Achieve Life Sciences Inc (ACHV) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the OncoGenex second-quarter 2015 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Jim DeNike, Senior Director, Corporate Communications.

Thanks, Abigail, 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 Dr. Cindy Jacobs, our Chief Medical Officer.

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 our website.

I will now turn the call over to Scott.

Thanks, Jim. Good afternoon and thank you for joining us. Today I will provide an update on several of our key clinical programs as well as preview anticipated milestones for the second half of this year and into 2016. John will conclude with a review of our financial results for the second quarter and then we will open the call to questions.

The insights we have gained about our products and updates we have made to our clinical programs over the past year have resulted in several upcoming key catalysts which are now imminent, including the Phase 3 data readout expected by the end of the year. Our two priority assets, custirsen and apatorsen, continued to demonstrate their potential value to provide clinical benefit in the most vulnerable patients: those at increased risk for poor outcomes or more resistant disease.

We have realized a number of important achievements since our earnings call in May, so let me take a moment to summarize some of these highlights.

I will begin today's update with our product candidate custirsen, which is the subject of two ongoing Phase 3 clinical trials in lung and prostate cancer. As we reported at ASCO, SYNERGY findings showed a benefit with custirsen therapy in men with metastatic castrate-resistant prostate cancer who were at increased risk for poor outcomes, and we continue to gain a better understanding of the patients most likely to benefit from custirsen treatment.

Additional analysis of the SYNERGY data have been accepted for presentation at the upcoming European Cancer Congress meeting in Vienna in September, and we look forward to sharing these findings in more detail at that time.

I would like to emphasize that we continue to believe that this data is significant, as our ongoing AFFINITY and ENSPIRIT Phase 3 custirsen trials include a higher percentage of patients who are at increased risk for poor outcomes. Based on the SYNERGY findings, we reached agreement with the FDA in June to amend the Phase 3 AFFINITY trial and statistical analysis plan to include a co-primary objective of evaluating survival benefit in men who are at increased risk for poor outcomes.

These patients will be identified as having two or more of five common risk factors. In addition, we agreed that an interim analysis will occur for the entire study population or intent to treat population when the final analysis for the poor prognosis subpopulation occurs. This interim analysis will have both futility and early efficacy criteria defined for the entire study population.

If the earlier final analysis on the poor prognostic subpopulation shows a survival benefit for custirsen, we could initiate a regulatory submission at that time and not be required to wait for final results from the ITT population. The entire trial could also be stopped early due to efficacy based on the interim assessment for the ITT population by the independent data monitoring committee.

Advice from the European Medicines Agency through their scientific review process will be obtained prior to finalizing the pending protocol amendment. Subject to finalizing the amendment, timing for the final analysis of the poor prognosis subpopulation is projected to occur by the end of 2015, while the final analysis for the entire study population is projected to occur in the second half of 2016.

Our other Phase 3 custirsen trial, ENSPIRIT, continues to accrue non-small cell lung cancer patients who have progressed following initial treatments and are receiving custirsen in combination with docetaxel as second line chemotherapy. Based on current enrollment projections, we believe final survival results could be available in the second half of 2016.

Although investments have been made in the treatment of non-small cell lung cancer patients with specific mutations and biomarkers, acquired resistance to treatment and patient selection continued to be a challenge.

Combination with chemotherapy remains the backbone of treatment for the majority of these patients. Although we remain blinded to the results, we were pleased to learn in July that the ENSPIRIT trial would be continued following its final scheduled interim futility analysis. As a reminder, we amended the ENSPIRIT protocol to include a more rigorous evaluation for determining futility in achieving the survival benefit when adding custirsen to second line docetaxel. We believe this more rigorous threshold is more appropriately aligned to the interest of both clinicians and their patients.

Given the aggressiveness of non-small cell lung cancer and the fact that approximately 80% of the patients in this trial had at least one poor prognostic risk factor at the time of the initial futility analysis, we believe the ENSPIRIT trial may already be enriched for the desired patient population. While it is too early to predict the final results or the potential of custirsen in treating non-small cell lung cancer, passing this important futility analysis milestone further strengthens our belief in this drug and its potential to provide clinical benefit in this vulnerable patient population.

Having cleared the remaining futility hurdle, and with the additional funds raised through the recent sales of our stock to Lincoln Park that John will be discussing in a moment, we believe we now have the required capital in hand to achieve our clinical goals, including the reporting of ENSPIRIT data expected in 2016.

I would now like to take a few minutes to discuss recent updates regarding our other clinical asset, apatorsen, at our ORCA clinical trial program. The ongoing trials in the ORCA program consists of investigator-sponsored clinical studies designed to evaluate whether the inhibition of Hsp27 can lead to improved outcomes for cancer patients.

We currently have five ongoing Phase 2 studies in bladder, lung, pancreatic and prostate cancers. The ORCA trials, with the exception of the PACIFIC trial, are designed to provide information that will be useful for designing future Phase 3 trials and maybe used as supportive studies for registration if applicable.

As a reminder, due to small sample sizes, data from these trials are not likely to result in statistically significant differences in either progression free survival or survival. At ASCO, data from the global phase 2 Borealis-1 metastatic bladder cancer trial were presented and showed clinical benefit in patients with advanced disease who had specific poor prognostic risk factors, including performance status, liver involvement, low hemoglobin and high alkaline phosphatase.

Additional results from this trial have been accepted for presentation at the upcoming European Cancer Congress.

The other metastatic bladder trial, Borealis-2, is expected to finish enrolling this quarter and will evaluate overall survival. Given the urgent need for new bladder cancer treatments and our results to date, we are working closely with investigators and plan to engage regulatory agencies to determine next steps.

Turning to our Phase 2 Rainier trial, we anticipate topline survival data by the end of the year. This randomized placebo-controlled trial is evaluating apatorsen in combination with abraxane and gemcitabine in approximately 130 patients with previously untreated metastatic pancreatic cancer. Rainier will evaluate overall survival as well as survival outcomes in patients with defined for prognostic risk factors.

Our Spruce trial is an investigator-sponsored, randomized placebo-controlled Phase 2 trial evaluating apatorsen plus carboplatin and pemetrexed therapy, compared to carboplatin and pemetrexed therapy alone in patients with previously untreated advanced non-squamous non-small cell lung cancer. The aim of this trial to determine if adding apatorsen to carboplatin and pemetrexed therapy can extend progression-free survival outcome.

Additional analyses are expected to include tumor response rate, overall survival, safety, tolerability and the effect of therapy on Hsp27 levels.

Patients who are at increased risk for poor outcomes will also be prospectively evaluated. This trial was initiated in August 2013, and patient enrollment was completed in February 2015. Primary progression-free survival endpoint data is expected in the first half of 2016.

Our other investigator-sponsored trials in the ORCA program include the Cedar trial in untreated advanced squamous non-small cell lung cancer and the Pacific trial in men with castrate-resistant prostate cancer who are experiencing a rising PSA while receiving ZYTIGA.

That concludes my update on our recent development progress. And I would now like to invite John to provide an overview of our financial results for the second quarter of 2015. John?

Thanks, Scott. As of June 30, we had $60.2 million in cash, cash equivalents and short-term investments. During the second quarter, we sold shares of our common stock to Lincoln Park Capital that resulted in gross proceeds of $3.3 million, including $2 million that was provided at the time we announced the purchase agreement.

After the end of the second quarter, we sold additional shares of common stock to Lincoln Park Capital, resulting in gross proceeds of approximately $14.7 million. No further amounts remain available for sale under this offering program.

Based on our current expectations, we believe that these resources will be sufficient to fund our currently planned operations late into the fourth quarter of 2016, which may include announcement of the Phase 3 AFFINITY prostate cancer trial final results of the poor prognosis subpopulation by the end of 2015 and final analysis for the entire study population in the second half of 2016.

Announcement of the Phase 3 ENSPIRIT lung cancer trial final survival results in the second half of 2016.

Completion of enrollment in the Phase 2 Borealis-2 bladder cancer trial expected to occur in the third quarter of 2015.

Announcement of the Phase 2 Rainier pancreatic cancer trial results expected by the end of 2015.

Announcement of the Phase 2 Spruce lung cancer trial results expected in the first half of 2016.

Announcement of the Phase 2 Pacific prostate cancer trial preliminary results expected in 2016, and completion of enrollment in the Phase 2 Cedar lung cancer trial expected in 2016.

Revenue for the three and six months ended June 30, 2015 was $4 million and $5.4 million, respectively, compared to $4.9 million and $16.7 million for the three and six months ended June 30, 2014, respectively. Total operating expenses for the three and six months ended June 30, 2015 were $9.6 million and $16 million, respectively, compared to $12.6 million and $13.2 million for the three and six months ended June 30, 2014, respectively.

Net loss for the three and six months ended June 30, 2015 was $6 million or $0.26 per diluted common share and $10.5 million or $0.46 per diluted common share, respectively, compared with $7 million or $0.47 per diluted common share and $15.7 million or $1.05 per diluted common share, respectively, for the three and six months ended June 30, 2014.

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

Thanks, John. As John just outlined, this is an exciting time for the Company with multiple imminent milestones expected throughout the rest of 2015 and continuing into 2016.

Our two product candidates continue to demonstrate their potential value in the clinical setting and now, with the additional capital that was secured that John discussed, we believe we are now well-positioned to achieve our important upcoming milestones. We look forward to providing additional updates throughout the rest of 2015 as we continue to build on our recent successes.

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

(Operator Instructions) Katherine Xu, William Blair.

A few questions here. On the AFFINITY study, can we just assume that if the poor prognostic [groups does] not meet the primary endpoint by the end of the year, then the ITT analysis would not work either?

First of all, thanks for the question, Katherine. So I don't think that is necessarily our view. I think we do have two separate shots.

Obviously we believe the poor prognostic group is the best opportunity for the drug based on the SYNERGY results. But I think there is an opportunity for the ITT patient population as well. And maybe if Cindy can turn over and address this in a little bit more detail.

Yes, because the statistical design or methods for both the poor prognostic subpopulation and ITT are a little different so the hypothesized hazard rate -- ratio for the poor prognostic is 0.69 versus the ITT of 0.75.

So we have put a little higher bar for the poor prognostic patients to achieve, so that would mean that the ITT, when the data is complete, would still have a chance.

I see. And then with ENSPIRIT, the interim analysis passed. There was an efficacy bar here that you actually cleared.

What does it mean from your perspective? Does it bode well for ENSPIRIT? How much more confidence do you think you have gained from the interim analysis and then does that extrapolate out to AFFINITY as well?

Again, I will let Cindy take the first response to your question and then I can fill in as necessary.

Yes, with our futility criteria, we have not disclosed that, but it certainly is a more rigorous criteria that is not just that the two arms are similar, or certainly the treatment arm is doing more harm. I think what it does in its criteria is give us better confidence that the trial is less futile to us. Obviously not being able to state that criteria, but I think we feel confident that this trial is definitely proceeding well and we look forward to the results at the end of next year.

Chad Messer, Needham.

You mentioned that there is some additional, I believe, SYNERGY data coming in September (technical difficulty) at the oncology conference. We had a pretty good update at ASCO. Is it possible to comment on at least a sort of general what kind of additional information we might be getting?

I will turn again over to Cindy who can respond to what the plans are for the European Cancer Congress coming up in September in Vienna.

What we will be presenting is a little more detail of baseline serum [clustering] levels and how they are correlating to the poor and the good prognostic patients and our treatment arm benefits.

Okay. And then, can you talk a little bit about assuming a positive result in the poor prognostic patients, what your current thinking is on what kind of label you would get? You have got the docetaxel study, SYNERGY, and then this one would be in Jevtana and poor prognostic patients.

It's not an insignificant number with the second line chemo, but obviously we are getting whittled down pretty far in metastatic prostate cancer. What kind of label do you think you can get?

So, I think there is a continuum that we will follow out of this, based on the data set. So as you articulated, the first data that comes off from this study is the poor prognostic patient group. But then, following that, a number of months later, we will follow with the overall ITT population. So that obviously has potential to expand from the poor prognostic group.

And then, there's some other discussions that we have had obviously with respect to how far does that potentially get to migrate. Those are obviously review matters with the FDA and other regulatory bodies. But can you start to migrate?

There is a trial I think that people are fairly familiar with cabazitaxel in the frontline setting. So, where does that potentially move? I think there are some interesting opportunities that do follow for us in the migration of, potentially, cabazitaxel.

And then I think we have also been speaking -- in fact, I think it came up on our last call, last time about how chemotherapy and its placement in the treatment of prostate cancer is really completely changing the face of treatment of this patient group. Again, if you recall, there were two separate trials -- the STAMPEDE trial and the Charter trial that is looking at patients that are high-risk/high-volume patients that are early stage, where chemotherapy has delivered a very substantive improvement to survival.

So I think generally, there is this evolution that is going on for the use of chemotherapy in prostate cancer. And obviously, it will be our role and job, assuming we see success in prostate cancer, to continue that evolution and to expand the utilization of this drug to the ever-expanding role of chemotherapy in the treatment of this disease.

No, I would agree it's a moving target. And probably moving in your favor. Maybe you could just comment on how prepared you are at this point, provided you would be filing an NDA potentially, or starting to get ready to file an NDA by the end of the year? That is coming up pretty close.

Yes, I think it is fair to say that we are all hands on deck in preparation for that particular action. There are elements of an NDA filing that we can begin to write, obviously. Obviously you have to plug in the clinical data, but the team is completely focused on a rapid writing effort so that we can get before the FDA and other regulatory bodies as humanly possible as we can. And I think the team is very much guided to that effort, and that is where our primary focus is, other than obviously execution of our clinical trials.

But that is kind of the dominant focus, is we are in now a launch preparedness mode on anticipation of a hopefully successful outcome from this trial.

Well, good luck with the several data readouts coming up.

Katherine Xu, William Blair.

Thank you for taking my follow-up. So, custirsen, I was wondering what the strategy that you have for the asset. What kind of data you think you will have for partnership customer or do you want to keep pushing forward yourself?

Sorry, I missed the question on apatorsen. Was it for partnering?

Yes, so basically do you -- if you want to go for partnering, what kind of data do you think you have to have in hand for it? Or do you want to keep pushing it until you see enough data? Or do you want to do it all for yourself?

That's a great question. We are -- we have, I think, a very interesting opportunity with respect to apatorsen. Clearly we are on the eve of multiple data points across the evolution and the maturation of the ORCA program. So, in very short order, we're going to have results across many different tumor indications now.

That, obviously, is a very exciting opportunity. That will define, I think, whether the opportunity expand beyond what we have already identified as an opportunity for bladder cancer.

As it relates to partnering, it provides a whole bunch of different opportunity obviously, depending on where the custirsen program goes. So, if we see success in revenues starting to derive from that program, it gives us a lot more optionality with respect to how much and what we do with respect to apatorsen development.

So, fortunately, given the timeline, we are in pretty good position to at least understand what the outcome is with prostate cancer, certainly with poor prognostic and potentially with ITT and maybe even lung, because those are starting to migrate towards a very similar timeline.

And that will give us so much more optionality with respect to apatorsen, and we have the benefit of having all these other apatorsen trials starting to demonstrate results for. So, I think we are in a good position to be able to understand what that landscape is, not have to walk down partnering paths too soon always incomplete data sets. And I think most of that is going to be known in the next six to nine months across the board.

So at this point, we are not rushing to get into a partnership, relationship. But we do what we always do, which is, we have multitudes of meetings at every conference and opportunity we can to keep our pharma partners and big biotech partners informed as to what we are doing and data sets as they mature, and timelines. So, we are active and ready to strike. But at this point, we don't absolutely need to, and on the eve of multiple data sets, that will drive a lot of that.

Thank you.

(Operator Instructions) Stephen Willey, Stifel.

I was wondering if you could maybe just comment a little bit with respect to where you are with EMA in the scientific review process. Have you already received that advice from them? And I guess is this really just kind of a timing issue with respect to the finalization of the protocol amendment? Or is there kind of an additional back and forth that is ongoing and needs to be completed between yourselves and the agency?

Good afternoon Stephen and thanks for the question. Again, I will turn this one over to Cindy. She is in the front line of the discussion with the EMA, so I will let Cindy answer your question.

Sure. The EMA is pretty -- the process is pretty formal and so everything has been submitted and we went for kind of a pre-review and comment before we did our final submission, which was in early July. Then they have very strict timelines once that is done, so we really won't hear from their review until early -- end of September or early October. And yes, we plan on finalizing the protocol amendment once we have that final review and any interaction that might be needed with EMA for any issues that they want to discuss with us.

Okay. And then maybe another question, just with respect to Rainier. If you guys -- I am just curious if you have any insight at this point as to what study conduct might look like. And I just ask the question because there was a little bit of an imbalance in the AE- induced treatment discontinuation that we saw in Borealis. I am just wondering if that is something that you are being replicated in Rainier.

In Rainier, we are completely blinded as to the treatment groups. We don't have any visibility at all on basically a treatment effect that we would be able to attribute to the drug at this point. We will have to wait till unblinding occurs and then obviously we would take a look at that. And that obviously is something that we are looking at for -- by the end of the year with respect to the Rainier results.

Okay.

Again, we could just turn it over to Cindy for a little bit more detail.

Yes, I think the one thing with Rainier, this is similarly a placebo, blinded, controlled and also it does not have the 1000 milligrams dosage group. It has the 600 dosage group, which gave far less issue on that as far as discontinuation. So we are hopeful that that will not be repeated because of the dosage.

Okay. And then maybe just the housekeeping question, I guess. Have we figured out what the schedule of the amortization schedule will be for the remaining revenue -- for the remaining revenue that is due from Teva as a result of the collaboration termination?

Thanks for the question again. I will turn this over to John, who can answer the question for you.

Yes, thanks, Stephen. So in terms of how we are going to amortize the revenue, this is going to be on a dollar-for-dollar basis for all of the custirsen development activities. So again, we have been running AFFINITY, and you have seen the revenue in prior periods as that has been our study.

In Q2, we have a little bit of revenue again from taking on ENSPIRIT starting at the end of April. So right now, just based on our expectations, we would expect that to be fully amortized by the first quarter of 2016.

Then, how much was remaining on the $27 million as of the end of Q2?

Roughly $18 million.

Okay. All right, thank you.

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

Thanks, Abigail. Thank you, everybody, for participating on today's call. As I said in the prepared statements, we very much look forward to the balance of 2015 and into 2016. This is an unprecedented time for us, with multitudes of events coming in that time period, and we certainly look forward to providing you updates as those mature and are realized. Thank you, again, for participating.

Ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may all disconnect. Everyone have a great day.