Welcome, everyone, to the Brickell Biotech First Quarter 2020 Financial Results Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to Patty Bank, Managing Director, Westwicke Partners..

Thank you. Good afternoon, everyone. Joining me on today's call are Brickell's Chief Executive Officer, Rob Brown; Chief Financial Officer, Mike Carruthers; Chief R&D Officer, Deepak Chadha; Co-Founder and Chief Operating Officer; Andy Sklawer; Chief Business Officer, Adam Levy; and General Counsel, Chief Compliance Officer, David McEvoy.

Before we begin, I would like to remind everyone that this conference 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 materially.

Please note that these forward-looking statements reflect our opinions only as of the date of this call. We do not undertake any obligation to revise or publicly release the results of 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 and are implied by such forward-looking statements are discussed in greater detail in our company's most recent annual report on Form 10-K and our other filings with the SEC.

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

Thank you, Patty, and thanks to everyone joining us on our call this afternoon. I will provide a business update, and then I will turn the call over to Brickell's CFO, Mike Carruthers, to review the financial results we reported earlier today.

Brickell continued to make advancements with sofpironium bromide for primary axillary hyperhidrosis during the first quarter as we work towards Phase III clinical trials in the United States. Today, we are pleased to announce the preliminary results from the sofpironium bromide long-term safety study.

Based on our review of the top line data from the Phase III open-label, long-term safety study, topically applied sofpironium bromide gel, 5% and 15%, was safe and generally well-tolerated and consistent with earlier Phase II trial results. Additionally, there were no treatment-related serious adverse events observed.

This 12-month study involved a total of 300 subjects with primary axillary hyperhidrosis over 9 years of age and at 30 clinical testing sites. We look forward to completing the analysis and the full study report soon, and we'll release more detailed results at the appropriate scientific forum.

In March, we announced that positive results from our Asian development partner, Kaken's, Phase III pivotal study of topically applied sofpironium bromide gel, 5%, in Japanese subjects with primary axillary hyperhidrosis were selected for an oral presentation at the Late-Breaking Research Program during the American Academy of Dermatology Annual Meeting, which was to be held on March 21.

As you know, the conference was subsequently canceled due to the concerns related to COVID-19. The conference is now rescheduled to be a virtual forum on June 12. The presentation will provide the details of specific efficacy and safety results from the Phase III pivotal study of sofpironium bromide gel in Japan.

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

Under the sublicensing agreement with Kaken, there are royalties and sales milestone payments due to Brickell. As we look ahead to the next steps for the global development of sofpironium bromide, the plan in the U.S. is for Brickell to initiate the Phase III pivotal trials.

We believe we have a clear Phase III regulatory pathway for sofpironium bromide in the U.S. The protocol and statistical analysis plan have been finalized based upon FDA feedback, and CROs are engaged. As a reminder, we expect the Phase III program to consist of 2 identical studies of approximately 350 subjects each across 40 to 50 sites.

The studies will be randomized, double-blinded, vehicle-controlled, evaluating the safety and efficacy of topically applied sofpironium gel in the 15% concentration. Subjects will be treated for 6 weeks with a 2-week follow-up.

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

If you remember, we achieved statistically significant results at the 15% concentration on both of these end points in our dose-ranging Phase IIb study. We are not currently giving guidance on the start of the pivotal Phase III studies.

As you can imagine, we are working through the COVID situation like other clinical-stage companies and securing the appropriate resources to run the study. We anticipate providing guidance on the timing of these studies when we have gained greater clarity on these variables.

We remain optimistic that the value of sofpironium bromide can be demonstrated through our planned development program in multiple ways, including its efficacy, formulation and delivery system.

The molecule is a novel, topical anticholinergic agent, retrometabolically designed with the intent to enhance the local therapeutic benefit while limiting 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 concentrations. To date, there have been over 1,300 subjects treated worldwide with sofpironium bromide in clinical trials conducted by Brickell and Kaken.

Based on this clinical experience, we believe that, if approved, sofpironium bromide has the potential to be recognized as a best-in-class therapy for hyperhidrosis by physicians and patients, starting in Japan and the U.S. I will now turn the call over to Mike for a financial overview..

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

I also encourage you to read our full consolidated financial statements contained in our quarterly report on Form 10-Q for the quarter ended March 31, 2020, which can be accessed through the Investors section of our website once filed with the SEC. Starting with cash. We ended the quarter with $7.1 million in cash and cash equivalents.

In addition, we've prepaid $4.6 million to third-party clinical research organizations in anticipation of commencing the Phase III pivotal studies for sofpironium bromide. Turning to revenue. We recognized revenue of $1 million for the first quarter. This compared to $3.5 million for the comparable quarter in 2019.

The decrease in revenue is because the Phase III long-term safety study of sofpironium bromide and other supporting studies that were in full swing in 2019 were finished or winding down by the first quarter of 2020.

These and other development activities that are now completed are the basis for revenue recognition for the $15.6 million R&D payment that we received from Kaken in the second quarter of 2018. Research and development expenses totaled $2.7 million for the first quarter compared to $6 million for the comparable period in 2019.

This decrease was primarily due to a decrease in clinical study and other regulatory costs of the Phase III long-term safety study of sofpironium bromide and other studies that were ongoing in 2019 but were concluded or winding down in the first quarter of 2020. Now moving to general and administrative expenses.

G&A expenses totaled $2.5 million for the first quarter. This compared to $2.1 million for the comparable period in 2019. This increase is primarily due to $300,000 in higher fees for directors' and officers' liability insurance since we are now a public company.

And with that, I'll turn the call over to Steve, the operator, to open the call for questions. Go ahead, Steve..

[Operator Instructions]. We have reached the end of our question-and-answer session. I would like to turn the call back over to management for any further closing comments..

All right. Well, thank you for that. And I'm surprised our -- all of our guests are so shy today, but I appreciate everyone calling in this afternoon.

As you can see, we are very encouraged by the Phase III data that have been generated so far for sofpironium bromide, both with the efficacy results in Japan and now with the preliminary data from the long-term safety study. We remain focused on moving this lead candidate into the Phase III pivotal trials in the U.S.

as a potential therapeutic treatment option for the 10 million people in the U.S. that suffer from primary axillary hyperhidrosis and look forward to keeping you updated on our progress. We hope you all stay safe in this current environment. Thanks again for joining..

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day..

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