Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2019 Catabasis Pharmaceuticals, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

[Operator Instructions] I would now like to hand the conference over to your speaker today, Andrea Matthews, Vice President, Corporate Affairs. Please go ahead ma'am..

Thank you, Josh. Welcome to today's Catabasis Pharmaceuticals conference call, where we will provide a corporate update and review our fourth quarter and full year 2019 financial results.

With me today are Jill Milne, Chief Executive Officer; Joanne Donovan, Chief Medical Officer; Andrew Komjathy, Chief Commercial 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 Q4 and full year 2019 financial results, which we will reference on today's call, and 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 discussed in our most recent annual report on Form 10-K, 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 edasalonexent, the Phase 3 PolarisDMD and the open-label extension GalaxyDMD trial. Andrew, will review the potential market opportunity for edasalonexent in Duchenne and Andy will share an update on our pre-clinical work.

Noah, will provide financial summary and we'll open for questions.

Jill?.

Thank you, Andrea. Good morning everyone and thank you for joining us for today's call. We made excellent progress Catabasis with our edasalonexent program in 2019. We believe that our product candidate edasalonexent can be a foundational therapy for all patients affected by Duchenne muscular dystrophy.

We are looking forward to the results from the Phase 3 PolarisDMD trial this year. The Phase 3 PolarisDMD trial in Duchenne is fully enrolled and we are preparing for top line Phase 3 results in the fourth quarter of this year and a subsequent NDA filing in 2021.

We have commercialization and supply chain preparations underway and recently strengthened our financial position based on our current operating plan we expect to be able to fund operations through a potential NDA filing and into Q3 2021.

For those that are less familiar with Catabasis, we are taking a different approach to treating Duchenne than other development programs. Edasalonexent was designed to inhibit NF-kB a mechanism with the potential to benefit all patients with Duchenne and therefore is not limited to patients with specific mutations.

It is important to remember that in Duchenne, the absence of the dystrophin protein is necessary, but not sufficient to drive disease progression, typically young boys with Duchenne are not symptomatic in their first couple of years.

However, without dystrophin mechanical stress from everyday activities like running chronically activates NF-kB , which leads to progressive deterioration of skeletal muscle. Importantly the chronic activation of NF-kB is also a critical component of cardiac disease and a factor in bone health in Duchenne.

By inhibiting NF-kB we believe edasalonexent can have broad therapeutic effects and benefit all patients with Duchenne regardless of mutation both as a monotherapy as well as in combination with dystrophin targeted therapies.

Based on our clinical data and the mechanism of action, edasalonexent has the potential to benefit skeletal muscle including the diaphragm, cardiac function and also bone health.

We believe that a recent analysis of the baseline characteristics of the patients enrolled in the Phase 3 trial supports the assumptions on which the Phase 3 trial was powered.

The analysis compared the baseline characteristics of the patients enrolled in our Phase 3 trial to the patients enrolled in our previous Phase 2 MoveDMD trial and sound overall similar characteristics in the patient populations in the two trials.

Joanne will talk more about this shortly and will also be presenting the baseline characteristics at the upcoming 2020 MDA Clinical and Scientific Conference later this month. We are also working in multiple areas to maximize the potential of edasalonexent both in Duchenne as well as in additional neuromuscular diseases.

We are excited to have entered into a partnership with the leading European patient advocacy organization Duchenne UK to explore edasalonexent in non-ambulatory patients with Duchenne.

We see this as important for the future both in terms of the needs of this patient population as well as to generate data in older boys and men to improve future access. We see edasalonexent as an attractive commercial opportunity in Duchenne and Andrew will elaborate on this.

We have also made great progress in the pre-clinical research on the potential benefits of edasalonexent in Duchenne and additional neuromuscular diseases as Andy will review today.

Before we move to our clinical and other updates, I want to note that going forward, we are going to reserve conference calls for clinical data and significant events and are not planning to host regular quarterly earnings calls. We will continue our frequent communication practices and remain available for questions.

With that, I'll turn the call over to Joanne to provide an update on our ongoing clinical trials and upcoming plans.

Joanne?.

Thank you, Jill, and good morning everyone. Our fully-enrolled Phase 3 PolarisDMD trial edasalonexent is progressing well. In less than a year we enrolled 131 boys affected by Duchenne in eight countries across the world. Due to strong interest from physicians and Duchenne families, as well as support from patient advocacy organizations.

Thank you to everyone who is making this global Phase 3 trial possible, including all participating families and the clinical trial site staff. As you likely recall the Phase 3 PolarisDMD trial is a randomized double blind placebo-controlled trial with 2 to 1 randomization.

The primary efficacy endpoint is the change in the North Star Ambulatory Assessment score after 12 months of treatment with edasalonexent compared to placebo. North Star was chosen as the primary endpoint with support from regulatory authorities.

Key secondary endpoints include the timed function tests, 10-meter walk/run, time to stand and 4-stair climb and additional assessments include growth cardiac and bone measures as well as patient reported outcomes.

We expect top line results from the Phase 3 PolarisDMD trial in the fourth quarter of this year and the trial is anticipated to support an NDA filing next year.

As Jill mentioned following the completion of enrollment, we conducted an analysis of the baseline age and functional test performance of the patients enrolled in the Phase 3 trial, as compared to the patients enrolled in the previous Phase 2 MoveDMD trial and found no significant differences in the baseline characteristics of the patient populations in the two trials.

We believe that these findings support the assumptions on which we powered the Phase 3 trial. The patient population in both trials is also similar to publish natural history studies of boys in this age range that are not on steroids.

To summarize the patient populations, both trials enrolled boys age 4 to 7 up to their 8th birthday, with any mutation type who had not been on steroids for the previous six months. The Phase 3 trial enrolled the 131 boys at 37 sites in the United States, Canada, Europe, Israel and Australia. And 98% had never been on steroids.

All 31 boys that enrolled in the Phase 2 trial were enrolled in the United States and has never been on steroids. We will be sharing more information on the Phase 3 baseline characteristics, as well as the reproducibility of North Star in this patient population at upcoming scientific conferences.

Our open-label extension trial GalaxyDMD, embodies our ongoing commitment to the Duchenne community. Our primary objective with this trial is to collect long-term safety data. And we're also monitoring assessments of muscle function as well as bone health. Clinic visits and assessments are conducted every six months for this trial.

Boys who have completed treatment in the Phase 3 PolarisDMD trial has enrolled in the GalaxyDMD trial in their eligible siblings up to age 12 have the option to enroll as well. We've seen an excellent rate of enrollment in GalaxyDMD from the Phase 3 trial and all boys are receiving open label edasalonexent.

Boys in the GalaxyDMD trials that are amenable are also able to initiate co-administration of approved exon skipping therapies. Earlier this year, we were thrilled to announce our partnership with the patient advocacy organization Duchenne UK, to evaluate Edasalonexent in a Phase 2 trial in non-ambulatory patients with Duchenne.

We recognize the need for a well-tolerated treatment for all patient populations that has the potential to slow disease progression and to preserve muscle function by benefiting both skeletal muscle as well as cardiac function. Duchenne UK granted us over $600,000 in funding to support patient and clinical trial site costs.

We are incredibly fortunate to have the opportunity to partner with Duchenne in UK for this important work and appreciate their deep commitment as we work together to bring treatment options to all patients.

This Phase 2 trial is planned to assess safety, pharmacokinetics, and exploratory measures including cardiac, skeletal muscle and pulmonary function in non-ambulatory Duchenne patients. The Phase 2 trial is designed to be a one-year randomized double-blind, placebo-controlled trial in non-ambulatory boys and men affected by Duchenne.

We are working on the final clinical trial design with investigators and look forward to sharing more details about the trial plans in the coming months. I'll now pass the call over to Andrew to discuss the potential commercial opportunity with edasalonexent in Duchenne.

Andrew?.

Thank you, Joanne and I'm happy to share my perspective on what we believe is a very attractive commercial opportunity for edasalonexent in Duchenne. Edasalonexent has the potential to provide clinical benefit broadly and serve as the foundational treatment for all Duchenne patients from the time of diagnosis onward regardless of mutation type.

There remains a high unmet need in Duchenne, with an estimated 15,000 boys and men living with Duchenne in the US today and approximately 19,000 in the Europe, with very few approved therapies, most of which are non-amenable to the whole patient population and with no cure available.

Unlike most rare diseases, Duchenne is an attractive commercial opportunity due to the fact that most patients have already been identified and diagnosed and that the majority of patients in both the US and EU are treated at highly concentrated sets of clinical treatment centers, which can be supported by a focused sales force and medical affairs team.

In order to better understand the substantial unmet need in Duchenne, we conducted primary blinded market research with US and EU providers and payers, which confirmed their high interest in a product like edasalonexent.

The most encouraging signal was it the vast majority of physicians participating in the research indicated strong interest in using edasalonexent based on the efficacy and safety profile available at the time of research. Both providers and payers, like the Phase 3 design and the endpoints.

Additionally, the payers interviewed agreed that edasalonexent potential clinical benefit would justify innovated orphan drug pricing in Duchenne. Overall, we were very pleased and encouraged by the responses and feedback in both the US and the EU.

We also see the planned Phase 2 non-ambulatory trial in partnership with Duchenne UK, as providing important data for future market -- providing important data for future market access. Given that approximately 60% of those affected by Duchenne are non-ambulatory and very under served by current approaches.

We also performed market research with patient advocates, parents and caregivers and they were also enthusiastic about the prospect of edasalonexent as a treatment for Duchenne.

The Duchenne community is eager to embrace edasalonexent, should it be approved by regulators and we look forward to working with the community as we prepare for the potential commercialization of edasalonexent. Our commercial plans are underway and as stated previously, we plan to commercialize edasalonexent ourselves in the US first.

We see edasalonexent having global potential as a therapy and are evaluating our commercialization strategy outside the US. We look forward to updating you on the overall plans in the coming months. Next, Andy Nichols will share updates from our research collaborations.

Andy?.

Thank you, Andrew. Our research program has been focused on establishing the potential for broad therapeutic benefits of edasalonexent in Duchenne and the potential for benefits in other neuromuscular diseases. We've had great progress in our pre-clinical research programs recently. One of our collaborators is Dr.

Pradeep Mammen, the founder and Medical Director of the Neuromuscular Cardiomyopathy Clinic at UT Southwestern as well as co-Director of the NIH sponsored UT Southwestern Wellstone Muscular Dystrophy Cooperative Research Center.

The mission of this center is to rapidly translate discoveries at the bench into therapies for Duchenne and Becker in the clinic. Our collaboration was designed to explore the potential of edasalonexent to reduce cardiac fibrosis and improve cardiac function in Duchenne and Becker muscular dystrophies.

Our collaboration has been very successful and we will be showing exciting results from this work at the end of the month at the 2020 MDA Clinical and Scientific Conference in Orlando.

We are also pleased with the progress collaboration with the Jain Foundation in dysferlinopathy, which includes limb-girdle muscular dystrophy type 2B and Miyoshi myopathy. The initial pre-clinical data with edasalonexent in the mouse model of dysferlinopathy are encouraging and we are continuing the study.

We plan to present these results at a future scientific conference. In addition to our work to establish the potential for broad benefits of edasalonexent, we are on track in our preparations for an NDA filing for edasalonexent in 2021 and establishing our commercial supply chain.

I will now pass the call over to Noah Clauser to share our financial update.

Noah?.

Thanks, Andy, and good morning everyone. Turning to our financials. Our fourth quarter and full year 2019 press release and 10-K provide the details. So, I will provide a brief summary. As of December 31, 2019, we had $36.2 million of cash, cash equivalents and short-term investments.

Following December 31, 2019, we raised an additional $25.6 million in net proceeds from equity financing. Based on our current operating plan, we expect to be able to fund operations through a potential NDA filing and into Q3 2021.

Our net cash used in operating activities was $7.8 million for the fourth quarter of 2019 and $26.6 million for the full year 2019. Our R&D expense was $4.3 million in Q4 2019 and $18.3 million for the full year 2019, compared to $3.7 million in Q4 2018 and $17 million for the full year 2018.

Our G&A expense was $2.5 million in the fourth quarter of 2019 and $8.8 million for the full year 2019, compared to $2.4 million in the fourth quarter of 2018 and $9.3 million for the full year 2018. Our operating loss was $6.7 million In Q4, 2019, an increase [ph] of $0.6 million versus Q4 2018.

Our net loss was $6.6 million or $0.55 per share in Q4, an increase of $0.5 million compared to our net loss in Q4 2018. Net loss for the full year 2019 was $26.3 million compared to $25.9 million for the full year 2018. For the fourth quarter we had weighted average common shares outstanding of 12.4 million.

Looking forward, we expect our quarterly net losses to be higher than Q4 2019. We anticipate net losses to increase over the course of 2020, due to the ongoing Phase 3 PolarisDMD trial, the increasing number of patients in the GalaxyDMD trial and additional activities to support a potential NDA submission and our commercial preparations.

I will now turn the call over to Josh to open for questions..

Thank you. [Operator Instructions] Our first question comes from Liana Moussatos with Wedbush Securities. You may proceed with your question..

Congratulations on all your progress and for taking my questions.

About how many of the 131 PolarisDMD boys are now in Galaxy?.

Hi Liana, this is Jill. That's a good question. So we are obviously announcing -- we had announced completion of enrollment in the Polaris Phase 3 trial back in September of 2019. And then of course had boys accrued over the previous -- approximately one year.

And so we haven't -- that number is changing as you might imagine on a very regular basis, on a weekly basis, and so we don't have an exact number, I believe at the moment to share.

Joanne, do you want to add anything to how Galaxy is running?.

We had a good rate of enrollment in Galaxy coming out from Polaris. And we are moving along, but we certainly had a good enrollment through the second quarter and third quarter of last year..

Would you say about half the patients are in Galaxy now, less or more than half?.

It is just that the number is changing. So I'd rather not say a number, because I don't have it at my fingertips..

And it is actively in the ramp-up phase as you might imagine..

Okay.

And my next question, if you're medical conferences that you want to present data at are canceled because of coronavirus; what's the backup plan of getting the data out there?.

That is a great question. And as you can imagine, one, that we have been discussing on a very regular basis internally at Catabasis because this is a season with multiple scientific conferences where we do intend to be presenting updates.

And so, I don't have definite answer for you now but we are actively considering that and trying to identify the best way forward to make sure that we can release updates on the data..

And my last question is, is there -- have -- at your trial site have any of the healthcare professionals or patients been infected with coronavirus or is there any kind of new procedures to take care of them?.

So, we are -- as you would imagine, we're actively monitoring the Corona virus situation and we do have plans in place to address any potential disruptions. I'll let Joanne address the question of whether to our knowledge there are any patients infected or investigators..

We don't. We're not aware of any one close to the trial. I think that one of the things to remember is that the patients come in every three months; so that -- if we are -- have a bit more flexibility than some trials do, and that's because of the safety profile we've seen to date..

Thank you very much..

Thanks, Liana..

Thank you. Our next question comes from Hartaj Singh with Oppenheimer. You may proceed with your question..

Great. Everyone, thank you for the questions. And like Liana, I congratulate you on your process -- sorry, on your progress, and process. So, just a couple of questions. So thinking ahead, one is, you've indicated that you're moving forward the initial commercialization and supply chain prep.

Can you just talk a little bit about what that is; will you be using a CMO? Will you manufacturer the commercial drug or supply yourself? Where are you between the clinical-to-commercial, you know, CMC, kind of tech transfer process; are you already their commercial? Can you just talk a little bit about that? And I just have a couple of follow up questions..

So we have not actually disclosed and discussed our supply chain plans and plans for commercialization.

But as you know, we actually do not have any physical capabilities of manufacturing ourselves and like most companies, we use third-party providers to produce and distribute clinical supply material and we'll also be doing that with our commercial material..

Great. Fantastic.

Then just in terms of -- when you are looking forward to filing the NDA, I know that part of the NDA, some long-term animal tox studies that are ongoing, even after the IND is filed and the preclinical work is done; is all of that complete or closing -- close to completion? Just how are you progressing in that regards?.

So we are progressing very well with all the non-clinical toxicology programs that are required for filing an NDA, and we do not see that as an issue at all..

Great. Fantastic. And then just a question, you had mentioned that with your prior -- with your current primary research, there is a potential that the drug -- the drugs risk benefit profile could support orphan like pricing strategy.

And this is a question; you know, we're just asking more companies more frequently now because has ISR [ph] become I think important in the drug pricing firmament.

So any thoughts about approaching ISR [ph] and thinking about working with them prior to a launch?.

That's a great question and something that we have under consideration and we'll certainly elaborate on more as we get closer. We do feel it's a little early for us to be talking about pricing per se, but we do believe that edasalonexent has the potential to be a very valuable addition to the treatment paradigm in Duchenne..

And the only other thing I might add to is, that one of the other thing that we learned in the research in both, the US and EU is that the payers are still going to defer to the key opinion leaders on their advice and the risk benefit associated with products like edasalonexent.

So we're going to continue to maintain that dialog, not only with payers, but also with KOLs, both in the US and in Europe..

Great. Fantastic.

And then, just a couple -- just a follow-up on Liana's question which is -- let me ask you about Galaxy differently, which is that, what's the total number of patients that Galaxy is allowed to approve including the siblings of boys under the age of 12 etcetera?.

So, I believe that clinicaltrials.gov leads with approximately 140 patients and that is anticipated to encompass with flexibility because it's approximate, all of the patients in Polaris, a certain number of siblings, and we are aware of the siblings that are potential enrollees. So it would be everybody..

Great. And then, my last question is just a housekeeping question on just the burn.

I know you had indicated that the quarterly burn will increase going forward which makes sense, it seems you've got about a two-third, one-third split between R&D and G&A right now; do you expect that to change too over the next four to eight quarters? Just any color and thoughts there would help. And again, thank you for all the questions..

No is the short answer. I think that split that you described has been pretty consistent over our history and unlikely to change..

Great. Fantastic. Thank you so much..

Thanks, Hartaj..

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

Thank you, Josh. 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 3 PolarisDMD trial for edasalonexent 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..

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect..