Achieve Life Sciences Inc (ACHV) 2012 Q4 法說會逐字稿

Good afternoon ladies and gentlemen, and welcome to the OncoGenex update on the clinical development programs, and discussion of fourth quarter and full year 2012 financial results conference call.

My name is Jaime. At this time, I would like to turn the call over to Susan Specht, the Director of Investor Relations with OncoGenex Pharmaceuticals, please go ahead.

Thank you. And thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, Chief Executive Officer, and Susan Wyrick, the Principal Accounting Officer.

Also on the call are Cindy Jacobs, the Chief Medical Officer, and Michelle Burris, Executive VP of Operations, and Jaime Welsh, VP of Marketing and Corporate Communications.

Before we begin, I would 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 OncoGenex documents filed with the SEC concerning factors that could affect the Company,copies of which are available on the website.

I will now turn the call over to Scott who will review key highlights from 2012, and provide an update on our two clinical stage product candidates, custirsen and OGX-427.

Thanks Susan. Good afternoon, and thank you for joining us. I would like to begin today's call reviewing the progress we have made on the custirsen development program in 2012. In the fourth quarter, we announced the completion of patient enrollment in SYNERGY, our Phase 3 primary registration trial for custirsen. SYNERGY is designed to evaluate a survival rate for custirsen, when added to the first line chemotherapy docetaxel in men with metastatic castrate-resistant prostate cancer, or CRPC. Over 1,000 men are now enrolled in the SYNERGY trial, at approximately 142 cancer centers throughout North America and Europe.

Custirsen has received Fast Track designation in the SYNERGY trials under an SPA agreement with the FDA. As we have previously discussed, the expected timing of results is based on a prespecified number of death events that we continue to project to occur in the fourth quarter of 2013.

We expect data results to be announced in the first half of 2014. In the third quarter of 2012, we initiated patient enrollment in two additional Phase 2 custirsen studies, AFFINITY and ENSPIRIT. AFFINITY is our Phase 3 clinical study evaluating an overall survival benefit of custirsen when combined with cabazitaxel, or Jevtana, as second line chemotherapy for patients with CRPC.

The study is being conducted throughout North America, Europe, Russia, and Australia, with a target accrual of approximately 630 men.

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

We are pleased to announce that custirsen has recently received Fast Track designation from the FDA in the patient population being evaluated in the ENSPIRIT trial.

Recently there have been numerous changes and paradigm shifts across the prostrate cancer treatment landscape. This means more options for physicians as the armamentarium to treat CRPC patients expands.

As new studies are initiated and the data emerge, the debate will continue on sequencing of new antigens and the incorporation of radiopharmaceuticals into treatment practice. Regardless of this evolution, as patients become symptomatic we believe chemotherapy will continue to be a mainstay in the treatment landscape. We are confident that custirsen is poised for success as a potential partner therapy to docetaxel and cabazitaxel.

I would now like to provide an update on our significant clinical development progress for our proprietary agent OGX-427. As you may recall in 2012, preliminary Phase 2 data on OGX-427 in chemotherapy-naive CRPC patients were presented.

The investigator-sponsored study showed activity in CRPC by demonstrating promising results. There were fewer patients without disease progression, greater declines in PSA and circulating tumor cells in the group receiving OGX-427 plus prednisone treatment, compared to those receiving prednisone alone.

Based on these findings and the potential role for OGX-427 in prostate cancer, in December we announced the initiation of the Pacific study. Pacific is an investigator-sponsored randomized Phase 2 study evaluating OGX-427 in combination with abiraterone acetate or Zytiga in patients with CRPC.

Approximately 80 men who are being treated with Zytiga and have evidence of rising PSA but no evidence of symptomatic or radiographic progression, will be randomized to either continue treatment with Zytiga and prednisone, or have OGX-427 added.

Patients can be enrolled to the study regardless if they have received prior chemotherapy or not, and will continue on study until symptomatic radiographic or other documented disease progression occurs.

The primary objective will be to determine whether the addition of OGX-427 can extend the benefit of Zytiga by delaying or reversing treatment resistance. The rational for Pacific is based on the idea that cancer cells use adaptive pathways to escape and proliferate,resulting in resistance to treatment.

OGX-427 and Zytiga are potentially synergistic, because they disrupt antigen receptor signaling pathways in different ways. This study is being conducted in partnership with the Hoosier Oncology Group, and is currently enrolling in the United States and Canada.

Moving on to bladder cancer, we continue to enroll patients to our randomized Phase 2 clinical trial of OGX-427 in combination with gemcitabine and cisplatin in patients with metastatic bladder cancer.

The study known as Borealis-1 aims to enroll approximately 180 patients, and is expected to complete patient accrual in the second half of 2013. We also recently announced plans for the initiation of a second Phase 2 study of OGX-427 in advanced bladder cancer.

Borealis-2 is an investigator-sponsored randomized study evaluating OGX-427 in patients with advanced or metastatic bladder cancer, who have disease progression following initial platinum-based chemotherapy. Approximately 200 patients will be enrolled to receive either OGX-427 plus docetaxel or docetaxel alone. Borealis-2 is expected to begin patient enrollment in the first half of this year.

Bladder cancer represents a significant opportunity for OGX-427 as limited treatment options exist for patients being treated with either first or second line therapies. Currently first line platinum-based chemotherapy regimens result in a median overall survival of approximately 12 to 15 months.

Docetaxel is commonly used in second line treatment with a reported median overall survival of approximately six months. Given acquired treatment resistance and these short survival times, there continues to be a high unmet need for additional therapeutic options for this patient population, and a unique opportunity for OGX-427 to demonstrate its potential to work synergistically with current standards of care.

Pacific, Borealis-1 and Borealis-2 are part of our ORCA program, which stands for On-going studies evaluating treatment Resistance in CAncer. ORCA encompasses clinical studies of OGX-427 across multiple cancer indications.

We look forward to providing further updates on the progress of these trials throughout the year, and expect to announce additional studies as part of the ORCA programs in the coming months.

In conclusion, we have made significant progress in 2012, and will continue to drive both custirsen and OGX-427 forward over the course of this year. With SYNERGY now fully enrolled, our accrual risk for our primary registration study is now behind us.

We also know how two additional Phase 3 custirsen studies enrolling patients, as well as a robust development plan for OGX-427. We are pleased with the momentum we have gained for both of these novel product candidates and look forward to an exciting year ahead.

At this time, I will turn the call over to Susan Wyrick, who will provide an overview of the fourth quarter financial results. Susan.

Thanks, Scott. We ended 2012 with approximately $75 million in cash, cash equivalents, and short-term investments, which is above our guidance of $68 million to $73 million, largely due to timing differences related to clinical trial costs.

We continue to expect that these funds combined with reimbursements due from Teva under our collaboration agreement will be sufficient to fund our operations into 2015. As part of the Teva agreement, we received an advanced reimbursement of $30 million for funding of certain custirsen clinical development activities.

As of the end of the year our commitment was fulfilled. Going forward, costs associated with custirsen's development will be reimbursed by Teva on a quarterly basis.

Revenue for the fourth quarter of 2012 increased to $9.8 million compared with $1.2 million for the prior year quarter. Revenue for the year ended December 31st, 2012 increased to $20.1 million compared with $5.5 million for the same period in 2011.

The increase in both periods was due to revenue earned through our collaboration with Teva, largely resulting from the initiation of the AFFINITY trial in August of 2012.

Total operating expenses for the fourth quarter increased to $16 million compared with $9.2 million in 2011. Total operating expenses for 2012 increased to $46 million compared with $27.8 million for 2011.

The increase in both periods was primarily due to higher clinical study expenses associated with the start-up of the AFFINITY trial, patient enrollment in Borealis-1, OGX-427 manufacturing costs, increased head count to support our clinical development activities, and stock based compensation expense. Operating expenses in 2012 included a non-cash gain on our excess lease liability of $1.7 million.

Net loss for the fourth quarter of 2012 was $4.1 million, or $0.28 per diluted common share compared with $9.6 million, or $0.98 per diluted common share for the prior year quarter.

Net loss for the year ended December 31st, 2012 was $21.1 million, or $1.56 per diluted common share, compared with $14.7 million, or $1.51 per diluted common share for the same period of 2011. The net losses in 2012 and 2011 included a noncash gain on the revaluation of our warrant liability of $4.5 million and $7.4 million respectively.

Before completing our financial review, I would like to provide guidance for 2013. Net cash requirements are expected to be in the range of $40 million to 50 million, reflecting AFFINITY costs which are reimbursed by Teva quarterly in arrears and completion of patient enrollment in Borealis-1.

Year-end cash, cash equivalents, and investments are expected to be in the range of $25 million to $35 million. This guidance reflects our continued development of custirsen under our Teva agreement, as well as our development activity for our proprietary asset OGX-427, soon to be in four randomized Phase 2 studies.

Thank you again for joining us, and I will now turn the call back over to the operator to open the line for questions. Operator?

(Operator Instructions). The first question comes from Chad Messer from Needham & Company.

Hi, guys, thanks for taking my question, and congratulations on a busy year. Good luck for what looks like will be an even more exciting one.

Scott, I know we have talked about this before, but the winds keep blowing, this is in regards to 427 and your strategy in prostate cancer in favor of Xtandi, especially in the larger pre-chemo market. Can you just review with us what your thoughts are on that, and how you plan to address that relative to Zytiga?

Hi Chad, and thanks for the question. Right now as you know and we reviewed briefly in the statements previous to your question, the strategy for 427 in prostate cancer now is in combination with Zytiga and evaluating the ability for 427 to augment the activity of 427 and really delay treatment resistance. The reason we didn't do anything with Xtandi is primarily because we wanted to basically have patients that were both chemo-naive and chemo-treated. And the data for Xtandi didn't go into the pre-chemo setting at the time this trial was designed.

We wanted to obviously get experience with one of the new agents that is directed towards the AR pathways.

We will be evaluating the combination with Zytiga first. If there is opportunity, and that data looks good, then other development plans would be discussed thereafter. But at this point I think we are looking for proof of concept of augmenting AR-directed pathway drugs for now.

Great. Understood. And just one quick one on the financials, if I may. The cash climates this year and the cash balance at the end of the year along with the statement that you believe your cash will last into 2015, just kind of implies a lot lower clinical trial expense in 2014?

And I am just wondering if you can help me think through the timing of ongoing and potential future trials, how that scenario plays out that way?

Sure, not a problem. I am going to go ahead and pass it to Susan who can address your question for you.

Hi, Chad. So the cost for the Borealis-1 trial wind down significantly in 2014, as the trial will be fully enrolled by the second half of this year. Also the timing of the manufacturing for OGX-427 may move a bit into 2014.

But the majority of those costs are currently slated for 2013. Also as you know the AFFINITY trial reimbursements are done on a quarterly basis in arrears. Such that the cash at the end of 2013 will not include the reimbursement that Teva will pay us for the fourth quarter of 2013. Does that answer your question?

That was very helpful. Thanks a lot, and best of luck with all of the ongoing activity.

Great. Thanks a lot, Chad.

(Operator Instructions). The next question comes from Stephen Willy from Stifel.

Good afternoon, thanks for taking my question. I know you mentioned 427 manufacturing costs I guess as part of the cash requirements going to 2013. I am wondering where you guys are in terms of 011 manufacturing, and whether or not that process has been transferred to Teva in its entirety?

Yes, thanks Steve, and thanks for the call and question as well. The manufacturing that we do as we discussed previously, we do a lot of the work with Teva principally through CROs.

As we start to plan and prep for NDA filings and so on, obviously you are doing the prep work in anticipation of doing the manufacturing submission.

Neither party is doing the direct manufacturing, but they are working cooperatively together with CROs at this time for the filing and for the initial launch provided obviously the custirsen programs are successful.

And if kind of fast-forward a little bit maybe towards the end of this year or early next, do you guys still have a opt-in decision that you will need to exercise at some point? Can you remind us how logistically that decision gets made, and when would we expect the timing of that?

So the opt-in option for those that are less familiar with that option, is a right that we have to opt-in to participate in the commercialization portion of custirsen development.

The way it works is Teva would deliver to us a commercialization plan. That would be reviewed and then we would decide whether we wanted to opt-in for really it is a North American right to participate in commercialization. We would take a look at that plan, take a look at what Teva is contributing, and then have more discussions and make that call.

We wouldn't expect that to happen in the next couple of months, but shortly thereafter as we start to get closer to the SYNERGY data in particular, we would review that and obviously come back to the market with expectation.

I think it is that it is important to note that in regards to that in particular the related costs, Teva is the group that is picking up the cost of the effort that we have once sales begin. So our exposure from a cost perspective is really only in that first part of the buildout before you have first sale.

And so the concept is, that our costs are really quite well contained, it is really the only element that we would pick up is in that pre-commercialization aspect. It is not a super large about to do the opt-in.

It sounds like you will be getting some kind of a commercial plan back from Teva here within the next few months, is that correct?

We don't have a specific timing on when we would receive the commercial plan, but we would expect especially given where we are in proximity to seeing the SYNERGY data, that we would expect to see that in the not too distant future.

Okay. And just given the fact that there doesn't appear to be much emerging on the pipeline front between now and then, is it safe to say that you guys are definitively leaning one way or another in terms of wanting to opt-in or not wanting to opt-in?

I don't think there is a definitive leaning that way. I think a lot of it will be revealed in the commercial plan. Particularly when you think about marketing a product like this into the branded oncology space. We would have to see what their plans are overall on that strategy before we can make an informed call.

I know you could I guys can't disclose anything ahead of medical meetings, but should we be expecting anything at ASCO?

At ASCO AGM?

The general meeting in June.

Right, no. I think that is probably a bit early on anything from our side, certainly on the custirsen program.

Thank you very much.

Thanks Steve.

(Operator Instructions). The next question comes from Philippa Flint from Bloom Burton.

Good afternoon. Just a question on the 427, the monotherapy study, you previously indicated you would have final data, I know you had previously announced some data, but final data on all patients in the first quarter. Are you still on track for that, and will you do it in a conference, or put out a press release? Can you give any information?

Thanks for the question, Philippa. What we have done with that study as you know it was presented at three difference conferences at preliminary data.

I believe it was ASCO GU, ASCO, and then ESMO. ESMO which is the last one we did in the fall of last year, we had reported the data on all but 10 patients, I believe it was.

We considered this and then specifically spoke to the investigators, and it was decided rather than to put another conference together and present the data in that forum, we would go straight to publication.

The publication manuscript is being developed now, obviously the study is completed, the accrual was completed some time ago, so it would go to publication next.

And just to let you know that we still have a few patients, five or six that were on the control arm that crossed over. We still do have some treatment of those patients before we can really say that all treatment is completed and then report the data.

Great, thanks. All of my other questions have been answered.

Great, thanks Philippa.

The next question comes from Howard Liang, Leerink Swann. Howard Liang, your line is open. Please check your mute button.

Sorry about that. Thanks for taking the question. Regarding the SYNERGY trial, I am not sure if the timeline is somewhat different than the previous projection, but just in terms of the event read, can you talk about whether that has been consistent with your previous protection?

Thanks, Howard. The timing is pretty much the same as we have been talking about for some time with respect to the event rate. As you know, the analysis that we are required to do for this trial is event driven.

We continue to watch that, and it is still tracking towards the back end of this year, the timing then so once you get the results you have got to do the QA on those results, and then do the analytics.

There are really two things that drive timing for us. One is when we actually do receive and cross the number of events to drive the analysis, and the second is the timing to do the analytics.

As far as the timing to get the events, I think that is more or less the same as it has been, but we will continue to watch it, and will do so for the balance of the year.

The difference between the time of the fourth quarter and the time to reach the protected number of events, and the data results, that is the process of logging the database and clean out the database and also doing the analysis?

Right.

Okay. Are there any additional analysis, I don't think there is interim, but are there additional decision points in the future, now and then either by the DSM V or by the Company?

Right, so in the study there are two utilities and one interim analysis. We haven't given specifics on whether we have crossed and conducted and finalized those analysis, in either the futility or the interim, nor the number of events that would drive those analysis.

What we have said though is obviously if the futilities ended up being negative such that you stop the trial, that would be a material event, and we would obviously disclose that.

If we went past it, and you continued the trial you normally would expect that it would basically be a nonevent, and we wouldn't necessarily disclose that obviously.

With respect to interim, if we had an interim analysis that was sufficient to proceed with filings, that would be a material event and we would disclose that.

But if the trial goes to fruition, then that would be part of the normal course of the trial, and we wouldn't disclose going forward, so that probably is the extent of information that I can give you at this point.

Obviously we haven't disclosed an early stop to the trial, so everything continues as it would be expected.

Great, thanks very much.

Thanks a lot, Howard.

At this time I show no further questions. I would now like to turn the call back over to Scott Cormack.

Thank you, operator. I want to thank everybody for participating on the call, and we look forward to providing you further updates as our year progresses. Thank you.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.