Welcome everyone to the Brickell Biotech Full-Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following some prepared remarks from the Company, we will open the call up to Q&A. As a reminder, this conference call is being recorded.

I would now like to turn the call over to Patti Bank, Managing Director, Westwicke Partners. Please go ahead..

Thank you, and good afternoon, everyone. Joining me on today’s call are Brickell’s Chief Executive Officer, Rob Brown; Chief Financial Officer, Mike Carruthers; Co-Founder and Chief Operating Officer, Andy Sklawer; and Chief Business Officer, Adam levy.

Before we begin, I would like to remind everyone that this call and webcast will contain forward-looking statements about the Company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call.

We will not undertake obligations to revise or publicly release the results or any revisions to these forward looking statements in light of new information or future events.

Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC.

I would now like to turn the call over to the Company’s Chief Executive Officer, Rob Brown..

Thank you, Patti, and thanks for everyone for joining us this afternoon. I will provide a business update. Then, I will turn the call over to Mike to review the financial results we reported earlier. Brickell’s made significant progress since becoming a public company and listing on the NASDAQ in September.

We remain enthusiastic about the potential for sofpironium bromide as a drug candidate to potentially improve the quality of life of millions of patients who suffer from primary axillary hyperhidrosis.

For those of you who are new to the Brickell’s story, let me provide an overview of the market for hyperhidrosis and why we think sofpironium bromide has the potential to become a best-in-class treatment. Hyperhidrosis is a medical condition that causes excessive sweating beyond what is required to regulation of body temperature. In the U.S.

alone, there are greater than 15 million people suffering from hyperhidrosis, representing approximately 4.8% of the population. Over 10 million people in the U.S. suffer from excessive underarm sweating, which is referred to as axillary hyperhidrosis. The disease is most prevalent among younger people and in the U.S.

affects approximately 9% of people ages 18 to 39 and about 17% of people ages 12 to 17. In summary, 75% of hyperhidrosis patients have indicated that the disease can have a negative impact on their socialized, wellbeing, emotional and mental health.

Our lead compound sofpironium bromide is a novel, topical anticholinergic agent, which was retrometabolically designed with the intention of enhancing the local therapeutic benefits while reducing systemic side effects.

Sofpironium bromide has a short plasma half life with rapid metabolic deactivation and fast elimination, potentially leading to a more favorable safety profile or enhanced efficacy at higher concentration. To-date, there have been 19 clinical studies conducted by Brickell and our Japanese partner Kaken that have included over 1,300 subjects.

Over the last year, both Brickell and Kaken announced significant progress in the development of sofpironium bromide.

Two weeks ago, we announced that the results from Kaken Phase 3 pivotal study in Japan were selected for an oral presentation at the Late-Breaking Research Program during the American Academy of Dermatology annual meeting on March 21st.

While the conference has subsequently been canceled due to concerns about coronavirus, we expect the data to be released in the coming days. This will be the first public disclosure of efficacy and safety results from the Phase 3 pivotal study of sofpironium bromide gel.

We previously announced that Kaken submitted a new drug application for approval of manufacturing and marketing in Japan based on the positive results of this study. Kaken also has rights to develop and commercialize sofpironium bromide in Korea, China, and certain other Asian countries.

Under the sub-licensing agreement with Kaken, there are royalties and sales milestone payments due to Brickell. In February, we announced that the positive results of our Phase 2b study with sofpironium bromide in patients with primary axillary hyperhidrosis were published in the peer reviewed Journal of the American Academy of Dermatology.

We were encouraged by these by Phase 2 study results and are pleased with the publication of these data in such a prestigious academic peer reviewed journal. These results along with Kaken’s Phase 3 results, give us the confidence to continue to advance the development of sofpironium bromide.

In January, we presented at the Dermatology, Aesthetic & Surgical Conference, the results from the pharmacokinetics and long-term safety extension trial with sofpironium bromide gel in the 15% concentration in pediatric patients, ages 9 to 17 with primary axillary hyperhidrosis.

The pharmacokinetic analysis of sofpironium bromide did not show any evidence of drug or major metabolite accumulation. These findings were consistent with previous investigational evaluations in adults. Sofpironium bromide was safe and well-tolerated in over 24 weeks of treatment in this clinical trial.

The majority of pediatric subjects had no treatment, emergent adverse events, and there were no severe or serious adverse events. These findings are important since the incidence of the hyperhidrosis is relatively high in the pediatric population.

We’re also pleased to share that earlier this year, we completed in line portion of our multicenter open-label Phase 3 long-term safety study of topically applied sofpironium bromide gel in 300 subjects with axillary hyperhidrosis.

This 52-week study was designed to evaluate the safety, local tolerability and efficacy of two concentrations, 5% and 15% of sofpironium gel. We look forward to announcing these top-line results soon.

For those of you who may not have been following our SEC filings and press releases closely through the last few months, in October of 2019, we announced that our licensor Bodor Labs filed a complaint against the Company in Federal Court in connection with an alleged breach of our license agreement.

We subsequently filed the arbitration and counterclaims against the licensor and participated in mediation. Following mediation, we announced a settlement with Bodor Labs in February.

We felt that resolving this dispute was on balance in the best interest of our stockholders and allowed Brickell to continue to advance sofpironium bromide without the cloud of litigation. Looking ahead, the next step for the development of sofpironium bromide in the United States is to initiate the Phase 3 pivotal trial.

The planned Phase 3 program is expected to consist of two identical studies of approximately 350 patients each across 40 to 50 sites. The studies will be multicenter, randomized, double-blinded, vehicle-controlled, evaluating the safety and efficacy of topically applied sofpironium gel in the 15% concentration.

Subjects will be treated for six weeks with a two-week follow-up.

The co-primary efficacy end points agreed with the FDA are the proportion of subjects achieving at least a 2-point improvement on the patient reported outcome scale called HDSM-Ax from baseline to the end of treatment, and a change in gravimetric sweat production from baseline to the end of treatment.

Importantly, we achieved statistical significance at the 15% concentration on both of these endpoints in our dose-ranging Phase 2b study. We haven’t given guidance on the start of the two Phase 3 studies yet. But, as we move through the year, I look forward to reporting on our progress.

I will now turn the call over to Mike Carruthers for a financial overview.

Mike?.

Thanks, Rob, and good afternoon to everyone on the call. I appreciate the opportunity to provide a summary of our fourth quarter and full year 2019 financial results.

I also encourage you to read our full consolidated financial statements and MD&A contained in our annual report on Form 10-K for the year ended December 31, 2019, which can be accessed through our investors section of our website, once filed with the SEC, later this evening. Starting with cash and investments.

We ended 2019 with $11.7 million in cash, cash equivalents and marketable securities. In addition, we prepaid $4.9 million to third-party clinical research organization in anticipation of commencing the Phase 3 pivotal studies for sofpironium bromide.

Net cash used in operations was $14 million for the fourth quarter and $36 million for the full year of 2019. Turning to revenue. We recognized revenue of $700,000 for the fourth quarter and $7.9 million for the full year of 2019. This compared to $2.5 million and $10.9 million, respectively for the comparable periods in 2018.

The decreases were primarily due to the completion of the Kaken funded research and development activities by the first half of 2019. Also in 2018, our revenue included a $5 million payment from Kaken. Research and development expenses totaled $6.6 million for the fourth quarter and $20.2 million for all of 2019, up from $13 million in 2018.

This year-over-year increase is primarily due to the additional clinical study activities, including the Phase 3 long-term safety study and drug supply costs associated with sofpironium bromide. Now, moving to general and administrative expenses. G&A expenses totaled $4.9 million for the quarter and $12.2 million for the full year of 2019.

This compared to $1.7 million and $6.4 million, respectively for the comparable periods in 2018. The increased expenses in 2019 largely came from merger related costs, legal and settlement accruals and recording of non-cash stock option and impairment expenses. And with that, I’ll ask Hector, the operator, to open the call up for questions.

Hector?.

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Your first question comes from the line of Leland Gershell with Oppenheimer. Please proceed with your question..

Just a few questions on the upcoming Phase 3. So, have you determined the dose that you’ll be testing in Phase 3, and also how long patients will be treated with before they’re guided for primary endpoint? Thank you..

Yes. We are going to take into the Phase 3, only the 15% dose, and that’s really based on the results that we saw during the Phase 2b study. And the study will be -- the treatment part of the study will be six weeks with the two-week washout period at the end of that.

So, what we’ll do is we’ll be measuring at the beginning, and then obviously at the end of that six-week period..

And then, in terms of Kaken’s regulatory process in Japan.

So, they’ve filed -- what are the timelines for them to be approved, if you have those, literature?.

Sure. So, they filed at the end of last year. And the typical approval timeline in Japan for regulatory approval is 12 months. After gaining regulatory approval, then there’s an additional period of time to gain pricing approval. And that’s normally a quarter..

[Operator Instructions] The next question comes from line of Ram Selvaraju with H.C. Wainwright. Please proceed with your question..

I just wanted to get a sense of what you anticipate will likely be the granularity of market information that you would get, once the product is formally commercially available in Japan.

Are you going to get much visibility on how the product performs, if -- as and when it actually is rolled out over there?.

Yes. I am sure you’re aware we’ve built a really strong working relationship with Kaken. Over the years, the sharing of work across the geographies has been very productive for both parties and saving costs and not duplicating work. And I obviously would expect that to continue to as we hit the commercialization phase.

We have already shared information back and forth about market, market research, et cetera. And we fully expect to have clarity into the product performance in Japan. Now that said, obviously, it’s their sales and their products.

So, what we’ll be reporting out will be dependent on what they’re communicating in Japan, which is sometimes going to be a little different. But, we expect to have a really good feel for how the product is doing and what the kind of experiences people are having on the product in Japan..

Okay. And then, just a couple of other clarificatory points. If I remember correctly, the U.S. program is using the 15% dose but the Japanese trial only used the 5%.

Is that correct?.

That is correct that the U.S. program is targeted at 15% and Kaken has studied the 5%..

Okay.

And then, could you comment on the degree to which having a 42-day endpoint might position you favorably from a commercial perspective against, for example, Qbrexza versus the 28-day endpoint that I believe for Qbrexza label?.

Yes. This is obviously speculation, because until you get the data from the study, you don’t know. But, the study was designed this way to give ourselves the best chance of getting quality data, especially given the gravimetric endpoint can be a bit tricky. The designs of our Phase 2 and their work though were done kind of concurrently.

So, I don’t know -- at that space, they’re both being developed in relatively similar periods of time. We didn’t want to change our endpoints or timing in our Phase 3 relative to our Phase 2 as you know, the fewer changes you can make, the better off you are. Whether there’ll be a competitive advantage because of it or not, I really don’t know.

But, we believe like our endpoint. We like the fact it’s the same endpoint we used in Phase 2, just to make sure that we have a few changes as possible..

Okay. And this is perhaps a bit of a sensitive topic. But, I was wondering whether you could comment at this juncture on any exploratory discussions you’ve been having with folks who might be willing to step into the place of NovaQuest, particularly with regard to helping you to get through the conclusion of U.S.

clinical development with sofpironium? Thank you..

Yes. You’re right. It is a sensitive thing in the sense -- obviously we’re not going to share where we are, who we’re talking to at this stage. But needless to say, we’re in lots of conversations with lots of different parties to look at how to build up the resources we need to be ready to conduct that Phase 3 study..

Ladies and gentlemen, we’ve reached the end of our question-and-answer session. I’d like to turn the call back over to Mr. Rob Brown for any further or closing comments..

Thank you for taking the time this afternoon to listen to our update. We remain committed to building on these results to hopefully bring life-changing medicines to patients in need. We recognize that the current situation with respect to the coronavirus presents a challenge for all of us.

I want to take this opportunity on behalf of the whole Brickell team to wish the best to everyone on the call and to your family. As always, please feel free to reach out to us at any time with your questions. Thanks..

Ladies and gentlemen, this does conclude today’s call. You may now disconnect your lines. Thank you for your participation..