ChemoCentryx Inc (CCXI) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen; thank you for standing by. Welcome to the ChemoCentryx first-quarter 2014 financial results conference call. (Operator Instructions) As a reminder, this conference call will be recorded.

I would now like to turn the call over to Susan Kanaya, Senior Vice President and Chief Financial Officer at ChemoCentryx. Ms. Kanaya, please go ahead.

Thank you. Good afternoon and welcome to the ChemoCentryx first-quarter 2014 financial results conference call. This afternoon, we issued a press release providing financial results and Company highlights for the first quarter ended March 31, 2014. This press release is available on our website at www.chemocentryx.com.

Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide a brief corporate update and review upcoming anticipated milestones for the remainder of 2014. Following his comments, I will provide an overview of the financial highlights from the first quarter before turning back the call over to Tom for closing remarks.

As a reminder, during today's call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These risks are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K, filed on March 14, 2014. You are cautioned not to place undue reliance on these forward-looking statements and ChemoCentryx disclaims any obligation to update such statements.

In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast May 8, 2014. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

I will now turn the call over to Tom.

Thank you, Susan, and thank you to everyone for taking the time to join us for our first-quarter financial results conference call. Today, I will review briefly the events of our first quarter of 2014 and then turn to upcoming highlights and expected milestones for the remainder of the year.

We are pleased to welcome Dr. Anne-Marie Duliege as Chief of Strategic Development and head of immuno-oncology. Dr. Duliege brings a wealth of strategic clinical and portfolio development expertise to this new role. We look forward to her contributions as we explore and leverage our rich portfolio of chemoattractant receptor modulators in the rapidly emerging area of immuno-oncology.

I will now turn to our key development programs, or to what we refer to as our four pillars of value. To begin, let's review our C5a receptor, or C5aR, program. This program includes CCX168, an inhibitor that targets the receptor with a complement protein known as C5a. CCX168 is currently in a Phase II clinical trial, named the CLEAR trial, in patients with ANCA-associated renal vasculitis.

As you will recall, we reported positive data from steps one and two of the ongoing three-step Phase II trial in this disease back in December, showing greater improvements in patients who are taking CCX168 than those who are on the standard of care. These improvements were consistent across a number of clinical parameters, including improvements in renal response rates, reduction in proteinuria, reduction in inflammatory mediators shed in the urine, as well as in improvements in the Birmingham Vasculitis Activity Score, or BVAS, which is a global disease activity index.

These data will be presented in oral sessions at upcoming medical meetings in Europe. The first is the European Renal Association, or ERA-EDTA meeting, in early June. And the second is a major European rheumatology conference, the EULAR meeting, which is taking place in mid-June.

In terms of progress in our ongoing clinical trial, we are pleased to report that we have actively begun enrolling patients in step three of the CLEAR trial, which is being conducted in Europe. As the current protocol is designed, this third step will examine how patients on standard of care, which include cyclophosphamide plus high-dose steroids, compare to patients treated with CCX168 and cyclophosphamide, but without steroid.

In terms of progress on the regulatory front, we met very recently with the FDA to obtain input on our CCX168 development strategy. We discussed topics related to chemistry, manufacturing and controls, or CMC, as well as nonclinical studies and clinical development.

Regarding matters related to CMC in nonclinical support, no particular areas of concern were raised, subject to further review following the anticipated submission of our investigational new drug, or IND, application. In terms of clinical development, we plan to continue with the current Phase II CLEAR trial in Europe as discussed.

Additionally, part of our overall strategy may include amending the protocol of the ongoing CLEAR trial to include both CCX168 active arms as we did previously in steps one and two of the study. Specifically, step three as amended would include the following three dose groups.

First, CCX168 cyclophosphamide plus low-dose steroids. Second, CCX168 cyclophosphamide, but no steroids. And third, the standard of care, which includes cyclophosphamide and high-dose steroids. As a result of our discussions with FDA, we also plan on filing an IND application for CCX168 in the US in the near future in order to launch our clinical program in North America.

We have identified multiple clinical sites in the US and Canada, including the leading centers for vasculitis, and are ready to move quickly once plans are finalized. Details of our US IND opening study will be shared after we have finalized our clinical development plans.

Additionally, we have recently applied for orphan drug designation for CCX168. If we receive orphan status, we may apply for fast track designation as well. If granted, such designations might facilitate expedited review and other regulatory efficiencies.

Turning to our second pillar of value, the CCR2 program, our lead drug candidate is CCX140, an inhibitor of the chemokine receptor known as CCR2. CCX140 is currently in a Phase 2 clinical trial for the treatment of diabetic nephropathy.

We remain on track for readout of 52-week data in approximately 200 evaluable patients in the fourth quarter of this year. We are also examining potential indications for the second-generation CCR2 compound, CCX872.

Our third pillar of value is the CCR9 program, which includes vercirnon and CCX507, both inhibitors of the chemokine receptor known as CCR9. We have now received data from our former partner, GlaxoSmithKline, for all four SHIELD clinical trials for vercirnon, and we aim to present our analysis of that data at future scientific meetings.

We are exploring partnering opportunities to address vercirnon's role in the maintenance of remission of Crohn's Disease, potentially along with CCX507, our second-generation CCR9 inhibitor, for the treatment of ulcerative colitis, among other indication. In the meantime, we expect to complete Phase 1 development for CCX507 in the first half of this year.

Finally, we are determining how to best position our pipeline of chemoattractant receptor modulators within the therapeutic landscape of immuno-oncology. Chemoattractant receptors are known to play diverse roles in cancer, such as in cancer growth, metastasis, angiogenesis, and especially the alteration of the tumor microenvironment.

Innovative therapeutic regimens with our chemoattractant receptor modulators could include combination therapy with traditional chemotherapeutic agents and/or with newer agents, such as checkpoint inhibitors and therapeutic vaccines, in an approach to maximize therapeutic benefit and overcome resistance mechanisms typical of the standard single-agent therapy.

With that, I would like to turn the call back over to Susan.

Thank you, Tom. As I mentioned earlier, our 2014 first-quarter financial results were included in our press release, which was provided earlier this afternoon. There was no revenue recognized for the three months ended March 31, 2014, compared to $1.9 million recognized in the same period in 2013.

The decrease in revenue from 2013 to 2014 was primarily due to funding of clinical support from our former partner, GSK, for CCX168 in 2013. Our product development and commercialization agreement with GSK ended in November 2013 and therefore no revenue was recognized in 2014.

Research and development expenses for the three months ended March 31, 2014, were $8.2 million compared to $9.3 million in the same period in 2013. This decrease was primarily attributed to lower expenses associated with CCX872, our second-generation CCR2 inhibitor, due to the timing of Phase I-related activities and lower spending associated with CCX140, our lead CCR2 inhibitor, due to the timing of patient enrollment in the ongoing Phase 2 clinical trial in patients with diabetic nephropathy.

These decreases were partially offset by higher expenses for CCX168, our C5aR inhibitor, as this program advanced into the third step of the ongoing Phase 2 clinical trial in the fourth quarter of 2013.

General and administrative expenses for the three months ended March 31, 2014, were $3.5 million compared to $3 million in the same period in 2013. This increase was primarily due to higher stock-based compensation expense or stock option grants and increased intellectual property-related expenses and professional service fees relating to our business development efforts.

Cash, cash equivalents, and investments totaled $141.9 million at March 31, 2014. With that, I will now turn the call back over to Tom.

Thank you, Susan. In closing, we look forward to several key milestones over the next several months. For CCX168, our C5a receptor inhibitor, we are planning to present data at the ERA-EDTA and EULAR meetings in June. We also look forward to sharing more specifics regarding our clinical development plan for this program.

For CCX140, our lead CCR2 drug candidate, we expect to report 52-week data from the Phase II study in diabetic nephropathy in the fourth quarter of this year. For our CCR9 program, we aim to report our analysis of the SHIELD data set at upcoming scientific meetings.

Further, we are exploring the next steps for vercirnon, including exploring partnering opportunities. We will complete Phase I development of CCX507, our next-generation CCR9 inhibitor, in the first half of this year. We look forward to further updating you on these programs and on our efforts towards advancing our immuno-oncology program.

Finally, our quarter end cash and investments of approximately $142 million puts us in an excellent position to execute on these plans.

Thank you and now I will turn the call over for any questions. Operator?

(Operator Instructions) Brian Klein, Stifel. Mr. Klein, please make sure your line isn't muted and if you're on a speakerphone, lift your handset, sir.

Hi, can you hear me now?

Yes, Brian, I can hear you.

Great, thank you. Thanks for taking my questions. So maybe starting out with CCX168, can you give us a sense of how long it will take you to enroll in the third step of the ongoing CLEAR trial and when we might see that data?

Yes, Brian, thank you. And so as you know, the third step is now ongoing. We are enrolling patients in that step. There are two functions by which enrollment will be completed or two variables that will determine.

One is the number of sites, and in fact, we are currently contemplating adding more sites to the CLEAR trial in Europe and so we'll have more and about that to say as soon as we get those sites on board.

Secondly, there is -- we contemplate the possibility of potentially even amending the trial to expand the enrollment of the CLEAR trial to even a greater number as part of a comprehensive -- ultimately, a comprehensive registration package.

But currently as articulated, the step three will enroll 36 more patients. And it's a little bit early for us to say exactly when we will see that data reading out. Again, I think I want to defer the question until we understand how many more sites we might bring on board.

Great. What about -- how quickly can you get the drug in the US to start being evaluated in the clinic?

We will be filing our IND -- we hope to file it sometime later this quarter, Brian. So as soon as we get feedback on the IND, we're already in the process of setting up the trial sites in the US. We've identified them both in the US and in Canada. So I think we'll be able to turn that around quite quickly, and our goal certainly is to start dosing in the US this year.

Perfect. In terms of the data presentations at the upcoming meetings in Europe, will they be for the most part consistent with what you've already press released or are you expecting to present some new data that we haven't seen yet?

There will be some more granularity around the data, Brian. The topline results are essentially as we've been talking. Definitely marked improvements in people on CCX168, at least in our interpretation of the data set. That we will put a little bit more analysis around.

We will certainly show some of the more per-patient data and dissect a little bit more on the Birmingham Vasculitis Activity Scores as well, dissecting out renal and non-renal components. I think all that will be new information, but principally the topline results remain exactly as we've been reporting.

The drug appears to be quite well tolerated so far. We don't have any safety issues. And when CCX168 is on board covering the C5a receptor, the patients appear to read out in all the indices we've looked at, more beneficially than if they're on the standard of care, which includes cyclophosphamide and steroids.

Great. Thank you for that. And then just last question on CCX140 -- so now that the patients for the most part have all been treated for several months, can you give us any sense of patient dropouts or if the patients in terms of tolerability is consistent with what we saw after the first three months?

Yes, I think we can give you a flavor for that, without going into too many details, as we await the 52-week data later this year. So we can say that the dropout rate continues to be quite low and we don't see any significant deviation in the rate of dropout from the earlier reports, the 12 week data.

That suggests the drug seems to be well tolerated in this patient population. I will also underscore the fact that we have had, since the 12 week data, we've had at least one more meeting and potentially more than one of the independent data monitoring committee, who look at all the data unblinded, at least the safety data.

They've recommended on all those subsequent meeting occasions that the trial continue unmodified. So again, they seem to be giving it a stamp as well of a green light. So I think that all the data so far suggests, as we mentioned before, the drug seems to be quite well tolerated and we have quite low dropout rates.

Great. Thank you for taking my questions.

Marc Frahm, Cowen & Company.

I was just wondering, with your FDA discussions around CCX168, have they -- how much commentary have you gotten on what your regulatory package will need to be in terms of the endpoint that they're going to look at? And really, are they accepting that renal remission number that you gave us in the press release?

Thanks, Marc, for the question. So we discussed a lot of different items with the FDA and we will -- as soon as we get our IND filed, we're going to discuss more in details about our clinical trial path going forward.

In any case, certainly the renal end points were discussed as part of our registration package, as were other ways of looking at endpoints, including (technical difficulty) So it will almost certainly be, as we go forward to Phase III, either a combination of renal end points, some of which we've discussed, which is decreases in proteinuria, improvements in eGFR -- glomerular filtration rate -- and even decreases in inflammatory mediators in the urine. And/or it may involve the global BVAS, the Birmingham Vasculitis Activity Score.

In all of the indices that I just mentioned, as you know from the Phase II data, the step one, step two data that we presented, the drug seems to be performing quite well in those patients. So wherever we end up with the endpoint for the registration package, I think we've got excellent clinical preliminary data so far that those endpoints will all be very reasonable, measurable, and things that we have a reasonable chance of making some positive impact on.

Thanks. And then on CCX140, with these approximately 200 patients that you're going to have at the end of the year, do you have a feel for how much of that population fits the subset that you guys released the data from?

Well, the subset population that we prespecified and called out in that analysis is a small subset, And we called it out specifically for a scientific reason, which was that those were the patients that fit best at entry into the trial, the pathophysiological characteristics that seem to match the animal models, those models that we tested the drug extensively in in our preclinical testing.

And those parameters were gauged upon filtration rates as well as the amount of protein in the urine. So I would say that the broader population certainly will be quite a bit bigger. There's no question about that. But it was that broad population that I will remind you -- at two weeks, the entire population showed a reduction in proteinuria, much like the animal models, even as early as two weeks.

So although that represents a much larger fraction in the subset that we called out with some of our analyses, and there will be other subsets that have been prespecified that we'll also analyze in the full 52-week data set, the broad population obviously is going to be much larger and encompass a lot more pathophysiological parameters at time of entry.

Okay, thank you.

Geoff Meacham, JPMorgan.

It's actually Mike in for Geoff. Thanks for taking the question. In the past, you guys have mentioned about the potential for vercirnon in the maintenance setting, but now you're kind of talking about expanding or exploring potential partnerships. Just curious what might've changed there. Thanks.

Mike, thanks for the question. In point of fact, I don't think much as changed, frankly. We've -- since receiving the asset back from our former partner GlaxoSmithKline, I think we've always suggested that the best way forward for us would be to find a new alliance partner for that program, with whom we would certainly do development in Phase 3 from maintenance of remission and who would essentially share a lot of the investment upfront and share in the upside as we go forward.

We've never contemplated in our long-range plan, necessarily, Phase III development of vercirnon, because quite frankly, we expected that to be in hands of the partner.

So I don't think a lot has changed since we receive the asset back. I think we are continuing to look very carefully at what we know about the program and the data. We have many reasons to believe that there is a path forward for vercirnon and we'd very much like to find a partner -- a qualified partner with interest in the GI space to do that with us.

Got it. And then for the SHIELD maintenance studies, I know those studies were sort of stopped early. Can you give us a sense of maybe how many patients -- the data is that you have?

Yes, well, there were a couple of different SHIELD trials ongoing when SHIELD-1 read out. SHIELD-2, -3, and -4 -- SHIELD-2 being the double blinded and placebo-controlled maintenance study which was supposed to run for a year worth of active dosing against the blinded control. Regrettably, there just isn't a lot of patient data in that trial.

We will report some of those numbers later this year, we hope, at our gastroenterology conference. So I don't think there's going to be a lot to glean from that study for a variety of reasons. It just didn't have long enough to go for a sufficient number of patients to conclude the one-year dosing across the different groups in that trial.

There will be some interesting information, I think, to be gleaned from the other trials. SHIELD-4 was an open label -- was a blinded, non-placebo match, but certainly an active study that was intended to go for two years. And quite a few people got in that study and at least went through a year's worth of dosing. There were two doses there -- 500 once a day and 500 twice a day.

And so although patients knew that they were on some sort of active medication, they didn't know at what dose group. So I think there will be some interesting data to glean from that and certainly at least the safety data will be very interesting. And to prelude that, we don't really see much of any importance in the safety database, that is. So there's -- we think that's quite good news.

SHIELD-4 was an open label feeder study that was meant to feed SHIELD-2, the long-term maintenance study. And again, quite a few people got into that study and at least concluded several weeks of dosing, so there again maybe some -- at minimum, some good safety data to be read out from that and maybe some other parameters as well.

So we're just really in the process now of going through all of that data. You can imagine there's lots of information there. We hope to have it all sorted through and be able to present that later in the year, possibly at a European gastroenterology meeting.

Great, thank you.

Yaron Werber, Citi.

Hi, this is Kumar [Agrain] for Yaron. Thanks for taking my question. So my question is how are the next-generation CCR9 differentiated from the earlier versions? And also can you talk about the early-stage programming immuno-oncology, like do you have any molecules there or what stage you are and when can we get an update on that?

Certainly. Thanks for the question. So CCX507 is our next-generation CCR9 inhibitor. And 507 is a somewhat different chemical class from the first generation, so it's a totally different pharmacological entity, if you will. It has its own IP space as well.

It is -- among the other good properties that we retain from the first generation compound, we improved somewhat on potency, so it's about minimum fivefold, perhaps even tenfold more potent on the targets than the previous generation molecule. It has some other biochemical properties that make it a little bit easier to get the drug on board and absorbed in vivo in a dose-dependent fashion, and all of those have been very useful properties in terms of thinking about its clinical dosing and usage over time. So I take potency and the biophysical properties that make it more readily absorbed in the real world.

And then you also asked about the immuno-oncology space. So there, we're working on essentially a premise that's gotten a lot of people excited, which includes the idea that, in the tumor microenvironment, we essentially attract -- that is, the tumor attracts through a variety of mechanism, cells that will wall off and guard the tumor. So these are immune cells. They can be T cells or even myeloid-derived cells that looked like macrophages, for example.

But in fact, they're cells that are pretty ineffective. They are suppressive in their nature. So whether these are so-called T regulatory cells or the myeloid-derived suppressor cells, or MDSCs, those cells are drawn to the tumor through chemo attractants -- chemokines and chemokine receptors -- that are really quite selective to that environment.

So once the tumor attracts those suppressive cells to essentially wall off or insulate the tumor, as you can well imagine, the tumor has a growth advantage in vivo and is not subject to quite so much immune effector attack. That is the actual antitumor mechanism that would help clear the tumor.

So if one blocks those immunosuppressive cells, whether they are T regulatory cells or the myeloid-derived suppressor cells, then perhaps you can have a more positive impact on the tumor and put the balance of immune surveillance and immune action back to the effector or killing side of the equation rather than suppressive side.

So those suppressor cells are attracted to the tumor microenvironment via a number of chemokine receptors that have been well documented by many groups in literature, both academically and in the private sector. Those receptors include such things as CCR2, CCR4, CCR5, perhaps CCR6 -- a fairly newly emerging receptor -- even things like CCR1 and certainly CXCR4 and it's very close cousin, CXCR7.

Now I'm sorry for that laundry list of receptors, but I bring that up because at least in two of those -- for all of those various chemokine receptors, we have unique potent and selective small molecule inhibitors of those receptors. In at least two of those cases, we have compounds that are in the clinic and indeed in Phase 2 development for other indications.

So for example, CCR2, as you well know, we are in a Phase II study with CCX140 in diabetic nephropathy, and we talked about that a little bit earlier. And in addition, we have a second generation compound called CCX872, which is just finishing up its Phase I work.

So there, in the context of tumor oncology -- again, envisioning most likely a combination therapy with something else, either a standard chemo or radio therapeutic regimen, or much more excitingly, something like a checkpoint inhibitor -- you can certainly imagine the use of CCR2 in otherwise difficult cancers.

And we've got a couple of ways to do that clinically. CCR1 has been shown to have a role, another chemokine receptor in multiple myeloma and certainly some of the bone and metastatic consequences of that cancer. And again, we've got a compound that went through successfully a Phase II proof-of-concept study, CCX354, in another indication, rheumatoid arthritis, but that was a nice and quite successful study.

And we have an earlier generation, CCX721, which has been shown very clearly to have quite beneficial effects in a very difficult model -- a murine model of multiple myeloma, with dire bone consequences in that disease, and CCX 721 is a very beneficial outcome in that model. Those data have been recently published.

In other cases, we have very late preclinical stage compounds that are ready for the IND enabling path, whether they are in CCR4, widely reputed as a chemokine receptor that attracts T regulatory cells to the tumor microenvironment, or CXCR7, which, again, is a fascinating receptor that probably regulates the tumor blood vasculature environment.

And then even earlier stage compounds with programs like CCR5 and CCR6. So all that is by way of saying that we've got a really broad base, a great IP position, lots of great biology, and we will be ready to start some initiations with these compounds, I think, in the relevant clinical setting fairly soon. And we're certainly entertaining a number of ways to do that, including alliances.

Are there any [particular locales] that you guys are focusing on, any [study] or like based on cell data, like do you see any particular highly enhanced [effecting particular radials], as such?

Well, there's a lot of data from us and others, and I think that to sift through it would require a longer call than we had today. But suffice it to say that there other programs as well, for example, with CCR2 inhibitors looking at pancreatic cancer, for example. We think there's lots of very interesting data around CCR2 and pancreatic cancer as well as other cancers, frankly.

There are some other programs with colorectal cancer looking at CCR5. The biology of CCR2 and CCR5 are often linked, incidentally, so I would also say that CCR2 could very well have a role there. So certainly pancreatic colorectal cancer and then other very interesting environments, like glioblastoma -- recurrent glioblastoma poster radiation. Very clearly a role for CXCR7 and its close cousin CXCR4.

And CXCR4 itself, there's an extensive literature over the years about its role in things like breast cancer and its metastases. Some of that biology may well be going through the close cousin CXCR7, and some of this will undoubtedly be worked -- will be worked out in the clinical setting.

Thank you so much. That's very helpful.

Thank you. At this time, I would like to turn the call over to President and CEO Dr. Thomas Schall for any closing remarks. Sir?

Thank you very much and I want to thank everyone for taking time to be on our conference call today and asking some excellent questions. We look forward to updating you next quarter on the many programs that we discussed today. And I wish everyone a great day.

Thank you, Dr. Schall. And thank you, ladies and gentlemen. That does conclude ChemoCentryx's first-quarter 2014 financial results conference call. You may disconnect your lines at this time. Have a great day.