Achieve Life Sciences Inc (ACHV) 2012 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the OncoGenex third quarter 2012 earnings conference call. My name is Matthew and I'll be the conference facilitator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded. This time I would like to turn the call over to Susan Specht, Director, Investor Relations with OncoGenex Pharmaceuticals. Please go ahead.

Thank you and thanks everyone for joining us today. With me from OncoGenex are Scott Cormack, Chief Executive Officer; Michelle Burris, Chief Financial Officer. Also on the call is Cindy Jacobs, Chief Medical Officer and Jaime Welch, VP of Marketing and Corporate Communications.

Before we begin, I'd like to remind everyone that today's call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. So please refer to OncoGenex documents filed with the SEC concerning factors that could affect the Company, copies of which are available on the website.

I'll now turn the call over to Scott who will provide an overview of the development opportunities and activities for our two clinical stage product candidates custirsen and OGX-427.

Good afternoon and thank you for joining us. I'd like to begin today's call with an update on the custirsen development program and the significant progress we've made in the third quarter. Earlier this week, we announced completion of patient enrollment in SYNERGY, our Phase III primary registration trial for custirsen.

As a reminder, SYNERGY is designed to evaluate the survival benefit for custirsen when added to the first-line chemotherapy docetaxel in men with metastatic castrate-resistant prostate cancer or CRPC. The target accrual for SYNERGY has been achieved and over 1,000 men are now enrolled. This is truly an important milestone for OncoGenex and for the custirsen program. Completing accrual advances our goal of making custirsen available to men who are in need of new treatment options for advanced prostate cancer. I'd like to applaud the efforts of the OncoGenex and Tampa SYNERGY teams and the clinicians and staff at the 142 trial locations throughout North America and Europe.

I'd also like to express my appreciation to the patients who are participating in the study. As we've discussed before, custirsen has received fast-track designation and the SYNERGY study is under an SPA agreement with FDA. We continue to expect data results by the end of 2013. However, the endpoint for SYNERGY is event-driven and may occur later than predicted.

In addition to completing enrollments in SYNERGY in the third quarter we initiated patient enrollment in two other Phase III custirsen studies at AFFINITY and ENSPIRIT. AFFINITY is our Phase III clinical study evaluating an overall survival benefit of custirsen when combined with Jevtana as second-line chemotherapy for patients with CRPC. The study is now enrolling with the target accrual of approximately 630 men throughout North America, Europe, Russia and Australia.

The ENSPIRIT study is designed to evaluate the potential survival benefit of combining custirsen with docetaxel in approximately 1,100 patients with advanced or metastatic non-small cell lung cancer who have progressed after first-line chemotherapy has failed.

I'd now like to provide a brief update on OGX-427, our product candidate that is designed to reduce levels of heat shock protein 27 or Hsp27. Preliminary data from an investigator-sponsored Phase II clinical trial of OGX-427 in chemotherapy naive patients with metastatic CRPC were recently presented at the European Society for Medical Oncology Annual Meeting in Vienna.

Consistent with previous data reported, the results showed a higher number of patients without disease progression at 12 weeks and greater declines in prostate specific antigen and circulating tumor cells with OGX-427 plus prednisone treatment compared to prednisone alone. This study has completed enrollment of 74 patients and we expect final data to be presented next year.

As previously announced, an investigator-sponsored randomized Phase II study evaluating OGX-427 in combination with Zytiga in patients with CRPC is expected to initiate in the coming months. In addition, we continue to enroll patients to our randomized Phase II clinical trial of OGX-427 in patients with metastatic bladder cancer. This trial will evaluate the overall survival benefit of OGX-427 in combination with gemcitabine and cisplatin and aims to enroll approximately 180 patients throughout North America and Europe. We look forward to providing updates in the near future as these studies progress as well as on our additional plans for OGX-427 in other malignancies.

As I stated in my opening remarks, we've made significant progress in the third quarter. It's been a long road and custirsen is now in the final stretch. With SYNERGY now fully enrolled, our accrual risk of our primary registration study is now behind us. We also now have two additional Phase III custirsen studies enrolling, as well as robust and fully funded development plan for OGX-427.

We're excited about the momentum we have gained for both of these novel mechanisms. In the field of cancer drug development, custirsen and OGX-427 are unique and that they both have combinability potential with various agents and they also both work by overcoming treatment resistance, which remains a primary concern for clinicians, patients with cancer and their families.

At this time, I'll turn the call over to Michelle who'll provide an overview of the third quarter financial results. Michelle?

Thanks, Scott. We ended the third quarter with approximately $85.1 million in cash, cash equivalents and short-term investments and we continue to expect that these funds combined with our reimbursements due from Teva under the collaboration agreement will be sufficient to conduct our operations into 2015.

As part of the Teva agreement, we received an advanced reimbursement of $30 million. Of this amount, we incurred costs through September 30, 2012 of $20.9 million. We expect the remaining $9.1 million to be spent by the end of this year. As we've discussed in the past, once the advanced reimbursement is exhausted, all costs associated with custirsen's development will be reimbursed by Teva on a quarterly basis.

Revenue for the third quarter of 2012 increased to $6.9 million, that compares with $1.2 million for the prior quarter last year. Revenue for the nine months ended September 30, 2012 increased to $10.3 million compared with $4.3 million for the same period in 2011. The increase in both periods compared with 2011 was due to increased revenue earned through the collaboration with Teva, largely resulting from the initiation of the AFFINITY trial in August of 2012.

Total operating expenses for the third quarter increased to $14.9 million. That compares with $5.3 million in 2011. And the operating expenses for the nine months ended increased to $30.1 million compared with $18.6 million for the same period in 2011. The increase in the period again is due to higher clinical study expenses associated with the start-up of the AFFINITY trial, patient enrollment in our clinical trial evaluating OGX-427 in metastatic bladder cancer, and the associated manufacturing costs, and finally employee expenses, including stock-based compensation.

Net loss for the third quarter was $5.9 million or $0.40 per diluted common share. That compared with net income of $4.5 million or 46 -- excuse me $0.45 per diluted common share for the prior year quarter. Net loss for the nine months ended September 30, 2012 was $17 million or $1.29 per diluted common share that compared with $5.1 million or $0.52 per diluted common share for the same period in 2011.

Net income for the three months ended September 30, 2011 included an $8.6 million non-cash gain on revaluation of our warrant liability. Operating expenses increased for both periods as previously discussed. Before finalizing our financial review, I'd like to reiterate our guidance for 2012. Net cash requirements are expected to be in the range of $45 million to $50 million.

Year-end cash, cash equivalents and investments are expected to be in the range of $68 million to $73 million and this guidance obviously reflects our continued development of custirsen under the Teva agreement as well as our development activities for our proprietary asset OGX-427. Again, I'd like to thank you for joining us. And I'd like to turn the call back over to Matt to open the line up for questions.

Thank you. (Operator Instructions). Katherine Xu, William Blair.

A couple of questions. With regards to prostate cancer, just in general actually the prostate cancer question. Scott, what do you think about the steroid role in prostate cancer. Now they are trial completing data here and there in your study. But currently there are some response rates from [ketoconazole] treated patients. So that is another question.

The other question is just mechanistically with custirsen, are there custirsen high, medium, low kind of range in patients. The point I'm trying to get to you is, are there patients, some patients are more sensitive to anti-custirsen therapy than others. Do we know those as a fact or everybody is pretty much -- once they had chemo, they pretty much over express clustering at a very high level uniform rate?

All right. Thanks, Katherine. Good afternoon. So your first question, I think was related to from the new body of data related to steroids in the treatment of prostate cancer and specifically on the glucocorticoid receptors. Clearly, that's a fairly big body of data that's starting to emerge. I think it's probably a little early for us to comment on where that goes.

As you know, in our clinical protocols, we tend to be combining with the standard of care with whatever has been used in that treatment paradigm. Chemotherapy typically is being administered in combination with prednisone and therefore our combination study certainly in custirsen do use prednisone as the base line. But that's predominantly because that is the standard of care for use of chemotherapy.

I'm not sure that we have a direct need specifically to have prednisone in our treatments. I'm not sure that we would have a direct biologic consequence on those glucocorticoids, either it's an investigation that would have to be pursued with probably both drugs. But I think as far as the data goes in the marketplace, there's still more studies that are going to have to be done, because a lot of what's been done so far has been retrospective in looking at patients who have been treated with or without prednisone and their outcomes. So I think we need to look at that through the lens of a prospective study rather than retrospective before we draw too many more conclusions.

On your second point with respect to clusterin expression as a protein, is it uniform? I think generally what happens is whenever we're applying treatment to patients, you will see an increase in clusterin. It's not necessarily uniform. You'll see patients that have high expression levels, some that have low and some that have medium. As far as responders, as you probably know, there's been a fair bit of work that we've been doing through the Phase II studies that still needs to be explored in a Phase III.

I think it's a little bit early for us to say that there are responders or non-responders specifically or how they may correlate to their expression levels. I do think over time these patients will, as you continue to treat them with other therapies, though the expression of treatment resistance factors like clusterin or Hsp27 do increase over time and from the data that we've been looking at in the publications and obviously generated through various academic institutions. I think those are implicated very strongly in the development of treatment resistance. Does that answer your question, Katherine?

That's good. Thank you.

Okay.

Howard Liang, Leerink Swann.

Hi. This is actually, [Rene Shen] in for Howard. Thanks for taking my question. So wanted to ask on the OGX-427 combination trial with Zytiga. Can you just remind us, is this the blinded study? And so when we look at the progression-free survival at 60 days as the primary endpoint, how we ensure that the valuation is not biased? And then also on the same study, in case Zytiga or abiraterone does get approve on the pre-chemo setting, will patients be allowed to or the study include patients in the pre-chemo setting as well?

Okay. So Cindy is here with us and we'll have her speak to the question specifically. Just keep in mind as we go through this, we haven't released a lot of the details with regards to the Zytiga study. That will come out at the time that we specifically initiate the trial. But with regard to blinding, maybe Cindy can address that question directly for you.

Right. So this study, no, it will not be blinded. It will be randomized and an open-label, obviously, with the control arm.

Okay. And have you done any dose ranging to look at the combination of OGX-427 with Zytiga. Is there a need for any dose adjustments?

No what we are doing is going with the highest dose that we have evaluated in our Phase I and evaluating in our other Phase II. And obviously we have dose modifications. So if needed for dose reductions from the 1000 mg of OGX-427 and we also have obviously safety reviewing with an independent safety monitor experienced in the field for the first 20 patients that go on, comparing it obviously with the 10 controlled versus the 10 patients that are combined with 427 and Zytiga.

Okay. Great, thank you so much.

Okay. Thank you.

Stephen Willey, Stifel Nicolaus.

It's Steve. Thanks for taking the questions. So following up on the previous question on the 427 open-label study. Are you guys going to have -- are we going to be able to get an interim look into the data, and if so when do you expect that we would get sort of the first tranche of data on that trial? Thanks.

Yes. Typically with those kinds of studies, we don't necessarily put in interim studies per se, but because they're open, we can be doing the data valuations. This particular one that I think this is true for smaller studies. You [won't] have specific number of patients that any analysis that you would run is meaningful.

So it's not like we're going to be [starring] at the data on a regular basis. I think it would be after you do a certain number of evaluations and then what we typically do is, that is tied to a data presentation at a scientific conference. So if you've got half of the patients or a fairly decent proportion of patients accrued and you've got your primary end point, then you would see it at various presentations. And again this is an investigator-sponsored trial. So that particular decision would be within the purview of those investigators as well.

And do you know, if that's -- if that number or a percentage of growth has already been decided, or is it going to be dependent upon when they decide to present [the data at] as you said in scientific meeting?

There are no set numbers of patients for interim analysis. So it would be at appropriate timing that the primary investigators in Canada and in the US view if there is adequate patients. This is obviously a study that is looking at a pilot study with early analysis of data at the 60-day primary endpoint. So we would assume that it's very similar to our other 427 study that you would have updates appropriate at meetings.

Okay, thanks. And if I can just quickly ask another question jumping to the lead program. So, [if in order to] -- you're reaffirming the timing on SYNERGY for top line data release at the end of next year. So does that mean you were sort of seeing event accruals happening in line with your expectations or --?

Yes. I guess what we're saying is, we still are of the view that the data should come in for by the end of 2013. But as we said in the statements, this is an event-driven analysis and that will ultimately determine the specific timing of getting that dataset. So this is the best estimate from where we stand today, but obviously the actual results will depend on the final number of events that we get that will drive that final analysis.

Great. Thanks for the taking the questions.

Thank you.

(Operator Instructions) Philippa Flint, Bloom Burton.

A couple of questions on 427. A couple of years ago you had data on combination in some really early stage research work with enzalutamide. Can you talk about plans that you may have to look at those two drugs in combination?

Yes. So at this point, Philippa again, thanks for the question. At this point, the primary task force is with the Zytiga study. We haven't announced any other plan specifically for any combinations with things like enzalutamide. I think from our perspective, continuing to watch the landscape as it shifts and see who is moving into front-line setting and success of these other trials is probably going to be fairly important.

The rationale for going forward with Zytiga is there is obviously biologics energy and the way these drugs work, and it's a way to evaluate the proof-of-concept about the potential combinability. And so that's what's going to be done in a fairly small pilot kind of study as we continue to watch landscape in that setting.

Okay. Great. And also more generally, can you speak about what you -- how you would like to progress 427? How far you intend to kind of take it along the path for yourself and potential for partnering at what stage in the ideal scenario?

Right, thanks again. The intent with 427, as you probably know, we completed the financing in March of this year and the intent of that was two-fold. It was to ensure that we have sufficient capital to get through to the data on SYNERGY that was mission number one. The second part was based on the data that we've seen with 427 and specifically our enthusiasm around the two trials that have been reported out.

We wanted to explore the potential of this drug in a more broad development plan that we had already planned. And so with that we took on the initiative to expand into other indications. That remains the plan. Obviously the funding was secured through that financing and we are executing through on additional clinical trials. As we've said, again, in prepared statements there are other trials that we're looking forward to announcing closer to the time and proximity that we'd actually start those trials. But the intent is to further the scope of evaluating OGX-427 in another indications.

The plan, as Michelle had discussed, we do have capital into 2015. And so the intent is obviously we'd finish off the randomized Phase II that we have, we have some others that are initiating. The intent is to continue that development plan.

Partnering becomes an interesting discussion. It is not specifically something that we're looking to achieve at this point, because we think especially since we have a development plan that's going to be robust across multiple Phase IIs, greater value should be achieved when we have realization of randomized Phase II data set. That is not to say that we don't regularly have communications with potential partners.

We want to keep them informed and aware of data as it emerges and make sure it becomes and remains top of mind as they consider other opportunities, but it's not an active we must sell it because we do have the funds to execute on the Phase II plans that we have talked about thus far.

That's great. Thanks very much.

Thanks, Philippa.

At this time we have no further questions from the audience.

Thank you very much everybody for joining us. We look forward to future updates as the year turns over and into 2013.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Good day.