Greeting. And welcome to the Brickell Biotech Inc. Third Quarter 2020 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dan Ferry of LifeSci Advisors. Thank you. You may begin..

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; and Co-Founder and Chief Operating Officer; Andy Sklawer.

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. Please note that these forward-looking statements reflect our opinions only as of the date of this call.

We will 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 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 Form 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, Dan and thanks everyone for joining our call this afternoon. I will provide a business update and then ask Deepak to provide an update on our Phase 3 clinical program, and then Mike will review the financial results we reported earlier today.

We continue to build positive momentum on our lead program, developing sofpironium bromide as a best -- potential best-in-class treatment option for primary axillary hyperhidrosis or more commonly described as excessive underarm sweating.

Several recent achievements have put us on a clear path forward for this program, with a set of near-term milestones on the horizon. Let me take a minute to -- just to touch on some of the -- our recently achieved milestones before I turn it over to Deepak to offer more detail on our Phase 3 program.

First, we initiated the Phase 3 Cardigan 1 clinical study to evaluate the safety and efficacy of topically applied sofpironium bromide gel 15% for the treatment of primary axillary hyperhidrosis. Enrollment is going as planned. Additionally, we remain on track to initiate the second Phase 3 study Cardigan 2 before the end of the year.

We anticipate announcing top line results from these studies in the fourth quarter of 2021. We completed an equity financing round with net proceeds of approximately $13.7 million. This additional capital strengthens our balance sheet, and it is expected to fully fund our operations beyond top line results of the U.S. pivotal Phase 3 program.

As previously mentioned during our last call, in July we completed our 12-month Phase 3 open-label long-term safety study, evaluating sofpironium bromide gel 5% and 15%, which confirmed both concentrations were safe and generally well tolerated. This data is consistent with our earlier Phase 2 clinical trial results.

We expect to release additional details at an upcoming scientific forum. Now turning to our Japanese development partner Kaken Pharmaceutical. This past September, they received regulatory approval in Japan to manufacture and market sofpironium bromide gel 5% under the brand name ECCLOCK for the treatment of primary axillary hyperhidrosis.

Kaken is now fully focused on launching ECCLOCK in Japan later this year. Important to note, Japan is the first country to approve sofpironium bromide for any indication.

Furthermore, sofpironium bromide is a first-in-class therapy in Japan, and it's also the first topical RX product for the treatment of primary axillary hyperhidrosis to be approved and marketed there.

As a reminder, Brickell is entitled to receive sales based milestone payments as well as tiered royalties based on a percentage of net sales of sofpironium bromide gel in Japan. This could represent significant value to Brickell over the years to come.

Importantly, together with Kaken, we were granted by the Japanese patent office, a composition of matter patent with claims directed to the novel polymorphic, or crystalline forms of sofpironium bromide that is expected to provide additional protection for these newly developed and distinct forms in Japan through 2040.

We are actively prosecuting patents related to this subject matter on a global basis. Lastly, we entered into a collaboration agreement with AnGes, which provides us with certain rights to develop their proprietary investigational adjuvanted plasmid DNA vaccine intended to prevent COVID-19.

Our rights include the U.S., South America and certain other emerging markets. AnGes is conducting Phase 1 and Phase 2 clinical studies with its vaccine candidate in Japan with data readouts expected through the first quarter 2021.

The results from these studies will guide our decision around any potential development efforts of this novel vaccine candidate. Now let's turn it over to Deepak to discuss our Phase 3 Cardigan 1 and Cardigan 2 studies.

Deepak?.

Thanks, Rob. We are excited to have recently initiated our Phase 3 program that sofpironium bromide gel 15% for the treatment of primary axillary hyperhidrosis here in the United States.

This milestone puts us on track towards achieving our goal of developing a potentially best-in-class treatment to improve the lives of millions of patients suffering with primary axillary hyperhidrosis in the United States. This program is comprised of two studies to evaluate approximately 350 subjects for trial with primary axillary hyperhidrosis.

We initiated the first study Cardigan 1 in October of this year and are on track to initiate the second study Cardigan 2 by the end of the year.

These randomized double-blinded vehicle controlled studies will each be conducted across approximately 40 sites United States and will evaluate the safety and efficacy of topically applied sofpironium bromide gel 15%. Subjects will be treated for six weeks with a two-week follow-up.

The core primary efficacy endpoint for each study as agreed with the FDA or the proportion of subjects achieving at least two-point improvement on the patient reported outcome scale, that is the HDSM-Ax 7 and the change in gravimetric sweat production each from baseline to the end of treatment.

Importantly, we achieved statistically significant results at the 15% concentration on both of these co-primary efficacy endpoints in our dose ranging Phase 2b study. Based on the 350 patients sample size, the studies are adequately powered to achieve a two-sided p-value of less than 0.05.

The design of these studies is based on our prior clinical development experience in which the investigational product sofpironium bromide gel 15% demonstrated statistically significant improvement in hyperhidrosis severity and was safe and generally well-tolerated as observant the Phase 2 and 12-month Phase 3 long-term open-label safety studies.

If these two pivotal studies are successful, they will form the basis of a prospective new drug application in the United States for sofpironium bromide gel 15% for the treatment of primary axillary hyperhidrosis.

While still early, given the pandemic and all the unknowns, we are encouraged with the screening and initial enrollment update in the Cardigan 1 study. And we look forward to providing updates on the progress of our Phase 3 program, including the initiation of Cardigan 2 over the coming weeks.

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

Mike?.

Thanks, Deepak and good afternoon to everyone on the call. I appreciate the opportunity to provide a summary of our third quarter 2020 financial results.

I also encourage you to read our full consolidated financial statements and MD&A contained in our quarterly report on Form 10-Q, which can be accessed through our investor section of our website once filed with the SEC. Starting with cash and investments.

As of September 30, 2020, we reported $20.2 million in cash and marketable securities having used $4.7 million in cash during the third quarter of 2020. In addition to our cash balance, we prepaid $4.2 million to third-party clinical research organizations for a recently initiated Phase 3 pivotal clinical study of sofpironium bromide.

Subsequent to the end of the third quarter, we completed a public equity offering resulting in net proceeds of approximately $13.7 million. This financing strengthened our balance sheet, and we believe our current cash position will support our operations beyond the top line results of the U.S. pivotal Phase 3 program.

Net loss was $4.1 million for the third quarter of 2020 compared to $4.8 million for the third quarter of 2019. The net loss was reduced despite the decline in revenue and is largely due to reduced R&D spending between finishing the long-term safety study and the start of the Phase 3 pivotal studies.

Revenue decreased by $1.1 million from the same period last year, because our revenue from both periods is largely from a $15.6 million research and development payment we received from our development partner Kaken in mid 2018. And at this point, we've already performed most of the work necessary to recognize the payment into revenue.

G&A expenses totaled $3.2 million for the third quarter of 2020 compared to $3.9 million for the third quarter of 2019. This $700,000 decrease was primarily due to lower costs for professional and related fees associated with the merger with Vical Incorporated and additional other miscellaneous fees that occurred in the third quarter of 2019.

These reductions partially offset by higher costs largely to become a public company for items including directors and officers liability insurance and stock and other compensation expenses from increased headcount. Now, I'd like to turn the call back over to Rob..

Thanks, Mike. I wanted to take a brief moment and recognize that November is hyperhidrosis awareness month. And on behalf of the Brickell team, I wanted to just thank the international hyperhidrosis society for their unwavering effort and commitment to support this patient community and make hyperhidrosis awareness of priority.

As many of you already know, hyperhidrosis is a life altering medical condition where a person sweats more than the body requires to regulate its temperature. More than 15 million people or 4.8% of the population in the United States and 12.7% of the population in Japan are believed to suffer from hyperhidrosis.

Primary axillary hyperhidrosis is the most common site of occurrence of hyperhidrosis affecting an estimated 65% of patients or 10 million people in the United States.

Hyperhidrosis is more common than psoriasis and based upon data that was presented at last year's American Academy of Dermatology Annual Meeting, 95% of hyperhidrosis suffers say their hyperhidrosis is not resolved.

We remain committed to keeping the hyperhidrosis community at the forefront of our mission and look forward to supporting the efforts of the IHHS. For more information on hyperhidrosis and the IHHS, feel free to visit sweathelp.org. That concludes our prepared remarks. I'll now ask the operator to open the call up for questions.

Operator?.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Thomas Flaten with Lake Street Capital Markets. Please proceed with your question..

Hey, guys. Thanks for taking the questions and congrats on all the progress.

With respect to the Phase 3 safety study, is -- are you able to share any more specificity with when we might see that data?.

Hey, Thomas, first of all, thanks for the question and calling in. We're now submitting it to meetings. So, obviously, until you know exactly what meetings accepted what -- we don't have any greater specificity, but our plan would be to have it be out in the public forum sometime early next year..

Great.

And then, given the -- at least from my perspective, slight acceleration in the initiation of the second study, can we take from that all of the plan sites are up and running at this point?.

Sorry.

For the first study or the second study, Tom?.

Yeah. For the first study, sorry..

Yeah. That’s fine. I am overlapping, it gets a little confusing. For the first study, I mean, things are progressing. I don't think all the sites are up and running at this stage, but the vast majority are..

Got it. And then just one quick one.

The COVID vaccine data -- so when you say the data will come out over the course of the first quarter, will they be staggered by Phase 1 portion and Phase 2 portion, or will all come out as one bolus?.

Yeah. W we'll get to see the Phase 1 data first, and then obviously the Phase 2 -- there's a roll over. So, the Phase 2, we'll see as it comes out. But it'll be staggered over the time..

Great. I appreciate you taking the question. Thanks..

Hey, no problem..

Thank you. Our next question comes from the line of Trevor Howard with Oppenheimer. Please proceed with your question..

Hey, guys. Thanks for taking the question. Wanted to ask also about for Cardigan 1.

Is there -- can you give us any update on the enrollment in terms of total numbers that you're seeing? And what's your expected age makeup going to be for most of those patients? Is it going to be in the younger side of things, or is it going to be kind of broad?.

Yeah.

Deepak, would you like to answer the question?.

Sure. Happy to do that. Hi, Trevor. This is Deepak Chadha. So, clearly, just on the enrollment update, it's too early. We just started the Cardigan 1 last month, so it's too early to provide any update, but we are encouraged that the screening and initial enrollment uptake thus far.

And based on the initial enrollment, we are still on targets and expected to have the readout from the Cardigan 1 by the year-end. And I think your second question was around the age. So, clearly, the patient population for hyperhidrosis, it's nine and above.

I think our main target will be the young patient population that will be something around like in 30 to 40-year-old range. I think that's the sweet spot for hyperhidrosis, but again, I think as per the FDA’s requirement, the Cardigan 1 and Cardigan 2 will enroll nine and above in age..

Yeah. Trevor, it's Rob. Just a couple of clarities. First off, when Deepak says year-end, he means year-end next year, not in the next month or so, just to be clear. And then, we aren't giving specific numbers on the patients at this time, partly because it's pretty early.

But we are committed to providing updates on enrollment as we go forward in the study..

Okay. Thanks..

Thank you. Our next question comes from the line of David Wang [ph] with SMBC. Please proceed with your question..

Hey, guys. Thanks for taking the questions. So just first one.

Do you have any awareness of how the payers are currently managing the hyperhidrosis category? How do they think about it in terms of utilization management for things like Qbrexza or BOTOX?.

Yeah. Hey, David. First, thanks for the question. Yeah. So, when we look at the Qbrexza data and certainly what Dermira was sharing before the acquisition by Lilly, they were saying that about 85% of lies were covered. When we look into the data what we see is that 80% to 85% looks about right.

And most of it, obviously, at this stage of the product lifecycle is tier three. I have not seen specific data on BOTOX and what its reimbursement is..

Okay. Great. Got it. And then I was just curious in terms of lifecycle management, have you thought much about that whether there might be a usage, for example, more plants or hyperhidrosis or other formulations of the drug, things like that..

Yeah. As you might imagine, we're kind of continually going through a process of evaluation of strategic alternatives, including lifecycle ideas with this product on different body parts. Right now, our primary focus is getting these Phase 3s moving forward and done. The good news is the IP on this product is really long.

And so, it gives us the opportunity to work through that and take full advantage of this opportunity that's in front of us..

I see. Okay. That's helpful. And then maybe lastly, just in terms of the general market awareness. I think historically it's been a little bit low and there's been the need for patient and physician education.

Do you think that's still rings true and how much education and marketing might be needed to support the product?.

Yeah. So, I think it does ring true. You do have a large population that has hyperhidrosis. People with hyperhidrosis know they sweat an awful lot. And often they seek treatment with -- to a physician. The challenge has been the options that are out there and the satisfaction of patients with those options. So, the people are aware.

So, a lot of patient awareness stuff is helping people realize that their symptoms are certain conditions, and then they should go seek treatments. That's the first part is actually not a challenge for this disease.

It's making people aware that there are valuable and worthwhile treatments out there and that they should go talk to their doctor about them. That's a much easier task for a commercial organization to do. But it needs to done and we would expect it to be done.

This is a marketplace that having multiple products will be helpful, because it'll help kind of -- it's kind of one of those things where all tides raise -- tide raises all ships. Awareness will help bring more people into the marketplace and more people in the marketplace will create more opportunities for everybody..

Got it. Well, thanks for taking my questions..

Sure..

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Brown for any closing remarks..

Thank you for taking the time this afternoon to listen to our update. I want to close out the call by commending the entire Brickell team on how much they've accomplished so far this year. This is especially noteworthy considering the ongoing COVID-19 pandemic.

The team has proven that they know how to execute against the strategy and overcome any challenges that come their way. It is because of this dedication and perseverance that we are now reaching this pivotal time in the company's history.

We have no plans to ease up, as we look to ramp up the Phase 3 program, targeting to report top line results from these studies in Q4, 2021. We are committed to building on the encouraging progress we've made this year, and we'll continue to seek ways to create value for the company.

To that end, we look forward to providing updates over the coming months. Finally, I want to take this opportunity on behalf of the whole Brickell team to wish the best to everyone on the call and their families. As always, please feel free to reach out to us anytime with questions..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day..