Achieve Life Sciences Inc (ACHV) 2014 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the OncoGenex third-quarter 2014 earnings conference call. My name is Sam and I will be your operator today. (Operator Instructions). At this time, I would like to turn the call over to Jaime Welch, Vice President of Marketing and Corporate Communications at OncoGenex Pharmaceuticals. Please go ahead.

Thank you, Sam, and thanks, everyone, for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer; John Bencich, Chief Financial Officer; and Cindy Jacobs, our Chief Medical Officer.

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 documents filed with the SEC concerning factors that could affect the Company, copies of which are available on our website.

I'll now turn the call over to Scott.

Thanks, Jaime. Good afternoon and thank you for joining us. I'd like to begin today by officially welcoming John Bencich to his first OncoGenex quarterly earnings call. Welcome, John. As previously announced John was appointed as Vice President and Chief Financial Officer in August. John brings to our management team extensive financial leadership and strategic corporate development expertise, both of which are critical for us in this exciting time of growth and opportunity.

As outlined in our press release issued earlier today, two important custirsen milestones were reached in the third quarter. The Phase 3 AFFINITY trial successfully completed patient enrollment of 635 men with castrate-resistant prostate cancer and the Phase 3 ENSPIRIT trial completed its first interim futility analysis and is continuing involvement on patients with non-small cell lung cancer. Importantly, both AFFINITY and ENSPIRIT are evaluating custirsen in combination with second line chemotherapy in patients who have experienced disease progression following initial treatments.

We believe that targeting potential mechanisms and treatment resistance is critical in the fight against cancer. As clusterin is more heavily expressed in tumor cells that have been [distressed] by treatments, patients in the AFFINITY and ENSPIRIT trials who have advancing disease despite previous treatments may derive a benefit from custirsen therapy.

As you know, the final SYNERGY results were reported at ESMO last month. We look forward to sharing additional data with supportive graphics from further exploratory analysis at our next public investor presentation.

These findings support our continued belief in custirsen, particularly in patients with more advanced disease and with poor prognostic factors. Following the completion of exploratory analyses, an improvement in overall survival was seen as some men who receive custirsen treatment in the SYNERGY trial and who had the worst poor prognostic scores across several risk factors. These risk factors included higher PSA levels, involvement of liver disease, poor performance status, and the use of opiates for cancer pain.

While SYNERGY did not show a significant improvement in overall survival, these additional findings provide us with valuable insights regarding potential patient populations that may benefit from treatment custirsen and support our confidence in the ongoing trials evaluating patients with more advanced disease and poor prognostic characteristics.

I'd now like to provide an update on our proprietary product candidate, apatorsen and the ORCA program. This robust development program, which is being conducted in partnership with leading cancer researchers and institutions, is evaluating the potential of apatorsen in four tumor types across seven randomized Phase 2 clinical trials and enrolling nearly 1,000 patients.

As a reminder, apatorsen targets each heat shock protein 27 or Hsp27. Hsp27 production increases with cancer treatment as well as with stage and grade, and not only contributes to cancer cell survival and proliferation and migration but also plays a role in dampening the immune function by inducing a number of immune inhibitory mediators. Given its role in immune modulation, there could be interesting opportunities to combine apatorsen with some of the emerging checkpoint inhibitors, which we are exploring.

Metastatic bladder cancer is our lead indication for apatorsen with key survival data expected by the end of the first quarter of 2015. This trial known as Borealis-1 is a randomized placebo-controlled Phase 2 trial evaluating apatorsen in combination with first line gemcitabine and cisplatin chemotherapy in 183 patients. Additionally, Borealis-2, evaluating apatorsen in combination with second line docetaxel chemotherapy in approximately 200 patients with metastatic bladder cancer, is currently enrolling very well and we expect to complete accrual late next year.

We are excited about the opportunity in bladder cancer, not only because of the potential to improve patient survival in a disease that has had little progress in decades but also because of apatorsen's supporting clinical data in this disease. As you may recall, our superficial or muscle invasive bladder cancer trial evaluating apatorsen in via intravesical administration reported a complete response rate of 38% after only one week of treatment.

These data together with the preclinical data supporting apatorsen in combination with chemotherapy reinforce our enthusiasm and confidence in our current bladder cancer trials. Additionally, there has been great interest from the bladder cancer community to pursue your apatorsen in earlier stages of disease with various combinations and sequencing strategies based on emerging data from the immune checkpoint modulators. We look forward to providing you with additional details as our bladder cancer program unfolds.

We believe apatorsen has great potential beyond bladder cancer as well with additional trials in non-small cell lung cancer, pancreatic, and prostate cancer expected to complete enrollment or report data in the coming year. Specifically, by the end of the first half of 2015, we expect to announce completion of patient enrollment in both the Spruce trial in non-small cell lung cancer and the Rainier trial in pancreatic cancer. Finally, we expect to submit data from the Pacific trial in prostate cancer to a medical meeting next year.

That concludes the development program updates. At this time, I'll turn the call over to John who will review our third-quarter 2014 financial results. John?

Thanks, Scott. We ended September of 2014 with approximately $54 million in cash, cash equivalents, and short-term investments. We believe these capital resources will be sufficient to fund our currently planned operations into the third quarter of 2016, and we expect that we would achieve the following milestones. For apatorsen the release of Borealis-1 final results and the completion of enrollment and results in both the Spruce and Rainier clinical trials. And for custirsen, the release of final AFFINITY results in late 2015 or early 2016.

Revenue for the nine months ended September 30 increased to $21.5 million compared with $21.3 million for the same period in 2013. Total operating expenses for the nine months ended September 30 decreased to $44.3 million compared with $49.6 million for the same period in 2013. Revenue is earned through our collaboration with Teva.

Changes from period to period largely results from clinical development activity associated with the AFFINITY trial. Changes in total operating expenses predominately results from patient enrollment in treatment in the AFFINITY trial and the ongoing apatorsen trials.

Net loss for the third quarter of 2014 was $4.9 million or $0.23 per diluted common share compared with $10.1 million or $0.68 per diluted common share for the prior year quarter. Net loss for the nine months ended September 30 was $20.6 million or $1.21 per diluted common share compared with $25.2 million or $1.72 per diluted common share for the same period in 2013.

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

Thanks, John. In conclusion, with numerous trials across multiple tumor types, stages of disease, and in combination with various therapies, we are in the midst of an exciting time as we are nearing the enrollment and data milestones. We have the financial resources to fund operations into the third quarter of 2016, and an experienced and dedicated team that will enable us to achieve our goals.

Thank you, again, for joining us today, and at this time I would like to invite the operator, Sam, to open the line for questions. Sam?

(Operator Instructions)

Katherine Xu, William Blair.

Thank you. Good afternoon. So, Scott, on Borealis-1, I'm just wondering how we should expect the data? I understand that overall survival is the primary endpoint, but there should be [OR data], as well as PFS as well. And are these correlated? And also, what would the Phase 3 design look like, possibly?

Thanks, Katherine, and welcome to the call. So Borealis-1 -- you're right -- the primary endpoint for that trial is overall survival, but because it is overall survival, we would have the opportunity to collect other information, including progression-free survival and response rates. We would likely do an initial press release with top-line results, though, when we first announce the data, and probably have some of the other data available in a scientific congress. And as you can appreciate, you want to have some of that information, so that you have the opportunity to present. So, we don't have exactly what we'd present in top line. Obviously, the survival would be key, and some of the other information probably at the medical conference.

As far as phase 3 design, there obviously -- there would be conceptualization around doing basically a repeat of the Borealis-1 trial. And that would obviously look at the metastatic patient with frontline setting -- combination frontline chemotherapy. As you know, we also have our Borealis-2 trial, which is being conducted in the second line setting. That represents a secondary opportunity. And then, as I mentioned in the prepared statements, we are looking at a number of other opportunities across the bladder cancer continuum.

We are quite interested in, obviously, what we observed out of our superficial muscle invasive disease study where we saw the 38% pathologic complete response rate. And that is a completely separate actionable item from our perspective that is also interesting that we are looking at opportunities in that whole sort of earlier stage here of the disease settings.

So, there is actually quite a few opportunities for us. With Borealis-1 reading out first, the easy one that would follow would be basically a replicate of the metastatic frontline setting.

Could you remind us the powering assumptions for Borealis-1 and 2?

Sure. So, I'll turn this one over to Cindy Jacobs since she's here as well -- our Chief Medical Officer -- and Cindy can take you through some of the stats plans.

And just to remind everybody, the Borealis-1 is looking at two different doses, and so what we will be looking at is the safety profile and a risk-benefit assessment for both of those dosage groups. And each comparison has approximately 80% power, using a log-rank test. The overall probability of a false positive over the three tests is one-sided -- 0.15. What we really are looking at is a trend in hazard ratio. Obviously, with 180 patients, we are looking for a trend and not a statistically significant difference. If we did it a statistically significant difference, it would have to be for a critical hazard ratio ranging between 0.66 and 0.72 for the combined Borealis groups compared to the controls. And Borealis-2 is the same. It has a similar -- overall survival is the primary endpoint for that with a little bit different, but close to that.

Thank you.

Stephen Willey, Stifel Nicolaus.

Thanks for taking the questions. Just on the follow-up to Katherine's question, is the critical hazard ratio that was just mentioned for Borealis-1, is that pooled -- the two dosing arms?

Well, the 0.66 would be closer to each arm and then pooled 0.72 -- it actually -- what is, it's a range of the table where the various hazard ratio and the powering -- with that we'd have 80% power. One of the most important thing is to this study is to, one, pick out what dose would be the most beneficial dose with the best benefit versus risk or safety profile, but also it will be used to sample size what would be an appropriate size of a Phase 3 trial. So that's where that hazard ratio -- obviously, if the hazard ratio is 0.66, then the Phase 3 trial can be a smaller size. If it's 0.72 or 0.75, then it is going to be a little larger. So that is really one of the most important aspects of this Borealis-1 study.

Just to clarify, Steve, the protocol and analysis plan does call for, basically, by-arm comparison to the control and also has the ability to combine the two treatment arms against the control, which is why there is the to hazard ratios that Cindy was referring to.

Okay. So those are pre-specified and not dependent upon each arm independently showing stat sig, correct?

Right. There's not a predetermined threshold that has to be achieved in one of the treatment arms versus the control that then would trigger the analysis where you pool it. There is no predefined criteria that would drive that secondary step.

It's just a prospective -- is the prospective plan for the analysis with that range and then how much would be the 80%, 90% power based on the hazard ratio.

Okay. And then, Scott, you talked about some of the patient characteristics, specifically kind of on the worst prognostic front for which the hazard ratios were skewed toward custirsen. Do you know what the Phase 3 population of AFFINITY looks like right now? And are there any kind of assumptions or any comparisons that can be made just in terms of baseline patient phenotypes relative to some of these poor prognostic indicators that you were able to extract out of SYNERGY?

We don't have a guest a pool to look at -- the poor prognostic characteristics of AFFINITY or ENSPIRIT, for that matter. I think the working assumption is that obviously if patients are coming off of prior lines of therapy, there is going to be a host of these prognostic characteristics that are probably just putting these patients in a worse state generally than they would be in previous lines of therapy. That's kind of the working assumption in these other trials. So, obviously, that would be something that we are looking at as we do the evaluations in both of those studies going forward.

Okay. And then just lastly, the commentary around the apatorsen and potential checkpoint combos. Would bladder be a seemingly safe place to start, or would you also be interested in something like lung where we have seen activity in some of these other tumor types already with the PD-1 cast of characters?

Yes, I think there's a pretty broad area that we could explore with respect to combinations. As you know from our existing development plan, our ability to partner with other therapies is quite broad. It's not really specific obviously to chemotherapeutic agents, or radiation, or different strategies. It's remarkably broad.

I think the benefit with some of the checkpoint inhibitors is obviously they are pursuing development across the pretty broad platform as well, and we are kind of going through that and saying, where is the data strong? Where could we potentially combine with potential synergy as well? I think it's quite interesting as we start to look at the totality of the Hsp27 story -- we have been really focused in this area of its role in development of treatment resistance. And we talk about tumors and their ability to do what they do within the human body with proliferation and escaping cell death triggers and migration -- all of which we have talked about in various calls and presentations and the role of Hsp27.

This sort of new area makes a lot of sense when you think about it. If a tumor is going to be able to proliferate and migrate and do those things, it would make logical sense that it is also finding a way to hide from the immune system. And in fact that's a lot of what these papers are starting to generate is Hsp27 is really compromising the immune surveillance, if you will, and allowing tumors to be hiding.

But the role of Hsp27 in this mechanism is quite distinct. So if you think about CTLA-4 as an example, you are basically putting the brakes on T cell activation whereas the role of Hsp27 is actually to drive that response, so you can see there's some really nice synergy there. They're basically in opposites.

So it's just a lot of different areas that we can go to. I think disease specific, our role is going to be to try and identify the therapeutic areas where there is going to be sort of natural opportunities for us to combine the markets and the size of the market and patient population, and especially the need is going to drive that direction in the biology.

Interesting. I appreciate the color. Thank you.

And, Steve, you will see a fair bit more about that part of the story as we get into -- especially a lot of the investor conferences. As I alluded to in the prepared statements, we want to take some of that SYNERGY data and give some of the graphics that are behind some of the observations that we saw in the exploratory analyses. I think pictures are worth a thousand words, and while we are giving some of the text behind this, I think seeing the visuals will help really drive home what we've been observing. And then we are going to be doing the same thing as we start to speak to the mechanism of action for immune modulation for, Hsp27. And, again, I think as you see those diagrammatic expressions start to unfold, that will really capture the story a lot better and see the totality of the Hsp27 potential that we are seeing across a number of ways that tumors are basically taking hold in the bodies of people.

Okay. We'll be looking forward to that. Thanks.

(Operator Instructions)

Chad Messer, Needham & Company.

Thanks for taking my question. A lot of interesting discussion. So it makes total sense to me that these findings from SYNERGY showing patients with poor prognostic indicators are potentially doing better, that that would certainly bodes well for the other two programs. But do you or the investigators or through preclinical data -- is there any hypothesis as to why that would be true? You mentioned you will have further data analyses at investor conferences. Is it possible to explain or at least tell us what kinds of further analyses we might look forward to?

Yes. I think the analysis that we are referring to is just getting a look at some of the pictorial analyses that we have kind of talked to that are described in the statements that we have made. So, for example, how does -- take liver mets, for example. I think that's one of the ones that were mentioned. Patients that have liver mets -- how do those patient care in the control group versus the treatment group? And when you see sort of the breakout of that, I think it becomes fairly apparent. Same thing is true when you look at sort of rising PSAs and the like.

So, I think that's really what we are talking about is showing some of that aspect.

The second part of your question -- or I guess it was actually the first part of your question -- is how this looks in the context of, say, the AFFINITY trial and how those patient characteristics may reflect some of these more advanced poor prognostics. That's the harder piece of looking at this because most of what we are talking about is trying to correlate poor prognostic factors versus patients that are de facto, I would say, more resistant. And those are hard correlations because poor prognostics and resistance don't necessarily exactly tie, but obviously as patients go through lines of therapy, they end up with worse health status obviously. That's part of it, and especially I think that's true with prostate cancer where patients tend to have a loss of performance status, which is what ends up claiming lives unfortunately.

Great. Thanks.

Fred Garcia, RBC Capital Markets.

Hi, Scott. I was wondering -- I came on a little late. Did you discuss your relationship with Teva now that they have de-prioritized some of their late-stage assets?

We didn't go through specific comments with regard to Teva other than as it relates to the ongoing AFFINITY trial and the ENSPIRIT trial. So as you may have missed the comments that were made, there's two critical events that have occurred with those trials, the first with respect to the AFFINITY is we completed patient accrual -- 635 patients in this last quarter, and now obviously doing the treatment follow-ups for those patients that are still on treatment, and then you'd be in survival follow-up which is obviously the final stages of that particular trial.

And then as it relates to ENSPIRIT, there was a futility assessment that was planned in the study, and we recently cleared that futility assessment which triggers the escalation of that study and basically a more aggressive enrollment strategy and broadening. So clearing that, both of those trials are obviously in the forward position.

Okay. Thanks. So there's no changes to [potential] commercialization agreements and all that?

Right now, we are just focused on the clinical trials. You know, Teva's role -- and I think we have been dealing with a lot of their strategic shifts over the last couple of years, and difficult to anticipate what they may be doing in the future. So at this point we remain completely focused on our development strategies and plans. I can't really comment on what they might do in the future.

Okay. Thanks.

Thank you. And at this time I am showing no further questions. I would like to turn to call back over to CEO Scott Cormack for further remarks.

Thanks, Sam. Just wanted to conclude this call by saying thank you, everybody, for joining us, and we look forward to providing you future update in the not too distant future. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.