Good day ladies and gentlemen and welcome to the Q2 2019 Catabasis Pharmaceuticals Inc. 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 be given at that time.

If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. I would now like to turn the call over to Andrew Matthews, Vice President, Corporate Affairs. Ma’am, you may begin..

Thank you Sydney. Welcome to today’s Catabasis Pharmaceuticals conference call where we will provide a corporate update and review our second quarter 2019 financial results.

With me today are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer;’ Andrew Nichols, Chief Scientific Officer; and Noah Clauser, Vice President of Finance.

We issued a press release this morning summarizing our corporate update and our Q2 2019 financial results, which we will reference on today’s call and is available on our website. We are also using slides during today’s call that are available within the Events and Presentations section in the Investors part of our website.

I would like to note that during today’s call, as mentioned on Slide 2, we will be making 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 discussed in our most recent quarterly report on Form 10-Q, which we filed this morning 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, who will provide our corporate update.

Joanne will provide an update on our two ongoing clinical trials with Edsalonexent, the Phase III PolarisDMD trial, and the open label extension GalaxyDMD trial. Andy will share recent preclinical data, and Noah will follow with the financial update. Jill will then wrap things up.

Jill?.

Thank you Andrea. Good morning everyone and thank you for joining us for today’s call. Today we will provide an update on our progress with our lead program, Edsalonexent in Duchenne muscular dystrophy, as well as recent corporate events.

I’ll start with Edsalonexent on Slide 3, which we believe has the potential to be a foundational therapy for all those affected by Duchenne. The loss of dystrophin in Duchenne leads to chronic activation of NF-kappaB, which is a key driver of skeletal and cardiac muscle disease progression.

Edsalonexent was designed to inhibit NF-kappaB for the potential for broad applicability and benefits. We believe Edsalonexent has the potential to benefit all patients regardless of mutation and throughout their lifetime as a monotherapy, as well as potentially co-administered with dystrophic-targeted therapies.

Based on our clinical and preclinical data, as well as the mechanism of action inhibiting NF-kappaB, we believe that Edsalonexent has the potential to improve skeletal muscle, cardiac and diaphragm function, and also bone health. Andy will share today recent preclinical data supporting the potential of Edsalonexent to preserve bone health.

The importance of broad benefits in Duchenne was reinforced recently in blinded qualitative research studies with physicians, caregivers and patient advocacy representatives.

A key observation from the research was that members of the Duchenne community prioritize treatments that can go beyond skeletal muscle and positively impact additional important aspect of Duchenne, including cardiac and pulmonary effects. Participants also shared their hope that treatments will provide durable benefits and improve quality of life.

Additionally, physicians predict that the majority of boys will receive combination therapy for the treatment of Duchenne within the next few years.

We believe that Edsalonexent can address these needs due to its broad potential to improve multiple areas of health impacted by Duchenne, to be co-administered with dystrophin-targeted therapies, and to benefit all affected by Duchenne. Importantly. Edsalonexent is not a steroid and has been very well tolerated to date.

Turning to our clinical activities on Slide 4, we are thrilled with all of the progress in our Phase III PolarisDMD trial. All 40 clinical trial sites across eight countries have opened for enrolment. Many boys are receiving study drug and sites have made excellent progress with scheduling the last remaining screening visits.

The final patients are being scheduled and we expect the remaining screening visits will be completed next month in September. Based on our current projections and as we mentioned previously, we expect to have top line results from the study in the second half of 2020.

The clinical data along with our ongoing efforts in CMC and non-clinical are intended to support an application for commercial registration of Edsalonexent in early 2021. Our next key milestone that we plan to announce is completion of enrollment in the Phase III trial.

We look forward to sharing baseline information from our Phase III PolarisDMD trial and additional Edsalonexent data at upcoming scientific conferences. In addition to our clinical activities, we are laying a strong foundation for the next phase of the company with the enhancement of our board or directors and commercialization preparations.

I am very pleased to share that we added a new member to our board of directors, Hugh Cole. Hugh brings extensive business development and commercial strategy experience and complements the collective skills of our board members.

With the addition of Hugh, we have added three new directors to our board this year which has enabled the evolution of the board to set us up for success as we prepare to become a commercial rare disease company.

We are executing on our strategy to bring Edsalonexent to patients with our Phase III trial and commercialization development planning is underway for what we believe represents a significant commercial opportunity for Catabasis.

We have full global commercialization rights for Edsalonexent and have been formulating a comprehensive product strategy informed by robust market research and insight gathering.

Among our key priorities is to characterize the benefits of Edsalonexent and its potential impact for patients, physicians and payors as well as to prepare the market for its introduction. Next, our CMO Joanne will provide an update on our ongoing clinical trials.

Joanne?.

Thank you Jill, and good morning everyone. At the Parent Project Muscular Dystrophy Annual Conference this summer, we had the opportunity to share an update on our Edsalonexent Phase III PolarisDMD trial in Duchenne. I’m extremely pleased that all 40 clinical trial sites across eight countries have opened for enrollment, as shown on Slide 5.

We are very appreciative of the dedicated site staff that are making excellent progress with the Phase III trial as well as the sustained high interest from the Duchenne community. The sites are rapidly enrolling the remaining patients for the trial and at this point there is limited remaining space in the U.S., Canada and Australia.

The sites in the U.K., Ireland, Sweden, Germany and Israel are all at capacity and no longer able to accept additional patients for the trial. The final patients are being scheduled and the remaining screening visits are expected to be completed next month in September. A quick reminder of the trial design on Slide 6.

PolarisDMD is a randomized double-blind placebo-controlled trial in which we are planning to enroll about 125 boys. As we did in our Phase II MoveDMD trial, the Phase III trial is enrolling boys aged 4 to 7 up to their 8th birthday.

We believe that given the mechanism of action for Edsalonexent, the earlier we intervene the greater opportunity for benefit for these boys. The Phase III study includes boys regardless of mutation type who have not taken steroids for the past six months.

The randomization is two to one, such that for every two boys that receive 100 milligrams per kilogram of edasa, one boy receives placebo. The primary efficacy endpoint is change in the North Star Ambulatory Assessment score after 12 months of treatment with edasa compared to placebo.

North Star was chosen as the primary endpoint because it’s age appropriate for the boys in this trial as well as supported by regulatory authorities. Key secondary endpoints include the time function test, time to stand, forced air climb, and 10 meter walk-run.

Turning to Slide 7, here’s an outline of the patient experience for the Phase III PolarisDMD trial. Starting on the left-hand side, after screening for PolarisDMD, patients are randomized within 28 days to study drug and baseline assessments are performed.

After beginning study drug, clinical trial visits occur every three months, as you can see here with the yellow circle. We recently launched a new open label extension trial called GalaxyDMD, shown on the right.

Our primary objective with GalaxyDMD is to collect long-term safety data, and we also are monitoring assessments of muscle function as well as bone health. Based on the excellent tolerability observed to date with Edsalonexent, GalaxyDMD has a streamlined visit schedule with visits every six months, as you can see on the right.

When boys in the Phase III PolarisDMD trial complete the 12-month placebo controlled study, they as well as their eligible siblings will have the opportunity to participate in GalaxyDMD and receive edasa.

We recognize the importance of co-administering therapies in the evolving Duchenne treatment landscape, therefore co-administration with EXONDYS 51 is permitted in the GalaxyDMD trial and we intend to allow co-administration of additional approved exon-skipping therapies going forward.

The GalaxyDMD trial has already enrolled the remaining participating boys and their eligible brothers from the MoveDMD open label extension. We were urged by families with sons in the MoveDMD trial to also provide edasa for their other sons affected by Duchenne, and therefore are also enrolling eligible brothers.

The MoveDMD trial originally initiated in 2015 is now wrapping up, and we expect the transition of boys from MoveDMD to the GalaxyDMD trial to conclude this month. An important area that Jill mentioned is bone health in Duchenne.

As Slide 8 highlights, there’s growing evidence that bone health is negatively impacted in Duchenne, both bone growth as well as bone strength in terms of fractures. At birth, boys affected by Duchenne are average length; however, over time they grow and their height falls behind their unaffected peers.

Important data were published in JAMA Neurology recently about bone health in Duchenne. The researchers studied fracture burden and growth delay in a large cohort of boys affected by Duchenne in the U.K.

and found that these boys are at higher risk for fractures than boys that are not affected and their risk is further increased with prednisone or deflazacort treatment, as shown in the bar chart. The probability of the first symptomatic bone fracture was 50% by age 11.

This research shows how Duchenne and current treatment negatively impacts bone health. The consequences of a fracture for boys with Duchenne can be severe, sometimes precipitating loss of ambulation, and can be associated with fatal complications such as fat emboli.

This research highlights the need for therapies that can preserve bone health and why we have included bone health assessments in our Phase III PolarisDMD trial. I’ll now pass the call over to Andy Nichols, our CSO, to share the encouraging recent preclinical edasa bone preservation data.

Andy?.

Thank you Joanne. We continue to learn more about the potential of Edsalonexent to impact multiple organ systems affected by Duchenne, including potential effects on bone health.

Bone is a dynamic organ with coordinated bone formation mediated by osteoblasts and bone resorption mediated by osteoclasts, which allows for growth and repair while maintaining appropriate biomechanical strength.

Turning to Slide 9, this diagram shows the mechanisms by which activated NF-kappaB can play a role in regulating the function of both osteoblasts and osteoclasts, which causes an imbalance of bone formation and resorption leading to a loss of bone strength and reduced bone growth.

By inhibiting NF-kappaB, Edsalonexent has the potential to inhibit inflammation associated bone loss. The shorter stature seen in boys with Duchenne as well as the increased fracture risk that Joanne reviewed is consistent with the activation of NF-kappaB that is seen in boys with Duchenne shortly after birth.

Inhibiting NF-kappaB with Edsalonexent has the potential to preserve bone health with longer and stronger bones in Duchenne. In contrast, corticosteroids are known to negative impact bone health in Duchenne, as Joanne discussed.

We are generating data with Edsalonexent regarding bone health in our Phase III trial and we are also investigating bone health preclinically in the mdx mouse model of Duchenne. On Slide 10, we can see the data that were presented earlier this summer in June at the symposium on muscle bone and direction in DMD.

In this study in the mdx mouse model of DMD, six month treatment with Prednisolone at a clinically relevant dose led to shorter femurs with reduced cortical density and thickness. The effects of Prednisolone, while modest, impact bone fragility and resulted in reduced biomechanical strength of the femur.

In contrast, Edsalonexent treatment at a clinically relevant dose preserved femur length, cortical density and thickness, and this resulted in maintenance in biomechanical strength.

In the MoveDMD trial, we saw that boys on Edsalonexent grew in height by an average of more than two inches per year, which is age appropriate for boys not affected by Duchenne.

We believe that providing those affected by Duchenne with a therapy that can preserve bone health could reduce the burden of fractures and provide an opportunity for vertical growth. I will now pass the call over to Noah Clauser, our Vice President of Finance to share our financial update.

Noah?.

Thanks Andy and good morning everyone Turning to our financials, our second quarter 2019 press release and 10-Q provide the details, so I will provide a brief summary. As of June 30, 2019, we had $46.1 million of cash, cash equivalents and short term investments.

Based on our current operating plan, we expect that we have sufficient capital to fund operations beyond the top line Phase III results and through 2020. In the second quarter of 2019, our net cash used in operating activities was $5.7 million. Our R&D expense was $5.2 million in Q2 2019 compared to $4.2 million in Q2 2018.

Our G&A expense was $2.2 million in the second quarter of 2019 compared to $2.4 million in the second quarter of 2018. Our operating loss was $7.3 million in Q2 2019 compared to $6.6 million in Q2 2018. Our net loss was $7.1 million or $0.62 per share in Q2. For the second quarter, we had weighted average common shares outstanding of $11.5 million.

Additional financial information is available in our 10-Q, which we filed with the SEC earlier today. I will now pass the call back over to Jill..

Thank you Noah. We believe that Edsalonexent offers a compelling potential opportunity to provide benefits on skeletal muscle, cardiac and diaphragm function, as well as bone health. We know that this is what the Duchenne community is looking for in a new therapy.

We believe Edsalonexent has the potential to benefit all patients regardless of mutation and throughout their lifetime as a monotherapy, as well as potentially co-administered with dystrophin-targeted therapies.

I want to say thank you to the Duchenne community, the teams at the clinical trial sites, and our Catabasis team for excellent progress with the Phase III trial as well as the recent launch of our open label extension GalaxyDMD trial.

We are excited by the Phase III clinical progress, commercialization preparations and enhancement of our board of directors as we lay the foundation for the next phase in which Catabasis becomes a commercial rare disease company. With that, I’ll ask Sydney to open up the call for your questions.

Sydney, can you please repeat the instructions and poll for questions? Thank you..

[Operator instructions] Our first question comes from Hartaj Singh with Oppenheimer. Your line is open..

Great, thank you for the question. I have a couple of questions. One is just around the bone health. I think you had mentioned that you will be collecting data on bone health from the Phase III. Can you just talk a little bit about that, and then I just had some questions on Polaris for that also, Jill and Joanne. Thank you..

Great, thanks Hartaj. I’ll hand it over to Joanne to address that. .

We have been working with experts to figure out what the best measurements to include are, and we are using DXA to look at bone density as well as lateral spine films to look at vertebral fractures.

We know those are common, these can occur even for example within six months of starting steroids, and so we will be able to look at them not only now but have the potential to look at those in the future as well..

Great Joanne.

Joanne, I don’t know if these are part of the secondaries, but assuming that Polaris is successful and this is filed, could this be something that’s part of the label or does this become more of a talking point around--you know, when you’re educating patients and physicians around the benefits of the drug?.

I think that the--actually, I should have also said that we’re measuring growth, so this is an important part of the clinical overall profile of edasa in terms of the side effect profile and the absence of side effects that are associated with the standard of care as well.

Whether that goes into the label or whether it goes into the publications and a better understanding of the effects of edasa is yet to be seen..

Fantastic. The other question I had was on Slide 7--actually, let me just take a step back. It seems that you’ve got your North American centers and Australia.

How much of that is the competition from all the other trials that are going on in a similar age group, 4 to 7 or 5 to 11, whether it’s gene therapy or exon skipping, is that’s what’s primarily why you’ve got the sites in North America and Australia still open, whereas the rest of the world seems to be comfortably closed?.

That’s a great question. I don’t think it’s that. I think it’s the--certainly the demand that we’ve seen in those countries, and we clearly have more sites open in the U.S. than we do in other countries. I would Australia came on a little later. We focused initially on getting all of the U.S.

sites because the vast majority of sites are in the United States and then Australia, so hence why we’re just completing the last patients there. In terms of the European sites, there was a robust demand there and looking at it now, we perhaps could have opened additional sites in Europe to meet that demand. .

Great, thank you Jill. Then Jill, the question I was going to ask between the screening and the baseline visit, what’s the difference between the two? Is the screening an actual visit versus baseline? If you can just explain that 28-day period between the screening and baseline..

Yes, for sure. I’m going to let Joanne handle that. .

It’s up to 28 days, so the boys come in and they sign consents, they go through basic assessments to ensure that they are appropriate for the study, have no other conditions, have genetic confirmation, and can do the assessments, and then they come back, which could be a few days, it could be up to 28 days, and then have the formal baseline assessments for the study.

.

Great Joanne.

Is there a preset--you know, your expectation of how many patients would be screening failures, or is that something that you’ll present in future medical conferences as you’re talking about the baseline data?.

Yes, we will present that, but I will tell you that the screening failure rate has been very low in this age group, so it’s been good..

Fantastic. My last question is can you just give a little bit more color on the exon skipping agents? What percentage were you expecting in the study, what are you seeing in terms of patients that are already on those therapies? Just any thoughts there and again thank you for allowing my questions..

Yes, so right now the only exon skipping agent that is included is Eteplirsen, of course, because that’s the only one approved as of right now.

If we look at the patient population that’s eligible for Eteplirsen, that’s about 13% of the boys, so we would expect certainly no more than that, and so we do have boys who are on Eteplirsen in the trial now. Once we have all of the boys in, certainly as we present the baseline data, we’ll give an overview of that as well.

Our intention is as other exon skipping agents are approved, our plan is to amend the protocol for the Galaxy open label extension trial to allow boys who are on a stable dose of those exon skipping agents to co-dose with Edsalonexent.

We think that’s an important part of our development of Edsalonexent to explore--certainly to establish the safety of the combination, and we do think there’s the potential for edasa to enhance the efficacy of those agents based on the mechanism of NF-kappaB controlling dystrophin expression..

Exon skipping agents are one of the stratifications, right, of the trial for the primary and the secondary read-outs? I believe there were two..

That is correct. We will stratify based on use of Eteplirsen..

Great. Thank you so much for my questions..

Thanks Hartaj..

Thank you. Our next question comes from the line of Joel Beatty with Citi. Your line is open..

Great, thanks for taking my questions. The first one is at the PPMD conference earlier this summer, I heard a lot of patients and their families express concern with the side effects of steroids, with some even calling being on steroids like living with another disease.

You’ve provided a great overview on this call about the measures of bone health that you’re looking at, and that seems to be one differentiation with steroids.

My question is in the Phase III trial, are there other side effect measures that you’re keeping track of that could help differentiate Edsalonexent from steroids on safety?.

Yes, thanks for the question, Joel. I’ll let Joanne address that, and absolutely a lot of the safety parameters that we’re looking at will give us a good set of data to compare what Edsalonexent does in these young boys compared to steroids.

Joanne?.

In addition to growth, which reflects bone health, and fractures and bone density, we’re also looking at weight. We know that with steroids, there is significant weight gain in the first year.

What we have seen, the boys actually grow age appropriately in the MoveDMD trial in terms of weight, in terms of BMI, and so that is something that we will be looking at. We are also--some of the other side effects of steroids that you see in this age group are things like behavioral and Cushingoid features.

Those of course would be captured in a side effect profile as well.

Those are the main things What you also hear from the parents is also the time course where you see the effects grow, and I think that’s a lot of what they are seeing when they even look around at a conference like that and they see the older boys that haven’t grown appropriately, that are not necessarily developing in terms of puberty.

That is something that they are very concerned about in terms of quality of life.

We have seen initial indicators or improved cardiac in the preclinical study, and then we saw in the MoveDMD study a decrease in heart rate to age appropriate levels from the elevated--from the relative tachycardia that one sees in Duchenne, so that’s something that we are working with cardiac experts to understand better and to also measure the ambulatory EKG monitoring to understand that better in the Polaris study and look at heart rate, heart rate variability, parameters that we know are abnormal in Duchenne.

.

Got it, that makes sense. Could you discuss any work that you’ve done on the potential to expand into vectors for clinical development? I imagine that if the Phase III trial in DMD is successful, there’s other diseases that it could make sense to use Edsalonexent in as well..

Yes, that’s for certain. Clearly Becker muscular dystrophy is one of the obvious areas for studying the potential benefits of Edsalonexent because of the shared mechanisms at play there.

What we’ve done to begin to support our ability to go into that population is we’ve done preclinical work that we’ve talked about publicly previously and presented, establishing that Edsalonexent treatment could enhance dystrophin expression, and that certainly is something that we believe gives us at least proof of concept for the ability of Edsalonexent in perhaps Becker patients, some of whom express low levels of dystrophin, to perhaps enhance the amount of dystrophin that’s expressed.

We have also--our preclinical data both the mdx mouse as well as the GRMD dog, while those models lack dystrophin, we’ve been able to show functional benefits along with the data that we’ve generated in the clinic in the MoveDMD trial also supports the potential.

So what we’ve been doing internally and in speaking with KOLs is to vet what the best pilot study looks like in the Becker population, so that’s work that’s ongoing and certainly an area that we hope to expand into. Of course there are other related muscular dystrophies as well where Edsalonexent may have potential..

Great, thank you..

Thank you. I’m not showing any further questions at this time. I would now like to turn the call back to Jill Milne for closing remarks..

Thank you Sydney. Thank you all for joining our call this morning and for your continued support of Catabasis. We will keep you updated as we execute on our Phase III PolarisDMD trial for Edsalonexent and share other areas of progress. We look forward to speaking with you again soon.

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 and you may all disconnect. Everyone have a great day..