Good morning ladies and gentlemen and welcome to the Chimerix Third Quarter 2019 Earnings Conference Call. I would now like to introduce you to your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix. Please proceed. .

Thank you operator. Good morning everyone and welcome to the Chimerix Third Quarter 2019 Financial and Operating Results Conference Call. This morning we issued a press release which outlines our third quarter 2019 financial results and an operational update.

You can access the press release by going to the Investors section of our website at www.chimerix.com. With me on today's call are President and Chief Executive Officer Mike Sherman; Chief Financial Officer and Business Officer, Mike Andriole; Chief Scientific Officer, Randall Lanier; and Chief Medical Officer, Garrett Nichols.

Before we begin I would like to remind you that the statements made on today's call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1955 and are subject to risks and uncertainties and other factors.

These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. You are cautioned not to rely on these forward-looking statements.

These risks and uncertainties are described in detail in Chimerix's filings with the Securities and Exchange Commission including the Form 10-Q filed earlier today, its most recently filed reports on Form 8-K and other documents subsequently filed with the Securities and Exchange Commission.

All forward-looking statements are based on information currently available with Chimerix and Chimerix assumes no obligation to update any forward-looking statements. With that I will now return the call over to Mike Sherman. Mike.

Thanks Michelle and good morning everyone and thanks for joining us. As I reflect on what the organization has accomplished in the six months since I joined, I am really pleased with the new track record of execution we're creating.

In that short time we've completed an objective assessment of all our activities and restructured the organization to maximize resources available to invest in those programs with the potential to have the biggest impact on the largest population of patients with the greatest need.

For the activities we stopped we've done that efficiently and compassionately as we've continued to support patient access to brincidofovir.

We've identified and acquired an exciting drug with the potential to fundamentally change the way AML patients are treated immediately following diagnosis, the point at which durable benefit is most meaningful and frankly elusive to patients.

For brincidofovir we've aligned with BARDA and the FDA on the remaining experiments to be performed prior to a pre-NDA meeting. We've even aligned on what we'll include in the NDA so that work is well underway. The final brincidofovir studies, those bridging studies are also underway and going well.

While the opportunities for brincidofovir outside of smallpox do not fit our strategy, we recognize that there may be value there for patients and shareholders so we identified a partner in SymBio who is already aggressively pursuing brincidofovir development in other viral indications.

So with two Phase 3 assets in hand we look forward to the next six to nine months with the same sense of urgency and commitment to disciplined execution we've demonstrated recently. This timeframe is rich with patient focused value driving catalysts.

For DSTAT we will meet with the FDA to align on our plans for a pivotal Phase 3 trial in first line AML and we expect to initiate that trial midyear next year. For brincidofovir we will meet with the FDA to discuss our planned NDA submission.

Success in that meeting sets the stage for a procurement process to add brincidofovir to the national stockpile as a countermeasure for smallpox. This is not only an important step for national security but can translate to hundreds of millions of dollars of non-dilutive funding for the company.

To be clear we're positioning our manufacturing plants to deliver up to $100 million worth of product to the stockpile before the end of 2021. So we're certainly planning and preparing for success. Before I hand it over to Garrett let me make a few more observations about the DSTAT program and AML.

I'm having a little déjà vu with prior experience in prostate cancer when following the approval of a handful of therapies five to seven years ago there was this perception that little opportunity remained in that indication.

However in that case despite the benefit provided by those therapies the disease would ultimately progress leaving a new void of options for patients. Physicians and investors have since recognized the enormous value that remains to first prevent and then treat metastatic prostate cancer.

AML presents a similar story with a flurry of approvals of targeted agents addressing niche populations of patients and then therapies for relapse and refractory disease. Perceptions among some are that the opportunity for new therapies is limited.

However a physician I spoke with recently reminded me that in AML there's nothing complete about a complete response. While some patients are responding to therapies these responses are typically short and five year survival rates in older patients remain less than 10%. We still have a lot of work to do for these patients.

While others are pursuing highly targeted mechanisms we believe that in an indication such as AML where there's a tremendous heterogeneity of disease even within a patient more durable responses and higher cure rates will require mechanisms that are multimodal.

And the best chance to apply that multimodal mechanism is in the first line of treatment where the intent is still curative.

What excites us about DSTAT mechanistically is that it targets multiple proteins that have been implicated in survival of leukemic blasts and leukemic stem cells and even mechanisms which delay hematologic recovery in these patients.

As Garrett will describe in more detail DSTAT improves the most important clinical parameters for patients, time without disease and overall survival. These are also important regulatory endpoints. No matter how we slice the randomized Phase 2 data for DSTAT the evidence of more durable responses persists.

Delivering that benefit into therapy that doesn't add materially to toxicity makes it's potential that much more attractive which of course is why we're eager to complete the planning for Phase 3 and get that trial enrolling.

With that let me turn the call over to Garrett to discuss the final Phase 2B results of these data and some updates on brincidofovir..

Thank you Mike and good morning to all of you. In October we presented final results from the recently completed Phase 2B randomized controlled trial of DSTAT in AML. The study evaluated DSTAT given as a 4 mg/kg intravenous bolus followed by either 0.125 or 0.25 mg/kg/hr continuous IV infusion for seven days.

These were in combination with standard 7+3 chemotherapy versus that 7+3 chemotherapy alone in 75 subjects greater than 60 years of age with newly diagnosed AML.

An analysis of the intent-to-treat or ITT population in this study indicated that patients receiving the high dose, 0.25 mg/kg/hr of DSTAT exhibited improved hazard ratios for event-free survival, overall survival and relapse free-survival when compared to control patients.

An analysis of subjects that meet the likely target inclusion criteria for the Phase 3 study, which will exclude patients with favorable cytogenetics or secondary AML also showed improved observed hazard ratios for DSTAT high dose versus control. With a median follow-up of 19.6 months the hazard for event free survival was 0.58.

Overall survival had a hazard ratio of 0.51 and the relapse free survival hazard ratio was 0.39 all improved for the high dose DSTAT arm versus control. These results suggest that durable responses were associated with the addition of DSTAT to set standard 7+3 therapy.

Combination treatment with 7+3 therapy and DSTAT did not show significant added toxicity at either dose. The most common serious adverse event in the DSTAT arm was febrile neutropenia. However there was no increase in the incidents of serious or non serious infectious events on the high dose DSTAT arm when compared to control.

DSTAT also showed no additive hematologic toxicity which is the case for virtually all other add on therapies that have been tried with 7+3 chemo. But rather showed signs of accelerating platelet and neutrophil recovery following chemotherapy. This may be consistent with its invitro activity against platelet factor 4.

We expect to initiate a Phase 3 clinical trial of DSTAT for the treatment of AML in mid 2020 subject to discussions with the FDA in early 2020.

On the smallpox front we are on the cusp of major milestones that build upon announcements that we made earlier this year regarding the statistically significant and clinically meaningful reduction in mortality in our GLP mouse pox and rabbit pox studies.

I've just returned from the 21st Annual Meeting of the Advisory Committee on Variola Virus Research which was held at the WHO from the 30th of October to the 1st of November in Geneva, Switzerland.

In this the 40th anniversary of the year that smallpox was eradicated worldwide the WHO recognized many significant achievements that have been made in antiviral and vaccine countermeasures.

However the WHO highlighted the need for at least one other antiviral with a different mechanism of action in order to facilitate therapy for treatment emergent resistance or more importantly for bio weapons that are engineered to have resistance to the currently available therapies.

Brincidofovir fits that need and is the only agent that we have delivered to the strategic national stockpile in the near-term with others very early in development and many years away. We are working diligently on the final reports to support approval and plan a pre-NDA meeting with the FDA in the first quarter of 2020.

In the meantime we continue to provide brincidofovir for treatment of serious orthopoxvirus infections via our expanded access program including cases that have occurred in the past few months.

Though uncontrolled these experiences may help us build the rationale for the licensor of brincidofovir and the inclusion of brincidofovir in the strategic national stockpile. I'll now turn the call over to Mike Andriole for a review of the financials..

Thanks Garrett and good morning everyone. Let me give you some highlights of the financial results we released this morning.

Starting with our balance sheet, at the end of the third quarter 2019 we remain well capitalized with $116.7 million of capital available to fund operations, no debt, and approximately 61.4 million shares of common stock outstanding.

The cash balance at the end of the third quarter reflects the upfront payment of $30 million we made to Cantex for the license to DSTAT but does not include the $5 million owed from SymBio which was classified as a receivable on September 30 due to the timing of the transaction.

The company reaffirms its previous guidance of approximately $110 million in cash and cash equivalents at the end of 2019. Turning to the statement of operations, the only unusual item to highlight is the acquired in process R&D expense of $65 million for the quarter which is related to the Cantex transaction.

This is mainly comprised of the $30 million up front -- we paid upfront and 34.9 million non-cash stock compensation expense related to the 10 million shares of common stock completed in the transaction.

Looking forward as I noted earlier in the year it has been our goal to meaningfully improve the underlying cash burn rate of the company following our Q2 restructuring investments. We've been successful in that effort and forecast an ex-DSTAT annualized cash burn rate just north of $20 million as we exit the year.

I'd like to finish today by reiterating our confidence in our new strategic direction. The significant progress we've made over the last several months has positioned us well for the balance of the year and beyond. We successfully transitioned our clinical pipeline to deliver a number of near-term value creating milestones.

As we look towards 2020 key inflection points we plan to reach include a meeting with U.S.

regulatory authorities to confirm a pivotal Phase 3 study protocol for DSTAT in first line AML, initiation of the DSTAT Phase 3 pivotal study midyear, submission of the marketing application for brincidofovir as a medical countermeasure for smallpox, and securing a procurement contract with BARDA to add brincidofovir to the U.S.

strategic national stockpile and in the process transitioning the company to a commercial stage biotech. With that operator we will now open the line for questions..

[Operator Instructions]. And our first question comes from Ed White with H.C. Wainwright. Please proceed with your question..

Hi guys, thanks for taking my question.

So just on DSTAT since the -- you're looking at the standard 7+3 chemotherapy in front line it appears that the study shouldn’t roll quickly, I'm just wanted to get your thoughts on I know you haven't talked to the FDA yet but your thoughts on perhaps the number of patients that you'd need for an FDA submission and what could be the timing for completion of the study?.

This is Mike. You kind of hit the first part of the answer the fact that we haven't talked to the FDA yet will cause me to be somewhat cautious but I guess I could point to, you know, there's at least one NCI study being conducted in this space and I think it's enrolling 570 patients.

I don't think that's too far out of the scope of what we would consider certainly is as we discuss endpoints with the FDA. We're exploring opportunities to be as expeditious with that strategy as we can. So I think we'll get through that discussion alignment on the endpoints and then we'll have a better opportunity to describe the timelines involved.

I will say that our plan is to use as many sites and in as many countries where standards of care are consistent to be able to enroll that in a really timely manner. So we'll report on that as we've confirmed those end points..

Great, thanks Mike. And maybe a question just on the SymBio agreement, you have milestones for future clinical, regulatory, and commercial endpoint initiations.

Are there any milestones for the clinical trial initiations or are you going to have to wait for data, I'm just trying to get an idea for timing for some of these upcoming milestones?.

Ed its Mike Andriole. We don't forecast any milestones in the coming years related to that milestone package but it will -- that obviously will start in Japan development and we'll expand globally from there. .

Okay, thanks. And then just as far as brincidofovir for smallpox you're going to meet with the FDA and that sets the stage you said for the procurement contract. But you don't need the FDA approval for the procurement contract.

So I'm just wondering if you've been meeting with the government in order to see where you stand for the term contract or if there's any update there for the actual decision makers procurement contract? And then also have you been talking to -- I know you do need FDA approval for sales outside of the U.S.

for stockpiling, have you talked to any countries outside of the U.S.

for potential procurement contracts yet?.

So now on the first question we do stay in close contact with the leadership at BARDA.

And while they could -- can trigger the stockpiling independent of the FDA process, they've been pretty -- well we've been very clear and very consistent that they'd like to get to the other side of that pre-NDA meeting just to confirm that there's alignment with the FDA to move ahead with the filing.

So they're not going to wait until the submission or necessarily certainly until approval but just want to get alignment with the FDA that we've done the work that's necessary. I would add that our dialogue with the FDA in the meantime has been as much about kind of preparing for and ensuring alignment on what's to be included in the NDA.

And so I view that as positive at least as it relates to their view on the work that we've done to date. I'll also add that the last time we provided an update we had not initiated some of these final dose bridging studies that are required before we go to that pre NDA meeting.

And so the fact that those have initiated and early signs are good in terms of what we're seeing is certainly positive though. There is work to be done there but I think that we've I think put some risks behind us as we've continue to execute on that. As it relates to outside the U.S.

opportunities for selling brincidofovir for stockpiling or other purposes, our focus frankly has been on the U.S. as you can imagine. There have been various exchanges with other parties outside the U.S. and I think there are opportunities there. I would argue that the largest opportunity though is going to be in the U.S.

where you've seen contracts, historical contracts in $400 million to $500 million plus range. And as I mentioned in my comments previously we positioned ourselves to be able to supply up to $100 million into the stockpile should we secure a procurement agreement.

So we can deliver that much product before the end of 2021, it ends up being an important mechanism to funding the organization..

Great, thanks Mike. .

Thank you. And our next question comes from Kenneth Atkins. Please proceed with your question..

Hi, thanks for taking my questions.

I'm just wondering if you could comment on how you anticipate DSTAT would fit into the treatment paradigm for AML, you've kind of hinted at this in your comments about potentially excluding patients with low risk cytogenetics or secondary AML in the Phase 3, could you just comment on that?.

Yes, so as we look at older patients who are fit for chemotherapy these are patients that are currently treated with 7+3 chemotherapy.

There are some additional add on therapies that are used, some of the target therapies and in patients with favorable cytogenetics for example these are patients that typically receive a drug called Mylotarg in addition to 7+3 therapy.

As far as the secondary AML or the AMO that arises from myelodysplastic syndromes those patients are licensed to receive Vyxeos which is the liposomal formulation of 7+3 therapy.

So as a -- in order to simplify the study in order to have one standard background therapy of cytarabine seven day infusion plus three days of an ampicycline [ph] either idarubicin or daunorubicin we would exclude those patients up front..

One of the attractive things about the therapy is that really for any patient that or any other therapy that could benefit or be augmented by the movement of the leukemic blast or even the stem cells into circulation where they can be exposed to therapy. This is a viable combination.

The overlapping toxicities given the safety of the drug should allow us to combine with virtually anything there and our development plans would be to expand that.

There's also some interesting science suggesting that there's potential to resensitize patients who may be resistant to prior therapies and so we're going to explore that as both a mechanism to expand the indication opportunity but also to generate data which I think can be catalysts or momentum for the drug in the meantime while the Phase 3 is enrolling.

.

Just to specifically address the Vyxeos population, Vyxeos did improve outcomes in the secondary AML patients compared to standard chemotherapy. The magnitude of the benefit was small and it was associated with worse or slower hematologic recovery, so those patients also had to stay in the hospital longer, etc.

There's no reason why DSTAT's mechanism would not be beneficial in patients who are receiving Vyxeos and we've indeed been approached by a number of physicians who were interested in exploring that combination.

Just we're focusing on this first Phase 3 trial as our near-term deliverable and then certainly we'll be looking at other combinations in AML and potentially other hematologic malignancies down the road..

Okay, thanks. That's very helpful. .

Thank you..

Thank you. And I am not showing any further questions at this time. I'll now turn the call over to Mike Sherman for any further remarks..

Great, thanks everyone again for joining the call this morning. Before we close I'd like to highlight a couple upcoming presentations. We'll be at the Credit Suisse Conference in Phoenix on November 13th and then at the Jefferies Conference in London on November 20th.

So we look forward to seeing some of you there and updating you on our progress in the coming months. Have a good day. .

Ladies and gentlemen this concludes today's conference. Thank you for participating. You may now disconnect..