CymaBay Therapeutics Inc (CBAY) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the CymaBay fourth-quarter and full-year 2014 financial results conference call. (Operator Instructions) Please be advised that the call will be recorded at the Company's request. It is also being webcast live on the investor section of the CymaBay website at www.cymabay.com.

At this time, I would like to turn the call over to Mr. Sujal Shah, Chief Financial Officer of CymaBay. Sujal, please proceed.

Thank you, operator, and good afternoon, everyone. Welcome to CymaBay's fourth-quarter and full-year 2014 financial and operating results conference call. This afternoon, we issued a press release announcing our fourth-quarter and full-year 2014 financial results. The release is available on our website under the investor's tab.

Joining me on the call today is Hal Van Wart, President and CEO, who will provide an operational update covering our clinical programs. I will return to review the Company's financial results. I'll then pass the call back over to Hal for a summary of our upcoming milestones. And finally, we'll open the call up for Q&A.

Before we begin, I would like to remind everyone that statements made during this conference call, including the Q&A session, relating to CymaBay's expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act.

Actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of CymaBay. CymaBay expressly disclaims any duty to provide any update to its forward-looking statements, whether as a result of new information, future events, or otherwise.

Participants are directed to the risks set forth in today's press release as well as the risk factors set forth in CymaBay's quarterly and annual reports filed with the SEC. This conference call is the property of CymaBay and any recording or rebroadcast is expressly prohibited without the written consent of CymaBay.

With that, let me turn the call back over to Hal.

Thank you, Sujal. Good afternoon, everyone, and thanks for joining us on the call. Today, I'd like to update you on the progress that we've made on our two clinical programs.

Let me begin with the arhalofenate program. Since our last quarterly call, we have delivered significant new clinical data in this program and are now able to describe what we believe to be an exciting new path forward.

Arhalofenate is being developed for the treatment of gout. The two primary goals of gout therapy are to lower serum uric acid and to prevent and/or treat flares. With regard to serum uric acid, approximately 60% of gout patients, or about 2 million people in the US, are unfortunately not able to reach their goal of less than 6 milligrams per deciliter on the commonly used uric acid lowering therapies allopurinol or febuxostat. Moreover, because these therapies paradoxically make flares worse over at least the first six months, there is significant noncompliance.

Per the American College of Rheumatology recommendations, this [IL] ULT-induced flare-up problem can be addressed in some patients with colchicine prophylaxis. Colchicine, however, is contraindicated in over 40% of gout patients and is generally not well tolerated, with a high noncompliance rate.

With regard to flaring, approximately 1 million goat patients experience three or more flares per year in spite of current therapy. Thus, there remains a significant unmet medical need in gout patients. First, for more effective serum uric acid lowering; and second, for better flare control.

We believe that our lead product candidate, arhalofenate, can address both of these unmet needs because it has two activities in the same molecule. Arhalofenate lowers serum uric acid by blocking the reabsorption of uric acid in the kidney by the urate transporter URAT1.

This uricosuric effect increases excretion of uric acid into the urine and thereby lowers serum uric acid levels. Arhalofenate also has an inherent anti-inflammatory activity. It blocks the urate crystal-induced production of IL-1 beta, preventing the trigger for gout flares.

This dual mechanism differentiates it from all available and emerging treatments for gout and defines what we believe to be a new class of therapy, which we refer to as Urate Lowering Anti-Flare Therapy or ULAFT.

Since the beginning of this year, we've announced data from the last two the total of five completed gout studies that provide clinical evidence to support both of these actions. First, we have shown that arhalofenate can address the need for additional serum uric acid lowering.

In January, we announced results from our Phase 2 study of arhalofenate at 600 milligrams and 800 milligrams administered in combination with febuxostat at 40 milligrams or 80 milligrams in patients with gout. The minimum goal of treatment is to reduce serum uric acid levels to below 6 milligrams per deciliter.

However, for patients with tophaceous gout, there is a need to more quickly eliminate tissue deposits of crystals. And in these patients, targets of below 5 milligrams or even 4 milligrams are desirable.

The combination of 40 milligrams of febuxostat with 80 milligrams of arhalofenate produced serum uric acid responder rates of 193% for the 6 milligram and 5 milligram per deciliter targets, respectively. In combination with the higher 80 milligram dose of febuxostat, responder rates of 100%, 93%, and 79% were achieved for the goals of 6 milligrams, 5 milligrams, and 4 milligrams per deciliter, respectively.

These responder rate data show that the arhalofenate/febuxostat combination therapy is strikingly effective at getting gout patients to their serum uric acid target goals. The use in combination therapy for patients to confidently achieve treatment goals will be an important component of our development strategy and I'll return to that in a moment.

A second important result from this study was the demonstration that the serum uric acid lowering contributed by the uricosuric activity of arhalofenate was produced in a safe manner. This is reflected by the observation that the increases in fractional excretion of uric acid produced by arhalofenate are gradual, with low intraday variations that do not exceed the normal range, a property that we believe explains arhalofenate's lack of demonstrated renal toxicity.

Earlier this month, we announced results of our Phase 2b flare study that confirmed that arhalofenate has anti-flare activity and can address the unmet need for better flare control. This randomized double-blind active and placebo-controlled study was designed to evaluate the efficacy and safety of arhalofenate by reducing gout flares in 239 patients that had experienced three or more flares in the prior year.

The study met its primary endpoint of demonstrating a reduction of 46% in flare rate for the arhalofenate 800 milligram group compared to allopurinol with a highly statistically significant p value of .0056. Arhalofenate also showed a reduction of 41% in flare rate relative to placebo, which was also statistically significant. This is the first study to show that arhalofenate produces reductions in flares without concomitant dosing of colchicine.

The serum uric acid lowering observed for arhalofenate in this study was somewhat lower than for allopurinol and we do not intend to position arhalofenate to replace allopurinol in responders, namely those patients who can achieve this serum uric acid goal on allopurinol. However, this incremental serum uric acid lowering, when combined with that produced by febuxostat, is enough to get the great majority of allopurinol in adequate responders to their serum uric acid goals.

I will note that arhalofenate was well tolerated in both of these studies and that the overall safety profile is favorable and continues to be consistent with those of earlier studies.

Collectively, the five Phase 2 studies completed to date have enabled us to align target profile for arhalofenate. We now believe that the major target population used in 2 million gout patients who are inadequate serum uric acid responders on their current uric acid lowering therapy, we believe that we can convert the great majority of them to responders by treatment with a combination of arhalofenate 800 milligrams and febuxostat.

For the subset of approximately 1.4 million of these patients with chronic gout and whose serum uric acid goal is less than 6 milligrams per deciliter, the ideal combination would be arhalofenate 80 milligrams with the 400 milligrams dose of febuxostat. For patients with tophaceous gout that need a more aggressive goal of less than 5 milligrams per deciliter, we will combine arhalofenate with the 80 milligrams dose of febuxostat.

We believe that not only will these patients be able to reach their serum uric acid goals, but the anti-flare activity of arhalofenate will decrease their flare rate, making them better able to stay on treatment and also possibly allow them to avoid the need for colchicine prophylaxis.

Finally, for the approximately 300,000 gout patients that either can't take or tolerate allopurinol, we are contemplating the development of arhalofenate monotherapy as a treatment option for this patient population that has very limited choices.

Within these markets, the competitive landscape in gout has continued to evolve. AstraZeneca has now completed the Phase 3 program for lesinurad, the only other uricosuric drug in late-stage development. Although the study involved the 200 milligram and 400 milligram doses of lesinurad, they have recently announced that their EMA submission was only for the lower 200 milligram dose in combination with allopurinol.

We believe that the combination of arhalofenate 800 milligrams with febuxostat has a superior profile to the combination of lesinurad 200 milligrams with allopurinol, with respect both to achievement of serum uric acid targets and also flare control and might very well be the better option for the gout patient.

This arhalofenate target profile can be confirmed in a very straightforward Phase 3 program in which we contemplate studying these three target patient populations: those with chronic gout, tophaceous gout, and those patients that can't take or are intolerant to allopurinol.

All in all, we are very excited about where this program is headed and are currently targeting an end of Phase 2 meeting with the FDA for the third quarter of this year, with the goal of being in a position to start a Phase 3 study in the first half of 2016. In parallel, we are running a very active effort to explore potential partnerships, either territory-based or global, as an option for advancing our Phase 3 program.

Now I'd like to change gears and provide a brief update on MBX-8025. This compound is an oral, potent, and selective PPAR-delta agonist with really exciting potential for the treatment of a number of high unmet need indications. MBX-8025 had previously completed a Phase 2 study in patients with mixed dyslipidemia and demonstrated positive effects on lipids, including reductions in LDL cholesterol.

Our strategy for MBX-8025 is to redirect development for indications with high unmet needs. We've identified homozygous familial hypercholesterolemia, HoFH, as the first new indication. HoFH is a rare life-threatening genetic disorder characterized by loss of function in patients in both alleles of the LDL receptor, resulting in extremely high levels of LDL cholesterol, early cardiovascular disease, and early mortality.

Two recently introduced therapies, Juxtapid and Kynamro, are able to provide LDL cholesterol lowering in (inaudible) patients. However, both of the drugs have some tolerability and safety issues, including black box warnings. Thus there continues to be a need for a therapy that will safely lower LDL cholesterol in these patients.

We observed significant reductions in LDL cholesterol in our earlier study in patients with mixed dyslipidemia. But we were not sure whether the mechanism would be relevant to HoFH. In this disease, the patients had a functional LDL receptors.

In January, we announced results from a preclinical study indicating that MDX-8025 decreased LDL by approximately 45% in an accepted animal model of HoFH. These data indicate that the LDL cholesterol lowering of MDX-8025 is not dependent on having a fully functional LDL receptor and could be a viable treatment for HoFH.

We are in the process of initiating a pilot study in up to eight patients with HoFH. This open-label dose escalation study will be conducted in Europe. Patients will be sequentially dose escalated up to 200 milligrams with treatment affects being evaluated relative to baseline as well as to the period following the end of treatment. We are actively engaged with health authorities and investigators and expect to start the study in the first half of this year.

We also continue to explore potential opportunities for a small focused or proof-of-concept studies in other indications. Based on the clinically demonstrated effects of MDX-8025, potential indications include primary biliary cirrhosis, severe refractory hypertriglyceridemia, and NASH.

For NASH, we are monitoring the progress of ongoing clinical studies of other drug candidates in this indication, including GenFit mixed PPAR alpha-delta agonist GFT505. As our plans become more firm, we will issue additional guidance.

With that, I'll now turn the call back over to Sujal to review our financials.

Thanks, Hal. In today's press release, we reported cash, cash equivalents, and short-term investments of $34.8 million as of December 31, 2014, compared to $31.2 million for the year ended 2013.

Subsequent to December 31, 2014, cash increased by $4.3 million from the net proceeds related to the sales of common stock under our at-the-market facility in the first quarter of 2015. We believe this provides us with sufficient resources to fund operations through at least the end of 2015.

Research and development expense for the 3 months and 12 months ended December 31, 2014, was $5.3 million $15.8 million, respectively. R&D expense for the same periods in 2013 was $1.4 million and $4.5 million, respectively.

The increase in R&D expense for both periods was primarily related to the increased spending associated with the conduct of our Phase 2 arhalofenate/febuxostat combination study and our Phase 2b arhalofenate gout flare study during 2014.

General and administrative expenses for the 3 months and 12 months ended December 31, 2014, was $2.3 million and $8.2 million, respectively. G&A expense for the same periods in 2013 was $2.1 million and $4.9 million, respectively. The increase in G&A expense in 2014 compared to 2013 was primarily related to an increase in personnel costs to both support our transitions from a private to public company and to resume our clinical development activities.

Net loss for the 3 months and 12 months ended December 31, 2014, was $12.7 million and $31.9 million, respectively. Net loss for the same periods in 2013 was $3.9 million and $10.1 million, respectively.

Increase in net loss was primarily due to the increase in R&D expense and G&A expense. The net loss for the 3 months and 12 months ended December 31, 2014, included non-cash losses of $4.9 million and $7.2 million, respectively, from the mark-to-market valuation of the Company's warrant liability. The net loss associated with these non-cash charges was $0.5 million for the 3 months and 12 months ended December 31, 2013. Hal?

All right, let me close by reiterating the Company's near-term value-generating milestones. Since the beginning of the year, we've provided strong rationale for moving both of our programs forward aggressively: arhalofenate into the registration studies in gout and MBX-8025 into a pilot study in HoFH.

We expect the HoFH study to begin enrolling in the first half of the year and hope to have clarity on our next indication for MBX-8025 within that same time period. We are also targeting the third quarter for our end of Phase 2 meeting with the FDA to discuss arhalofenate.

Throughout the coming quarters, we'll also be conducting extensive review of our options for advancing arhalofenate in the clinic, including potential partnerships. And we look forward to updating you on our progress as these efforts evolve.

I would now like to open the call up for your questions.

(Operator Instructions) Brian Klein, Stifel.

Thanks for the comprehensive update and for taking my questions. I guess first, Hal, on arhalofenate, I know you want to meet with the FDA in the third quarter and I assume you'll have some clarity on the Phase 3 trial design. Are you prepared to start that Phase 3 program prior to landing a partner for arhalofenate?

Brian, this is Sujal. Let me articulate I think our thoughts behind this. We are optimistic, given the data we now have in hand, and the current level of interest that we may in fact be able to get a partner for arhalofenate before entering into Phase 3.

You know, both the public market and pharma, specifically, very recently signed significant value for a uricosuric drug that simply addressed the additional serum uric acid lowering needs of nonresponders to allopurinol alone. That's a patient population of about 1.5 million to 2 million patients.

And that drug, particularly at higher doses, has had some significant renal safety issues. So we look at our profile and we believe we have a highly differentiated uricosuric anti-inflammatory drug with a very good safety profile. If the right deal is on the table, we will assess ways to move forward. If the right deal is not on the table, we'll assess ways to move [our state] forward in the best interest of our shareholders.

At the end of the day, we're very open to looking at different types of structures, Brian, and we'll firmly look to make those decisions at that point in time.

Okay, great. Thanks. Along those lines, what is preferable to you guys internally? Are you looking for a worldwide partner who would help fund the Phase 2 program or do you think regional outlicensing makes more sense?

Yes, I think at the outset, we are relatively agnostic to that. We want to see what kind of options we're given and decide which direction we want to go into. We certainly would not be adverse to a global partnership with the right partner. We are not specifically trying to carve out any regions for ourselves, if that's what you're asking.

Okay, great. A couple of questions quickly on MBX-8025. I know you are targeting enrollment of eight patients, maybe starting in the first half of this year. When do you anticipate we might see initial data from that study?

Well, we are in the very final stages of getting our protocol through the regulatory agencies and the ethics committees. And while we're going to stick with the guidance that we plan to start that for the first half of this year, we're hoping that it might even be a little bit sooner. I think it's realistic to assume that we could get that data before the end of the year.

Great. And I know you mentioned GenFit and their upcoming data. Would you be anticipating possibly starting a trial in NASH sooner, depending on the outcome of that competitor trial?

Yes, that's a very good question, Brian. So it turns out the relevant fact related to that is that we only have 13 weeks of toxicology coverage right now for being able to do clinical studies with MBX-8025. We have -- the rest of our chronic toxicology program is in progress. We will have that data the first quarter of next year, in which case we will no longer be limited by that.

And since most of the exciting data from NASH has come from serial biopsies in studies of a year or longer duration, it's difficult to see what kind of study you could do in NASH that would be informative in only three months. So our likely preference would be to delay a start of any potential NASH study until we can dose for the full length of time needed to see biopsy data.

Great, thanks. And just one final question for Sujal. I was wondering if you could give us a little bit of guidance here on R&D spend for the year. Thanks.

Sure, Brian. So a bulk of what you see here, little over $11 million of the $15.8 million reported for year end, was really towards project costs. A great majority of that, of course, was for arhalofenate, both the febuxostat and arhalofenate combination study as well the gout flare study. The remaining somewhere around $4.1 million was really the personnel costs that support our R&D.

Great, thank you. Thanks for taking my questions.

Jeff Chen, Cowen & Company.

Thanks for taking my questions. So question around the discussions of partnerships. So are you still kind of having ongoing discussions about Phase 3 designs with the potential partners? Or is this something that you'll wait until what you see in terms of the interest parties?

No, Jeff, I think we have a very clear idea of what our Phase 3 program would look like for arhalofenate. And we actually have touched upon that in today's dialogue.

Having said that, as we engage pharma partners and start to learn how they might view the program, we could be influenced by that and that could shift us in one direction or another. We are always trying to keep an open mind as to what better and more effective ways to develop the drug could be.

But I don't think we could assume that we'll have both pharma partner before we go to our end of Phase 2 meeting. So we're taking the view that we are going to go there and negotiate what we think is the best possible program to support the strongest possible label. And along the way in parallel have discussions with pharma to be able to get their input and assess their level of interest.

That's very helpful. Thanks. And a follow-up question on MBX-8025. So for Phase 2 in the EU, what would you consider to be a acceptable standard in terms of LDL lowering that you're looking for?

Yes, that's a good question. So we've had extensive calls with KOLs and we asked them that question: what amount of LDL lowering do you believe would be clinically meaningful for this patient population?

And the numbers tended to gravitate around 25% -- 20%, 25% -- because you need to remember also that that's 25% off of a very high baseline level. So the absolute reduction in LDL is actually quite significant and meaningful from that percentage drop. So I think if we saw anything in that vicinity, we would consider that to be a victory.

(Operator Instructions) There are no further questions in queue at this time. I would like to turn the call back over to management for closing comments.

Thank you, operator, and thank you, everyone, for joining our call today. We look forward to sharing with you more in the upcoming quarters. If you'd like to know more about our progress, please feel free to reach out to us directly.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and have a great day.