Achieve Life Sciences Inc (ACHV) 2013 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the OncoGenex fourth-quarter and year-end 2013 financial results conference call. My name is Karen and I will be the operator assisting on the call today.

All participants are currently in a listen-only mode. After the speakers' prepared remarks, there will be a question and answer session.

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

Thank you. Thanks, everyone, for joining us to.

With me today from OncoGenex are Scott Cormack, Chief Executive Officer, and Susan Wyrick, Principal Accounting Officer. Also on the call are Cindy Jacobs, Chief Medical Officer, and Jamie Welch, VP of Marketing and Corporate Communications.

Before we begin, I'd 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's 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.

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

In 2013 we made exciting progress toward our goal of developing innovative treatments for patients suffering from a variety of cancers. Today I'd like to provide a brief status update on custirsen and apatorsen development programs, and highlight the much anticipated critical milestones that will make 2014 a truly transformative year for our Company.

Beginning with our lead product candidate custirsen, which is being evaluated in three Phase III clinical trials, two in metastatic castrate- resistant prostate cancer, or CRPC, and one in metastatic non-small cell lung cancer. Our primary registration Phase III SYNERGY trial is designed to evaluate the survival benefit of custirsen in combination with first-line docetaxel chemotherapy in men with CRPC.

Last month we announced that a number of events required to conduct the final analysis for SYNERGY has been reached. We continue to expect the final analysis of survival results to be announced by mid-2014. As a reminder, survival results will remain blinded to both OncoGenex and Teva until all study data have been thoroughly reviewed and prepared for final analyses.

Also in CRPC we have made significant progress and are enrolling patients in the Phase III AFFINITY trial designed to evaluate a survival benefit for custirsen in combination with cabazitaxel as second-line chemotherapy. We expect to enroll approximately 630 patients to AFFINITY by the end of this year.

Finally, the Phase III ENSPIRIT trial continues to enroll patients. ENSPIRIT is designed to evaluate a survival benefit for custirsen in combination with docetaxel treatment as second-line chemotherapy in patients with non-small cell lung cancer. There are two formal interim futility analyses planned, the first of which will occur in 2014.

In addition to the continued momentum for custirsen, we continue to make great strides in advancing the apatorsen ORCA program. Through collaboration and partnership with leading cancer centers and experts, apatorsen is now being evaluated in a total of seven randomized Phase II clinical trials in advanced bladder, lung, pancreatic, and prostate cancers.

In July of 2013 we completed enrollment in Borealis-1, a Company-sponsored randomized, placebo-controlled Phase II trial, evaluating overall survival of apatorsen in combination with first-line gemcitabine and cisplatin in patients with metastatic bladder cancer. We expect to announce Borealis-1 results in the second half of this year and are incredibly enthusiastic about the potential of this novel agent.

Additional Phase II trials of apatorsen in advanced bladder, lung, pancreatic, and prostate cancers continue to enroll patients.

At this time I will turn the call over to Susan who will provide an overview of our financial results. Susan?

Thanks, Scott.

We ended the year with approximately $39.2 million in cash, cash equivalents, and short-term investments. This is above our guidance of $25 million to $35 million, largely due to the timing of payments for our clinical trial.

We believe we have sufficient operating capital to fund are currently planned operations beyond the first quarter of 2015, and through the expected release of final survival results from the SYNERGY and Borealis-1 trials, and through the completion of enrollment in AFFINITY and Spruce

Revenue for the fourth quarter of 2013 decreased to $8.6 million, compared with $9.8 million for the prior-year quarter. Revenue for the year ended December 31, 2013, increased to $29.9 million, compared with $20.1 million for the same period in 2012. Revenue in both years was earned through our strategic collaboration with Teva. The increase in 2013 compared with 2012 was due to patient enrollment and treatment in the AFFINITY trial.

Total operating expenses for the fourth quarter of 2013 decreased to $15.6 million, compared with $16 million for the same period in 2012. Total operating expenses for the year ended December 31, 2013 increased to $65.2 million, compared with $46.1 million in 2012. The increase in 2013 compared with 2012 was primarily due to higher clinical trial expenses, toxicology expenses related to apatorsen OGX-225, and increased headcount to support our clinical development activities.

Net loss for the fourth quarter of 2013 was $6.7 million or $0.45 per diluted common share, compared with $4.1 million or $0.28 per diluted common share for the prior-year quarter. Net loss for the year ended December 31, 2013 was $31.8 million or $2.17 per diluted common share, compared with $21.1 million, or $1.56 per diluted common share for the same period in 2012. The net loss in the year ended December 31, 2013 included a non-cash gain on revaluation of our warrant liability of $3.2 million, compared with $4.5 million in the prior period.

In summary, we believe we have sufficient operating capital to fund our currently planned operations beyond the first quarter of 2015, and through the expected release of final survival results from the SYNERGY and Borealis-1 trials, and through the completion of enrollment in AFFINITY and Spruce.

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

Thanks Susan.

Our enthusiasm for custirsen and apatorsen continues to build as we approach major milestones that have the potential to redefine treatment paradigms and breakthrough the pervasive challenge of treatment resistance. We remain confident in our ability to execute and in the potential of our products to change the lives of cancer patients and their families.

We look forward to sharing more updates with you in the coming months. Thank you again for joining us.

Operator please open the line for questions.

(Operator Instructions)

Katherine Xu from William Blair.

Good afternoon.

Hi, Katherine.

I am just wondering from the ENSPIRIT study. You said there are two interims scheduled or designing as well and the first one is coming up this year. Could you just tell us a bit more about the full design and what the interims were, futility or is there efficacy looking there as well?

Sure. We can speak to this. The futilities that we are referring to are looking at, the first one specifically is looking at progression free survival and then overall survival, and the way these are designed is we have established pre-defined criteria that if we don't meet those criteria, we would go ahead and stop that trial.

But they are not designed as early stops for efficacy. Cindy, I'm not sure if you wanted to add anything addtional on to that. We have not given the additional details around [ladrozacam slrf] at this time as far as the statistical parameters.

Just again to add, the interim analyses are for futility only. The early one is designed to look at inadequate evidence of clinical benefit or survival futility. And the second one is survival futility alone.

To some extent similar to SYNERGY?

No, this is a little different than SYNERGY. SYNERGY has survival futility, one, not as early as this and the ENSPIRIT trial, and then the other one later for survival futility. So AFFINITY has two strictly survival futility assessments.

SYNERGY also had an interim analysis for efficacy as well, which ENSPIRIT does not have.

Okay. And for Borealis, it's a good-sized study, and if the data is positive, what would the next steps be? Would there be an abbreviated path going forward depending on the strength of the data, or what are the [card falls] here?

Katherine I will go ahead and let Cindy answer that question for you.

Our plan obviously if we have positive survival benefit would be to meet with FDA to discuss a Phase III using that Phase II as the supportive trial. Very similar as what we have done with SYNERGY. We went and asked for the Phase II survival study to be a supportive trial and only have one Phase III study, and that would be the path that we would go for bladder cancer with apatorsen.

Finally, with the SYNERGY, the biggest reveal. Can you just let us know what exactly is ongoing, what are the steps that you and the third parties are going through right now? And then looks like we're going to see the data during second quarter.

Yes, the process is, as we announced last month, we hit the number of events that drive the final analyses. And then the process that goes on from there to basically ensure that we have all the case report forms for all the patients that we're doing the analyses on, ensuring that all of the parameters that are to be collected are collected for each of the patients, that the units are consistent across all the patients, those kinds of activities to ensure that the data set is complete before you go to that full lock. Cindy again if you want to add anything additional to that?

When you have a final database lock you need to make sure all the central lab data is also in the data sets. All of the independent videographic reviews that are part of the secondary endpoint are done and in the data set. There's also some final monitoring and making sure all significant queries have been answered by the site.

Great, thank you very much and all the best.

Thanks a lot Katherine.

Thank you. Howard Liang from Leerink Partners.

Good afternoon, Howard.

Hi this is [Gina Wang] dialing for Howard. Thank you for taking my questions. Following Katherine's questions on SYNERGY, just wondering should we expect CSS and the CSA data as well in addition to the OS final readout?

Yes, so good question. I think the expectation at this point is to basically announce topline data only, which would be typical of other biotechs in similar stages. And the main purpose of that is that we would want to preserve other parameters for presentation at appropriate scientific congress.

And as you know, if you reveal too much in your releases in the topline, then you have not preserved novelty for the ability to present at some of the congresses. So there's still some active discussion with our partners Teva on exactly what that will look like, but pretty certain it would be fairly topline only to ensure that we have an ability to present at appropriate congress, because that is our primary marketplace for advancing the reveal of the data set.

I see. So should I expect this would be a press release first and then will anticipate in the upcoming medical conference presenting this? And then following that question, how will SYNERGY outcome affect the second-line study AFFINITY? Do you see a scenario where SYNERGY does not work but AFFINITY works?

Okay, so to answer your first part of the question, yes, you would expect a press release first that would give topline results and that would be followed at the next available scientific congress where the full results would be available or the more detailed results would be available. And then the third element to that would be a manuscript actually that would be the complete review of the entire study.

Then with regards to the SYNERGY trial, there's a couple of scenarios that play out there. SYNERGY succeeds and you hit the intended target for hazard ratio and P value. As you may recall, we have both an SPA with the FDA for this trial that indicates that we could go forward on the SYNERGY trial only. Similar concept with the EMA for scientific advice, again that trial would be sufficient for filing and using our randomized Phase II as supportive.

If you end up in a situation where your P value is in the area where you haven't quite achieved the objective of the trial but it is still significant, then you may be in a situation where you'd be looking at the AFFINITY trial as a confirmatory trial and I think we've seen this in other companies. And so in that circumstance you may be looking at AFFINITY to confirm the clinical benefit that was observed in SYNERGY.

The third scenario is if the results are not there with SYNERGY you could still be looking at AFFINITY as basically a case for approval in a separate marketplace. So those three scenarios is where AFFINITY becomes important to us.

Thank you.

You are welcome.

Arlinda Lee from CRT.

Thanks for taking my questions. I just wanted to maybe follow-up on further detail on SYNERGY. You guys mentioned you are in the process of locking the database and describe how, what is entailed. Do we have an estimate on more specific timing, is it fairly close to being done, is there a chance that you might need to ask a late abstract?

We have not given any more specifics Arlinda. Basically what we've said is by midyear, and that's because it wasn't that long ago that we hit the number of events and it takes awhile to go through and see what the status of the case report forms are and all the details that haven't been there. So we haven't really tightened up the timeframe with regards to timing other than just to say by midyear.

Okay. And then secondly on Borealis, you mentioned that if the results were positive that you would go through the typical asking FDA for a Phase III input. Would that include -- are you planning on asking for special status like breakthrough and other such things?

Go ahead, Cindy.

Depending on the data? Yes, anything might be asked. Breakthrough is one that we are discussing as well as in getting [biopsy] in a Phase III with FDA as soon as possible.

I think that is an important point. As I think many of our listeners and stakeholders would recognize, bladder cancer is a disease where we have not seen improvements for a couple of decades. And I think if the Borealis-1 trial demonstrates statistical significance in survival, yes you would be pursuing a number of different avenues with the FDA. And I think the logical one is to pursue a Phase III. But if those results are very strong, you'd be talking about a much more aggressive strategy.

Forward-looking statement, very much defined on that particular statement, we expect that you would go into a Phase III. But obviously if those results are positive, you would want to be doing something to bring a product to those patients who desperately need new therapies given we have not seen anything for decades. So we are trying to advance that as quickly as possible, both with FDA and elsewhere.

Great, thank you very much.

(Operator Instructions)

Chad Messer from Needham and Company.

Hi guys. Thanks for taking my question. It's very exciting as we get into these final innings, at least for SYNERGY. Last quarter you spent some time on the call talking about some concerns people might have for the market of -- in prostate cancer given all the new anti-antigen agents.

I was just wondering if you had any updated thoughts with three more months now since we had the expanded data. Any updates on what you are seeing? I'm sure you guys are paying very close attention to what is going on in the prostate cancer market.

Thanks for the question Chad and I very much appreciate the insight on particularly the landscape. We do get a number of questions about particularly the relevance of chemotherapy in the landscape given that you've had new agents enter the prostate treatment paradigm. And as we explore that question not only with key (inaudible) and investigators throughout the world, and also look at script data, I think it is fairly clear that chemotherapy remains a primary modality of therapy for patients with advanced prostate cancer.

We have looked at some of the data sets, the PREVAIL data in particular is the most recent data set. And as I think everybody is very impressed with the data set that is there, but I think that message remains the same as it was when we're talking about it just a few months ago, that the improvement seems to be a delay in the development -- or sorry, the delay in development of the disease, and primarily access to chemotherapy.

But once those patients get to the point where chemotherapy is indicated, and that is typically with your metastatic symptomatic patient group, the survival from that point on, and you can look at that as the time from radiographic progression to passing away, is consistently around 18 or 19 months. It's the same as what we saw with the Zytiga pre-chemo study and I think PREVAIL showing pretty much the same timeframe. And that ironically is the same as it was with TAX 327 approximately 10 years ago.

So from our perspective, while these new therapies have done a really nice job of extending this delay, the unfortunate piece is once they do progress and they do start to need chemotherapy because the advanced disease -- the time period from that point on to the point where they pass away remains unchanged. So from our perspective there continues to be a massive need for something that is going to improve on chemotherapy, because as these agents migrate to the front end of the disease, we're still left with the issue of what do you do with a man that has got advanced disease and approximately two years of life expectancy. We need to improve on that just like we did 10 years ago, and I don't think that's changed in the marketplace at all.

Great, thanks so much.

Thanks a lot Chad.

Stephen Willey from Stifel Nicolaus.

Hi, guys. Have you guys disclosed the number of events that are required to trigger Borealis?

No, we haven't given the specifics on the Borealis analyses either, all we've indicated is that we would be there in the second half of the year and obviously the main primary endpoint for that trial is overall survival.

Okay. The thought process there, OncoGenex's control arm is still in the 13- to 15-month range?

Yes, I think that is pretty much in the zone where we are looking for the front-line treatment with [Gaman sys]. I think MVAC shows pretty much the same survival time period. I think that's a fairly good number, particularly given that we haven't see any new therapies come into the marketplace for a couple of decades. So I think that's a pretty easily relied upon number actually.

Okay. And then do you have any idea as to where Sanofi is right now just in terms of the Phase III study comparing cabazitaxel and docetaxel head to head?

Not with authority. We have asked of the rumor mill, but probably can't comment on what the rumor mill is telling us. So I don't think we have it from authority from Sanofi at this point.

Okay. And then maybe just lastly just your interactions with Teva over the course of the past few months or so. It's a question that we get with respect to what happens post-SYNERGY to some of these other programs. And there's obviously been a little bit of churn there from a managerial perspective. So maybe just wondered if you could comment on just how you perceive to be the level of commitment from Teva, specifically with some of these other studies. Thanks.

Thanks for the question, Stephen. I think it's important to recognize with the partnership with Teva, we get similar questions because there have been changes at the top end, particularly with Jeremy's departure. Well, arrival and then departure. You should recognize that given that we're in Phase III development, our interactions are much deeper than just at the Senior Management level as if you're trying to do a deal.

The regulatory people on both sides of the companies are interacting on a regular basis. Same with data, same with clinical, same with manufacturing. And so you've got these team interactions where the companies have actually been very, very stable, the same personnel have been there for a number of years. That level of collaboration and interaction has been remarkably stable and somewhat independent of what is going on at the top levels, because this is an active partnership where we're working on Phase III and preparing for NDA filings and so on.

I don't think we have really noticed that change as much as perhaps some other companies would be if you are trying to do a deal with them, or it's an early start off where you're trying to establish a relationship, because those teams have been working together for a number of years now.

As far as the effect of SYNERGY on the rest of the programs, we don't see obviously any change in what is happening with AFFINITY and ENSPIRIT, those continue to enroll, there is not any difference on that front. And then obviously the question becomes what if SYNERGY does or does not succeed? If it succeeds, obviously things would continue.

In the alternative, I think we've talked about this on many conference calls previously. The agreement that we have that is available for people to view is that the commitment from Teva is to basically fund those three Phase III clinical trials. There's a couple of exceptions, safety patent issues and so on, and saving anything like that, we would see that they would continue to do that on the basis of that agreement. So we wouldn't see that that would change.

So hopefully that answers your question Stephen. I think we are in pretty good position and we're particularly looking forward to the next couple of months and the reveal of SYNERGY.

Operator, I believe that is the end of our queued questions at this point, and I just wanted to thank everybody for participating on the conference call. Obviously the next couple of months are going to be very critical and exciting for us, and we look forward to providing you an update. And that next update likely is going to be around the timing of our data set. Thank you very much for joining us.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.