Trevena, Inc. (TRVN) Q3 2018 Earnings Call Transcript

Erin Clark – Senior Director-Corporate Strategy and Investor Relations Carrie Bourdow – President and Chief Executive Officer John Hamill – Vice President-Finance Mark Demitrack – Chief Medical Officer

Jason Butler – JMP Securities

Good day, ladies and gentlemen, and welcome to the Trevena Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Erin Clark, Senior Director of Corporate Strategy and Investor Relations. Ma’am, you may begin.

Thank you, and welcome, everyone. Thanks for joining us on this morning’s call. With me today are Carrie Bourdow, our President and CEO; Mark Demitrack, our CMO; Jonathan Violin, our SVP of Scientific Affairs; and John Hamill, our VP of Finance. Before we begin, we wish to inform participants that we will make forward-looking statements on this call, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You’re cautioned that such forward-looking statements involve risks and uncertainties, including risks detailed from time to time in the company’s periodic reports filed with the Securities and Exchange Commission, and we undertake no obligation to update these statements beyond today. During today’s call, Carrie will provide a brief corporate update. John will then review our financial results, including our near-term cash flow outlook. I’ll now turn the call over to Carrie.

Thank you, Erin. As you know, last Friday, we received a complete response letter from FDA for the oliceridine new drug application. We discussed the contents of the letter on our conference call on Monday. So today, I’d like to focus our comments on how we will resolve questions about the oliceridine program, advance our business and rebuild investor confidence. Obviously, we were disappointed by the CRL. The letter highlighted four distinct items that we believe will be addressable following our meeting with FDA. We remain confident that once approved, oliceridine will become an important addition to the currently limited set of IV analgesics in the hospital. The question for us now is what steps do we need to take to accomplish the work ahead. Here’s the plan. First, we have to prioritize and reduce expenses. Today, we made a difficult decision to reduce our workforce by about one-third. John will provide details on how this impacts our cash runway, but we will have a smaller, more targeted organization to work on oliceridine. Second, we need the necessary skills and expertise to help us work through our plan. At Trevena, we have retained key people in non-clinical and clinical development, manufacturing and regulatory who can help us address each of the items raised by FDA. In addition, we are working with external clinical experts in the area of cardiac electrophysiology and with seasoned regulator consultant who have experience working on NDAs and complete response letters, with companies as well as with the agency. Together, we will be focused on understanding exactly what FDA needs to approve oliceridine and how to most efficiently deliver that information. Third, we will pause spending on our early pipeline until we finalize the path forward and have a better understanding of the investment needed for oliceridine. Despite this pause, we’ll continue to work with the National Institute of Drug Abuse or NIDA on the potential for TRV734 to treat opioid dependence. We will also continue to evaluate the plans for TRV250 for acute migraine and our S1P modulators for non-narcotic treatment of chronic pain, which includes potential partnering options, but we won’t be advancing these pipeline assets with our own cash until we can weigh those investments versus the expenditures on oliceridine. We may incur delays in some instances, but we believe the extra information is critical to enable strategic decision-making. Finally, we are committing to all Trevena stakeholders that we are focused on reducing risks, managing time lines and using capital efficiently. Our goal in the coming month is to reach agreement with FDA on a plan that gives investors confidence we are on a path to building oliceridine and our early pipeline value. All of this won’t happen overnight. There’s an incredible amount of work to do behind the scenes, but we are committed to updating you as we learn more in the coming months. Before I turn it over to John, I’d like to mention a few recent highlights. In October, we presented our ATHENA open-label safety study for oliceridine at the Annual Meeting of the American society of anesthesiologists. The trial included 768 patients with moderate to severe acute pain with a substantial number of patients at elevated risk for opioid-related adverse events, 32% of patients over the age of 65 and more than 50% with BMIs over 30. We were encouraged by the positive interactions we had at the meeting and the support we received from physicians who were excited about the possibility of having this treatment option available in the future to help manage patients’ pain and improve hospital care. Also in October, we announced the appointment of Dr. Scott Braunstein to our Board of Directors. Dr. Braunstein has both investment and operational experience in the specialty pharmaceutical space, and his insights and experience will be a tremendous asset to Trevena. Finally, we’ve continued to support NIDA as they evaluate TRV734 for the treatment of opioid dependence. They’ve recently presented data at the Society for Neuroscience Annual Meeting showing beneficial effects of TRV734 in a rodent model of opioid dependence and drug-seeking behavior. We look forward to continuing this collaboration as NIDA contemplates clinical evaluation of TRV734 for this important unmet need. Now I will hand the call over to John to review our financials. John?

Thanks, Carrie. We’ve disclosed key financial measures earlier today in our press release, and we’ll file our 10-Q today. For now, I’ll summarize the headline numbers. For the third quarter of 2018, we reported a net loss attributable to common stockholders of approximately $4.5 million or $0.06 per share compared with approximately $16 million or $0.27 per share for the third quarter of 2017. The reduction in 2018 expense compared to 2017 is largely attributable to substantially reduced R&D expenses following the completion of the oliceridine Phase III program and a discontinuation of early-stage research in the fourth quarter of 2017. More specifically, research and development expenses were approximately $3.4 million for the third quarter of 2018 compared to approximately $10.2 million for the same period in 2017. General and administrative expenses were approximately $3.9 million in the third quarter compared to approximately $5.2 million in the third quarter of 2017. Our cash, cash equivalents and marketable securities were approximately $70 million as of September 30, 2018. As Carrie mentioned earlier, we have reduced our workforce by approximately one-third, and this reduction along with other cost-saving initiatives are expected to save more than $3.5 million a year. We expect to incur a cash charge in the fourth quarter of 2018 of approximately $1.3 million related to this workforce restructuring. We believe that our cash, cash equivalents and marketable securities as of September 30, 2018, together with the reduction of operating costs from our restructuring plan, will be able to fund our operations into the second quarter of 2020. To be clear, this estimate reflects our current assessment of the extent and costs of activities required to address the comments in the CRL. This assessment may change following our meeting with FDA. I’ll now turn the call back over to Carrie.

Thanks, John. Our view is that we have options to build shareholder value with a clear path forward for oliceridine, our pipeline and our cash resources. While today’s restructuring was necessary, this is always an incredibly difficult step to take as an organization. I would like to extend my gratitude to the employees impacted by these changes for their commitment and dedication to patients and their many contribution to the company. I will now open the line for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Jason Butler of JMP Securities. Your line is now open.

Hi, thanks for taking the questions. First one, I – obviously, you need to wait for the meeting with FDA to clarify all of the responses that you need to the CRL, but are there any pieces of the CRL that you can begin to address now ahead of that meeting? For example, can you start any of the non-clinical work ahead of the meeting with FDA?

Jason, thank you. So yes, as we said on Monday, as it relates to the manufacturing question around leasables, two of the three analyses are already underway and are already ready to go. There are a couple of other things, so let me turn it over to Mark Demitrack. He’s already working on it as it relates to the proposal.

Sure. Thank you, Jason. So the answer is yes. There are things that we have taken steps to begin to do. We’re obviously working on preparing study designs and an approach to the question of QT that was raised and discussed on Monday. And in addition, we are taking steps to address the question of the analytic approach to the metabolite, which was one of the other questions that was raised on Monday. So certainly, we have steps underway in preparation, as quickly as we can do this, to meet with the FDA to discuss these options.

Okay, great. And then two additional quick questions. One, the early pipeline work that you discussed, can you give us a sense of what the expenditure is likely to be on those programs? You said that you wouldn’t do expensive work with your own capital, but just give us a sense of what the budget would be today. And then have you used the ATM facility at all since the last 10-Q was filed?

Great. So let me ask John to answer the ATM question. And then I’ll talk about the pipeline expenditures.

Jason, so as you’ll see in the Q, outstanding shares as of September 30 and November 2 haven’t changed. So we haven’t used the ATM since then. We did raise approximately $13.8 million in the third quarter through the ATM. We have approximately $36.4 million remaining.

Thank you, John. And then Jason, as it relates to the pipeline, as I mentioned, we’re going to put that on pause. We really need to get clarity from the agency on the expenditures as it relates to oliceridine. So we’re not going to be spending any cash, external cash until we have that clarity on the – with the FDA.

Okay, great. Thanks for taking the questions.

Thank you. And I’m showing no further questions at this time. I would now like to turn the call over to Ms. Carrie Bourdow for closing remarks.

Great. So thank you all again. And in closing, in the near term, we’re looking forward to getting additional clarity, as I mentioned, on the plans and timing related to the ultimate approval of oliceridine. We remain committed to building long-term shareholder value by bringing differentiated medicines for patients in pain. Thank you for joining us this morning.

Ladies and gentleman, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone, have a great day.