Achieve Life Sciences Inc (ACHV) 2013 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to OncoGenex update on clinical development programs and discussion of second-quarter 2013 financial results conference call. My name is Mercy.

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 the time. (Operator Instructions).

At this time, I would like to turn the call over to Susan Specht, Senior Director, Investor Relations, with OncoGenex Pharmaceuticals. You may go ahead.

Thank you, and thanks, everyone, for joining us.

With me today from OncoGenex are Scott Cormack, Chief Executive Officer; Susan Wyrick, Principal Accounting Officer; and Jaime Welch, VP of Marketing and Corporate Communications. Cindy Jacobs, our Chief Medical Officer, normally participates on this call, but she is unavailable today due to business travel.

Before we begin, I would 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. 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 provide an update on our two clinical-stage product candidates, custirsen and apatorsen, previously referred to as OGX-427.

Thanks, Susan. Good afternoon and thank you for joining us.

I would like to begin today's call by providing a brief update on the custirsen development program. In the fourth quarter of 2012, we announced the completion of patient enrollment in SYNERGY, our Phase III primary registration trial for custirsen. As a reminder, SYNERGY is designed to evaluate a survival benefit for custirsen when added to the first-line chemotherapy docetaxel in men with metastatic castrate-resistant prostate cancer, or CRPC.

Custirsen has received Fast Track designation and the SYNERGY trial is under an SPA agreement with the FDA. As previously announced in May, the SYNERGY trial is continuing as planned per the recommendation of an independent data monitoring committee, who completed the second futility analysis per protocol.

The expected timing of survival results for SYNERGY is based on a prespecified number of death events. Based on current projections, we now expect the required number of events to occur late in the first quarter or early second quarter of 2014.

This timing has been shifted due to death events occurring slower than expected. While some may view this as a positive signal, we caution that no conclusion regarding the possible outcome of the trial can or should be drawn from the fact that death events have occurred more slowly than we expected.

When timelines were originally estimated, we did so by modeling the occurrence of death events based on the results from the randomized Phase II median survival duration for each treatment group, and then added an additional four months to account for the introduction of new treatments. According to our current estimates, we believe survival results will be announced in mid-2014.

While we are tracking cumulative death events in the SYNERGY trial, both OncoGenex and Teva remain blinded to all analyses and data.

Patient enrollment continues in the two additional Phase III trials of custirsen, AFFINITY and ENSPIRIT. AFFINITY will evaluate the potential survival benefit of custirsen in combination with Jevtana as second-line chemotherapy in approximately 630 men with CRPC and is currently enrolling patients throughout North America, Europe, Russia, and Australia.

Patient accrual continued to progress at a rate consistent with our expectations and we currently estimate that accrual will be completed in the second half of 2014.

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

Custirsen has also received Fast Track designation from the FDA for the ENSPIRIT trial.

I'd now like to turn the focus to our unpartnered product candidate. OGX-427 was recently granted its generic name, apatorsen, by the United States Adopted Names Council. During the balance of this call and in our future communications, we will be referring to OGX-427 as apatorsen.

We continue to make great progress on the ORCA development program for apatorsen. ORCA, which stands for Ongoing Studies Evaluating Treatment Resistance in Cancer, now includes six randomized Phase II trials of apatorsen in four tumor types.

Last month, we announced that patient enrollment was completed in Borealis-1, our Company-sponsored randomized placebo-controlled Phase II trial of apatorsen in combination with first-line gemcitabine and cisplatin in patients with metastatic bladder cancer. 183 patients have been randomized into Borealis-1 at 55 clinical sites throughout North America and Europe. We are very pleased that this trial completed accrual ahead of our guidance, which we believe is a testament to the need of new therapies for this difficult-to-treat cancer.

The primary endpoint of the trial is overall survival and data are expected in the second half of 2014.

Also in bladder cancer, patient enrollment is ongoing in Borealis-2, as announced in April. Borealis-2 is an investigator-sponsored randomized Phase II trial evaluating apatorsen in combination with docetaxel in approximately 200 patients with metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy. This trial is being sponsored by the Hoosier Oncology Group and is being conducted at approximately 30 sites in the United States.

We eagerly anticipate the results of these trials in order to initiate discussions with the FDA on the potential of apatorsen for patients suffering with bladder cancer.

Moving on to lung cancer, we also announced last week that patient enrollment has been initiated in the Spruce clinical trial. Spruce is an investigator-sponsored randomized double-blind placebo-controlled Phase II trial evaluating apatorsen in approximately 155 patients with previously untreated advanced non-squamous non-small cell lung cancer. This trial is being conducted in partnership with the Sarah Cannon Research Institute, or SCRI, at approximately 20 cancer centers in the United States.

Additionally in lung cancer, in May we announced plans to initiate a second randomized Phase II trial of apatorsen. The Cedar trial will evaluate the potential benefit of adding apatorsen to gemcitabine and carboplatin in patients with advanced squamous cell lung cancer. This trial is being conducted by the UK National Cancer Research Network and the UK Experimental Cancer Medicine Network. Cedar will enroll approximately 140 patients at 35 centers in the UK.

Also in May, we announced plans to initiate the Rainier trial, an investigator-sponsored randomized placebo-controlled Phase II trial evaluating apatorsen in combination with ABRAXANE and gemcitabine in approximately 130 patients with previously untreated metastatic pancreatic cancer. This trial is also being sponsored by SCRI and is expected to begin patient enrollment in the coming weeks.

As for prostate cancer, patients continue to be enrolled in the Pacific trial, an investigator-sponsored randomized open-label Phase II trial evaluating apatorsen in approximately 80 men with CRPC who are expressing rising PSA while receiving Zytiga.

This concludes the clinical development program update. I will now turn the call over to Susan Wyrick, who will provide an overview of the second-quarter financial results. Susan?

Thanks, Scott.

We ended the second quarter of 2013 with approximately $57 million in cash, cash equivalents, and short-term investments. 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.

Revenue for the second quarter of 2013 increased to $6.3 million, compared with $2.4 million for the prior-year quarter. Revenue for the six months ended June 30, 2013, increased to $11.4 million, compared with $3.7 million for the same period in 2012. The increase in both periods was due to higher revenue earned through our collaboration with Teva, largely resulting from clinical development activity associated with the AFFINITY trial.

Total operating expenses for the second quarter of 2013 increased to $15.7 million, compared with $8.4 million for the same period in 2012. Total operating expenses for the six months ended June 30, 2013, increased to $29.1 million, compared with $15.2 million for the same period in 2012. The increase in both periods was primarily due to higher clinical trial expenses associated with patient enrollment in the AFFINITY and Borealis-1 trials, increased costs directly associated with efforts to increase patient enrollments, increased headcount to support our clinical development activities, and toxicology and preclinical expenses related to apatorsen. These increases were partially offset by lower apatorsen manufacturing costs due to the timing of manufacturing activities.

Net loss for the second quarter of 2013 was $8.4 million, or $0.57 per diluted common share, compared with $4.2 million, or $0.29 per diluted common share, for the prior-year quarter. Net loss for the six months ended June 30, 2013, was $15.1 million, or $1.03 per diluted common share, compared with $11.1 million, or $0.89 per diluted common share, for the same period in 2012. The net loss in the six months ended June 30, 2013, included a non-cash gain on revaluation of our warrant liability of $2.3 million.

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

Year-end cash, cash equivalents, and investments are expected to be in the range of $25 million to $35 million. We continue to expect that this estimated year-end cash balance and the fourth-quarter receivable from Teva will be sufficient to operate the Company into 2015. Keep in mind, the majority of our Phase II apatorsen trials are investigator sponsored and substantially less capital intensive than Company-sponsored trials.

This concludes the prepared financial results discussion. I will now turn the call back over to Scott for closing remarks. Scott?

Thanks, Susan.

In conclusion, we are pleased with the progress we have made in the first half of the year for both custirsen and apatorsen. In partnership with multidisciplinary cancer experts who share in our enthusiasm for the potential of apatorsen, we now have a robust development program that will enroll nearly 1,000 patients in randomized Phase II trials.

For custirsen, we eagerly await SYNERGY results, while continuing our efforts to enroll the two additional Phase III trials, AFFINITY and ENSPIRIT. We remain committed to executing against our goals, while demonstrating capital efficiency and retaining cash into 2015.

Thank you again for joining us and we will now turn the call back over to Mercy to open the line for questions. Thank you very much.

(Operator Instructions). Stephen Willey, Stifel Nicolaus.

Yes, hi, thanks for taking the question. (Technical difficulty).

It looks like the connection was broken. Perhaps we should take the second question.

Katherine Xu, William Blair.

Hi, actually this is John in for Katherine. I had a quick question about if there are any plans on doing possibly a combo study with XTANDI?

Hi, John. Was that in regards to the custirsen program or apatorsen?

Apatorsen.

Yes, at this point we're going to pursue the investigation in combination with Zytiga. No immediate plans to do something with XTANDI.

Obviously, a lot of interest in that program of a very effective drug, in our view. But I think it would be prudent for us to see what we see with combination with Zytiga first, and then we could explore for subsequent development activities a subsequent combination with XTANDI.

Okay, thank you. And also, just a quick follow-up to that, just curious how that trial is going with Zytiga. If you could talk about -- maybe provide some color about the recruitment and maybe some potential impact on timelines?

Yes, we generally don't give updates on accrual until, obviously, when we initiate or when we complete the accrual, so I can't give you too much guidance on that one.

What I can get into is, obviously, our enthusiasm on the concept of what we're doing with Zytiga. I think in this particular trial, it is one that we're really testing the theory and hypothesis of apatorsen affecting treatment resistance. As you can appreciate with Zytiga and, in fact, all agents, I think what we're seeing is continuing resistance occurring with patients as you see breakthrough in these patients going forward.

And in this particular trial design, what we are doing is we're taking patients that are on Zytiga that have rising PSAs, so it's that early sign of resistance coming through, and adding apatorsen on top of that with a view to see if we can change basically the development and continued development of resistance.

So it's one of the bigger tests I think we have for this theory of breaking treatment resistance in cancer patients. It's a pretty exciting trial. Hopefully, that goes through your questions, John.

Yes, thank you very much.

Philippa Flint, Bloom Burton & Co.

Hi. Just a quick question. From the clinical development side, your costs -- or from clinical trials, if I understand it, are really just related to the Borealis-1 and -2, right, because the others are either investigator sponsored for apatorsen or Teva funded from custirsen. So can you give any guidance as to what the total cost of those two trials over the length of the trials might be?

I don't -- hi, Philippa, this is Susan. We don't really give specific guidance related to the costs of an individual trial.

But I can tell you that as you mentioned, the AFFINITY trial is reimbursed 100% from Teva, and except for Borealis-1, the other trials are investigator sponsored and so the majority of our costs related to clinical trials are related to Borealis-1.

Okay, thanks.

(Operator Instructions). Stephen Willey, Stifel Nicolaus.

Yes, hi, guys. Sorry about that.

No problem. Welcome back, Steve.

Yes, so with respect to the powering assumptions in SYNERGY, if I remember correctly and I think you said it in your opening remarks, you've guided four months to what you anticipated to be the median OS times in each arm, correct?

Right, right.

So you're at about 25 and 21 months, then?

Yes, so if you go back to the -- what we did is we basically took the randomized Phase II trial, which was giving us control patients of around 16.9 and the combination with custirsen at about 23.8; added four months to each one of those; and then, obviously, superimposed that over the accrual curve to give us an estimated timing on the event.

So, yes, your estimations are pretty much bang on. I think it works out to be about 20 months or thereabouts for a control and about 27, 28 for the treatment group.

Okay. And then, I guess as you look at some of the other failed Phase IIIs that we've seen in the tax-naive space that have read out over the last year or two, I think a lot of those studies were enrolled -- or enrolled the majority of those patients, I think, when these newly available therapies maybe not have been as widespread in terms of availability as they are now. So I guess when you just look at some of the numbers that have come out of those other competitive studies, do you feel like the four is adequate at this point?

Yes, that is one of the tough parts of doing in the estimation, I think, in this particular trial.

In the initial concept of adding the four months, that was something that we did fairly early on, and that was based on most of the new agents are providing sort of somewhere in that range, and there is just basically a lack of studies that have been reported in the literature that are looking at sort of the series of all these different agents now and giving us a good handle on how long patients live in that first-line chemotherapy setting.

As you very much know, a lot of the newer agents, particularly Zytiga, and I think we are seeing the same thing with enzalutamide starting to shift into that pre-chemo space. So, you know, how much impact that really has on the survival duration once you start with chemotherapy obviously isn't all that well known.

So I think our four months is probably, you know, not a bad number. But there is not a lot of new information to be able to peg it with a recent published study that says, if you are to take docetaxel frontline followed with a cabazitaxel, and if you got one of these new [antienergen] directed compounds somewhere in that sequence after doce, how long those patients would live.

But I think it is probably not a bad proxy, but obviously we will have to unblind the results and see what that is looking like. That is part of the rationale for I think what we have described before that these events are accruing more slowly than we expected. Obvious we can't say what that is from because we are blinded on the data set, but that is the present reality. It is coming in one or two quarters beyond what we had originally projected, which is quite a delay.

And then, what kind of insight do you have just in terms of the geographical distribution of patients? I know that this study, I think, incorporated a lot of Teva ex-US sites, which may be within some geographies whereby these drugs aren't readily available. Do you have any kind of insight with respect to the percentage of patients that might be in some of these, say, countries within -- like eastern Europe whereby Zytiga and 3100 may not be readily available?

Yes, it's a good point. We haven't given the specifics on number of patients by, sort of, geographic range, but we have talked in the past about the site distributions, and that site distribution was kind of two-thirds ex-US.

And as we know, the approvals by the FDA from the US of these new agents was quite a bit faster than it was in the other areas. So I think in that particular case, we probably had longer exposure of these agents not being used in these patients because of the geography that we had ex-US. Obviously, again, when we get into the results and take you to look at the specifics, we will see how that might have influenced or continues to influence, but we don't have any specifics on that at this point.

And then just one, I guess, big picture on apatorsen. You're obviously going to be getting quite a bit of data, I think, probably throughout 2015 with respect to these ORCA programs, and I guess, how do you kind of balance the individual trial signals that you'd get on a one-off basis? There's obviously going to be incentives to move forward in the event of positive data, but you are running this drug across essentially four or five different tumor types.

And so, do you want to essentially sit back and try to gauge what the data looks like in each of those tumor types before you make a go-forward decision within a couple of different tumor types, or are you kind of committed to a couple of these indications that, if positive, you're going forward regardless?

Right, it's a great strategic question, so I think it varies a little bit by tumor. So I think we have to break out bladder cancer first because obviously we have completed accrual of Borealis-1. That's a study that is 180 patients and it has a primary endpoint of overall survival.

That one, obviously, and I think we have talked to this in the past, we have always said that we expect survival somewhere about 12-plus months after we complete accrual. So that puts us into second half of 2014 as far as the survival results' expectation for that particular trial.

That would lead the other survival numbers from the other trials by quite a margin, actually. And if Borealis-1 is positive, and in particular if it is highly positive, we would want to initiate discussions with FDA much, much sooner and certainly get into planning for a Phase III, if that is warranted, in that trial sooner.

With respect to the other trials, because they are all initiating roughly at the same time and similar size and context and trial design, it is likely that they start to mature, I would say, in closer proximity to each other, and in that way you have, I think, a different opportunity to say, let's take a look at the totality of the remaining trials and kind of pick winners and prioritize our efforts with regards to those trials, both with respect to the overall outcome as well as the relative outcome.

The landscape, as you all know -- we have Jaime online here. We have a very confident marketing staff and it's part of the analysis that we do is looking at landscape and the opportunity for these drugs.

So I think for the other trials outside of bladder, we will probably be looking at a very robust analysis of not only the data, the landscape, the opportunity, availability of patients, the overall need -- you know, kind of a broader strategic perspective on where to pursue apatorsen with regards to its prioritization of capital and investment.

Okay, thanks.

(Operator Instructions). I am showing no questions at this time. I will turn the call over to Scott Cormack, CEO, for closing remarks.

Thank you, Mercy. Thanks, again, everybody, for joining us. We very much have enjoyed the call and the Q&A and we look forward to providing future updates in the not-too-distant future. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may now disconnect. Everyone, have a great day.