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1 Full Regular Transcription Full-Year Results 2015 Wednesday, February 24th, 2016 at 4:00 pm CET Duration: 60 minutes COMPANY REPRESENTATIVES Chief Executive Officer Chris Tanner Chief Financial Officer Chief Security Officer QUESTIONERS Bank am Bellevue Credit Suisse Bob Pooler Valuation Lab Henrietta Rumberger AWP Peter Welford Jefferies 2016 Chorus Call SA. All Rights Reserved 2009 Chorus Call SA. All Rights Reserved

2 PRESENTATION Operator Ladies and Gentlemen, good morning, welcome to the Cassiopea Pharmaceuticals Full-Year Results 2015 Conference Call. I am Sara, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the Conference is being recorded. After the presentation, there will be a Question and Answer Session. You can register for questions at any time by pressing * and 1 on your telephone. Should you need assistance, please press * and 0 to call an operator. The Conference must not be recorded for publication or broadcast. At this time, it s my pleasure to handover to the management team of Cassiopea Pharmaceuticals. Please go ahead, Ladies and Gentlemen. Thank you very much Sara and thank you everybody for joining our call today. I am, the Chief Executive Officer of Cassiopea. And today, I am joined by Chris Tanner, the Chief Financial Officer and, the Chief Scientific Officer. Thank you so much for joining our call today. We will be going over the presentation on the 2015 highlights that we posted on the website earlier this morning. We hope you ve had a chance to see not only the press release that we issued, but also the financial report of the Full-Year 2015 results. We will start by giving you a brief overview of the 2015 highlights and some important program updates on our key products and developments, and we were willing and hopeful to answer any questions you might have at the end of the presentation was a very busy year for us, even though it was a year that was a six months year for the newly formed Cassiopea. Our capital was increased by 49 or nearly 50 million Euros just before our IPO and the first day of trading was on July 1. We were very happy with the results of the IPO, having accomplished the biggest healthcare IPO on the Swiss Stock Exchange since the year 2000, where we had very nice support from investors in both US and in Europe. With our lead compound Winlevi, our new topical anti-androgen for the treatment of acne, not only did we obtain FDA approval on our SPA for our pivotal Phase III program, but we enrolled our first patient on November 9, Chorus Call SA. All Rights Reserved 1/18

3 For Breezula, our topical anti-androgen for the treatment of androgenic alopecia, we completed the six months treatment of our proof of concept study by the end of December and in fact yesterday we released the top-line results of that study which we will be talking about in a few moments. And then for our new topical antibiotic for the treatment of acne, in 2015 we completed enrollment for the POC study and in fact we will be releasing results in the next four to eight weeks. And our CB-06-02, our immunomodulator for the treatment of genital warts, the enrollment has not yet been completed, but we have initiated new sites, and we expect to complete the enrollment in the first half of 2016 and publish results in the second half of If you take a look at the financial results all of which are available in our Annual Reports and of course in the press release on our website, you will see that we understand for the year considering what we were planning to spend in our initial estimates, and I ll hand it over to you, Chris. Chris Tanner Yes. Well of course, we have no revenues yet, since we of course don t sell anything and we didn t license anything out because we didn t plan to license anything for anyway. On the operating expense, as Diana said, we spent slightly less than we planned, because there was... and you know as you shift when you start running your clinical trials and sometimes your expenses are a bit delayed, but in principle we are spending as much as originally planned. And we adhere to the original plans we gave to you as to how much money we will be spending overall until we have the data, the Phase III data for Winlevi in So I think if we go through the financial statements, really are not exciting, not much to talk about. The expenses, the most important part of the expenses I think is the breakdown, if you look at the breakdown of what we spent on which of the trials, that s on page, I don t have a page number on this, but title is discussion of income statement. There you can see the breakdown of the cost of the clinical trials. The other operating expenses you may look at are very minor and important to highlight here again is that Cosmo SpA continues working on with the company, with Cassiopea, on the basis of the service agreements which has allowed Cassiopea to work with the seven headcount staff, let s call it seven headcount staff, and the rest of the activities are in essence outsourced to Cosmo SpA. We can skip the next slide, the discussion of the income statement service cost because I don t think we have to go into the details of 1.2 million total cost Chorus Call SA. All Rights Reserved 2/18

4 On the income side, only important of course you saw the inflow of the 49 million and then we were lucky, if you want we decided at the time that we put everything into Dollars, or keep not invested, which was also very fortunate. So we kept the cash balance in U.S. Dollars and on the basis of the strengthening of the Dollar, we ve made a profit of 1.4 million, but of course these 1.4 million Dollar are going to be used again since we will keep the funds in U.S. Dollars and spend them when we need them. Total assets not much to be said, it consist practically entirely only of cash and cash equivalents and only of equity of course, with very, very small current liabilities, which has to do with payables that are due to Cosmo in part for services provided and for the clinical trials for the survey, for any activities that have been ongoing there. And then we can down to the next, discussing of the statement of financial position, I have already said that, we sold the BioMAS stake to Cosmo because we said at that time, that it s not in the intention of Cassiopea to hold any financial investments, so Cosmo took it over at the same price that was in the books. And all the other points in the financial statements are in essence this discussion of the equity position. Cash flow statement I think we can skip that. And we move over directly to the projects to-date, and Diana will give you a first overview of Winlevi and then Luigi will go into Breezula. So in Winlevi, our topical anti-androgen for the treatment of acne, our program is on track. We began our Phase III clinical trial program and are enrolling patients each and every day here and both in U.S. and Europe. We expect data to be available in the second half of 2017 and all is on track with Winlevi. In Breezula, you might have seen our press release announcing the top-line proof of concept results in androgenic alopecia and Luigi will go over the features of our Phase II study and then talk a bit about what the top-line results indicates. Yes. Very few words, just to underline our satisfaction in seeing the top-line results that we released this morning because in both the co-primary endpoint we had a very favorable ratio compared to the vehicles which was our real comparator, because the comparator that we set, that is Minoxidil is known to have the maximum activity at 4 to 6 weeks, 4 to 6 months so, it s in the top of the possible parabola and could be only a comparator in term of effectiveness Chorus Call SA. All Rights Reserved 3/18

5 We had very satisfying results also for the other two assessments, this hair growth assessment done directly by the patients and by the IGA that is done by the physicians. In both the cases, CB Breezula resulted the most effective arm compared to the other. And this is absolutely encouraging pushing us to develop the dose-ranging study that we already planned. So if you take a look at what will happen with Breezula over the coming months and the rest of the year, we are deep now into reviewing the detailed tables and listings on the POC results and our planning, our Phase II dose-ranging study to start in the Quarter 3 of We don t expect any top studies to be needed and we will be of course packaging it in the typical 60 ml bottle, not unlike Minoxidil In terms of our other programs, CB is our new chemical entity that s in Phase 2, proof of concept for acne. This study is completely enrolled and in fact under the... the results are expected here in about the next four to eight weeks. We look forward to publishing that data when it becomes available. This of course will be important data for us to make a go/no-go decision on our future activity as it might relate to our new topical acne antibiotic. For CB for genital warts, this program is in a Phase II proof of concept study for genital warts conducted in Israel and we expect enrollment to be complete over the next several months. Here we ve got 18 of 60 subjects enrolled so far and we expect to announce results top-line in the second half of this year. So when we look forward to the next few years, here you see that there are quite a few results coming out of the Company here in Of course, we just announced the Breezula top-line Phase II. We will be of course announcing the top-line results for the POC studies in both the CB acme antibiotic and products for genital warts and then will be announcing in the beginning of our Phase II dose-ranging study for Breezula in the second half of the year. As we move into 2017, we will of course, complete the end of Phase III for Winlevi and we will be having a... and of course announcing the Phase III results and having a pre-nda meeting with the U.S. FDA in And then finally in 2018, here we will be filing the NDA for Winlevi and announcing the Breezula Phase II results. So for Cassiopea, it is all about execution right now. And as we look into 2016 you ll see here what some of our product development objectives are, clearly it will be for Winlevi completing the Phase III enrolment by... in about 6 to 8 months from now Chorus Call SA. All Rights Reserved 4/18

6 We will have the first patient being enrolled in our long term safety study by the first quarter of You recall that a certain portion of patients rolled over from our Phase III pivotal trial into a long term safety trial according to FDA requirements and will also be initiating the pediatric HP study in the first half of As I mentioned with Breezula, we will start the Phase II dose-ranging study later this year, and will be making a go no go decision on each of CB and CB after we received result of the proof of concept studies over the next year. So when we look into the 2016 financial outlook, you will see our projected spend here for each of the programs in 2016, the bulk of which is in Winlevi worth over a little bit over 15 million Euros as we invest in our Phase III clinical trials there. And we d be happy to answer any questions you have regarding these results and our programs. Any questions? QUESTION & ANSWER Operator We will now begin the Question and Answer Session. Anyone who wishes to ask a question may press * and 1 on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use only handsets, while asking a question. Anyone who has a question may press * and 1 at this time. The first question is from Bob Pooler from Valuation LAB. Please go ahead. Bob Pooler Good afternoon and congratulations with the successful proof of concept results for Breezula. And just a couple of questions, if I may, first of all, on the Breezula trial, what were the reasons for the dropout of the patients from the 95 enrolled all the way down to the 73 per protocol analysis? 2016 Chorus Call SA. All Rights Reserved 5/18

7 Well, the reason was to have small groups, in order to have the chance to evaluate what kind of efficacy we could recover at the end of the shorter treatment period in alopecia trial that is three to six months. We know that, other clinical trial in alopecia took 12 or 18 months, but we decided to do the first timeframe in order to have a clear cut evidence if the product has the efficacy that we suspected. He want to know about why the dropout? Bob Pooler The dropout, yes. Dropout was due to the loss of patient or confidence of the patient to the treatment that has been subjected. So generally it is the normal 20% for a six months period of treatment is quite normal (not audible). But in another words, there were no safety issues (not audible) any issues at all. Bob Pooler Okay, it s just a normal dropout they did not take the drug that s used and so on. But you are not sure that the timed event and so. Okay, that s great. Just on the target doses for the Phase IIb, the dose ranging trial. What dose were you looking at? And then, just on... looking at the timing, it seems that you might go for a longer duration treatment there, because you are starting this Phase IIb trial in Q3 2016, and the results will come out in So are you going for longer treatment duration than the six months you did not? Yes. This is our intention to promote a long-term duration maybe 12 months, and also we have to test other different concentration because we wanted to see what kind of dose should be the lowest efficacy dose, FDA recommended to evidence. Bob Pooler Okay Chorus Call SA. All Rights Reserved 6/18

8 So Bob we are in deep analysis now on the data and the competitive set and are consulting with our key opinion leaders and our regulatory thought leaders around the construct of the dose ranging trial. So we are not ready to announce, what our doses will be or what the timing will be in terms of the duration. But if you look at some of the other development in the area, it wouldn t be surprising to consider a trial beyond six months perhaps up to 12 months that s a consideration. And of course, to really understand what doses we should study. So we are in the midst of doing that now and not quite ready to announce what that is yet. Bob Pooler Okay. But I think, yes with the long duration then you will get the differentiation with Minoxidil. Okay, just on Winlevi, on the pediatric study, what is the age group you are looking at, because I think on the clinical trial, you are starting from 9. So what age, and do, you know, the number of patients, I wonder results will be unknown? Yes, the FDA requires us to integrate our PK/HPA Study with recruiting 20 patients with 9 years or more up to 9 to 12, because the previous study that we did was starting from 12. And we are now completing this request, and we are starting with a trial that you understand due to the nature and the shortage of the trial to enroll, it is quite difficult to complete in that time. But we have a good situation that we are controlling now the CRO, in order to arrive in time with the results. Bob Pooler Okay. Well, thank you for answering my questions. You re welcome. Thanks Bob. Operator The next question is from Peter Welford from Jefferies. Please go ahead. Peter Welford Hi, thanks for taking my questions. I have got a few. First, if we just take for a minute with Breezula. Just trying to understand here the difference between the endpoints, and what you think could have driven that difference Chorus Call SA. All Rights Reserved 7/18

9 I guess, I am particularly thinking you have to get a more significant improvement, not specifically... but a significant improvement in the growth assessment, but not in the actual hair count versus Minoxidil. I guess, any insight into what it is that s driving the difference between the investigator and the subject assessment, and the disparity with that versus on the other hand the hair count from the other endpoint? I ll comeback with the second one. Yes, Peter. The problem is that, you know, that Minoxidil is known to make some wellness promotion. The wellness is something that probably the patient doesn t perceive as a real (not audible) and that s probably the difference between the hair count and the (not audible). Well, let me say also that the LTS has been confirmed by the IGA that is the investigator brought for assessment. So I am prone to think that the hair growth that Breezula is able to promote could be more evident than with Minoxidil. But we don t have any other confirmation for this. Let me also say that despite we use Minoxidil in this proof of concept trial. Our real competitor for the future life of the product should be Propecia and not Minoxidil. And so, we are now to address comparison with the Propecia data that at the first glance we are very satisfied as well. Peter Welford Okay. And I guess, my second question sort of relates to that, which is with regards to the total hair width and hair diameter or density, what will be the other endpoint is. Obviously, I appreciate the data is still fairly new to you and immature, but have you had any chance to look at any trends you are seeing in some of the quality and type of hair that you saw in the trial? Well, we don t have the time up to now, because the recent... the data are very, very recent and we have no time to make a full valuation. But in principle, we are discussing about two types of data. The first is a microscopic data like the hair count, the width and the darkness, and the other is the microscopic data that is the appearance of the full scalp of the patient to the patient itself and to the investigator. So I think that there could be a discussion between the two types of parameter also because the two type of proof are really different. But I don t have today an answer for your question, because I don t have the time to look into the full data package up to now Chorus Call SA. All Rights Reserved 8/18

10 Peter Welford Hey, then the last one on the Breezula, then I ve got one on 06-02, but just the last one on that, is it feasible to consider at all a study head-to-head versus Propecia whether that would be the dose range finding or Phase III or do these... does the side effect profile of Propecia, and obviously a difference in dosing make any sort of comparative trial challenging? Well, there is a possibility that we are evaluating, and we want to discuss with other consultant, particularly with the regulatory consultant and the clinical consultant. For sure, in terms of mechanism of action, we are closer to Propecia than to Minoxidil, and this could be a natural competitor. We don t know, what could be the best design for the Phase II dose finding and for the Phase III program that we have to discuss this, really it is a possibility. Company Representative Yes, but Peter, just one thing that s important Propecia cannot be used by women and our intention of course is to have our drug being authorize both for men and women. So in our dose ranging trial, we did not have any women. But we plan to include women in the further clinical trials. Yes, the RPOC study did not include women. Yes. Peter Welford Yes, sorry, that was what I was wondering, whether or not, I guess that was the vain in my question. Is the Phase IIb going to be only in males again, therefore enabling you to consider Propecia because I imagine as you said, the Phase III will presumably be an (not audible) which would obviously prevent the use of an active comparator like that? We want to discuss this possibility with the regulatory consultant that has to address us in the right path. For sure, we want to extend the treatment possibility also to female, and then we have to evaluate this is better to do this in the Phase II or in a dedicated other Phase II trial or in the Phase III. This is something that we didn t decide up to now. And then, just remember Peter that Propecia is an oral, and we are a topical, and that introduces just some complexity in the Phase II trial with a double dummy et cetera Chorus Call SA. All Rights Reserved 9/18

11 But clearly we are... we just received this Breezula data; we were very cognizant of announcing the top-line results because of the sensitivity, as soon as possible to the market. But now we are (not audible) details around that only the proof of concept study results, but also the planning on Phase II. Peter Welford Great, thanks. And then, sorry final question on I am just wondering what it is that that s holding back enrolment, is it... I mean, obviously you ve increased the number of sites, but is it the screening criteria been to strict in absence of eligible patients in the first place or is it you know, within us to consider the clinical trial versus available therapies? Thank you. No, we made a sort of (not audible) situation at the end of last year. And we changed some site and we promote a different approach to the site for this kind of trial. And since then we had let s say temptation to the (not audible) in less than two months. So we are really now positive towards the end of February to end... Peter Welford Thank you very much. Okay. Operator The next question is from from Credit Suisse. Please go ahead. Yes, hi everyone. Good morning or good afternoon. I have a few questions left, basically, on Breezula if I may, just. Can you give an indication as to when or where we can get more detailed results in the proof of concept trial? Well, I think that we need at least one... for the proof of concept trial one month just to have a full understanding of the results, and a deep evaluation should be needed. I think that one more should be the right time Chorus Call SA. All Rights Reserved 10/18

12 Okay. And when do you plan to publish that in a journal or do you intend to issue a new press release, what s the communication strategy here? Chris Tanner Well, Thomas, this is Chris. You know that we didn t have an R&D Day in January this year. I mean Cosmo didn t and Cassiopea didn t. Last year we had them all together. This is something that we are debating for maybe May, something like this. So we are debating on how to do this and we will be coming forth news soon. Okay, okay, perfect. Thanks. If I may, a question on Winlevi, I mean you still say that you plan to have the patience recruited by the third quarter of this year, yet use the, you know, the end of the Phase III is still slated for the second half I mean, you know, and you have a 12 week treatment, I just think that s rather generous timeline. I mean could you update, do you have any updated thoughts on the timeline? Well, first... Yes. First of all, when you think about the overall rate-limiting half to the FDA filing, what you see is not only do we have the 12-week trail in acne, but we do have the rollover study for long-term safety. That s an open-label study that requires us to have over 300 subjects on the drug for six months and 100 subjects having 12 months exposure. This is the rate limiting step to having results and completing our Phase III program. So we have been relatively conservative in our estimates of when we expect results and when we expect the timing of filing. But this give you a little bit more color in terms of the program, if you think about the fact that we are running two very large studies, each was 700 patients each in two continents. Okay. And would you be able to say how... what percentage of patients you have recruited so far? 2016 Chorus Call SA. All Rights Reserved 11/18

13 We have recruited about 40 patients so far. We started the European trial in November and we started the U.S. trail in January, end of January. So the U.S. has been up and running for about a month. Okay. So we are having of course patients being enrolled each and every day. Okay. And then, just one last question on Breezula, if I may, because, you know, because you mentioned anti-androgens are known to have the peak efficacy at 12 months. I was just wondering whether you have expected that local administration of an anti-androgen could actually have like quicker onset of action. Yes. It is because we are administrating the product exactly what is required to be in order to be effective. And I thank you for this question, because it gave me the chance to say that if you compare the Propecia activity in terms of hair count for example and you compare with the number that we obtain, you will be surprised to see that there is more or less the same effectiveness. But, this of course is in two different studies, right? Yes. This is not done in the single study. Yes. I was comparing our result with the resettle data, of course Chorus Call SA. All Rights Reserved 12/18

14 Okay. Okay, then one very last question, you mentioned in the presentation that the program manager left the Company at the end of Can you give any color on the reason for that? So, that was Diane Goostree., she came abroad as a Program Manager and actually had been associated with Cassiopea from some earlier work she had in support of the derm trails while they were under the care of Cosmo. And actually Diane Goostree loved to become the Chief Executive Officer of a small derma company. So the opportunity was a very good one for her. Fortunately though, in fact since then we have hired now up to 7 staff members inside of Cassiopea, all of which have long-term high experience in the area of dermatology, many of which came out of Medisys and other derm companies where they spent years and years of their career managing and running development programs in the area of dermatology. So I would generally state that I think we are even better positioned now with our staff who is growing everyday appropriately to support the level of activity we have ongoing inside the Company. If you take a view of in fact the programs and understand the number of studies we are running, you will be surprised that how much we are getting done with up from now about 7 employee inside of Cassiopea, and then a number of employees that we have access to at Cosmo by virtue of our service agreement. Okay, thank you. That was it from my side. Thank you. Operator The next question is from Henrietta Rumberger from AWP. Please go ahead. Henrietta Rumberger What I would like to do is more regarding... We cannot hear you Chorus Call SA. All Rights Reserved 13/18

15 We can t hear you. Henrietta Rumberger Can you hear me now? Come closer. Henrietta Rumberger Can you hear me now? Yes. Henrietta Rumberger Okay, wonderful. What I would like to know is some, since all the other questions have been answered; looking at your share price, it has come down quite a bit since your IPO. Are you satisfied with the actual development? Chris Tanner You know, I don t think it make sense to make any comment on the share price. If you look the range that we had when we started building the book, it was a range that was from 30 to 40 Francs and we priced it at 34 Francs, more or less in the middle. And since then of course, we have had a lot of storms and bad weather in the stock markets. So lots of things have happened. We haven t had any news there has been decline in share price, it s a bit surprising maybe that people who pay 34 Francs and nothing has happened or wish or willing to sell those shares for less. But I can t comment on the individual driving forces or elements of the individual shareholders. But overall, there has been little news on probably repositioning of the shareholders in the light of the generally falling stock market. Henrietta Rumberger Okay. Thank you Chorus Call SA. All Rights Reserved 14/18

16 Operator As a reminder, if you wish to register for question please press * and 1 on your telephone. The next question is from from Bank am Bellevue. Please go ahead. Good afternoon. And thanks for taking my question, a couple of question on Winlevi first. You mentioned earlier on at the rollover study as a bottleneck issue, if you want, for the read out. So I would like to know some color, out of the 40 patients you already enrolled how many are in this rollover open-label safety study. Could you comment on that please? One, because it s not finished the main treatment. Okay. Right and we are expecting the very first patient to rollover into the long-term study in March. Alright. Right. Because if you think about the first patients started in early November, Maurizio. Sure. And then, by when do you expect this to be, this open-label study to be fully enrolled, then can you give some hints and would it be possible to have an interval read out by the end of the year, if you say that you expect the complete enrollment by Q3 2016, so plus 12 weeks would that make end of the year? Yes. Well, you would have to take into account that the rollover up to 12 year means that most of the main Chorus Call SA. All Rights Reserved 15/18

17 12 months months, sorry. 12 years is too much. You have to take into account that there is the main treatment of 3 months and then a rollover treatment of 9. So if you account for the last patient out in that the last quarter this year, you have the last patient out for the LTS, long-term study in the third quarter next year. Chris Tanner Yes, but it s possible that we complete our 300 patients much before. Exactly, exactly. That s the point. Chris Tanner If you don t have any experience yet, Maurizio, as we will see... we will see how many of the patients decide to continue with the treatment post-the... and with this at Half-Year, we have a much better number on which proportion is rolling over. Yes, let me say that we didn t find any resistance by the patient to accept to be regulator for the long-term study in addition to the general treatment. Okay. And then, maybe some question on the CB-06-01, you said you expect a proof of concept readout within 4 and 8 weeks. Yes. I would to know for the go or no-go decision what would be the impact on the outlook for our 2016, I imagine then the cost would then come up, could you maybe go more in detail about that. And would it be then directly up for the Phase III study or should you do something, some dose study in between or something similar? 2016 Chorus Call SA. All Rights Reserved 16/18

18 We must do another dose-ranging study also in this case. And then, we make the Phase III, so it s a not a direct access to the Phase III after this trial. And for the cost, so the cost you expect and a hundred... or almost one million you expect in 2016 for CB and is this implementing already this. So what the... Issue of the cost as budgeted on the last page includes everything as if everything works. Okay. If one of the projects fails then we will have saved money, if it continues, we will spend as much money as on that sheet. And then, a last question on the IP of CB-06-01, you mentioned if I remember correctly, that you filed a new patent in 2015 for granting a longer IP protection, do you have any news on that? No, because we have... you know, that the patent evaluation requires years and we just started deciding last year. So we expect to have any news in a couple of years. Okay, perfect. Thank you. Okay. Thank you Chorus Call SA. All Rights Reserved 17/18

19 Operator Once again, to ask a question, please * and 1 on your telephone. There are no more questions at this time. Well, thank you everybody for joining our call today. And thank you for the support of Cassiopea. We look forward to keeping you updated as we progress with our program. It s a very exciting time for the Company. And thank you for your support. Have a nice day. Operator Ladies and Gentlemen, the Conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the Conference. You may now disconnect your lines. Goodbye. - END Chorus Call SA. All Rights Reserved 18/18