ChemoCentryx Inc (CCXI) 2014 Q3 法說會逐字稿

Welcome to the ChemoCentryx Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

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. Kanaya, please go ahead.

Thank you, Eric. Good afternoon and welcome to the ChemoCentryx's third quarter 2014 financial results conference call. This afternoon we issued a press release providing financial results and company highlights for the third quarter ended December 30th, 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 corporate update and review upcoming anticipated milestones for the remainder of 2014. Following his comments, I will provide an overview of the financial highlights for the third quarter before turning the call over back 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 14th, 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, November 5th, 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 joining us on our third quarter financial results conference call. Today, I will discuss recent accomplishments, upcoming milestones from our development pipeline programs or what we refer to as our four pillars of value, specifically our complement C5a receptor program, our CCR2, our CCR9 and our earlier stage programs that include immuno-oncology.

We continue to advance our clinical programs in various other preclinical initiatives in our pipeline. During the quarter, we made an important progress in several areas including preparation for some key milestones that we expect will occur between now and end of the year.

These milestones included data readout from our first-generation CCR2 inhibitor known as CCX140 in diabetic nephropathy. In addition to the initiation of a clinical trial in pancreatic cancer with our second-generation CCR2 inhibitor CCX872 and the initiation of two Phase 2 trials with our complement C5a receptor inhibitor, CCX168 in patients with atypical haemolytic-uremic syndrome or aHUS as well as in IgA nephropathy.

While our ongoing clinical programs are focused on renal and orphan diseases, we are broadening our clinical development portfolio in immuno-oncology. First I will start with our complement C5a receptor program. CCX168, our lead compound in this program is a potent orally available and highly specific small molecule inhibitor of the complement C5a receptor.

The European CCX168 Phase 2 clinical trial, known as the CLEAR trial, is ongoing. We continue to enroll patients with anti-neutrophil cytoplasmic autoantibody or ANCA associated vasculitis, sometimes refer to as AAV. In the third and final step of this trial, an enrollment rates are encouraging. We attribute this to investigator enthusiasm following the release of positive data from steps one and two of this trial and to the two study modifications we discussed last quarter.

Specifically, we have made significant progress towards expanding the number of clinical trial side. As we mentioned on our last call, we were increasing the number of clinical trials to approximately 50 throughout Europe.

Second, we have also begun to treat patients whose background therapy includes Rituximab as an alternative to cyclophosphamide. While the full implementation of these changes is ongoing, our goal is to increase the enrollment rate so that we can complete patient recruitment in 2015.

Later this month, at the American College of Rheumatology Meeting being held in Boston, one of our clinical investigators Professor David James (ph) from the University of Cambridge will present the Phase 2 CLEAR data in patients with AAV.

In the CCX168 North American Phase 2 AAV trial, we continue to initiate clinical sites and anticipate opening enrollment by the end of this year. This trial will be conducted at several of the leading vasculitis centers throughout the U.S. and Canada and will examine the safety and efficacy of two dose regiments of CCX168 when added to the standard-of-care in patients who fully diagnosed or relapsed to AAV.

Beyond AAV, we believe that other opportunity exist for our C5a receptor program. One of these maybe among patients with atypical haemolytic-uremic syndrome or aHUS, a life-threatening disease that causes chronic blood vessel damage, thrombosis or clotting within blood vessels, hemolysis or red blood cell rupture and sudden progressive organ failure, such as kidney failure.

The disease is caused by genetic defects and factors that control the activation of the complement system. Current treatment options are still quite limited, and prognosis and quality of life are extremely poor.

We have positive CCX168 preclinical data suggesting an important role of C5a receptor inhibition in reducing microvascular thrombosis formation from serum of patients with aHUS.

As such as we plan to initiate a small Phase 2 proof-of-concept study in patients with aHUS by the end of year. The primary objective of this proof-of-concept study will be to assess the effects of C5a receptor inhibition by CCX168 on both in vitro and ex vivo thrombus formation as well as disease activity in end-stage real disease patients with aHUS.

While still in its early days, we look forward to the potential impact that CCX168 may have on patients with this syndrome and also in terms of the potential clinical validation for this promising program.

Also, we mentioned on our last call, our plans to further expand our complement C5a receptor program including evaluating CCX168 in patients with IgA nephropathy. Clinical scientists have shown that the deposition in the kidney of the complement fragment C3a as well as C5a and the expression of their receptors C3aR and C5aR increased with advancing severity of renal pathology.

Further complement deposition and expression levels correlate with the increase in proteinuria and serum creatinine, which are signs of degrading could be function. IgA nephropathy is characterized by significant proteinuria. Importantly, you may recall that patients treated with CCX168 in the CLEAR trial showed a rapid and profound decline in proteinuria as measured by urinary albumin creatinine ratio.

Thus we and study investigators are keen to evaluate CCX168 in the studying of IgA nephropathy and anticipate initiating a Phase 2 proof-of-concept study in this disease by the end of this year begin enrolling patients in early 2015.

We continue to believe that there is strong scientific rational, significant support from the medical team and exciting momentum around CCX168 and its potential to be safer, more efficacious alternative to the current standard-of-care in renal disease such as AAV, aHUS, IgA nephropathy and others. I look forward to proving more information about these opportunities in the coming months.

Turning to our next pillar of value, our CCR2 program. There is a great deal of scientific interest to support the chemokine receptor known as CCR2 in playing a crucial role in the progression of diabetic chorionic kidney diseases or diabetic nephropathy. As such, I will provide a brief update on CCX140, our CCR2 inhibitor currently being evaluated in a randomized double-blind Phase 2 clinical trial in the treatment of patients with diabetic nephropathy.

We remain on track to have 52-week data from this trial in approximately 200 patients this quarter. We plan to outline the drug's effects on improvements in renal function, including the primary efficacy and endpoint of the trial that is defined by the reduction in urinary albumin:creatinine ratio, or UACR.

Patients received orally-administered doses of either five or 10 milligrams of CCX140 on top of the standard-of-care and are to compared to patients who received standard-of-care alone. We will also evaluate additional important markers related to kidney function including serum creatinine and estimated glomerular filtration rate or eGFR as well as glycemic parameters such as hemoglobin A1c or HbA1c.

As appropriate pending the 52-week data analysis, we will schedule an end of Phase 2 meeting with regulatory authorities to discuss next steps regarding the clinical development for CCX140. We support 52-week data we remain committed to developing commercializing CCX140 in the U.S. and Canada, while seeking the rest of world partner or partners. We hope to begin the Phase 3 next year.

Beyond CCX140 is our second generation CCR2 inhibitor CCX872. By the end of this year we intend to commence the Phase 1b multi-center clinical trial of CCX872 in patients with non- resectable pancreatic cancer and to begin dosing those patients early in 2015. The goal of this study will be to evaluate the safety and efficacy of CCX872 in combination with [volfirnox] (ph).

While I'm on the topic of CCR2, I would like to mention that in September we appointed Israel F. Charo, M.D., Ph.D. as Senior Vice President of Research. Dr. Charo was responsible for the discovery and cloning of the chemokine receptor known as CCR2. We are thrilled to have Dr. Charo's wealth of scientific expertise at ChemoCentryx, particularly in the area of chemoattractant receptor and disease.

I will now turn to our third pillar of value, our CCR9 program, which includes Vercirnon and CCX507 both of which are inhibitors of the chemokine receptor known as CCR9. As I mentioned on our last call, we remain optimistic about partnering opportunities for our CCR9 program. This could include both Vercirnon and our second-generation CCR9 inhibitor, CCX507 in the treatment of inflammatory bowel disease.

We just announced results at medical meetings where additional data where presented from the Phase 3 SHIELD program, which was run by our former alliance partner GlaxoSmithKline.

Let me begin my summarizing the first set of results presented at the American College of Gastroenterology or ACG Meeting recently from the SHIELD 4 trial, a Phase 3 randomized double-blinded induction of clinical response study in patients with moderate-to-severe Crohn's.

SHIELD 4 was designed to treat patients with one of two dose regimens of vercirnon and then to enroll the clinical responders from this induction trial in a Phase 3 maintenance trial SHIELD 2. The main conclusion from the SHIELD 4 trial, one that I believe may be of interest to potential partners was that there was a dose dependent increase in response and remission rates in patients treated with vercirnon in SHIELD 4 trial.

This was in contrast to the lack of dose response observed in the SHIELD trial that GSK conducted. Importantly the responses observed in the population of patients who completed 12 weeks of dosing in SHIELD 4 was very similar to the earlier positive results from the Phase 2b PROTECT-1 trial that ChemoCentryx conducted.

Specifically, clinical response as measured by the Crohn's disease activity index 100 point or greater reduction, sometimes known as CDAI greater or equal to 100 in the PROTECT-1 trial was 55% in the patients who received 500 milligrams once-daily of vercirnon. Similarly, in the SHIELD 4 trial in the population of patients that completed 12 weeks of dosing, CDAI greater or equal to 100 was 56% in patients receiving the same dose, 500 mg once-daily and 69% in patients receiving 500 mgs twice daily.

Moreover, unlike the earlier SHIELD 1 trial, the GI adverse events in SHIELD 4 were not higher in patients who received the twice-daily dose of vercirnon. Encouraged by these results, we remain committed to identifying the optimal path for further development of vercirnon.

As for as our second-generation CCR9 inhibitor, CCX507, we presented positive Phase 1 clinical data at the ACG meeting which demonstrated that CCX507 is safe and well tolerated in healthy voluntaries and effectively blocks CCR9 on circulating leukocytes. Also presented at ACG was some encouraging pre-clinical data demonstrated that CCX507 in combination with an anti-alpha-4 beta-7 antibody reduced the severity of colitis more effectively in-vivo than either CCX507 or the anti-alpha-4 beta-7 blocking antibody by the alone.

Vedolizumab also known as Entyvio is an anti-alpha-4 beta-7 blocking antibody developed by Tekada that was recently approved for the treatment of both ulcerative colitis and Crohn's disease. We believe that the CCX507 data combined with the encouraging vercirnon data released in October, provide a strong complement of drugs in our CCR9 program for which we intend to find the strategic partner.

Finally, I would like to address our emerging immuno-oncology program. The scientific community continues to validate the first roles that the chemoattractant receptor such as CCR1 through CCR6, as well as CXCR7 may play a role in cancer growth, metastasis, angiogenesis and the composition of the tumor microenvironment.

We continue to assess how we may employ chemoattractant receptor modulators to enhance immunotherapeutic agents and potentially maximize clinical development and plan to present some of our initial analysis at the tumor immunology, immunotherapy meeting in December in Orlando, Florida.

We believe that our second-generation CCR2 inhibitor, CCX872, which completed its Phase 1 clinical program is an ideal candidate to evaluate in the cancer setting given its mechanism of action. At the tumor immunology meeting we will report the ability to reduced tumor burdened animal models were myeloid cells are present in high numbers, such as in pancreatic and breast cancer. As such locking myeloid cell infiltration using the CCR2 inhibitor may augment the immune response within the tumor.

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

Thank you, Tom. As I mentioned earlier, our 2014, third quarter financial results were included in our press release provided earlier this afternoon. There was no revenue recognized for the three months ended September 30, 2014 compared to 1.5 million recognized in the same period in 2013.

The decrease in revenue since 2013 to 2014 was due to funding of clinical support in 2013 from our former partner GlaxoSmithKline for CCX168 for the treatment of ANCA associated vasculitis.

Our product development and commercialization agreement with GSK ended in November 2013 and therefore no revenue was recorded in 2014. Research and development expenses for the three months ended September 30, 2014 were $7.5 million compared to $8.2 million in the same period in 2013. The decrease was primarily attributed to lower expenses associated with CCX140 as a diabetic nephropathy Phase 2 study nears completion.

Partially offsetting this decrease were higher expenses associated with CCX168 as our complement C5a inhibitor advanced into the third step, three steps based in clinical trial for the treatment of ANCA associated vasculitis and expanded clinical development into the United States and Canada.

General and administrative expenses for the three months ended September 30th, 2014 were $3.5 million compared to $2.9 million in the same period in 2013. This increase was primarily due to higher employment related expenses, including stock-based compensation expense and higher intellectual property related expenses and professional service fees relating to our business development effort. Cash, cash equivalents and investments totaled $124.7 million at September 30th, 2014.

With that, I will now turn the call back over to Tom.

Thank you, Susan. Looking forward to the remainder of 2014 and into 2015, we anticipate the following milestone.

In our complement C5a receptor program with our drug CCX168, we look forward to continuing to enroll patients in our European Phase 2 CLEAR trial in patients with ANCA-associated vasculitis with the goal of fully enrolling the study by the end of 2015.

We will commence enrollment in our North American AAV Phase 2 clinical trial of 168 and we will present additional data from the CCX168 Phase 2 CLEAR trial in patients with AAV at the American College of Rheumatology Meeting in Philadelphia later this month.

In addition, we will initiate a Phase 2 proof-of-concept study for CCX168 to assess the effect of C5a receptor inhibition therapy in end-stage renal disease in patients with aHUS and we will expand our C5a receptor program to evaluate CCX168 in patients with IgA nephropathy and lupus nephritis during the first half of 2015.

In our CCR2 program we look forward to announcing 52-week data from our Phase 2 clinical trial of CCX140, our first-generation CCR2 inhibitor in approximately 200 patients with diabetic nephropathy later this quarter.

With positive 52-week data, we will conduct an end of Phase 2 meeting with regulatory agencies and seek to partner rest of world rights in anticipation of initiating a Phase 3 development program. And we will advance CCX872, our second-generation CCR2 inhibitor, by commencing a Phase 1b multi-center clinical trial in patients with non-resectable pancreatic cancer and begin dosing those patients early in 2015.

In our CCR9 program, we look forward to identifying an optimal path, potentially with a strategic partner to further develop our CCR9 inhibitors vercirnon and CCX507 in the treatment of inflammatory bowel disease.

And finally, in our Immuno-oncology program, we look forward to presenting our initial analysis of chemoattractant receptor modulators in the treatment of cancer at the Tumor Immunology and Immunotherapy Meeting in December.

To summarize, during the third quarter, we continue to make progress and look forward to discussing several upcoming milestones. I remain truly excited about all four of our pillars of value and the clinical potential that are our growth candidates demonstrate.

As always, I thank you for your continued support, and now I would like to open up the call to any question. Operator?

(Operator Instructions)

And our first question comes from Brian Klein from Stifel. Please go ahead.

Hi, guys. Great progress and thanks for taking my questions. First on 140, could you possibly give us a little bit more granularity, I know mentioned in this quarter, but we are now in November and there is only about eight weeks left. Do you expect the data to come out on 4 December or do you think it will be sometime in December?

Hi, Brian. Thank you. Very good question. I am also -- and it's great pleasure of having with me today, our Chief Medical Officer, Pirow Bekker in addition to Susan Kanaya at the table. Brian, in all likelihood we will be into December before that data is available, and so we are targeting some time in December at this point.

Okay. That's very helpful. Thanks. And then also would you plan to host a conference call to discuss the results or will this be just a press release.

You know, likelihood, we would plan to host a conference call to go through the results.

Great. Excellent. And then in terms of potentially presenting the data or publishing, when do you think the most appropriate venue will be for that?

There are several opportunities. Pirow has probably picked up a couple that I think he is targeting.

You know, I think in terms of presenting certainly at the ASA meeting next year will be good opportunity to present the full data. We will also be looking at potential opportunities for live breaking extra event.

Excellent. And then just last question on 140. As we head into dataset, is it too premature at this point to start thinking about Phase 3 program? You have some potential trial designs in mind.

And when you think about the opportunity for 140 versus the rest of your pipeline, is a Phase 3 program even with the partner, something like you want to tackle, or do you think you still busy with your other programs that you go want out license completely this program. Thanks.

All of are great questions, Brian. Thank you. So the opportunity in diabetic nephropathy and chronic kidney disease and even large spectrum is so enormous and so necessary that we are very enthusiastic about trying to find the way to work in that area. Certainly, those are big trials in Phase 3. So a partner is going be highly desirable and probably necessary in order to do that properly for us.

In terms of thinking about what Phase 3 looks like, however, it's not too early to be thinking about that at all. We know historically what Phase 3 pivotal trials have looked like in the diabetic nephropathy space.

They typically included three outcomes. In some of those have been distilled now recently by recommendations from the National Kidney Foundation in collaboration even with regulatory -- this regulatory advise about how to streamline Phase 3 trial.

So, in all likelihood we are going to be looking at many hundreds or perhaps a couple of thousands of patients over time and trying to look at endpoints. Predominantly, we believe the endpoint will be an increase in serum creatinine of about 50%, so time to increase it 50%. And we will be looking at various groups in that blinded fashion to see if there is a differentiation between the treatment groups.

Historically, it's been a time to doubling of serum creatinine, a time to dialysis or kidney death or a time to death for all the causes, the so-called triple outcome studies. But I think that picture has been refined now since it seems that all of the outcomes are predictable by an increase in serum creatinine, and so that's how we're thinking about our Phase 3 development plan.

Excellent. Thanks so much for taking my questions.

Thank you.

Our next question comes from Navdeep Singh of Goldman Sachs. Please go ahead.

Hi, this [Kamran] filling in for Navdeep. Thanks for taking my question. First up I was hoping you could perhaps help us that our expectations heading into FDA data for 1.0. In other words what you would you guys view as a positive outcome?

Well, thank you Kamran. Very important question. So, personally, I would define success as anything that really meaningfully supports us moving forward in the clinical development program, particularly a Phase 3 trial, obviously.

And so to us, as we move this program forward, the data to support that is success by definition, but how would we actually evaluate that? Well, we're thinking about primarily three factors. So, first, as you know, protein in the urine or proteinuria is bad. So, we're looking at reductions in proteinuria and we measure this by unitary albumin creatinine ratio or UACR.

Secondly, we'll be keeping a very close eye on the so-called eGFR, estimated glomerular filtration rate which is a function of serum creatinine, that's the parameter I just mentioned in response to Brian's question. So, we'll be looking at the change in creatinine in the treatment group versus the background standard-of-care.

And then third, because our patient population in this trial is so broad in terms of physiological parameters and there I'm referring to the degree of filter nation dysfunction and the degree of proteinuria in these patients.

We have pre-specified and I'll just stress that we pre-specified these analysis plans several important and relevant patient sub-population. So, we're going to be looking at kind of matrix of how all these three things work together and define success of the trial.

So, in UACR, of course, we'd like to see a statistically significant lowering of UACR over the standard-of-care in our treatment groups and the primary efficacy and point of the trial. Now, I'll stress to that all patients in this trail are receiving standard-of-care in ASO and ARB and our drug is on top of the standard-of-care. So, any improvement we see there that's statistically significant will be quite interesting.

And then obviously with eGFR, we're just hoping to see a slowing down in the rate of decline of eGFR. So, that's what we'll be looking at. And there are some other subtleties around eGFR that can be very informative indeed have a positive treatment effect.

Great. Thanks. And one more question if I may. I was hoping you could give us some color perhaps around the competitive landscape for 104, are there any other agent's development targeting same indication that we should be aware of?

Well, we know in diabetic nephropathy there's a number of different kinds of agents in DN with other mechanisms. We also on clinicaltrials.gov, there was a 12-week trial, I believe, Pfizer is the sponsor, running with a CCR2 -- probably a CCR2/CCR5 dual antagonist.

Again, that's a 12-week dosing study. We think fee enrolment there is complete, but we don't know yet when Pfizer will be announcing their result. But that's the only other chemoattractant or chemokine receptor inhibitor competitor in the DN landscape.

But naturally you have other things going on in DN, everything ranging from DPP-4 inhibitors, [endofeel] antagonist, phosphodiesterase inhibitors and the like. And so there is a lot of stuff going on in this space. That just speaks again to the enormous unmet clinical need and the really quite large opportunities both clinically and commercially.

Thanks for taking my question.

Thank you.

(Operator Instructions)

And our next question comes from Mark [from] -- from Cowen and Company. Please go ahead.

Hi, yes, thanks for taking my question. I'm afraid just change a little bit to the CCX168 program. With the CLEAR trial -- now in North American Phase 2 trial, can you talk about what kind of are the differences between the trial design in North America versus the European setup?

Sure. So, the European trial which we call CLEAR trial has always had couple of very interesting features. In that trial we have essential three treatment groups. One is a standard-of-care which is cyclophosphamide or rituximab plus a full dust of steroid. And that's just the standard-of-care comparator that we run in the trial.

And then we have essentially a group that gets a placebo to -- I'm sorry a group that we have a two-thirds reduction in the steroid load and they get a sort of dummy steroid. So, it's all blinded, double-blinded and double-dummied in this trial and then the get CCX168 on top of that.

And then another group still gets no steroid at all, they are still getting either cyclophosphamide or rituximab and they get CCX168. So, that's ongoing now and enrolment is really quite good in that trial. That's the so called step three of the CLEAR trial. We've already run steps one and two. And we've reported that data before that we can certainly reduce the steroid load and it looks like even eliminate steroids completely in steps one and two of this trial and have very good effects of kidney function.

In fact, the suggestion is to even look -- those scripts look even better than the standard-of-care in steps one and two. So, that's the CLEAR trial in Europe.

In the United States, we're doing something a little bit different. We are putting people on standard-of-care that's now in this case either cyclophosphamide or rituximab plus the full dose of steroid, plus either a 30 mg twice a day dose of 168 or a 10 mg dose of 168. So, we're looking at a slightly different question which is what happens when you overlay our therapy and two doses on top of standard-of-care. In both cases we're dosing those patients for 12 weeks at this point with a 12-week follow-up.

Okay, great. In terms of standard-of-care may be shifting a bit to include Rituxan now in addition to -- or instead cyclophosphamide. Is there a reason to believe CCX168 might synergize better with one or the other.

Interesting question. I think I'll ask Pirow to acclaim on that.

Yes. Essentially good reason to believe that CCX168 to synergize very nicely and very effectively with rituximab. So, rituximab is targeting B-cells and therefore, targeting reduction of antibodies including potentially other antibodies against MPO and PRC which are the antigens as of vasculators.

It's not a very effective anti-inflammatory drug and that's where I think CCX168 could potentially be very effectively in the combination. We've already demonstrated and as Tom has pointed out with the combination of CCX168 with cyclophosphamide seems to be synergizing very well. So, I think there's good reason to believe that we see the same with CCX168 plus rituximab.

And then partly Mark, that's why we were so pleased to be able to get the step three of the CLEAR trial off the ground and have been rolling so well as well as the North America trial which either way I think we call classic, don't we Pirow?

Because in both of these trials now rituximab is part of the protocol. So, if the patient presents and the physician prefers to given Rituxan rather than cyclophosphamide, that's certainly allowable and then those patients will be evaluated, obviously in combination of 168.

Does the design include stratification for the--?

Absolutely, yes.

Okay. And then forward once we have that data for registration, I know you guys expand at the size of the step three. Are we going to in total have a patient population big enough that you might be able to register or do we definitely need a Phase 3 trial?

It's a great question Mark, and it's certainly something that's been under discussion with regulatory agencies and that dialog continues. I think we'll have a little bit more say about that in the coming quarters.

We certainly have a lot of flexibility in the way we're performing the trials even now. So, we might in fact amend to include a few more patients still. And again, we'll keep you posted on that in the next quarter or two.

Okay. Thank you.

There are no further questions at this time. I'd like to turn it back to Thomas Schall for closing remarks.

I'd like to thank everyone for participating in this conference call today and all the excellent questions and the chance for discussion on this. I look forward to reporting our results next quarter and thank you very much for your time and attention today.

Ladies and gentlemen, this does conclude today's conference. Thank you for your attendance. You may now disconnect.