treated with edasalonexent decreased toward age normative values through 48 weeks of treatment.

When boys originally randomized to placebo moved on to edasalonexent at the start of the open label extension period the heart rate decreased. These results are further supported by positive heart effects seen with a reduction in cardiac fibrosis in preclinical models.

We believe these clinical heart rate observation show early clinical indication that edasalonexent could ultimately have important heart effect in Duchenne, a key target in this disease as cardiac failure is a leading cause of mortality.

Also of note boys with edasalonexent continue to progress along standard growth curves for unaffected boys through 60 weeks of treatment increasing their height and weight on track with their friends at school. BMI trended toward a decrease for quality of life for these boys this is very important to grow and develop like their peers.

It adds [ph] profile is favorably differentiated from the typical profile associated with the corticosteroids standard of care in Duchenne which includes delayed puberty, weight gain and stunted growth. For example in the MoveDMD trial over 48 weeks the boys gained an average of half a kilo consistent with normal growth.

On the other hand in other studies boys [indiscernible] over a year gained an average of five kilos and for prednisone eight kilos. Also presented earlier this week at the MDA clinical conference where new data from the imaging DMD natural history study a collaboration led by the University of Florida and independent of the move DMD trial.

Imaging DMD assessed annual measures of the same time function test that we assessed in the MoveDMD trial. There were 28 boys initially aged 5 to 8.5 years old who did not take corticosteroids during this study.

The imaging DMD natural history study and our MoveDMD trial were performed at the same clinical site using the same protocols for the assessment.

The observations of the imaging DMD natural history study were generally consistent with declines in the abilities experienced by boys during the off-treatment control period in the MoveDMD trial and the absolute values of the time function tests were also consistent.

These data provide important corroboration that the MoveDMD off treatment control period observations are characteristic of the expected natural history and provide additional confidence in the slowing of disease progression treatment effects observed with ADASA [ph].

These data along with input from FDA, from KOLs, from families having formed a rigorous and meaningful design for our Phase 3 study. We have a clear path to registration. We are planning to initiate a single global Phase 3 trial with many fundamental elements in common with our MoveDMD trial including the patient population and key endpoints.

The patient population designed for this Phase 3 trial will include boys age 4 through their 7th birthday regardless of mutation type and who have not been on steroids for at least six months.

We expect to enroll approximately 125 boys and plan to have the primary endpoint be the Northstar ambulatory assessment following 12 months of the EDSA treatment compared to placebo We also plan to conclude the same time functional test as the MoveDMD trial.

We're planning to follow up on the differentiated safety profile of the EDSA and include cardiac and bone measures at baseline and following treatment. Preparations are well underway for our Phase 3 trial, we've made progress both on the clinical operations as well as CMC.

We've explored sites for the study globally and we have EDSA drug supply ready and we look forward to initiating the Phase 3 trial in the coming months. Earlier this month I attended a meeting with advocates of the Duchenne community including a number of families impacted by the disease.

Well I've attended dozens of these meetings over the course of my career I continue to be struck by the tireless efforts and perpetual hope of these families. Their support is deeply appreciated and their enthusiasm is infectious.

I want to personally thank them for sharing their stories and their challenges to help us in our effort to improve their lives. I will now pass the call over to Andy Nichols, our CSO who will share updates on pre-clinical data.

Andy?.

Thank you, Joanne. Good afternoon everyone. In 2017 we augmented our package of preclinical data for our EDSA program with additional results. We demonstrated metabolism of EDSA in human muscle fibers to its active components confirming availability of the component bioactives in the target tissue to inhibit [indiscernible] as desired.

We also saw human myocyte growth differentiation, a concentrations of EDSA that are consistent with those achieved during patient dosing. Supporting the potential of EDSA to regenerate muscle fibres.

We see this as an important function that could provide valuable contributions to the slowing of disease progression compared to control that we have seen employees in boys in the clinic.

We performed experiments in MDX mice, a mouse model the DMD showing that once daily dosing does not produce the same level of efficacy as sustained dosing of the edasalonexent.

We believe that time over threshold is the primary driver of efficacy for edasalonexent and that these results support dosing EDSA three times per day going forward as is planned for our Phase 3 trial. Turning to our cystic fibrosis program, as Jill mentioned we have made additional progress with our CAT-5571 program.

CAT-5571 is designed to restore host defense by activating autophagy, a mechanism for cellular recycling and digesting pathogens. By restoring autophagy which is depressed in cystic fibrosis post defenses re-established to enhance the clearance of pathogens.

CAT-5571 has the potential to augment the efficacy of antibiotics and could also be used with other CF therapies including CFTR targeted agents. We are continuing IND enabling activities for CAT-5571 and we expect to initiate a Phase 1 trial in the second half of 2018 with top line results in 2019 based on our current operating plan.

I will now turn the call back over to Jill for a review of our financials..

Thank you, Joanne and Andy. Turning to our financials our fourth quarter and full year 2017 press release and 10k provide the details so I will provide a brief summary.

As of December 31, 2017 we had $16.4 million of cash and cash equivalents following December 31, 2017 we raised in additional 8.3 million in net proceeds under an at the market offering program. We expect to be able to fund operations through September 2018.

To advance edasalonexent in the Phase 3 trial we expect to obtain additional funds through equity or debt financings or through partnering our licensing transactions. In the fourth quarter of 2017 our net cash used in operating activities was $5.6 million and $26.8 million for the full year 2017.

We also recognize collaboration revenue from an option agreement with an unaffiliated partner in the fourth quarter of $0.3 million and for the full year of 2017 it was $0.5 million.

Our R&D expense was $4 million dollars in Q4 2017 compared to $6.3 million in Q4 2016, a decrease of $2.3 million and $18.7 million for the full year of 2017 compared to $25.5 million for the full year of 2016. The decrease in research and development expenses was primarily attributable to the completion of certain clinical activities.

Our G&A expense was $1.7 million in the fourth quarter of 2017, and 8.9 million for the full year 2017. Our operating loss was $5.5 million in Q4 2017 a decrease of $3.2 million versus Q4 2016. Our net loss was $5.5 million or $0.24 per share in Q4, a decrease by $3.3 million compared to our net loss in Q4 2016.

Net loss for the full year 2017 was $27.4 million or $1.26 per share. For the fourth quarter we had weighted average common shares outstanding of $23.2 million, additional financial information is available in our 10-K which we filed with the SEC earlier today. Building on our accomplishments in 2017, 2018 will be an important year at Catabasis.

We plan to bring our first program interface three development into Duchenne muscular dystrophy. While this is an incredibly important milestone for all of us at Catabasis it is especially rewarding as it brings us one step closer to making a difference in the lives of boys living with Duchenne.

Bringing CAT-5571 to the clinic for the potential treatment of cystic fibrosis also shows the strength of our development pipeline at Catabasis and the opportunities it represents to impact additional rare diseases. We enter the Phase 3 trial for edasalonexent with excitement.

We plan to initiate in the first half of 2018 and we expect topline results in 2020 depended on raising capital. After more than a year of treatment we continue to see a significant slowing of disease progression and get very positive feedback from clinicians who see the potential for edasalonexent to change the course of the disease.

We continue to be moved by the candid testimony of family, stories of their challenges as well as their boys with the ability to stand and walk while their peers run and jump on the playground.

What continues to motivate us are the stories from families of boys being treated with edasalonexent, we're working to progress edasalonexent as quickly as we can and thank you we're so grateful to all the boys and their families participating in our edasalonexent study as well as to the dedicated investigators and their staff to make our trial possible.

With that I'll ask the operator to open up the call for your questions. Bruce can you please repeat the instructions and pull for questions? Thank you..

[Operator Instructions]. Our first question comes from the line of Hartaj Singh from Oppenheimer. Your line is now open..

This is Emma on for Hartaj. Based on the early signals you've seen is reduced tachycardia in the boys in MoveDMD and also just given how central the cardiac health is to the trajectory early stage progression. Just wondering specifically what your plans are to measure the effect on cardiomyopathy in Phase 3 and how important that is as an endpoint..

I think that it is going to be very interesting to see in Phase 3, what we saw was a decrease in heart rate from the resting tachycardia to basically to age normative values for these boys and you know that's the first sign.

What is that followed by is the development of fibrosis a few years later and the development of cardiomyopathy and in fact the boys who have the highest resting heart rates are more likely to develop cardiomyopathy later. So we're going to be measuring with an ambulatory relatively easy to deal with monitor.

We're going to be measuring resting heart rate to monitor the boys over 24 hours as well as other indicators such as heart rate variability things that are known to be altered in Duchenne.

So that's the main measure that we're going to be looking at in the boys at this age, as you know they are cardiac function at this point in terms of ejection fraction is still maintained, the heart rate in the first signal. So we'll be focusing on that..

But that heart rate will be a secondary endpoint?.

It will be a safety assessment and we will monitor that yes..

Great.

And then just one follow-up looking ahead to any future plans to study EDSA in boys outside of that 4 to 7 population both younger and older and also any potential benefits in [indiscernible] how are you prioritizing those plans internally?.

We do intend to study it edasalonexent in the future in boys at older age range and we do believe that EDSA has potential for boys from the time of diagnosis throughout their lives based on what we have seen so far in our MoveDMD trial but importantly also what we've seen in pre-clinical models of Duchenne.

The Becker's question is definitely an interesting one and one we've been giving a lot of thought to especially based on the results of the MoveDMD trial and results from preclinical studies so as you know Becker's patients expressed some low levels of dystrophin it's known that [indiscernible] suppresses dystrophin production and so our hypothesis is the edasalonexent which inhibits NF-kb [ph] could potentially enhance dystrophin expression in Becker's patients and that's something we certainly are eager to pursue in the future.

The results from the MoveDMD trial on heart rate are particularly intriguing as well because we know Becker's patients also suffer from cardiomyopathy as well so something we are certainly eager to explore..

Our next question comes from the line of Ted Tenthoff from Piper Jaffray. Your line is now open..

I was wondering - for how you're thinking about power the study and I think you said 120 boys. So what kind of delta do you need to see on the primary north fall [ph] to achieve significance..

So we're planning to enrol about 125 boys and that's based on what we saw, we saw an annualized rate of decline of 4 points compared to stabilization in the boys as well as the standard deviation of the variability in the measures that we saw. So that's where we came to what we think is a robustly powered study..

Great.

So it will be a 12 month end point for north star?.

Yes Northstar..

Okay great. And then similar question I was hopeful to hear that [indiscernible] what about the bone, what are you looking to see there? Thanks..

Yes on the cardia monitoring is that what you're asking Ted? Bone I'm sorry..

So bone health is important in these boys just about half of them have fractures by their early teens and boys even as young in the trial can have fractures. So we will be looking with measures like DEXA [ph] to look at bone density that changes early in boys that are treated with steroids and also to look at things like lateral spine film.

You know these are things that the recent care guidelines that have just been published in Lancet in the last month or so are saying that really boys should be monitored this young even at diagnosis they should be getting it because of the importance of bone health.

So we think that's going to be a very important differentiator of EDSA versus steroids standard of care..

Our next question comes from the line of Liana Moussatos from Wedbush. Your line is now open..

For CAT-5571 what do you imagine primary endpoint would be in Phase 2, would it be some anti-microbial endpoint or [indiscernible].

And my second question is when do you expect combo-results with Tepperson this year?.

Yes so for CAT-5571 we will be looking primarily at functional endpoints measures as FFE-1 [ph] as opposed to looking at microbial content and density in the lungs they will look at those as secondary measures. They certainly wouldn't be a primary drivers of efficacy that we're looking at..

And for the Tepperson combo-data so as you know we have two boys in the MoveDMD open label extension that are co-dosing now with [indiscernible] Tepperson and I will let Joanne give an update on where we are there and what the plans are..

So we'll continue to follow them for safety.

We have two boys and we're anticipating also including boys that are on a stable Tepperson dose in the Phase 3 study as well and that's important with the recent news there's going to be more EXON [ph] therapies that are further along in development and in fact in the trial about a third of the boys had mutations that are amenable to either commonly marketed mutations specific therapies or those that are in clinical development right now.

So it is going to be a very important area and this is a disease that's going to likely require more than one therapies that we are thinking that that combination therapy with EDSA is going to be important. We see this as foundational as monotherapy and combination therapy..

And when would we see any kind of data on the combination with the two boys?.

So we'll continue to provide safety updates with those..

Yes so throughout this year we'll continue to provide updates.

Those will largely be focused on safety and you know I think you know perhaps where you are going with this as well and mechanistically the combination with EXON [ph] skipping in dystrophic targeted therapy makes a lot of sense for edasalonexent because of the mechanism and the ability to enhance dystrophin expression and so that's something we are certainly very eager to take a look at and as we think about that for diseases like Becker's or these combination approaches with EXON skipping that's very exciting to us..

During the safety updates will you provide dystrophin changes?.

Not from the MoveDMD open label extension child, we do not do biopsies in the open label extension portion so there will be no measures of dystrophin levels directly..

Phase 3 then?.

That is something that we are considering of how best to do that as part of the Phase 3 because as you know the protocol that we've talked about publicly has us enrolling, allowing boys who are on stable doses of Tepperson to enrol in the child..

Our next question comes from the line of Joel Beatty from Citi. Your line is now open..

I guess the first one for the enrolment criteria I think you just mentioned you know the use of Tepperson could be used in Phase 3 given as a global study do you anticipate there could also be use of trends line up from PTC..

That's a great point because ultimately we think that edasalonexent could be used in dystrophin variety of dystrophic targeted therapies not just EXON skipping as well as non-dystrophin targeted therapies. Ataluren has very specific dosing and we would not we would want to do a drug interaction study before that.

So we won't be including we haven't done that to-date and we won't be including boys that are on trend line or in Phase 3 study..

And then one other question would that from the MoveDMD trial as a whole you've been putting out these updates from the extensive study, do you anticipate there could be additional extension study updates before initiating the Phase 3 trial?.

So we will continue to report updates throughout 2018 at scientific conferences. Those updates will be largely from this point on focused on safety data as the boys are now several years into this trial. And so you know expect to hear updates at some of the relevant upcoming scientific conferences..

Thank you. At this time I would like to turn the call back over to Jill..

Thank you, Bruce. We're excited about the strong and consistent edasalonexent data after more than a year of treatment and are looking forward to initiating the Phase 3 trial as we move edasalonexent towards registration. We are dedicated to improving the lives of patients affected by rare disease and their families.

We believe that edasalonexent represents an important and differentiated opportunity to treat Duchenne. 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. 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 thanks for your participation in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day..