Q4 2023 Achieve Life Sciences Inc Earnings Call

Participants

Nicole Jones; IR; CG Capital

John Bencich; CEO; Achieve Life Sciences Inc

Cindy Jacobs; President and Chief Medical Officer; Achieve Life Sciences Inc

Jerry Wan; Principal Accounting Officer; Achieve Life Sciences Inc

Thomas Flaten; Analyst; Lake Street Capital Markets

Francois Brisebois; Analyst; Oppenheimer

Michael Higgins; Analyst; Ladenburg Thalmann & Co. Inc

John Vandermosten; Analyst; Zacks

Vadim Merkulov; Analyst; Freedom Finance

Presentation

Operator

Thank you, greetings. Welcome to the Achieve Life Sciences Fourth Quarter and Year Ended 2023 Earnings Conference Call and Webcast. (Operator Instructions) As a reminder, this conference is being recorded, and I would like to hand the call over to Nicole Jones Investor Relations. Thank you. You may begin.

Nicole Jones

Thank you, operator. Good afternoon, everyone, and thank you for joining us today from achieved life sciences. We are joined by John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; and Jerry Wan, Principal Accounting Officer. Management will be available for a Q&A session.
Following today's prepared remarks, I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to achieved documents available on our website and filed with the SEC concerning factors that may affect the company. At this time, I will turn the call over to John.

John Bencich

Thank you, Nicole, and thank you for joining us as we discuss achieves financial results for the fourth quarter and year ended 2023, along with providing key updates on the cytisinicline development program, 2023 was a transformative year for Achieve marked by significant clinical, regulatory and financial milestones. Our commitment to developing cytisinicline for smoking cessation and nicotine dependence has yielded remarkable progress and we're excited for the year ahead.
During 2023, we completed and announced results from the Phase three ORCA three and Phase two ORCA V1 trials, which have been instrumental in demonstrating cytisinicline potential for treating nicotine dependence. The ORCA three trial again confirmed the promise of cytisinicline for smoking cessation with significant efficacy and tolerability benefits observed in treated patients.
Furthermore, the ORCA V. one trial highlighted cytisinicline effectiveness in treating nicotine dependence for vaping cessation marketing, a pioneering step in helping to address this emerging public health challenge in which currently over 11 million adults and an additional 2.1 million users have reported vaping in the United States alone.
Late last year, we conducted our pre-NDA meeting with FDA to review NDA submission requirements and timing during the meeting agreement was reached on many of the expected requirements, including that we have sufficient data sets from an efficacy perspective to proceed with submission at that time, the FDA indicated that they would need additional safety exposure data beyond 12 weeks to assess the long-term exposure risk for patients receiving multiple courses of treatment over a lifetime due to the repetitive and chronic nature of smoking cessation attempts.
In February of this year, we reached agreement with the FDA that a single open label study would meet the requirements for long-term cytisinicline exposure data, which clears the path for driving forward the cytisinicline program towards an NDA submission.
I will now turn the call over to Cindy to go into further detail on our study design and planned initiation of this open label safety study, which we are calling the ORCA OL. trial. Cindy?

Cindy Jacobs

Thank you, John. The Orca OL. study will be a single-arm open-label study that will administer cytisinicline treatment with our novel three milligram t. i. d. administration to subjects who have already participated in our Phase two and Phase three cytisinicline trials either for smoking or vaping cessation. The primary objective of this study will be to obtain longer term cytisinicline exposure, safety data for cytisinicline treatment for up to one year FDA was clear that the long term exposure safety data they require is cumulative exposure for the periods of six months and one year because this open-label study will enroll subjects who participated in our previous ORCA studies and two thirds of them have already received up to six or 12 weeks cytisinicline treatment.
This will allow for faster collection of cumulative exposure data to support the NDA submission. Based on our discussions with FDA, we have agreed to include safety data on a minimum of 300 subjects exposed to cytisinicline for a cumulative period of six months at the time of NDA submission and then prior to approval of the NDA that we will submit safety exposure data on at least 100 subjects with cumulative exposure for one year. This agreement follows the general ICHY. one guy wins for products with chronic or repeated instrument used for longer than six months in the treatment of non life threatening diseases.
We anticipate initiating ORCA OLI. trial in the second quarter of this year at approximately 30 clinical trial locations in the US, all of which participated in prior orphan studies. All of these clinical sites have now been engaged and are actively conducting outreach to potential participants. As we have previously stated, there were more than 1,700 subjects who participated in the prior Orckit studies with over 1,100 that were previously treated with cytisinicline in those trials.
We currently have enrollment in the protocol at up to 650 subjects to ensure that we have sufficient subjects to quickly meet the long long-term exposure for six months. And importantly, one year, we will obviously be monitoring enrollment and discontinuation rates closely as the study progresses to make a final determination on study enrollment, we have completed contracting and onboarding with our key contract partners and vendors to execute the Orco OL. study as quickly and efficiently as possible. These include our CRO data management, lab services, safety monitoring and drug distribution partners.
And we are on track to begin enrollment in the second quarter of this year. And based on our current expectations, I believe we will be in a position to submit an NDA in the first half of 2025 although the study objectives are specific to assessing for safety results, such as the incidence of serious adverse events over exposure time, we will also assess for cytisinicline efficacy with longer-term exposure these assessments will be for observation purposes only and are not an FDA requirement for an endpoint to determine success of the trial. In addition to finalizing NDA submission requirements for the smoking cessation indication.
We will continue our discussions with FDA regarding status silicones role as a treatment for e-cigarettes cessation. We anticipate conducting our end of Phase two meeting on finalizing a Phase three protocol. This year, we will be discussing the adequacy of a single Phase three trial for obtaining a label expansion for an e-cigarette cessation indication since the Phase two ORCA V. one trial received grant support from NIH, and neither we will continue to explore nondilutive funding support as we continue to advance our Phase three planning.
I will now turn the call back over to John. John?.

John Bencich

Thanks, Cindy. In connection with the FDA clarity on NDA requirements, we bolstered our financial strength significantly in February, announcing an equity financing of up to $124.2 million in gross proceeds. That includes initial upfront funding of $60 million and up to an additional $64.2 million upon exercise of milestone driven warrants. This initial funding positions us to advance our clinical initiatives, including the Orco OL. study and targeted NDA submission in the first half of 2025, all while ensuring a robust balance sheet as we continue strategic partnership discussions.
I will now turn the call over to Jerry, who will provide additional details on the financing an overview of our latest financial results.

Jerry Wan

Thank you, John. Good afternoon, everyone. I would like to first provide an update on our recent financing and cash position and then review our fourth quarter results. As of December 31st, 2023, the Company's cash, cash equivalents and restricted cash totaled $15.6 million, down from $24.8 million as of December 31st, 2022.
Subsequent to the end of the fourth quarter, we announced a registered direct offering of common stock and a concurrent private placement of warrants worth up to $124.2 million that closed earlier this month. This transaction included initial upfront gross proceeds of $60 million and up to an additional $64.2 million upon exercise of milestone driven warrants after giving effect to the February 2024. Equity financing, the company's pro forma cash, cash equivalents and restricted cash as of December 31st, 2023, would have been approximately $71.8 million.
This equity financing was key for the business, and we were pleased with the support of new and existing fundamental healthcare investors such as Propel bio, not to Halla and Franklin Templeton to name a few as well as strategic investor. So pharma proceeds from the offering will be used to fund the clinical development of cytisinicline, including the upcoming ORCA OL. clinical trial, which is expected to be initiated in the second quarter of this year as well as the anticipated NDA submission in the first half of 2025.
It will also be used to fund other cytisinicline related research and clinical development activities and for working capital and general corporate purposes. We expect that the initial net proceeds from the financing will fund us into the second half of 2025, including the potential repayment of our outstanding debt obligations under our contingent convertible term loan. If the milestone warrants issued as part of the recent financing are exercised in full, we would anticipate these proceeds to extend runway into 2026 and through potential approval of cytisinicline in the United States.
With respect to our statement of operations, total operating expenses for the fourth quarter and year ended December 31st, 2023 were $4.4 million and $27.3 million, respectively. Net loss for the fourth quarter and year ended December 31st, 2023 was $5.5 million and $29.8 million, respectively.
That concludes my portion of the call or not turn the call back over to John.

John Bencich

Thank you, Jerry. It has certainly been an eventful and exciting start to the year in addition to finalizing NDA plans with FDA and completing the financing to ensure we have adequate resources to complete the development of cytisinicline. We were privileged to deliver three presentations at last week's society for research on nicotine and tobacco Annual Meeting.
Data from our completed Phase three and Phase two trials were shared with the prestigious audience of nicotine treatment specialists and researchers who share our commitment and dedication to finding new solutions to address nicotine dependents and presented data highlighting our impressive results from the Phase three ORCA three trial, which was consistent and reinforced our findings from the Phase three ORCA two trial.
Dr. Nancy, regarding an Orca primary investigator and Professor of Medicine at Harvard Medical School reviewed findings from the Phase two ORCA V1 trial for vaping cessation. Additionally, we delivered a presentation highlighting findings from our post trial patient experience survey, which provided insights directly from a small sample of participants in the Orca two and Orca three trials, which showed high levels of reported smoking abstinence reductions in both cigarettes consumed and cravings for smoking and a strong willingness to recommend cytisinicline to other smokers looking to quit, if approved by FDA.
Importantly, almost three-quarters of respondents felt the side effects were manageable or that they experienced very few side effects. We continue to believe this is one of the key differentiating benefits of cytisinicline. As we know side effects remain the key reason that many smokers are not compliant with or are unwilling to take currently available medications.
As I wrap up my remarks though, I'd like to express my appreciation for your continued support and for the collaborative and ongoing efforts of our trial participants and their health care providers at our trial sites. So many of us have been personally touched by the devastating consequences of smoking and remain steadfast in our belief that cytisinicline can truly make a profound impact to help the millions of individuals who have not seen any treatment advances in almost two decades.
Our priorities for the balance of this year remain clear complete. The ORCA OL. study continued NDA submission preparations finalize the path forward for expansion into e-cigarette cessation and continued productive dialogue with prospective commercial partners.
Thank you again for joining us today, and we will now open the line for questions.

Question and Answer Session

Operator

Thank you. At this time we'll be conducting a question and answer session. (Operator Instructions)
Thomas Flaten, Lake Street Capital.

Thomas Flaten

Hey, thanks for taking the questions out. Cindy, in your comments, there seem to be an implication that you would not do anything on the vaping program in the absence of non-dilutive funding. Was that a correct read?

Cindy Jacobs

Well, we're looking at and getting additional non-dilutive funding. I don't think we're going to be able to complete the Phase three trial was only nothing dilutive or grant funding arm. So we'll probably have to have a mixture of both, but it was very similar to what we had with the Phase two half of it was paid with neither grant funding and half by us. So there would be some mixture of that.

Thomas Flaten

Got it. And then just two quick ones on the OL. study, is there anything being done to monitor compliance of patients with the dosing instructions?

Cindy Jacobs

You mean as far as making sure they're compliant. We have the same compliance kind of tactics with the OL. study as we did with our Phase three, we will have text messaging. We will be giving out packets. They will need to bring them in. We'll review that the tablet through taken so all of that is being applied. Similarly, that was done in the Phase three with the OL. study.

Thomas Flaten

And then kind of related to that, what burden is being placed on the patient, how often they have to come in for visits, some follow-ups and things like that?

Cindy Jacobs

But that is the one nice thing there instead of coming in weekly, which they did for the first 12 weeks and then monthly afterwards, they start out and they're only coming in monthly through the OL. study.

Thomas Flaten

Appreciate the question. Thank you.

Operator

Francois Brisebois, Oppenheimer & Company.

Francois Brisebois

Thanks for the questions. Can you help us understand the time line here from first half 25 NDA filing to potential approval and launch?

John Bencich

Sure. Thanks for the question, Frank. So right now, as Cindy indicated on the call, we're really driving forward towards initiating the open the ORCA OL. trial in the second quarter of this year. We think, again, depending on enrollment of those subjects that could put us in a position to have the requirements for NDA submission that we've completed in the clinic late this year or early next.
And so that would put us in a position to get the NDA on file first half of 2025. Right now this would be a standard review cycle. So two months to accept 10 months for review, which would put approval first half of 2026.

Francois Brisebois

Okay, great. And in terms of the OL. trial, why the push on I'm looking at efficacy here? What's the upside of doing that?

John Bencich

Yes. So with respect to the FDA, they specifically told us they don't need efficacy out of this trial. This is solely for longer-term exposure, safety data, which is fine for FDA, but from our perspective, we think efficacy is interesting, and we think there's a lot of data points that could come out of this trial that could be leveraged for publication for payers.
For other future trial planning, for example, you know, if a patient had quit in a previous study but relapse, you know, how likely are they to quit again, going back onto treatment as well as what happens with longer duration, does that get to more robust efficacy that again could lead into a new a lifecycle management play of extending dosing beyond 12 weeks at some point in the future. So I think from an efficacy perspective, there's an interesting learnings that we could get out of the Orco well trial.

Francois Brisebois

Thanks.

Operator

Michael Higgins, Ladenburg Thalmann.

Michael Higgins

Thanks, guys, for the taking the questions and congrats again on the agreement with the FDA on. Yes, John, to give you some feedback as to how the patients are responding so far, it sounds like the sites have begun their outreach. You mentioned 30 U.S. sites gives us some some feedback as to how many are opening, how many are reaching now and what the patients are are responding?

Cindy Jacobs

So the 35 save on all started to reach out of this month to the participants and they are getting a lot of enthusiasm for coming back in to an open label study. And I guess we were not surprised by this because we did do surveys of the Phase threes afterwards and that some of the data that was presented at the ASRNT. meeting last week that they were very satisfied and they thought the treatment was very helpful. And so with that positive survey, probably indicates that, yes, they are on we are getting positive responses for participating in this open-label study.

Michael Higgins

That's great. Yes, we saw that presentation last week, and I'm no surprise to hear that. I'm curious if you've had a chance since the news from the FDA last December to have discussions with payers and in light of that news and how that may guide what you're doing here in the open-label trial, what kinds of efficacy information which apparently FDA is not looking for, but certainly may help with your new reimbursement scenarios post approval, anything that you can share with us from the discussions as to what you may be looking for in terms of efficacy from this trial?

John Bencich

Sure, thanks, Michael. Yes, on the payer front, we've had a number of discussions with payers payers over the last two or three years. And I think one thing to keep keep in mind is that the Affordable Care Act does mandate that all FDA approved smoking cessation medications be covered. So no, from an access perspective, this is one of the better categories out there. With that being said, the open label trial. I think we'll have the ability, like I mentioned before to look at what happens with repeat administration.
So both success initially and then recruitment again or perhaps no lack of success in an initial treatment and having success a second time around all those sorts of data points can be used with payers as we have those discussions leading up to and on the other side of approval of this product. So I think those are probably the most important pieces. But I think as we kind of dig in further with the datasets that we get there could be other interesting learnings that we could leverage with the payer community.

Michael Higgins

That makes sense. Thanks for that feedback. And one quick follow-up, if I could is the on the monthly visits, if you find because it's different than the weeklies before that patients just aren't as compliant as they were in the previous trials, are you able to adjust along the way and seeing that tried to reach out to them more often?

Cindy Jacobs

Well, absolutely. Yes, that one of the things we will be monitoring in that regard.

Michael Higgins

Very good. Appreciate it. Thanks and congrats again.

John Bencich

Thanks, Michael.

Operator

John Vandermosten, Zacks.

John Vandermosten

Great. Thank you and hello, John of Cindy and Jerry and good afternoon. How many arms since there's a delay relative to the first expectations on the on the trial? How does this affect the work with. So pharma preparing for the FDA inspection and all the other work that you're planning to do with them?

John Bencich

Yes. John, thanks for the question. So as we've spoken about further, one of the key areas of focus for us will be continue to be working with So pharma to ensure FDA inspection readiness. And so that will continue. This gives us effectively another 12 months of preparation timing.
With respect to that, one of the items that we are working with Ziopharm on is looking at additional CDMOs that could be side-by-side with So pharma groups from both drug substance and drug product perspective that have already been FDA approved historically, and that could continue to minimize any risk from an inspection perspective. So that's something that we're working with in addition to the continued work at So pharma and their sites.

John Vandermosten

Great. And then we saw, I guess, an explosion of generic options for varenicline recently and I don't know if you had seen any news on that or had any update for us? I know you're keeping an eye on that on the generic side and how that's progressing any new observations over the last several months?

John Bencich

Yes. With respect to generic varenicline, I believe there are six generics on the market now. So over the last 12 months that has expanded beyond Endo, who was the first to market to something we continue to monitor as we as we proceed. And we have seen some data points. I believe there's some recent IQVIA data that was suggesting the generic market for varenicline was on an annual run rate of roughly 450 million. And for what we're seeing in the marketplace. That's somewhere north of a 30% discount to where Chantix the brand left off.

John Vandermosten

Okay, great. Thank you, John. Appreciate it.

Operator

Vadim Merkulov, Freedom broker.

Vadim Merkulov

Good afternoon. Thank you for taking my question of notable event of Expo currently Annual Meeting. Could you share any feedback received from the professional community on the presented results of HoReCa program and have raised any concerns about potential chronic use on the drug?

John Bencich

Yes, thanks for the question. So on as we talked a bit on the call, we did have a very strong reception at the SRNT. meeting. Last week, we were able to present three different data sets of two from the Phase three program and then New York at the one trial results presented by Dr. Nancy regarding from Harvard Mass General. And I would say overall very well received. And I think we continue to see cytisinicline as the lead compound driving to market. There's really not much else going on behind it. That's anywhere near that phase of development that we have with our product candidate here. So I think that's refreshing.
I think overall, the perspective is that this is a viable treatment option and a very needed treatment option in a category that hasn't seen any new new options in nearly two decades. And so I think overall, great, very warm reception from a lot of the folks that we look to for input as we've develop this program over the last several years.

Vadim Merkulov

Thank you. And one more from me, please. Could you collaborate on the safety endpoints requested by FDA for a open label trial. Have any changes to the protocol been made in safety parameters compared to the previous studies?

Cindy Jacobs

Sure, we have kind of a primary one of looking at just serious adverse events. And then after that, there would be any related serious adverse events, just general treatment emergent adverse events related treatment, emergent adverse events and no clinically significant laboratory abnormalities on and And after that, looking at any problematic vital signs, I mean, most of these, we haven't seen in the Phase threes, but we have all of those objectives or endpoints in the open label as similarly as we did in the Phase three studies.

Vadim Merkulov

And it's Thank you.

John Bencich

Thanks, Vadium.

Operator

Michael Higgins, Ladenburg Thalmann.

Michael Higgins

Thanks again, guys for taking a few more follow-ups here on. Can you help us with on your conversations with the FDA and NIH on vaping, what that may look like throughout this year. I know you want to get that going. You've had your and forward with only and all that's been happening there, but just trying to get a better sense for the timing with the dating program and your discussion? Thanks.

John Bencich

Yes. So the focus on the vaping indication really is going to be the end of Phase two meeting with the agency. So now that we've got the work of the one trial complete, we're able to share that with the agency again under the guise of an end-of-Phase two meeting to get clarity on the path forward. As we've indicated before, our belief is that a single Phase three trial is what will be required to open up the label and expand into nicotine e-cigarette cessation, but we need clarity on that. And so that is a high priority for us this year and something we we'd hope to get clarity on in the second half of this year.

Michael Higgins

Okay. Sounds good. We'll sit tight for that and for that. And then on the second one here being manufacturing it sounds like the sites are open and so forth. Do you have enough supply at this point? Is that still coming on board in the summer months and into the fall I'm trying to understand that the manufacturing is ready to go for early?

John Bencich

Yes. Thanks, Michael. On the manufacturing side of things, this probably is the gating item to initiating centers and getting folks back into the clinic for the ortho Oh well trial, the cabinets we've all been made and we're in the process here in the coming weeks to get that blister pack and ready for the clinic. So everything's on track to move that a horse that fast forward here in the coming weeks that we can initiate the Orca well trial.

Michael Higgins

Okay. Sounds good. And then finally on I noticed that OpEx in Q4 was lighter than we had expected. Congrats on that and then we looked ahead to 4Q oh and trying to get an assessment or some sort of gauge as to how the cost may be compared to Orca two and three, it's longer, but less frequent visits. Just trying to get a sense in comparison to the trials how this cost may not may come out?

John Bencich

Yes. Thanks, Michael. With respect to the costs for our core COOL., we've currently estimated this roughly $20 million trial that will come in basically over the course of 2024 and 2025. And so while the visits are less frequent, the the overall number of visits is similar to what we've seen in our previous studies just over a longer period of time.
And I've seen the articulated that what we're doing at those businesses is very consistent. And the bulk of the cost of these studies is the patient recruitment costs. And so the bulk of the expense will come come in as the patients are enrolled and complete their therapy. And so we'll see some of that cost kick off here in Q1 and then drive the bulk of it through the first part of next year. So hopefully that's helpful in kind of modeling out the lower expenses?

Michael Higgins

That certainly we appreciate of the other feedback. Thanks, guys. Congrats again.

Operator

Thank you. And we have reached the end of the question and answer session, and I'll now turn the call back over John Bencich for closing remarks..

John Bencich

Thanks, operator, and thanks, everyone, for joining us today. Appreciate all the continued support we've made a huge amount of progress here recently to get clarity from FDA and really move forward quickly with the Orco well trial now, and we look forward to providing additional update updates as we proceed and look forward to continue to stay in contact. Thanks again, everyone.

Operator

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.