Trevena, Inc. (TRVN) Q4 2019 Earnings Call Transcript

Greetings and welcome to the Trevena Fourth Quarter and Full-Year 2019 Earnings 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, Bob Yoder, Chief Business Officer. Please go ahead.

Thank you and welcome, everyone. Thank you for joining us on this morning's call. With me today are Carrie Bourdow, our President and CEO; Mark Demitrack, our Chief Medical Officer; Barry Shin, our Chief Financial Officer; and Timothy Beard, Chair of the Department of Surgery at Summit Medical Group in Bend, Oregon. Before we begin, we wish to inform participants that we will be making forward-looking statements on this call, which are made pursuant to the Safe Harbor provision 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 review our 2019 and recent corporate achievements and lay out our plan for 2020. Mark will provide an overview of the data from our IV oliceridine program that was recently resubmitted to FDA. Dr. Beard has also joined us this morning to provide his perspective on the current role of IV opioid analgesics in his clinical practice. Barry will then review our financial results, followed by some time for questions. I'll now turn the call over to Carrie.

Thanks, Bob. Good morning, everyone. Thank you for joining us this morning. At the start of 2019, you'll remember that I laid out a plan to resubmit oliceridine for approval and to advance the pipeline. What you're going to hear this morning on this call is that we've delivered on the plan and you'll hear that with successful resubmission of oliceridine, we'll now turn our attention to preparing for expected approval in August of this year. And on the pipeline front, what you'll hear is that we've hit key development milestones. We now have two proof-of-concept studies underway – one for acute migraine and another for opioid use disorder. And we're studying TRV045, a novel S1P modulator in epilepsy and a variety of other CNS conditions. Importantly, we completed all of this work while we managed our expenses very carefully. And I have to say I am extremely proud of this team and what was accomplished in 2019. Let me give you just a few more details on the highlights, the high points from my perspective from the year. As you saw last week, FDA accepted our resubmission of the oliceridine NDA and it's crazy. They told us that it was a complete response to their action letter. They set a PDUFA date of August 7 and we're looking forward to working with them as they review our application. In the past, you've heard me talk about the market opportunity for oliceridine. It's large. Over 45 million patients each year in US hospitals receive drugs like IV morphine for acute pain, and about 9 million of those patients are at greater risk of developing adverse events. Hospitals are seeing a rise in these at-risk patients and an increase in the number of severe acute pain surgery. And we believe this at risk patient population alone represents a total addressable market of $1 billion to $1.5 billion. That's impressive. But at the end of the day, it's important that we focus on why we developed a novel analgesic like oliceridine and the reason is to improve patients' lives. Later on this call, we've invited Dr. Tim Beard to talk with you about some of his high-risk patients and the challenges that he faces in managing post-op acute pain. Beyond oliceridine, we made significant progress on the pipeline. Late last year, we initiated an acute migraine proof-of-concept study for TRV250. Migraine is also another large market. Approximately 650 million migraines are treated annually in the US. And there's still a need for novel treatment options. TRV250 is a novel new mechanism, and this one at the delta receptor. And the delta receptor is located throughout the brain and the delta receptors regulate mood, anxiety and pain, including migraine pain. We're evaluating the ability of TRV250 to reduce the occurrence of headaches and also to potentially reduce symptomatic anxiety. About half of all migraine patients experience anxiety. There are no approved treatment options that can treat both migraines and anxiety. So, obviously, this would be a large market opportunity for us for TRV250. It's a really exciting asset and we're expecting top line results on this study in the second half of this year. Another proof-of-concept study we started late last year was in collaboration with the National Institute on Drug Abuse, or a group called NIDA. And this study is for TRV734 for opioid use disorder. NIDA is looking at the potential of 734 as a safer and better tolerated treatment option for patients suffering from addiction. We're really pleased to be working with NIDA to help fight the opioid crisis and I'll keep you updated as the study progresses. And then lastly, as you saw this morning, we announced that we've initiated another collaboration with the NIH to investigate the potential of TRV045 as a treatment for epilepsy. 045, another new mechanism, represents a novel approach to treating neurological disorders. And it's a next generation S1P receptor modulator that activates the receptor target without any of the immunosuppression that you get with other S1P modulators. NIH has already initiated the first round of assays for epilepsy. And we believe this asset holds promise not only for epilepsy, but for a variety of CNS indications. With all of our assets, including oliceridine, we're actively investigating collaborations and strategic partnerships. Remember, we already have two ex-US partnerships for oliceridine. And these collaborations are going really well. We're expecting to receive a $3 million milestone payment upon FDA approval of oliceridine. As we continue to make progress on oliceridine and the pipeline, we're going to continue to look for ways to advance all of our assets and to maximize shareholder value. With that, let me now turn the call over to Mark.

Thank you, Carrie. I'm also very pleased that we've successfully re-submitted our NDA for IV oliceridine. This milestone represents more than a year of work by members of our clinical, non-clinical, manufacturing and regulatory teams. And I'm extremely grateful for the opportunity to work with such a dedicated group of individuals. I believe the outcome of that work is compelling and further strengthens our evidence in support of oliceridine as a potential new treatment option for patients with moderate to severe acute pain. The promise of oliceridine as a distinctive addition to a clinician's armamentarium of IV analgesics is built on its novel mechanism of action and unique pharmacokinetic profile. Oliceridine is a new chemical entity, a first in this space in decades, and was designed to optimize G protein coupled receptor pharmacology by preferentially engaging the G protein signaling pathway responsible for analgesia, with reduced recruitment of beta-arrestin, which is largely involved in development of adverse effects. Oliceridine has a rapid onset of action, with perceptible pain relief as early as two to five minutes after the first dose and lasting approximately three hours, providing a highly differentiated analgesic profile for clinicians. Oliceridine also has no evidence of active metabolites, which can complicate dosing and result in the emergence of delayed adverse events. Finally, our recently published studies in special populations have shown that no dosage adjustment is necessary in patients with underlying renal impairment or in the elderly. These attributes distinguish oliceridine from currently available IV analgesics like morphine. As a reminder, we've amassed a comprehensive clinical data set for oliceridine across multiple efficacy and safety studies, involving over 1,800 individuals. On past calls, we've spoken about the respiratory safety data, but today I'd like to highlight the GI tolerability data collected during our pivotal Phase III studies, using a complete GI response outcome measure. This is a common endpoint used in drug development for antiemetics and defines the complete responder as a patient who reaches the end of a study period without vomiting and without receiving a rescue antiemetic. The results of this analysis for oliceridine are extremely compelling. In the Phase III heart tissue study, patients on oliceridine were three times more likely to complete the study without vomiting and without needing a rescue antiemetic compared to patients on morphine. We saw a similar pattern in the Phase III soft tissue study. Importantly, these results held true when we control for differences in level of pain relief achieved. Put it different way, oliceridine doses that provided pain relief comparable to morphine had strikingly lower GI side effects. In addition, the improvements in GI tolerability were not due to differences in pre-existing risk for nausea or vomiting among the treatment groups. We believe this data reinforces the overall GI tolerability data for oliceridine. I'd now like to introduce Dr. Tim Beard, who is a practicing general surgeon and is the Chair of the Department of Surgery and Medical Director of Research at Summit Medical Group in Bend, Oregon. Tim also serves as an affiliate Professor of Surgery at Oregon Health Sciences University. We've asked Tim to join us this morning to provide his perspective on the current clinical challenges he faces in his hospital and outpatient practice and his thoughts on the oliceridine data. Tim?

Thank you, Mark, for the introduction. I'm pleased to join the Trevena team this morning to provide my perspective on the current role of IV opioid analgesics in my clinical practice and to share my thoughts on the body of data that the company has amassed on their investigational product, oliceridine. I'm speaking on my own accord and not in my position as a general surgeon at the Summit Medical Group. I am a paid consultant with Trevena. I practice as a general surgeon in a large multispecialty group and split my time between a community hospital and a physician-owned busy outpatient surgery center. I perform approximately 750 cases a year, with a third of those being done as inpatients. I have spent a considerable amount of time reviewing the published data for this compound and I have assisted Trevena's R&D group in data analysis and participated as an author on some of the key publications. I believe this experience has provided me some insights into what can be expected from oliceridine's potential use in practice. While the role of IV opioids in the post-operative pain management has undergone an evolution over the years, these medications remain the pillar and standard of care for acute pain management. In my practice, drugs such as IV morphine, dilaudid and fentanyl remain an integral part of all post-operative pain management strategies. The main reason for this is that only these medications can provide the definitive pain relief required in certain highly painful post-operative circumstances. I can't perform surgeries in my clinical practice without them. Poorly managed pain can have many undesirable consequences, including a lack of mobility, poor appetite, and disrupted sleep patterns. On the flip side, drugs like IV morphine also have side effects including respiratory depression, ileus, nausea and vomiting. So, you're left with a few options but to prescribe opioids when they're required, and then to supplement their use with several additional medications in order to try to minimize or counteract these side effects. Because of this, I frequently find it necessary to prescribe as many as five to seven different additional drugs in the post-operative setting. This unavoidable polypharmacy poses additional challenges to patients' recovery, including an increased risk of drug-drug interactions and the poor rate of adherence to these additional medications. In my opinion, Trevena's investigational product oliceridine offers the first truly novel advance towards a solution to this problem. I have been impressed with the quality and amount of data Trevena has gathered and published in peer-reviewed journals. The two pivotal Phase III studies provide the initial clinical data in bunionectomy and abdominoplasty surgeries. And these results showed great pain relief with a potentially differentiated and improved side effect profile from what we expect with conventional opioids. The results from the Phase III or real world open label safety study extended these findings. Of particular interest to me was the diverse patient population of this study, many of them with multiple comorbidities, including older age, obesity and diabetes. These types of high-risk patients represent ones I operate in my practice all the time. These complicating risk factors can pose significant challenges to a patient's post-operative course. A recent patient I treated does come to mind. This was a 52-year-old woman who needed surgery for a near obstructing tumor in her distal transverse colon. And at the same time came to surgery with a history of poorly controlled diabetes and a BMI of 53. The challenge here was not the surgical procedure itself, but the risks that emerged in her post-op recovery, given her high risk health history. For example, her surgical wound presented a huge infection risk. So, any occurrence of nausea, vomiting or retching could disrupt the integrity of her wound and lead to an infection. This is just one example of the type of patient who I could potentially benefit from the profile that oliceridine appears to offer. In his remarks, Mark noted the complete GI responder analysis from the clinical trials. Overall, these data suggests that, when the magnitude of analgesic benefit is held constant across treatment groups, patients treated with oliceridine are more likely to achieve a complete GI response compared to patients treated with morphine. This is an important endpoint and I feel relevant to me when considering the management of the patient I just discussed. Decreasing the risk of vomiting by two or three fold might make the difference for this patient of having a relatively straightforward post-operative course versus the risk that I would be seeing her back in the operating room to repair her wound dehiscence. I also see the potential advantage that oliceridine could provide in the outpatient setting. My ambulatory surgery center performs about 1,300 cases per month. One of our limiting factors in this setting is the availability of recovery room beds. If patients are delayed in the recovery, it prevents us from starting more cases. By far the most common reason for prolonged recovery time are pain, nausea and vomiting. As a result, the recovery room nurses are hesitant to give too much opioid medications as that makes patients sleepy and they do not breathe as well. On the other hand, if they give too little, patients will have too much pain, which itself may contribute to increased rates of nausea and vomiting. Oliceridine's pharmacokinetic profile offers several attributes that could provide advantages in the setting of care. For example, its rapid onset of analgesic effect makes it very easy for physicians to use. There also appears to be no need to adjust the dose for renal insufficiency, which again makes it easy on physicians. This is especially important in my practice as all the nephrologists in our town or in our group. Thus, I see a lot of renally-impaired patients. Oliceridine also appears to have no active metabolites, which makes pain management in the short-term setting, like an ambulatory surgery center, more straightforward. All of these factors could contribute to a decreased length of stay in our recovery room and increase patient satisfaction. To sum up, I'm excited by the oliceridine data that I have seen, and I believe that oliceridine has the potential to help address some of the post-operative challenges that physicians and their patients still face. Thank you again for the invitation to speak. And now, let me pass the call back to Mark.

Thanks, Tim, for your remarks. We greatly appreciate hearing your perspective on the challenges you face in your practice and what improvements you really hope to see in the current treatment landscape that would benefit both you and your patients. Tim will be available to answer questions during the Q&A later on this call. I'd now like to turn the call over to Barry for a review of our full-year financials.

Thanks, Mark. We issued our press release and filed our Form 10-K with our full financial results. For now, I'll summarize the headline numbers. For the fourth quarter of 2019, we had a net loss of $6.4 million or $0.07 per share, compared to $8.0 million, or $0.10 per share, for the fourth quarter of 2018. For the full-year 2019, we had a net loss of $24.9 million, or $0.27 per share, compared to $30.8 million, or $0.42 per share, for 2018. This decrease in net loss is mainly due to a headcount reduction in 2018 and a decrease in R&D expenses related to TRV250. At year-end 2019, we had cash, cash equivalents and marketable securities of $35.8 million. With additional clarity following completion of our healthy volunteer study, I'm very happy to update our guidance and report that we expect this amount both under operations and capital expenditures into the first quarter of 2021. This includes pre-commercial preparations and post-approval activities to ensure oliceridine will be available for distribution either by us or with a commercial partner in the fourth quarter of 2020. It also includes completion of a proof-of-concept study for TRV250 in acute migraine and IND-enabling work for TRV045. We'll now open the call for questions, after which Carrie will provide some closing remarks.

Thank you. [Operator Instructions]. The first question is from Jason Butler of JMP securities. Please go ahead.

Hi. Thanks for taking the questions. I had two for Dr. Beard. First of all, you talked about the types of patients that you might use for drug in. Can you talk about how you think about the procedures that you're doing and which procedures maybe warrant using the drug more than others? And then, can you just give us any thoughts you have on cost considerations of using a new drug like oliceridine and how those cost considerations compare and contrast in different institutions? For example, the community hospital you work in versus the outpatient clinic. Thanks.

Great. Thanks. Thanks, Jason. I actually think those are three questions, but, okay. Well, that'll be alright. So, Tim, I don't know if you could hear the first questions around the types of procedures in addition to the patients that you mentioned. And then secondly, talking a little bit more about cost, contrasting between the hospital and your ambulatory surgery center business.

Sure. Well, the procedures, I kind of split them up into two different and then same with the costs. So, if you look at our inpatient, the procedures, I think, where oliceridine will be best are procedures that cause more pain. So, any sort of laparotomy where you're making big incisions, any sort of thoracotomy where you're going into the chest with, again, big incisions. We're trying our best to manage those with multimodal analgesia, but opioids play a key role. So, I would say any, again, procedure that causes a lot of pain, so maybe not as much minimally invasive, although I still see a role in minimally invasive surgery which is laparoscopic and robotically. I guess that would be for the inpatient. And outpatient, what I'm excited for is the fact that this drug with what appears to be lower side effects that we'd be able to give people pain free and out of the recovery room faster. So, any patient I do in an outpatient surgery center, I think, there would be a role for this drug because, again, we are limited in space by recovery room. And if we get back up in the recovery room, everything kind of slows down. So, I do the majority of my patient cases in an outpatient surgery center, to be honest with you, and that's the trend nationally as more and more stuff is being done as outpatients and a big part of that is controlling costs. So, I would say almost all patients we do as outpatients would be good candidates for this drug. Now, costs are interesting. In the hospital, it would get absorbed in what's called the DRG. And the hospital looks at costs somewhat, but not super strict because it seems to me, like in our hospital, that DRG payments are fairly large, and they don't micromanage us very much on if we're using drugs that are a little bit more expensive than others. Sometimes, a little bit, we will get pushback. That's mostly on antibiotics. And that's mostly so you're not changing the form of antibiotics in our area. In the outpatient surgery center, the margins on the cases are much smaller, and so costs are looked at more. So, I don't have any idea of what this drug is going to come out as cost-wise. But that would be looked at a little more as far as do we see a benefit from that. But, again, I think most of us at the surgery center look at the bigger picture. So, if a drug does cost a little more, but people are happier getting out of the surgery center faster and we're more efficient, then the overall efficiency, I think, would far outweigh the cost of the drug. An example of that is when IV Tylenol came out. That's a lot more expensive than oral Tylenol, but yet we use it quite a bit because we see a benefit with that drug, even though the cost is more. So, I hope that answers your question.

That's great. Thank you very much. And thanks for taking the questions.

Thank you. Thanks, Jason.

The next question is from Douglas Tsao of H.C. Wainwright. Please go ahead.

Hi, good morning. I guess my first question is for Dr. Beard. In terms of you think about your overall patient population, both inpatient and outpatient, or you could address them separately, what percentage of them do you think fall into this high risk category and would be candidates for use once it is eventually hopefully approved?

Great. Thanks. Thanks, Doug. Great question. Dr. Beard, did you hear the questions, the percent of high-risk patients. Yeah?

Yeah. So, that percent goes up daily, it seems. I don't know. That was a real patient example that I gave. She was 5′1″, 325 pounds. So, that was an extremely difficult case and extremely difficult post-operative recovery. So, I would think, in our hospital, when this drug gets approved in August, we'd probably be able to get it to the P&T pretty fast, would be my guess. And you probably start using it on higher risk patients. So, people with pulmonary issues, people that are at risk for nausea and vomiting. For example, I do a lot of laparoscopic foregut surgeries, which are called Nissen fundoplication or paraesophageal hernia repairs, mostly for heartburn and reflux, and if those patients retch or vomit, it can totally disrupt the wrap that you've done. So, I would say, if I had to give a number of inpatients that I would say are what I would consider higher risk and that this drug is just tailor-made for, it'd put it probably at 50% or 60%. Unfortunately, I don't have a practice where I can operate on all this in healthy patients all the time, I wish. But this doesn't exist in reality. Again, in the outpatient, these are healthier patients by definition. We don't do anyone over an ASA 3 in an outpatient surgery center, so they're healthier. But I think their benefit, again, it's a little different. It's not so much for their post-operative risk. The drug would be used for its what appears to be lower side effect profile and patient satisfaction and ease of getting them to our system.

And then, just one follow-up. Or two follow-ups, one for Dr. Beard. I know you mentioned you're often treating – sort of taking a polypharmacy approach. Just curious what drugs oliceridine alone would be able to replace. And then, just a question for Carrie in terms of TRV045, the S1P, which are going into epilepsy. Just curious, how it was epilepsy was the first indication selected for development? Thank you.

Great. Yeah. Tim, I'll let you start on oliceridine.

Sure. So, we've developed these massive what are called ERAS pathways after surgery for a lot of our surgeries, which is Enhanced Recovery After Surgery. I'm sure you're familiar with them. And in that pathway, we do everything we can to optimize patients postoperatively. So, let's say I do a colectomy on someone, take out a colon for colon cancer. We obviously do a lot of stuff pre-op for those patients, but postoperatively even though they may get tap blocks or these rectus sheath blocks, they all get IV opioids. So, the drugs we give to counteract IV opioids, we give a drug called alvimopan or Entereg, which is a peripheral acting new opioid receptor antagonist, which blocks the side effects that opioids have on the gut. So, opioids cause an ileus where they cause the gut not to move. You can't pass gas or stool. So, you get that drug. We give a whole bevy of antiemetics, probably at least three different antiemetic to prevent the nausea and vomiting, including sometimes we give Decadron in surgery or Zofran or Phenergan or Compazine, any of those we can give to stop the post-operative nausea and vomiting. We also then are super aggressive with our respiratory care on these patients. So, we get a respiratory therapy consult, do incentive spirometers and may or may not give them nebulizers if they need it. So, I think those are the three sort of main areas that we were giving drugs to counteract the side effects of opioids.

And it sounds like – it's difficult for you right now to say what oliceridine may replace. You've got to get it in your hands, I think, and use it, right, is really Doug's question around what potentially oliceridine could replace.

Right. We're hoping – because, yeah – and what I tried to mention in my talk is that when you give so many different drugs to the polypharmacy that the compliance to that regimen is fairly low. That's what we're finding out with our ERAS protocol, is that we give all these different drugs and then people actually don't really get them scheduled because it's too much, the compliance is fairly low. So, yeah, we don't know. That's why I'm excited for this drug to get approved to try it to see how much we can eliminate because anything we can do to simplify it would be great.

Thank you. Thank you. And then, Doug, to follow-up on your question on S1P, so quick reminder, and I'll turn it over to Mark to talk specifically about epilepsy, but there are other areas that we've studied with TRV045 or in the process of looking at. Chemo-induced peripheral neuropathy is another area that we've looked at on the animal data. And then, epilepsy was really – Mark is going out and talking to folks that are involved in looking at epilepsy drugs and epilepsy trials. So, Mark, I'll let you talk a little bit about…

Doug, it's a great question. And as you know, we've talked in the past, the S1P target is really quite interesting because of its broad representation in the CNS. So, really, the challenge for us is more focused since there's an enormous number of targets that are of potential interest. And as Carrie mentioned, most of our early work was focused on chemotherapy-induced peripheral neuropathy in rodent models. That's one of the best studied animal models for the S1P system. But because of S1P localization on cell types in the brain, particularly glial cell types or astrocytes, it has demonstrable impact on various measures of membrane stability. And as a result, people became interested in the idea of exploring it in epilepsy models. And although it's not as well studied as the CIPN work, there has been some animal work done with some of the available S1P ligands, like fingolimod, for example. Now, you know that fingolimod is a non-selective S1P modulator and it also is accompanied by peripheral immunosuppression. The S1P1 receptor target, which is what 045 is directed at, is a bit more selective to the CNS receptors and it also is absent in immunosuppression in our studies to date. So, it allows us to build on some of the literature that exists for the epilepsy target in animal models with earlier tool compounds. And that really is kind of the thing that prompted our interest. The collaboration with EPSP emerged from those discussions. EPSP program is a longstanding, well regarded preclinical screening program that's sponsored by NINDS through the NIH. It's been in existence for about 30 years and has actually shepherded along several pretty key anti-epileptics to the market in their experience. So, we're pretty gratified that in our discussions that we've engaged in this program. So, further updates in the future.

Thank you. Thanks. Great.

This concludes the question-and-answer session. I would now like to turn it back to Carrie Bourdow for closing comments.

Great, thank you. And thank you for your questions. Thank you to Dr. Beard for addressing the questions. We appreciate that. Let me close with some of the key points that you heard today. First, we've executed on our plan. We did what we said we were going to do. We resubmitted the NDA for oliceridine, got confirmation from FDA that the submission was complete, and we also advanced the pipeline, as we carefully managed our expenses. I'd like to add my thanks to the team for their hard work and commitment. We expect 2020 to be a transformational year for Trevena. With the oliceridine NDA now under FDA review, we're preparing for expected approval in August. And we're also going to continue to make progress on the pipeline. So, I will continue to provide updates as the year progresses. Thank you again for joining us this morning on the call.

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