CymaBay Therapeutics, Inc.

Dan Menold - Vice President, Finance Sujal Shah - President and Chief Executive Officer Chuck McWherter - Chief Scientific Officer Dr. Pol Boudes - Chief Medical Officer

Jay Olson - Oppenheimer & Co Joseph Schwartz - Leerink Partners Bill Tanner - Cantor Fitzgerald Ted Tenthoff - Piper Jaffray

Thank you, operator, and good afternoon everyone. Earlier today, we issued a press release announcing our third quarter 2017 financial results and business update.

You can access that release on our website under the Investors tab. Leading the call today is Sujal Shah, President and CEO of CymaBay, who will provide an update on our clinical programs and review upcoming milestones.

I will then summarize the Company's financial results. After our prepared remarks, we will open up the call for Q&A.

Before we begin, I would like to remind everyone that statements made during this conference call, including the Q&A session relating to CymaBay's expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of CymaBay.

The Company assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise. Participants are directed to the risk factors set forth in today's press release, as well as the risk factors set forth in CymaBay's Quarterly and Annual Reports filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

This conference call is the property of CymaBay and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay. At this time, I would like to turn the call over to Sujal.

Thank you, Dan, and good afternoon everyone. We made tremendous progress in the third quarter which has transformed CymaBay in several important ways.

First, in July we announced positive interim data from our ongoing Phase 2 study of seladelpar which established its potential to offer improved efficacy and better tolerability as a second line treatment in patients with PBC. The clinical profile we have seen has positioned us to now advance the program into Phase 3.

Immediately after announcing the data, we completed a successful financing. We have significantly broadened our institutional shareholder base and provided a strong balance sheet that will carry us into 2019.

These developments have enabled us to begin preparations for the Phase 3 program for seladelpar in PBC and for a Phase 2 proof-of-concept study of seladelpar in NASH, both of which we intend to initiate in 2018. Let me provide you with individual updates on our PBC and NASH programs for seladelpar before turning it over to Dan for a review of our financials.

The positive interim data from our ongoing Phase 2 study of seladelpar in PBC was featured in an oral late-breaking presentation by Professor Gideon Hirschfield at The Liver Meeting hosted by The American Association for the Study of Liver Disease in Washington DC on October 23rd. This was the second consecutive year that seladelpar clinical data was featured in the late-breaking sessions at The Liver Meeting.

An accomplishment that I believe highlights the strong level of interest in seladelpar in the medical community for its potential to offer patients a significant advance in their treatment. The late-breaker presentation by Dr.

Hirschfield, an internationally recognized expert in PBC and a lead investigator in the study provided additional details regarding the interim results. It created an opportunity for CymaBay to get critical feedback from the international hepatology community as well as to increase awareness around seladelpar’s potential in PBC.

Briefly the presentation which can be found on our website recap the significant reductions of serum alkaline phosphatase or AP of 39% in the 5 milligram dose group and 45% in the 10 milligram dose group after 12 weeks of treatment. In 12 weeks of dosing seladelpar treatment also resulted in reductions in other markers of cholestasis, including gamma GT and bilirubin and in LDL cholesterol and markers of inflammation including high sensitivity CRP.

Importantly, there were no Grade 2 or Grade 3 elevations in ALT observed. Instead mean ALT levels decreased in both dose groups further supporting the anti-inflammatory effects of seladelpar at 5 and 10 milligrams.

The decreases in transaminase levels were seen soon after initiation of dosing. Many patients entering the study had elevated ALT values and mean ALT in both dose groups decreased, supportive of an anti-inflammatory efficacy.

Additionally, data work also presented supporting the observation that seladelpar does not cause or worsen pruritus in PBC patients. As you may know, pruritus or itching is a key feature of PBC affecting as many as 30% to 40% of patients.

Pruritus can be quite severe for some patients, enough to disrupt their daily activities and sleep and can require medical intervention. Data were presented assessing pruritus in the study using a visual analog scale or VAS in which patients record their perception of the severity of their pruritus on a scale of 1 to 100.

The weekly median and range of VAS scores for patients in both the 5 and 10 milligram dose groups did not increase from baseline through 12 weeks of dosing. We believe the absence thus far of a signal for drug-induced pruritus is potentially a key differentiator from current second line treatment for PBC.

Immediately following The Liver Meeting, we hosted investors and analysts in New York City with presentations from Dr. Hirschfield and Dr.

Pol Boudes our Chief Medical Officer. The presentations from this event are also available on our website.

Dr. Hirschfield provided an overview of PBC and discussed the existing unmet need in the treatment of the disease.

There are currently two approved treatments for PBC, ursodeoxycholic acid or UDCA, which is used in the first-line setting and obeticholic acid marketed under the name Ocaliva by Intercept, used as second line therapy. Both of these drugs have limitations.

Approximately 40% of patients receiving UDCA do not have an adequate response to therapy and approximately 5% are intolerant. For those patients that subsequently move on to second line treatment with Ocaliva, just under 50% are likely to get an adequate response based on data demonstrated in a Phase 3 study.

Ocaliva has also been associated with increased rate of drug induced pruritus in PBC patients. Dr.

Boudes recapped the AASLD presentation and supplemented it with additional AP data from the interim analysis showing individual responses for each patient from baseline to week 12 in the 5 and 10 milligram dose groups. It was evident that all patients responded with reduction in alkaline phosphatase.

Impressively, this included some patients with very high baseline who had striking decreases in their AP level. 45% of patients on 5 mg seladelpar had AP value of less than 1.67 times the upper limit of normal while 82% of those on 10 mg reached the same threshold after just 12 weeks.

Furthermore, nearly half of the 10 mg patients achieved normal alkaline phosphatase levels at week 12. We have now expanded and extended the ongoing Phase 2 study largely in order to satisfy the safety database requirement and to maintain aggressive timelines for an NDA submission.

The ongoing study also gives more PBC patients an opportunity to gain access to a drug candidate that thus far has been effective and well tolerated. This will also allow us to gather safety and efficacy data out to 52 weeks of dosing, a timeframe that matches that used for Ocaliva in the registration study for PBC.

We expect to be able to announce maturing data from the study when we have included a greater number of patients with up to 6 months of dosing in the first half of 2018 and with up to 12 months of dosing in the second half of the year. Our plan as usual is to share these data with the medical community at the appropriate scientific meetings.

As part of our ongoing commitment to broadly share results from our clinical studies, we were also pleased to announce in August, the publication of the first Phase 2 study of seladelpar for PBC in the Lancet Gastroenterology and Hepatology. This study which evaluated higher doses of seladelpar established the potency of our drug candidate to reverse cholestasis, the prominent pathophysiological mechanism involved in PBC.

It also demonstrated seladelpar’s activity to inhibit bile acid synthesis and reduce inflammation without a signal for drug induced pruritus. We believe the peer reviewed publication of these data along with sharing data from our second ongoing Phase 2 study serves to gain important feedback and further raise the profile of seladelpar within the medical community and among patients suffering from PBC.

In September, we also announced that the European Medicines Agency’s Committee for Orphan Medicinal Products issued a positive opinion on the application for organ drug designation of seladelpar for the treatment of PBC. Seladelpar now has orphan drug designation in both the U.S.

and EU. We are planning for regulatory discussions with both the FDA and EMA between now and early 2018.

Our objective is to get agreement on the design of a single Phase 3 program to satisfy the registration requirements in both the U.S. and EU.

Our plan is to initiate Phase 3 in the second half of 2018. I want to stress that we do not believe that completion of the ongoing Phase 2 study is required for either the regulatory discussions or per starting the Phase 3 study rather to compliment that database necessary for an NDA submission.

Shifting gears to NASH. In July, findings from a pre-clinical study of seladelpar in a diabetic obese mouse model of NASH were published in the journal Hepatology Communications.

In these mice, seladelpar normalized hyperglycemia, hyperinsulinemia and glucose tolerance. In addition, Seladelpar reduced ALT by 50%, normalized serum lipids and hepatic levels of free cholesterol and other lipotoxic lipids.

Seladelpar treated mice also experienced a reversal of NASH pathology, with significant improvement in liver fibrosis, reductions in inflammation and a complete abrogation of hepatocyte ballooning. With a path forward into Phase 3 for PBC, we started to work with experts in the NASH field to design a Phase 2 study we plan to initiate in the first half of 2018.

We look forward to providing you an update in the near future as we finalize these plans. As I mentioned earlier, in addition to our progress with seladelpar in the clinic, we completed a successful public share offering in July that brought in net proceeds of $91.1 million.

We believe the significant demand to participate in the deal is reflective of the interest and potential in seladelpar in both PBC and NASH. We believe our existing cash will be sufficient to fund the Company into 2019 as we begin Phase 3 development of seladelpar in PBC and look to explore development in a Phase 2 proof-of-concept study in NASH in 2018.

I would like to now turn the call over to Dan for an update of our third quarter financial results. Dan?

Thank you, Sujal. Our cash, cash equivalent and marketable securities totaled $102.2 million at the end of the third quarter of 2017 and were up significantly from $17 million as of December 31, 2016.

This increase was a result of the public share offering we completed in February and July which brought in net proceeds of approximately $100.6 million offset by $13.6 million of cash used in operations and $2.3 million of principal payments on our loan facility in the first nine months of the year. As Sujal mentioned, we believe our cash is sufficient to fund our operations into 2019.

Turning now to our operating results for the quarter ended September 2017. Research and development expenses were $4.2 million as compared to $3.5 million in the third quarter of 2016 and consisted primarily of PBC-related clinical trial and drug manufacturing expenses.

These expenses rose due to increased manufacturing of seladelpar to support our ongoing lower dose Phase 2 study and preparation for our upcoming Phase 3 clinical trial activities. General and administrative expenses were in line at $2.2 million in the third quarter of 2017 as compared to $2.1 million in the third quarter of 2016.

Other income and expense net reflected a $1.8 million loss for the third quarter of 2017 as compared to a gain of $81,000 in the third quarter of 2016. These amounts represent non-cash adjustments associated with the quarterly mark-to-market revaluations of our warrant liability.

And finally, net loss of $8.2 million or $0.21 per diluted share in the third quarter of 2017 as compared to $5.9 million or $0.25 per diluted share in the third quarter of 2016. Net loss for the third quarter increased $2.3 million primarily due to the non-cash mark-to-market loss we recorded on the revaluation of our warrant liability.

Moving on to our operating results for the nine months ended September 2017. We recorded $4.8 million of collaboration revenue following the receipt of a $5 million upfront payment in the first quarter related to our arhalofenate licensing deal with Kowa Pharmaceuticals America.

No revenue was reported in the comparable nine month period in 2016. Research and development expenses were largely in line at $12.3 million for the nine months ended September 2017 as compared to $12.1 million for the prior year period and consisted primarily of ongoing clinical trials and manufacturing activities related to seladelpar in PBC.

General and administrative expenses were $9.5 million for the nine months ended September 2017 as compared to $6.8 million for the prior year period. The increase in expenses was largely due to a one-time non-cash stock based compensation charge another several benefits associated with the retirement of our prior CEO in April 2017.

Other income expense net reflected a $5 million non-cash loss for the nine months ended September 2017 as compared to a non-cash gain of $43,000 in the prior year period associated with quarterly mark-to-market revaluations of our warrant liability. In summary, the net loss was $22.5 million or $0.71 per diluted share for the nine months ended September 2017 as compared $19.7 million or $0.84 per diluted share for the prior year period.

Net loss increased $2.8 million primarily due to one-time severance related expenses and a non-cash mark to market loss on the revaluation of our warrant liabilities, partially offset by Kowa collaboration revenue recognized in the first quarter of 2017. Sujal?

Thank you, Dan. Let me close by leaving you with a few thoughts about our key upcoming milestones that I believe will further drive value through the rest of 2017 and through 2018.

Our discussions with the FDA and EMA around the Phase 3 program for seladelpar in PBC between now and the early part of 2018 will allow us to provide you with an update along this front by the second quarter of 2018. Around this time, we will also look to share and expanded set of data that we believe can further de-risk and emphasize the differentiated profile of seladelpar for patients with PBC at a medical meeting with focus on liver disease.

As we approach the second half of 2018, we will have 52week data from the going Phase 2 PBC study and will also be in a position to begin enrollment in the Phase 3 study. We will also look to share with you detailed plan around our Phase 2 study design and timelines for Seladelpar and NASH as they are finalized in the coming months.

As we bring a transformative 2017 to a close, we look that 2018 as another year in which we believe CymaBay can experience significant growth and advance even closer to our goal of bringing novel treatment alternatives to patients suffering from liver diseases with significant unmet needs. Thank you for joining us today.

We would now be happy to take your question. Operator?

I was wondering if you could please update us on your latest thinking with regards to the Phase 3 PBC study design in terms of whether or not you think an active competitor would be needed or there would be a placebo-controlled study. And then I have one follow-up question.

Sure, thanks for the question Jay and I will start off and ask Pol Boudes, our Chief Medical Officer perhaps to add any additional comment. Currently our intention is to conduct a study in Phase 3 very similar to what you saw POISE for Ocaliva.

We think that there is significant rationale first of all in doing a study of seladelpar versus placebo. The current ongoing Phase 2 study of course doesn’t have a placebo comparator and typically regulatory agencies would like to see a comparison directly to placebo in this case.

We think that there's also some additional reasons for this consideration. Ocaliva has a warning of precaution around potential cause and worsening of pruritus.

So that consideration can potentially restrict the population that we would have in a study that might be only head-to-head for registration. And we would like to conduct a Phase 4 study in the pruritus population, particularly as we look to potentially measure the effect of seladelpar on pruritus.

To-date the data that we have add from two separate Phase 2 studies to get that seladelpar certainly doesn’t cause a worsened pruritus. We would like to be able to investigate whether or not in a placebo-controlled study you can measure effects on potentially reducing pruritus versus placebo.

Pol? So maybe follow up to that Jay?

I guess I heard at least one KOL speculate that he would like to consider studying seladelpar in a first line setting in PBC. Could you comment the possibility of conducting a first line setting in PBC?

Sure. I think as you know our target label really for seladelpar is for second line treatment, in particular to be the preferred second line treatment alternative for PBC patients.

PBC patients typically start on ursodeoxycholic acid or UDCA, about 50% to 60% of those patients don’t have an adequate response to UDCA but at this point in time we are not planning on conducting a study that put seladelpar head-to-head against UDCA. Now, I will simply comment that I think some of the -- my interpretation certainly around the interest level among thought leaders and experts in the field, I think that is more aligned to the potential use of second line treatment earlier in therapy rather than replacing UDCA at the outset.

UDCA is well tolerated. Patients do experience some response to UDCA.

But I think many of those that are treating patients with more severe disease I think have at least expressed potential interest in starting second line treatment earlier. But our goal and our design is really to conduct a Phase 3 study that positions seladelpar as the preferred second line treatment alternative.

So I was wondering given the recent safety concerns which have impacted OCA recently. I was wondering if you see any impact from that on your development strategy or market opportunity or regulatory interactions.

Do you think the FDA will require you to study seladelpar more stringently or perhaps even try to accelerate development of an alternative like seladelpar?

Thanks for the question, Joe. This is certainly an evolving situation.

So let me first comment by saying, of course, we don't have the full set of information that Intercept has and the agency has to date. But I can’t at least offer a few comments that I think can be helpful.

First, patients with moderate-to-severe hepatic impairment are not typically included in clinical development for PBC. Many of these patients are already on transplant list and have various challenges independent of therapy, frankly.

The situation at a minimum I think raises awareness of the differences in treatment, dosing and frequency in particular and monitoring for these patients. I think as a first step I will say that we will be conducting a hepatic impairment study as we launch into Phase 3 with seladelpar, which will allow us to evaluate the exposure of seladelpar in patients with mild, moderate and severe hepatic impairment.

And this will, of course, inform us of our next steps forward in how to address these specific patients to small percentage of the population with moderate-to-severe Child-Pugh B or C cirrhosis. We think that at a minimum the situation raises an awareness level that will allow us to be much more prepared both in our discussions with regulatory agencies as well as our conduct of the Phase 3 study, and if we're successful, ultimately, when we're taking seladelpar to patients.

We have the benefit of course to have these conversations at a time. It’s hard for us to understand or imagine that there will be any different requirement in Phase 3, of course, again, Child-Pugh B or C cirrhosis are not included in the POISE study and are typically not included in clinical development, but there can be some means to better understand the right way to treat those patients.

And then given there is an option for dose adjustment in the extension portion of the Phase 2 low dose study in PBC. I was wondering how that decision is being made?

Is that up to the treating physician? Or is there some sort of an algorithm to make this decision systematically?

Yes, you know it's a combination of those things. I'll ask Pol here perhaps to give you more guidance and color around that question.

Yes, basically there is an algorithm and of course it's based on the level of alkaline phosphatase. And we actually decided in conjunction with the investigators.

And we are waiting in general for twelve weeks for patients to digest to continue on that dosing. So there is an algorithm.

And we also take into account of course the safety situation with the patient.

Yes, Joe, maybe I’ll just add that of course AP is a key contributor to this determination, but we of course look at the totality of the clinical picture for patients, so looking at other markers of cholestasis, looking at inflammatory markers in the overall condition of patients overall.

Sujal, I have just a couple. Number one is you mentioned it obviously the Phase 2 program was expanded and extended.

But I'm curious if you could provide any other detail since then on any kind of enrollment update a little bit more detail there, if possible?

Sure Bill. So, first let me just that we continue to be very pleased with how the ongoing Phase 2 study has been enrolling.

We continue to see very strong interest from physicians and their patients to be on seladelpar. That’s of course I think reflective of the Phase 2 data that we have been able to share particularly from the low dose study this past July.

We do not provide detiled enrollment figures while studies are in the midst of recruiting. But I can say that all the patients that made it out to the original 26 weeks which just as a reminder was the design of the study overall before we were able to amend it to extend to 52 weeks.

All the patients that made it out to 26 weeks have in fact moved into the extension phase taking them all the way to 52 weeks of dosing. So, we continue to be very pleased by enrollment thus far and believe that in the early part of 2018 in fact we will have the opportunity to share much more expansive dataset, a greater number of patients through six months of dosing as well as some of our experience as we continue to move patients through the study.

And if you can speak to it, I don’t know if you can. I mean then we should presume that the folks that have moved on into extension that the treatment responses being to be persistent or acceptable to stay in the study?

Or I don’t know if you can you speak to that or not, but I am assuming that there is some modeling that’s being done, right?

Sure. This is an open-label study and of course I can’t comment in terms of how patients are doing through the study.

Again I would simply say that we remain encouraged by the conduct overall of the study and how we are proceeding through it and look forward to sharing more data as we can at upcoming medical meetings.

And then just on the Phase 2 NASH, I don’t know it's an unfair question to ask, but thus on timing where you might potentially get the results obviously that’s going to depend on the enrollment. I don’t know there is sort of a timeframe along which or in which you’d like to get to the data.

But I was just wondering -- curious then to is, the tradeoffs, should we speak to the tradeoffs of the size of the study and may be the duration, the treatment or the quality of data that you might actually generate in terms of being convincing that this a safe and effective drug potentially for NASH?

Hi, this is Chuck McWherter. I will try to take a shot at this and ask my colleague to jump in.

This is really quite an exciting and evolving time in the field of NASH especially in the Phase 2 stage, and we have been very encouraged -- we’ve been I think pretty successful engaging with really the best leading experts in the field to get there. Their guiding and their inputs about how the field is changing, in particular we had an opportunity at The Liver Meeting to catch up with to several of them.

We’re going to share the details of the design once it’s finalized in the coming months. And I think we are feeling very strongly that we have an opportunity to initiate a study that will really compose really the best efforts of drug development that would include for example dose ranging.

We think incorporating non-invasive markers both lead biomarkers as well as non-invasive imaging methodology, provide the way to more efficiently screen and enroll patients to cut down costs and accelerate timeline. And also use paired biopsy in conjunction with those non-invasive methods to, first of all make sure that the end of the study that we have the right information to make an informed decision about what to do in NASH, in other words you have the histology as well as the non-invasive markers.

But I think importantly as we have an opportunity to look at an interim read in the study, and as you've seen this in with other sponsors and studies in which they’ve taken an ability to evaluate effects and after a few weeks or months of treatment. And that really gives just a strong emphasis in building the program forward both for a single agent as well as in combination you build database of pharmacodynamic responses.

And it also gives us an opportunity to make decisions about dose retentions. So if you do good dose ranging, you can decide which doses are the most effective and you learn early.

I think our -- what we -- the guidance we're providing is that we would like to start the study as really as feasible in the first half of 2018. And I think it's a little bit early to comment around what accrual rates would look like.

We're really putting pen to paper right now with our expert advisors and we’ll be able to provide an update in the upcoming few months.

And just one last question on that Chuck. Whether there would be then end points or measurements that you would make that you would think okay this is reasonable to see for a monotherapy and this is perhaps not reasonable to see, unless there's an agent that’s working by different mechanism or you just kind of going in with your eyes wide open?

I think the beauty of seladelpar is really, it has the potential we believe based upon the results that we found in the diabetic obese mouse model to really bridge the divide, if you will between metabolic activity as well as inflammatory and fibrosis activity. So that kind of a kind of broad multiple activities, I think the Phase 2 study will give us the first opportunity to confirm whether the effects that we saw in mice translate into humans.

And I think it’s our belief at this point that that will be very informative about the primary single agent activity as well as what other mechanisms are out there that make sense to consider in the future for combination.

And most of my questions have been answered. And I want to pick up on the last one of question with respect to NASH because one of the differentiators there's apparent and obvious is the safety profile that's emerging for seladelpar.

So how important is that in NASH? And secondly, is this something where maybe you actually see sequencing of patients i.e.

treating in combination with later stage patients but evaluating earlier stage patients to sort of prevent the progress to fibrosis? Thanks.

Yes. Ted, it's a good question.

I think there's a lot for us to be learned, perhaps, Pol can give you some color on some of our discussions here internally thus far.

Yes, concerning safety what I think it's important to consider for example LDL cholesterol, as you certainly know. The must stricken reason in for death in this disease is [indiscernible] cardiovascular diseases.

So as you might also remember and we’ve seen that also in the PBC study, seladelpar decreases LDL cholesterol. And there is a reasonable prediction that this would probably impact the cardiovascular outcome.

So, I think this, extrahepatic benefit if you want on cardiovascular outcome are very interesting. Another thing that seladelpar partners did very well and we know that from the previous mixed [indiscernible] study to decrease triglyceride, and this also a factor which is also some important in cardiovascular outcome.

So I think this is very interesting to us because we are looking at what’s going on in the field, and I think it’s not only the question of what’s happening in the liver itself, even on the histology and things like ballooning of high voltage, but it’s also the other aspect of the disease like cardiovascular outcome, but also the metabolic end point like glucose-related outcome. A lot of these patients as you might know are diabetics, mostly have diabetes, so that’s also important to consider the impact on in insulin resistance of being an extra additional benefit for the patient.

So I think we feel pretty good with the combination of both potential intrahepatic activity that also impact on extrahepatic factor with the drug, but you can somewhat as term safety, but yes I think it’s a very important question.

That will be interesting to see how this develops some of the data, comes out, I am looking for the first studies in NASH as well as the update on PBC. Great work guys.

Well, thank you all once again for joining us today. All of us here at CymaBay remain very committed to our mission to improve treatment alternative for patients with liver disease.

We appreciate the support we received that allows us to focus on this work. We remain very encouraged by our progress to-date and look forward to providing further update on our next call.

Thank you.