Good morning, ladies and gentlemen, and welcome to Chimerix's First Quarter 2021 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. Good morning, everyone, and welcome to the Chimerix first quarter 2021 financial and operating results conference call. This morning, we issued a press release, which outlines the topics we plan to discuss today. You can access the press release in our investor's section of the website.

With me on today's call are President and Chief Executive Officer, Mike Sherman; Chief Medical Officer, Allen Melemed; Chief Financial and Business Officer, Mike Andriole; Chief Scientific Officer, Randall Lanier; and Chief Technology Officer of Imipridones, Josh Allen.

Before we begin, I would like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, 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. Please refer to our filings with the SEC for more complete disclosure of these risks and uncertainties.

At this time, I would like to turn the call over to our president and chief executive officer Mike Sherman..

Thanks, Michelle. Good morning, everyone. And thank you for joining us. We've certainly had an eventful first few months of 2021. We're extremely focused on execution and we remain on track for several important milestones in the second half of the year.

We look forward to the potential approval of Brincidofovir as a medical countermeasure for smallpox, by the July 7 PDUFA date. Of course, that would mark Chimerix's first product approval. And with this promising pipeline, of course, I'm counting on it not being our last.

On the NDA review of brincidofovir I can say that process has continued to go extremely well, no surprises to date.

As it relates to the potential procurement contract in late March, BARDA published a source sought notice seeking information regarding the availability capability for procuring, stockpiling, and investing in the development of an FDA-approved smallpox antiviral with an alternative mechanism of action relative to TPOXX.

And you can see with that very specific requests and particularly because the qualifying parameters they outline in the request require a drug currently under NDA review, we believe Brincidofovir is the only drug meeting those criteria. And so as such, we have responded to the request and are currently awaiting the next steps from BARDA.

The sources sought notice of course, brings us one step closer to a possible procurement contract. You'll note that we did expect the RFP to have been issued by now. Based on our frequent and a positive interaction with BARDA I'm confident, the RFP delay is driven by COVID-19 activity that has kept the HHS division of government contract review busy.

Our timelines always anticipated delivery into the stockpile in the second half of the year. And that expectation remains on track. BARDA is intimately aware of our manufacturing schedule. Responding to an RFP is not a trivial undertaking. So we've been doing as much of that work in advance as possible.

And that should allow us to respond quickly and potentially shorten the window from RFP the contract. Moving now to our imipridones program. We remain on track there as well to report the blinded independent central review of response rate in the 50-patient registration cohort in the second half of this year.

This response data along with other important measures of clinical benefit and safety may form the basis of accelerated approval of ONC201 for the treatment of patients with H3 K27M mutant glioma. Turning now to our DSTAT program. Earlier today, we reported partial data from the second cohort of our Phase 2 study of DSTAT for COVID-19 patients.

Allen will provide additional detail in a moment. With the updated randomization schedule of two to one, the placebo group consisted of just three patients and excluding patients who withdrew shortly after randomization. All three placebo patients that entered the trial had less severe disease as measured by the NIAID score and each recovered quickly.

As a result, our ability to gain insight into efficacy signals in this cohort is limited. However, the upcoming biomarker analysis may offer important additional insight to potential efficacy signals. We've been really transparent about the data as we've received it and our decision-making process for this trial.

As I've mentioned before, we're continually assessing the path forward for acute lung injury indications for DSTAT based on first the clinical data, second, the rate of trial enrollment, and third, the ever-evolving standard of care.

And remember this trial was as much about gaining insight into the potential use of DSTAT in acute lung injury, unrelated to COVID as it was about bringing up potentially important therapy to COVID patients. In the meantime, the team has done a nice job, getting DSTAT DASH AML trial up and running, and now enrolling.

With that overview, let me turn the call over to Allen who I've asked to give a little more detail on the second cohort data from the COVID trial..

Thank you, Mike. During the last conference call, we reported promising preliminary data from the 12 patients in the first cohort of our ongoing Phase 2 study of DSTAT and COVID-19. We knew that there were imbalances in arm in the data, particularly in the serious illness of those treated, which favor the DSTAT arm.

So we were cautious about the rapid recovery observed versus the control group. In the second cohort, we saw imbalances in favor of placebo arm, as it relates to disease severity as to the entry.

Here, eight patients were randomized to receive DSTAT as 4 milligrams per kilogram, bolus followed by continuous infusion of 0.325 milligrams per kilogram, per hour. And four patients were randomized to receive placebo.

Recall of the trial allows for patients with NIAID score of three, which means hospitalized and required noninvasive ventilation or high flow oxygen or NIAID four hospitalized that required supplemental oxygen. None of the patients treated with placebo entered the trial with more severe disease.

While two of the DSTAT patients were identified as NIAID score three. Among all patients, one patient randomized DSTAT required a transfer to the ICU within 24 hours of admission and required discontinuation of DSTAT due to prohibited concomitant medications. One patient randomized to placebo with true consent prior to treatment.

All of the remaining seven patients receiving DSTAT and three patients receiving placebo had recovered by day 28. The first thing to note is our DSMB had previously provided the go-ahead to advance to the cohort three with a higher cohort two dose. Now we're currently enrolling patients.

These first two cohorts were designed to confirm safety first and foremost, and that has been achieved.

Because each cohort has been relatively small in terms of the number of patients, and the tutor and randomization we did, we've performed some informal analysis combining the two cohorts comparing the 14 patients treated with DSTAT to the nine patients treated with placebo.

This post hoc analysis suggests that there may be areas where patients treated with the DSTAT showed clinical improvement over standard of care. This analysis was limited by the low patient numbers. So improvement was seen exclusively in the patients, entering the trial with more severe disease or NIAID score three.

In these patients who were treated with DSTAT, three or four achieved clinical improvement within 28 days, whereas only one of the five patients treated with placebo achieved targeted clinical improvements.

This is in contrast to help the patients with less severe scores or NIAID 4 where all patients on both arms, tended to recover rapidly, making it hard to demonstrate an improvement here. This is obviously a small sample size, so we can't draw a definitive conclusion.

That being said, we're particularly interested in further investigating the patients on DSTAT with severe disease who were pulled off DSTAT early and did not recover. A specific interest is whether DSTAT had any effect on the biomarkers prior to discontinuation of DSTAT.

We remain enthusiastic about the potential benefit DSTAT may offer for patients with acute lung injury, particularly from non-COVID causes. Unfortunately, the enrollment in this trial has been far slower than we anticipated, and we continue to monitor the COVID environment. We'll keep you updated as we progress in this study.

With that, I'll now turn the call over to Mike Andriole with the review of the financials.

Mike?.

Thanks, Allen, and Good morning, everyone. As Michelle mentioned in her introductory remarks earlier today, we issued a press release containing our financial results for the first quarter of 2021.

Starting with our balance sheet, we remain well capitalized and ended the first quarter of 2021 with proximately $152.5 million in capital to fund operations. In addition, potential approval of brincidofovir and a subsequent BARTA contract would further serve to strengthen our balance sheet.

Our manufacturing schedule remains on track to potentially ship into the stockpile in the second half of this year.

Turning to our statement of operations, the company reported a net loss of $97.4 million or $1.21 per basic and diluted share for the first quarter of 2021, compared with the net loss of $10.4 million or $0.17 per basic and diluted share in the first quarter of 2020.

This increase is due to the recording of the in-process R&D associated with the Oncoceutics transaction of $82.9 million. Revenue for the first quarter of 2021 was $1.4 million compared to $1.2 million for the same period of 2020.

Research and development expenses increased to $11.9 million for the first quarter of 2021, compared to $8.9 million for the same period in 2020. The main driver of this increase is the addition of personnel and critical expenses to support the addition of ONC201 to our pipeline.

General and administrative expenses increased to $4.1 million for the first quarter of 2021, compared to $3.2 million for the same period in 2020. Loss from operations was $97.5 million for the first quarter of 2021, compared to a loss from operations of $10.9 million for the same period in 2020.

Again, the main driver of this variance was the IP R&D charge related to the acquisition of Oncoceutics. And with that overview, I'll now turn the call back over to Mike for closing remarks.

Mike?.

Thanks, Mike. As I mentioned, we are well-positioned for a variety of value-creating milestones from this broad pipeline.

Now throughout the balance of the year, we expect first potential approval of Brincidofovir as a medical countermeasure for smallpox, a potential BARTA procurement agreement for Brincidofovir, completion of our Phase 2 trial of DSTAT in COVID-19 related acute lung injury, completion of Brincidofovir drug product manufacturing to support potential shipments to the strategic national stockpile, and the blinded independent central review of response rate in the 50-subject registration cohort of ONC201 in recurrent H3 K27M mutant glioma.

When you consider how the company was positioned, say 18 months ago, this is really a phenomenal transformation. Of course, that only happens when the team's making good decisions and executing well, so let me express my appreciation for the great work that Chimerix's team has delivered recently.

With that, operator, we'll open the line for questions..

[Operator instructions] Your first question is from the line of Maury Raycroft with Jefferies..

Hi. This is Kevin on for Maury. Just a couple of questions.

In terms of the second half update for ONC201, could you clarify if you need any more patients for the registrational cohort and what kind of durability we could potentially see at that update? And then also, maybe whether you're saying it's going to be a medical meeting or when that could be in the second half?.

Yes, so those patients are fully enrolled. We'll have more than 12-months follow-up, even on the last patient in that cohort. As for the announcement of the data, we will likely announce top-line data via sort of a non-scientific event and then follow that up with the detailed review at a scientific forum..

Great. Thank you.

And then just on the time line for the Brinci contract, so is that something that we should still potentially expect this month, or is that just something that's between now and the PDUFA could be announced?.

Yes. That's a great question and one that I'm not going to predict the date on the RFP anymore, honestly.

I'm very confident that as BARTA is looking at the NDA review process, and they know our manufacturing schedule and that on both fronts the process is going very well, that they will be in a position to execute both an RFP and then our ability to respond quickly to that RFP to get to a procurement contract.

I still think we have a really good window to get that done prior to when we would be ready to ship the product anyway. So, it's a long-winded answer to say, look, we're positioned to manufacture and to ship product in the second half of the year and there's, there's plenty of time for the procurement contract to be executed in the meantime.

So, we'll keep you updated as both the RFP is delivered and, of course, as decisions are made..

Great. Thanks for taking my questions..

Your next question is from Naureen Quibria with Maxim Group..

Hi. Good morning, and congratulations on a very strong quarter, exciting things coming up.

So with regards to ONC201, the update that's coming in the second half, can you talk about in terms of size and scope of the data that we'll actually be getting both in terms of the top line and then thereafter, as you mentioned, potentially greater details at the scientific forum?.

Yes. And maybe Allen and Josh can add to this if I miss something. But the size and scope will focus on the 50-patient group. Of course, in the background, there are more than 350 patients that will be relevant for the safety data that we're gathering that would be part of a potential submission so that work is going on behind the scenes.

But our focus in terms of data will be on that registration cohort. And it would include, I think, there's a lot of attention on response rate and just confirming what we've seen in the initial blinded assessment of the first 30 and then, of course, confirming that again and the investigator assessment of the subsequent 20.

So, it's a revalidation of that. It's also as important is just the other data that will be supportive, the clinical benefit that we see.

And as we've said all along, I think, the FDA will be very holistic in terms of how they look at this data, not just the response rate but also measures of clinical benefit performance, status improvement, neurological benefit, safety, other measures that, I think, are important in this population.

So, it's probably that kind of detail that would be elucidated in greater detail in the scientific forum. Let me pause there. I think, Josh or Allen, if you have any thoughts to add..

I have nothing. This is Allen.

Josh?.

Yes. Same here. I think Mike covered it well. Maybe the only addition I would note is that the 50-patient readout that is expected at the end of the year will be focused on a blinded, independent, central review focused on radiographic-based endpoints but keep in mind for this disease that uses RANO criteria to evaluate response.

Baked within that is data and consideration for data points such as performance status and steroid use, so these could be additional endpoints we may look to capture clinical benefit in addition to the radiographic endpoints that you're used to seeing for targeted oncology agents..

Right. That's really helpful.

And then just staying on the same topic, obviously, this is the registration-directed cohort, but the study that they're part of, I was just curious, what are your expectations with regards to the data coming out of the totality of those studies? Do you have any sense of when those would read out, or is that much later years?.

No. No. That's really a big part of what we're doing over the next months is essentially the locking and the cleaning of the data that would support all of that, so not just the imaging and RANO assessment, but all of the other measures of clinical benefit and safety. So those are really coming together simultaneously.

As I say, I imagine a lot of the focus is on the RANO response rate, but we'll have that richer view of the data really at the same time as that data wraps up..

Got it.

And are you able to comment on what percentage of the patients make up the pediatric population versus the adults?.

Let Allen respond to that..

So if you look in general, we have a large proportion to pediatric patients throughout our development program. If you look in the registration cohort, there's only a handful of patients that are the PDH due to some of the discussion with FDA of who is going to be included in the registration cohort..

Okay. Got it. And just switching over, you also have one in paraganglioma. It's an IST study.

Josh, I was just curious, what percentage of the patients actually overexpress DRD2, and perhaps, could you comment a little bit about the addressable market and an indication?.

So let me address the first point. You know, this is an investigator-initiated trial that was really signal searching. I'll highlight an update on that particular trial. We'll read out its notes at ASCO. So take note there.

But as part of that investigator-initiated trial in order to enroll patients at a sufficient pace in really accomplished with the primary objective of the study, which was to observe the potential for single-agent responses, which was seen as we've reported, there was not a requirement for archival tumor tissue or fresh biopsy at enrollment.

So as a conclusion, we're not able to really comment on DRD2 expression on individual patients. What we can see is widespread overexpression in that disease. So I think more to come maybe in the future.

I'm looking at individual patients, but what we can say at this time is we're seeing single-agent responses as we've reported, and we're seeing a fairly uniform overexpression of DRD2 across this patient population when we look into larger data sets..

And this is Mike Andriole. I can comment on the market potential there and sort of relative to diffuse midline glioma. I'd say it's maybe about a quarter of the patient population looking – comparing the two indications. So a smaller market opportunity target, but another targeted oncology indication..

Great. Thank you. That's all for me today. Thanks..

Your next question is from Ed White with H.C. Wainwright..

Good morning. Thanks for taking my questions. So perhaps just a prescindy question to start off, maybe you can discuss the outside the U.S. opportunities. I know I – I've asked this before, but as we're getting close to the PDUFA date, I think it becomes more relevant.

I believe that if you have FDA approval at that point you can market it overseas or at least fulfill the need overseas..

Yes. So you can imagine that as the NDA review processes winding down, we've pivoted our attention to be able to prepare essentially convert that submission to submissions in other geographies. Canada, Europe are the obvious next two targets. And then we'll kind of go beyond that as soon after.

So we're essentially combining where we believe there's a market potential with that regulatory review to prioritize where we go next. And that's the least of the next two steps I do believe. And maybe Mike can expand on this is there whereas – maybe a year or two ago, we would have said there's not much opportunity outside the U.S.

or certainly North America. I think that dynamic may be changing..

I'd agree with that, Mike. The biodefense market is clearly evolving during the pandemic. And as we think about sort of post-pandemic that continues to evolve. Just looking at the market in total, Canada's the likely next priority opportunity for us in terms of geographic markets.

Scandinavia has been also a buyer on a smaller scale of some other biodefense assets. And so we're being selective as we think about our regulatory strategy, as you might expect in terms of how we prioritize markets and where we go next, but there are opportunities outside of the U.S.

and we would expect those to continue to mature in the months and years ahead..

Thanks, Mike. And perhaps just switching over to DSTAT in COVID-19, you had mentioned about the cohort three and 50 patients and the enrollment there, I'm just wondering maybe – how long it will take to enroll those 50 patients.

Do you have an idea of that now? And when we can see that data, and then what's your strategy in that space going forward? Would you proceed to go forward assuming positive data in COVID-19 and running that Phase 3 study that you had mentioned before, that could be up to 450 patients, or would you look more to do a study in ARDS and an acute lung injury outside of the COVID space?.

You really outlined the decision before us. I think it's the enrollment, as Allen mentioned, has been slow in the third cohort. And so I think by definition, in order to access that full 50 patient data set, we'd have to do something different. And what we do is going to be dependent on the data and kind of where we're seeing the disease in the U.S.

Good news is that the patients are fewer and farther between as the vaccines are more widespread.

I think there's probably more likelihood that – and it's why I pointed in my comments up front to – the original plan was – it was always that this was going to give us a signal that more likely would be utilized in developing the drug in non-COVID-related acute lung injuries.

We just want to get enough data from these patients to give us a signal that that makes sense. I don't think we are there yet. And that's partly what the continued analysis of the cohort two is going to look at. I'm particularly curious about this one patient, Allen mentioned that that progressed and was taken off drug pretty quickly.

And it'd be interesting to see if in fact that patient had responded from a biomarker standpoint before they were taken off drug. Just be another signal that compliments what we saw in the first cohort that we're hitting relevant targets.

There's a bundle of criteria that we're going to take into that decision of how we access that data and decide to pivot outside of COVID as the case may be – and we're mindful that the strategic focus here is AML. And so we've got to be cautious about the resources that we're not chasing this at the expense of other priorities.

And so that's part of the equation. So if the data supports it and we've got a sort of an efficient targeted way to make that investment, then we'll do it. In the meantime, we'll obviously make sure that the AML trial is going well..

Well, thanks, Mike. And you answered my next question about the strategy or what to express at the ARDS or AML. So I think those were the questions that I had. Thanks for taking them..

Thanks, Ed..

Your next question is from Joe Thome with Cowen and Company..

Hi there. Good morning, and thank you for taking the question.

The first one on the request for proposal for VCV, is there a standardized timeline that these requests have to be out there before they can make a decision on the contract? Obviously, we don't know exactly what it's going to come, but is there a time that they have to allow others to respond even though it's will be tailored to you? And then the second question on ONC206, should we be expecting initial data from that Phase I this year? Or how should we think about disclosures from that trial? Thank you..

I'll say the first one on the RFP, they're part of the outcome of the sources sought requests, which they already issued as to see who responds and qualifies. It's our view that we're the only ones that qualify and as such the RFP is essentially targeted toward us.

And so it makes that process a little bit simpler if indeed there's just a single potential source. And I think given our work to – that we can do in advance and in preparation for that RFP then we can make that actual procurement negotiation happen pretty quickly, and so the short answer is there's not a prescribed timeline per se.

They'll usually give you a 30- to 45-day time to respond. Perhaps with our advanced work, we can shorten that and be within that timeline. And if so, they're able to accelerate their end, as well. Let me go into your second question, ONC206. ONC206 is actively enrolling in the Phase 1 trial.

We haven't really committed to publishing data from that later this year, so I think it's premature to say that. I imagine it will likely get updates.

There will be updates on that ongoing trial at all of the relevant conferences going forward, but I don't know that there's going to be much rich data coming from that, as there's dose-escalation involved between now. So it's probably more in the 2022 timeframe where you'll see meaningful data from ONC206..

Perfect. Thank you very much..

And your final question comes from the line of Soumit Roy with JonesTrading..

Good morning, everyone. Thanks for taking the question, and congratulations on pushing forward on all forefronts, at least.

One question, on the glioma trial, if you want to take a few minutes to benchmark what the standard of care, physicians' choice, response rate, or clinical benefits should we expect? As you know, it has been difficult to find the exact comparable patient population and what's in this mutant population. And the second is on the Phase 3 AML trial.

If you can just give us an anticipated pace of enrollment, how many centers that you are opening. Yes..

Great. I'll start with the glioma. Maybe I'll – certainly Allen and Josh, I'm not sure which you want to start. Maybe, Josh, you give a little bit of history relative to the trials that we've done and how those patients have been treated historically, and then Allen can follow that..

Yes. Happy to give that a shot. So I think an important thing to note here is that H3 K27M and mutant gliomas the lead indication for ONC201. While it was only recently defined, a subset of this population, such as diffuse intrinsic pontine gliomas have been studied for decades in clinical trials.

The sole intervention within the toolbox available to glioma positions, that is proven in this population, has been radiation. And as a consequence, that's really the only consensus we see for standard of care. When we look across the spectrum of H3 K27M mutant gliomas. So there's frontline radiation.

Another consideration here is that this population is almost uniformly MGMT-unmethylated, which is a biomarker for resistance to temozolomide that is usually used to treat high-grade gliomas.

As a consequence of that, we see heterogeneous use of temozolomide in the frontline setting, depending on the investigators view of use of MGMT-unmethylated as a gating biomarker for use of that agent. So that being said in the settings that I just mentioned with DIPG, that agent has failed to prove benefit.

Beyond frontline therapies, largely constituting radiation and temozolomide, you move them to the recurrent setting where onto a once a registration cohort is aimed at and where the relevant competitors would be in terms of response rate or benchmarking efficacy, which I think is at the core question. There, we predominantly see use of Avastin.

The anti-angiogenic that's failed to prove a survival benefit, even in the overall glioblastoma population, but we still see use as part of palliative care for symptomatic improvements that are there.

As you point out, when we look into the literature, we have failed to identify bonafide objective responses in a similar population to ours, when we tried to do a head-to-head comparison.

And as we've noted in the past, our conversations with FDA have indicated an acceptance that available therapy in our population, when you put it in comparable terms, that recurrence is really palliative care. So in summary, there's really no evidence of efficacy for available therapy in recurrent H3 K27M mutant glioma.

What we see out in the field is use of palliative therapies for symptomatic control, such as bevacizumab.

Allen, would you like to add anything?.

No. You had it captured perfectly nothing to add, Allen – or Josh..

And then maybe I'll follow up with the phase – I think your question about Phase 3 trial enrollments, and I had mentioned previously that we would, later this year, give update and maybe a more definitive timeline on our expectations around that enrollment.

We expect to have, for this first portion, between 30 and 40 sites engaged to enroll that first 80. And then as we sort of reach that 80-patient milestone, which is the interim assessment, where we're going to look at both the response rate and MRD.

Probably MRD being the key measure there, as you've seen some, I think we talked about this last quarterly call, increased emphasis of the importance of that metric and predicting survival in AML that we would essentially pivot to expand to other sites, including outside the U.S. But our initial focus is on getting that 80-patient assessments.

And we think we can do that in a good timeframe in that 30 to 40 sites, which are activating now and it will be as we get a dozen or so sites up and running, that's when we'll have a better sense of what that enrollment timeline can look like. And we'll give an update on that. I do expect that 80-patient assessment.

It won't happen this year, but it will happen in 2022, is our expectation..

Thank you so much for taking the questions..

Thank you..

I'm going to I'll turn the call back over to Mike for closing remarks..

Yes. I'll just thank everyone again for your time this morning, and look forward to updating you on these exciting milestones in the coming months. Thanks again..

This concludes today’s conference call. You may now disconnect..