Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of Urovant Sciences Ltd earnings conference call or presentation Thursday, February 13, 2020 at 9:30:00pm GMT

Urovant Sciences Ltd. - CFO & Senior VP of Business Development

Urovant Sciences Ltd. - Chief Medical Officer of USI

* Keith A. Katkin

Urovant Sciences Ltd. - CEO & Director

Urovant Sciences Ltd. - Executive Director of IR

* Biren N. Amin

H.C. Wainwright & Co, LLC, Research Division - Equity Research Associate

Good day, ladies and gentlemen, and welcome to Urovant Fiscal Third Quarter 2019 Earnings Call.

(Operator Instructions) As a reminder, today's conference is being recorded. I would now like to turn the call over to Ryan Kubota. Sir, you may begin.

Ryan Kubota, Urovant Sciences Ltd. - Executive Director of IR [2]

Thank you, Fati. Good afternoon, and thank you all for joining Urovant's Fiscal 2019 Third Quarter Financial Results Conference Call.

With me today are 4 members of our leadership team. Keith Katkin, Chief Executive Officer; Ajay Bansal, Chief Financial Officer; Dr. Cornelia Haag-Molkenteller, Chief Medical Officer; and Christine Ocampo, Chief Accounting Officer.

Today, after market close, we issued a press release containing detailed information on our quarterly results. You may access our release on our company website, urovant.com.

During our call, we'll be making forward-looking statements, including statements regarding our plans and strategies for the clinical development of vibegron and other treatments for urologic diseases.

Listeners are cautioned that all of our forward-looking statements are based on our current expectations and assumptions, which are subject to numerous risk factors that could cause our actual results to differ materially. Accordingly, we advise listeners to review the forward-looking statements disclosure in today's press release and the Risk Factors section of our Form 10-K, as well as our Form 10-Q, which we filed later today.

With that said, I will now turn the call over to our CEO, Keith Katkin. Keith?

Keith A. Katkin, Urovant Sciences Ltd. - CEO & Director [3]

Thank you, Ryan, and my thanks for all of you for joining us this afternoon.

This has been a very exciting and transformational quarter for Urovant, marked by key milestones across all aspects of our business.

First, in December, we submitted our New Drug Application to the U.S. Food and Drug Administration for vibegron for the treatment of patients with overactive bladder. The submission comes one quarter earlier than we initially anticipated, and we are very excited to have submitted our application by the end of the calendar year and ahead of schedule.

Second, we initiated our Phase IIa study in URO-902, our novel gene therapy product for patients with overactive bladder, suffering with urge urinary incontinence that have failed oral pharmacologic therapy. The study is evaluating URO-902's efficacy, safety and tolerability of a single administration of the product, and we expect top line safety data towards the end of the year.

Third, pursuant to the transaction between Sumitomo Dainippon Pharma, also known as DSP, and Roivant Sciences, DSP is now Urovant's majority shareholder. As part of the transaction, Urovant entered into a loan agreement with DSP, whereby DSP provided Urovant with a $300 million low interest, interest-only 5-year term loan facility with no repayments due until the end of the term. This loan facility provides Urovant with capital well into 2021 and enabled us to pay back the outstanding amount on our previous loan agreement with Hercules Capital.

DSP also expects to support Urovant through profitability and provide support for the commercialization of vibegron, providing access to its U.S. commercial infrastructure, including drug distribution, operations and managed care support.

Finally, Urovant and DSP entered into an investor rights agreement that provides certain protections to Urovant minority shareholders for as long as DSP holds between 50% and 90% of Urovant's outstanding voting power.

We're excited about our new strategic relationship with DSP, the potential benefits that it brings to Urovant and the future of our company. With the submission of our New Drug Application and launch preparations for vibegron well underway, we look forward to the strategic support and proven commercial resources of DSP.

Their drug distribution, operational and managed care support capabilities should greatly optimize Urovant's commercial approach to the U.S. market.

Now to comment briefly on some of our other important business highlights. We continue to enroll patients into Part 2 of the Phase III COURAGE trial, which will assess both efficacy and safety of vibegron in men with OAB and BPH, a patient population for which no product is currently approved.

Enrollment also continues for patients into our IBS-associated abdominal pain trial with top line results expected later this year.

With that, I'll now turn the call over to our Chief Medical Officer, Dr. Cornelia Haag-Molkenteller, who'll provide more detail on our clinical programs.

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Cornelia Haag-Molkenteller, Urovant Sciences Ltd. - Chief Medical Officer of USI [4]

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Thank you, Keith. As mentioned before, we are pleased to have submitted our new drug application for vibegron for the treatment of OAB to the FDA at the end of last year.

Let me briefly outline what to expect regarding the OAB filing and the program, then provide an update on our other clinical development programs.

In OAB, first, the submission of a New Drug Application to the FDA at the end of December 2019, we'll be waiting for the notification by the FDA of the acceptance of our file in March of 2020.

Second, we're expecting a 12-month review cycle at the FDA and potential approval could occur at the end of this year. We are looking forward to working with the FDA during the review process.

Third, in May, at the upcoming AUA, American Urological Association's 2020 Annual Meeting in Washington D.C., we will have 2 presentations: the first presentation would be our 52-week EMPOWUR extension study data; and the second presentation will be that of the EMPOWUR data by age.

Regarding the EMPOWUR extension study, we performed a post hoc analysis to test the difference in week -- at week 52 between vibegron 75 milligram and the active comparator tolterodine on the change of baseline in the urge urinary incontinence and total incontinence episodes between vibegron and tolterodine.

Notably, for both parameters, vibegron demonstrated a statistically significant reduction over tolterodine. The symptoms of urinary incontinence are key symptoms OAB and the main reason for patients to seek treatment. We're very excited by this data and believe this further supports the strong efficacy profile of vibegron.

Let me now turn to our other clinical programs. I'm pleased to report that we continue to make excellent progress across all of our development programs. Regarding our international, Phase III COURAGE development program for vibegron in men with OAB and benign prostatic hyperplasia, or BPH, we continue to enroll patients into Part 2 of the trial, which over 1,000 patients will be enrolled.

The trial is running in North America, and we will soon be initiating studies in Europe.

Our 2 of the Phase III current trail, which will assess both the efficacy and safety of vibegron in men with OAB and BPH. The co-primary endpoints are reduction in micturition frequency and urgency episodes per 24 hours. Key secondary endpoints are reduction in nocturia episodes, which means the awakening at night avoid, prostate symptom scores and safety. In addition, the first patients from Part I have enrolled into the long-term extension study, which will follow patients for a total exposure of 52 weeks.

We're excited about this program as there is currently no FDA-approved product specifically indicated for overactive bladder in men with BPH.

Let me now turn to our Phase IIa clinical program for IBS-associated abdominal pain. The study continues to enroll female patients with IBS-associated pain. Patients are randomized to either 75-milligram of vibegron or placebo. The primary endpoint is a 30% reduction in abdominal pain intensity on an 11-point rating scale over 12 weeks for IBS-D, which is the IBS with diarrhea. A responder is defined with the subject with at least 30% decrease in worst abdominal pain compared to the weekly baseline average.

Secondary endpoints include a global rating scale and safety, in particular, a lack of negative effects of stool frequency or consistency. We expect to report top line data from this study in the third quarter of 2020.

Finally, as reported recently, we initiated a Phase IIa trial for URO-902 in December 2019, our novel injectable gene therapy for patients with OAB, who've failed oral pharmacologic therapy.

This is a randomized, double-blind, placebo-controlled trial that will evaluate the efficacy, safety and tolerability of a single administration of URO-902. The therapy is administered by direct intradetrusor injections into the bladder wall under local anesthesia.

The trial is expected to enroll approximately 80 female patients in the U.S., 2 cohorts. The first cohort will receive either single administration of 24 milligram of URO-902 or matching placebo. The second cohort will receive 48 milligrams of URO-902 or matching placebo. Patients will be then followed for 48 weeks.

The primary outcome measure is the change in the average daily number of urge urinary incontinence for baseline, 2 week trial as well as assessment of safety and tolerability for this potential new therapy.

I am pleased with the progress we made over the last quarter and look forward to providing you with further updates in the coming quarters.

Now I'll pass to Ajay for a financial update.

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Ajay Bansal, Urovant Sciences Ltd. - CFO & Senior VP of Business Development [5]

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Thank you, Cornelia.

In addition to the financial results summarized in our press release, you can find additional information in our upcoming Form 10-Q, which will be filed later today.

R&D expenses were $23.1 million for the third quarter of 2019 compared with $21.3 million for the same period in the prior year. In the third quarter of 2019, R&D expenses were comprised of costs related to the submission of a new drug application for vibegron to the U.S. FDA.

Clinical development. Specifically, our ongoing studies in OAB plus BPH and abdominal pain associated with IBS. When comparing the 2 quarters, the increase in R&D expenses is primarily due to: a $2.9 million PDUFA fee for our NDA submission of vibegron for the treatment of OAB; a $2.5 million milestone payment as part of a collaboration agreement to Kyorin Pharmaceuticals in connection with our FDA submission of vibegron; and an increase of $2.6 million in share-based compensation due to the acceleration of vesting of certain stock options and RSUs as a result of the sale of Roivant's interest in the company to DSP.

These increased expenses were partially offset by lower clinical research organization costs, primarily due to the completion of Phase III EMPOWUR study earlier this fiscal year.

G&A expenses were $16.7 million for the third quarter of 2019 compared with $4.9 million for the same period in the prior year. The increase in G&A expense is primarily due to an increase of $8.7 million in share-based compensation from acceleration of vesting of certain stock options and RSUs and an increase in personnel costs as well as other general and corporate expenses.

Total operating expenses were $39.8 million for the third quarter of 2019 compared with $26.2 million for the same period in the prior year. As mentioned before, the increase is primarily driven by the increase in share-based compensation expense, PDUFA fee and Kyorin milestone payment.

Cash used in operations was $23.6 million for the quarter ended December 31, 2019, a decrease of $0.9 million as compared to the immediate prior quarter ended September 30, 2019.

Net loss was $41.3 million or $1.36 per share for the third quarter of 2019 compared with a net loss of $26.4 million or $0.87 per share for the same period in the prior year.

At December 31, 2019, total cash and cash equivalents were $131.9 million. As you're aware, in December of last year, we entered into a $300 million low-interest, interest-only 5-year term loan facility with DSP with no repayments due until the end of the term.

At closing, we drew down $87.5 million and still have $212.5 million available to us under this facility, eliminating the need for any short-term equity financing.

In addition, DSP also expects to continue to support Urovant through profitability. Looking ahead, for the fourth quarter of fiscal 2019, ending on March 31, we expect our total operating expenses to be in the range of $41 million to $43 million, which includes a $10 million milestone payment that will become due upon acceptance of our NDA submission by the FDA.

Cash used in the quarter ending March 31, 2020, will include the $48.2 million that we used to repay the Hercules Capital loan and the $10 million milestone payment due upon acceptance of our NDA. We expect to end fiscal 2019 with a cash balance of $44 million to $46 million.

Turning now to fiscal 2020. We expect fiscal 2020 to be an exciting year for us as we prepare for the launch of vibegron during the first 3 quarters and then launch vibegron if approved by the FDA in the fourth quarter.

For fiscal 2020, which begins April 1, we expect our quarterly operating expenses to be higher than the first 3 quarters -- to be higher in the first 3 quarters as compared to approximately $30 million of quarterly operating expenses, excluding stock-based compensation for fiscal 2019.

Operating expenses will increase further in the fourth quarter of fiscal 2020 as we bring our sales force onboard and launch vibegron if approved by the FDA.

With that financial update, let me turn the call back over to Keith.

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Keith A. Katkin, Urovant Sciences Ltd. - CEO & Director [6]

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Thanks, Ajay.

I'd like to reiterate our excitement for what we have accomplished during this past quarter, especially, the progress we have made with the submission of our New Drug Application for vibegron and the initiation of our Phase IIa study for URO-902.

Our new relationship with DSP provides us with a stronger and more stable financial profile, while also providing access to a global platform, enhanced commercialization resources and other significant advantages as we prepare for the launch of vibegron.

We remain very excited about the market opportunity for vibegron in OAB. Our belief in the differentiation of vibegron is further supported by what we believe has been a very strong launch in Japan.

While the market dynamics in Japan are very different than the United States, current data suggests that vibegron was able to take meaningful share from mirabegron in a short period of time.

In closing, the third fiscal quarter of 2019 was transformational for our company, marked by key milestones across all aspects of our business.

We look forward to several upcoming milestones that will continue to drive towards the goal of developing Urovant into a leading specialty urology company. These upcoming milestones include: the FDA acceptance of our New Drug Application for vibegron in OAB, which we anticipate by the end of Q1 2020; our 2 upcoming presentations in May at AUA in Washington, D.C., that includes data from our recently completed post hoc study, demonstrating the statistically significant benefit of vibegron over tolterodine at week 52; Phase IIa top line safety data for IBS-associated pain in the second half of 2020; the continued and the patient of cohort 1 enrollment in Phase IIa of our novel injectable gene therapy for OAB URO-902, followed by the initiation of cohort 2 enrollment later this year; and the ongoing evaluation of Part 2 of the Phase III COURAGE trial, which will assess both efficacy and safety of vibegron in men with OAB and BPH.

With that, I'll now open the call to questions. Operator, can you open the line?

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Your first question comes from the line of Mr. Eric Joseph from JP Morgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [2]

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You kind of anticipated one of them here. I'm just curious to get a better of a sense of what you're seeing from Kyorin and their launch of Biova in Japan? And -- understanding there's going to be differences in dosing in the label here in the U.S., but where are they seeing patient demand come from? And what's the dynamic been with mirabegron there?

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Keith A. Katkin, Urovant Sciences Ltd. - CEO & Director [3]

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Yes. Thanks for the question, Eric.

We don't have a ton of information from Japan, particularly, we don't have insight into exactly what patients are going after with their campaign. What we do have is that we've got 2 sources of information: we've got essentially the Japanese IQVIA data; and also and maybe more importantly, we've got the sales numbers that have been reported by Kyorin as they're a publicly traded company.

Both the IQVIA-like data in Japan and also the sales numbers that we're seeing from Kyorin suggest they're taking a really nice percent share. We don't want to go into the specifics, but even if we got that share within the first 12 months of our launch, we would be extraordinarily happy with the uptake of our launch as we think everybody else would be as well.

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Edited Transcript of UROV.OQ earnings conference call or presentation 13-Feb-20 9:30pm GMT - Yahoo Finance

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