ChemoCentryx Inc (CCXI) 2015 Q4 法說會逐字稿

Welcome to the ChemoCentryx, Fourth Quarter 2015 Financial Results Conference Call.

(Operator Instructions)

As a reminder, this conference call is being 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, Carmen. Good afternoon and welcome to the ChemoCentryx Fourth Quarter 2015 Financial Results Conference Call. This afternoon we issued a press release providing financial results and Company highlights for the quarter ended December 31, 2015. 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 our anticipated milestones for 2016. Following his comments, I will provide an overview of the financial highlights for the fourth quarter before turning the call 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 Security and Exchange Commission, including our annual report on form 10-K filed on March 14, 2016. 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, March 14, 2016. 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 Fourth Quarter 2015 Financial Results Conference Call. ChemoCentryx achieved significant strides during 2015. This was true in both terms of advancing our clinical development programs as well as in the progress of our Company as a whole.

The past year has been an outstanding period of accomplishment and we believe that this is one of the most exciting times in ChemoCentryx's history. The commitment, efforts and productivity of our R&D team over the past year have enabled our transition into a late stage company. Our complement inhibitor, CCX168, is poised to enter Phase III development and could potentially change the current treatment paradigm in ANCA vasculitis.

Our enthusiasm for our programs is also shared by the medical community, especially the investigators who participated in our recently completed CCX168 Phase II Clear trial, which I will discuss momentarily. Before I recap our 2015 accomplishments and outline our anticipated upcoming milestones for 2016, I would like to reflect on the values and vision that we set forth when ChemoCentryx was founded. At that time we set a goal of offering patients new medicines from a novel class of highly potent and specific compounds that target chemokines and chemoattractant receptors, which through the built in specificity of the underlying biology, would offer safer and more efficacious treatment options. We believe that this goal is now closely within reach.

The most exciting recent developments have been with our lead drug candidate in orphan and rare disease, CCX168. CCX168, is a potent orally administered highly specific small molecule inhibitor of the complement C5A receptor. We are evaluating CCX168in multiple rare diseases, including anti neutrophil psyco plasmic auto antibody, or ANCA associated vasculitis, also called ANCA disease or AAV, as well as an atypical hemolytic uremic syndrome or AHUS.

In January of this year we announced positive results from CCX168 in AAV from our European Phase II study known as the Clear Trial. Standard of care containing chronic high-dose steroids is at the core of a current treatment regimen which results in significant health consequences, and indeed, often leads to premature death. The aim of the Clear Trial was to provide effective therapy for AAV with an inhibitor of the C5A receptor while reducing the chronic high-dose of steroid containing standard of care and therapy by eliminating or reducing exposure to systemic steroids. The Clear Trial achieved its aim.

Clear met its primary endpoint, demonstrating numerical superiority and statistical non-inferiority of CCX168 treatment groups versus the chronic high-dose steroid containing standard of care control group, based on the Birmingham Vasculitis Activity Score or BVAS response. Specifically, BVAS response was defined as the percentage of patients who achieved a BVAS reduction from baseline of at least 50% at 12 weeks and who also had no worsening in any body system component.

We randomized 67 patients among three cohorts in this trial, of which 63 patients were evaluable for the BVAS endpoint assessment as well as prespecified in the statistical analysis plan. It should be noted that as a result of review per our protocol of BVAS data by an independent, centralized BVAS review panel from the follow-up period of the study that the initially reported BVAS response of 75% for the chronic high-dose steroid standard of care group was found actually to be lower, 70%.

This resulted in a revised P value of 0.002 compared to the initially reported value of 0.005, both of which, of course, are highly statistically significant. The BVAS response data for the CCX168 groups remains unchanged. In addition to meeting our primary endpoint in Clear, importantly the individual patient data also showed that BVAS response and even BVAS remission, that is BVAS score going to zero, was rapid and sustained in the CCX168treatment groups.

Of note, in the chronic high-dose steroid standard of care treatment group, only one patient, 5% of the standard of care patients, achieved BVAS remission by week 4 and remained there through week 12, the duration of the treatment period. By contrast, nine patients in the CCX168 treatment groups or 21% of the patients achieved remission by week 4 and remained there through week 12, and of these nine patients six were taking CCX168 with no steroid at all.

Other positive findings from Clear included pronounced and rapid improvements in proteinuria as measured by lowering urinary albumin creatinine ratio. These improvements were statistically significantly superior in patients on CCX168 compared to those in the chronic high-dose steroid standard of care group.

Finally, in terms of patient's quality of life, which we and others believe is increasingly important from a regulatory perspective in Phase III development, CCX168 treated patients felt better than those on chronic high-dose steroids standard of care and CCX168 patients had improved scores in both physical and emotional categories of patient reported outcomes throughout the duration of therapy.

It should also be noted that we are preparing a submission of the Clear data for peer-reviewed publication. During the preparation of that data, it's been noted that the prespecified intent to treat definition that was used in the Clear Trial analysis actually likely inflated the apparent response of the chronic high-dose steroid standard of care group relative to the CCX168 treatment groups.

Specifically, as predefined in the stats analysis plan, a patient randomized in the study needed to have at least one post baseline on treatment BVAS score to be included in the BVAS evaluation. In other words, the pre-specified definition of ITT population, which we have been presenting, should be contrasted to and all patients randomized group or a full ITT. As such, only 20 of the 23 patients in the randomized chronic high-dose steroid containing standard of care group were actually included in the pre-specified analysis that we have been presenting.

And by contrast, the CCX168 treatment groups, 43 of the 44 randomized patients were included in the evaluable patient population. Accordingly, the higher early dropout rate in the chronic high-dose steroid standard of care group disproportionately favored the apparent response of evaluable patients in the cohort on standard of care relative to the CCX168 groups.

Simply put, this is sense the higher dropout rate in the standard of care group, which was 13% versus 2% in the CCX168 groups, did not count as treatment failures as they would have in a full ITT analysis. To summarize, the main objective of the Phase II Clear Trial was to substantially reduce or eliminate the need for chronic high-dose steroid component in the current AAV standard of care treatment regimen because such high-dose steroids contain abundant risks including the risk of premature death. At the same time, we aimed to achieve therapeutic efficacy with a safer and better tolerated drug. CCX168 achieved this objective. Following the announcement of the Clear Trial results, we held an experts meeting with a dozen key opinion leaders in the field of AAV. At this meeting and in our conversations with KOLs, the overwhelming consensus held that the Clear data were highly encouraging having the potential to change the standard of care at AAV and that therefore we should proceed in a Phase III pivotal program.

Physicians emphasize a great need for improved therapies for patients who are intolerant of the current standard of care treatment and the need for protection against progressive organ damage in AAV, especially of the kidney. The elimination of the need for high-dose chronic steroid therapy in AAV with 168, speaks directly to the core of main challenges confronting physicians and patients in AAV.

Now turning to the North America Phase II clinical trial in AAV, known as Classic. We view Classic principally as a safety study. Patient enrollment in Classic was completed in January with a total of 42 patients enrolled in the trial and we have the dedicated and enthusiastic clinical investigators to thank for this accomplishment.

In this double-blind randomized placebo-controlled trial, patients in Classic received one of two different doses of CCX168, but in addition to the chronic high-dose steroid containing standard of care compared to the steroid standard of care alone. In other words, all patients in the study received a full dose of chronic steroids. The aim of Classic is fundamentally different from that of Clear. The Classic Trial is primarily focused on providing more clarity around potential safety profiles of CCX168 when administered with the full standard of care. 42 patients enrolled in the study, which is believed to be sufficient to assess safety questions. However, no inferential statistical analysis will be performed on the primary efficacy endpoint, which will be presented in summary form.

Regarding specific next steps for CCX168, the results from Clear Trial are forming the basis of the briefing document for an end of Phase II meeting with the FDA combined with information from the Classic Trial, we plan to conduct our US and European regulatory meetings in the middle of 2016 then initiate our Phase III registration trial by the end of this year.

In advance of incorporating the input from regulatory agencies following our end of the Phase II meetings, I would like to outline some initial thoughts for the design of a Phase III study in ANCA vasculitis. This strategy we used in designing the Clear study with the goal of reducing or eliminating chronic high-dose steroid therapy is the approach we would favor to take forward in Phase III. We would similarly employ a BVAS based endpoint. We would also plan to include other relevant secondary endpoints of renal health and quality of life measurements as we did in Clear. We and others believe these are increasingly important from a regulatory perspective.

A conservative Phase III design could be modeled from regulatory precedent in ANCA vasculitis Phase III studies. Specifically, we could look to the Rituximab, Rave study, which formed the basis of Rituximab's approval as a non-inferior immuno suppressant alternative to Cyclophosphamide. In the Rave study, 197 patients were enrolled, providing precedents in terms of size that we might envision with efficacy assessed at 26 weeks. While these assumptions are still subject to our end of Phase II regulatory discussions, they represent examples of a study size and scope that we believe to be manageable by ChemoCentryx.

Another opportunity within our orphan and rare disease program includes CCX168 in patients suffering from atypical hemolytic uremic syndrome or AHUS, where as in AAV we have obtained orphan drug designation. AHUS is a rare disease where in the absence of appropriate therapy up to half of all the patients progress to end stage renal disease with 25% dying in the acute phase of the disease. Patients with AHUS who have in the stage renal disease are generally consigned to lifelong dialysis, which carries a five year survival rate just under 40%, with infections accounting for almost 15% of deaths.

AHUS is currently treated with Eculizumab, but treatment is not accessible to all patients and not all Eculizumab patients derive benefit. Our ongoing Phase II proof of concept clinical trial in patients who are on dialysis continues to enroll, we plan to provide an update on this study later this year.

2016 is already shaping up as an exciting time for ChemoCentryx as we plan for key regulatory meetings, which we expect will pave the way for the initiation of our Phase III pivotal trial for CCX168in AAV by yearend.

Turning to our immuno oncology program, we have an ongoing multicenter clinical trial with CCX872and inhibitor of the ChemoCentryxkine receptor known as CCR2 in 54 patients with non-resectable pancreatic cancer. We are very pleased to report that we have completed patient enrollment of this study well ahead of schedule. In this trial patients received CCX872 in combination with Folfirinox one of the current standards of care in the treatment of pancreatic cancer. The primary efficacy measurement will be progression free survival following completion of at least 24 weeks of treatment. We expect data before hand, including the overall objective response data from the study to be presented in the second quarter.

Initial progression free survival data is planned for the second half of this year. At the so-called Triple Meeting during the fourth quarter of 2015, we presented pharmacokinetic and pharmacodynamics data from our ongoing Phase 1B trial with CCX872that outlined an excellent pharmacokinetic profile that was consistent with our results previously in healthy subjects. After a single 150 mg dose daily of CCX872, we saw very good receptor coverage after 12 hours with the data supporting that greater than 90% receptor blockade will occur throughout the day with twice a day dosing, providing and optimized therapeutic index for CCX872.

Apart from CCR2 in pancreatic cancer, other ChemoCentryx attractant receptors are thought to be involved in other kinds of tumors. For example, we presented additional research at the Triple Meeting last year, showing that our orally administered inhibitor of the receptor known as CCR1 with a drug candidate known as CCX9588 combined with an antibody against a checkpoint inhibitor such as PDL1 may be of utility in treating triple negative breast cancer, which we have modeled in preclinical experiments.

Specifically, the combination of our inhibitor of CCR1 with an anti-PTL 1antibody resulted in significant decreases in circulating and tumor infiltrating cells known as myeloid derived suppressor cells, or MDSCs. These MDSCs are known to be responsible for the induction of an immune suppressive environment around a growing tumor and also an increase in metastatic properties of a primary tumor. In addition to decreasing MDSCs in the combination of CCX9588 and the anti-PDL 1 antibody, we also noted increases in effector T cells in the tumor infiltrate. These are known to have an anticancer effect. Importantly, the overall tumor size was significantly reduced by the combination of the CCR1 small molecule receptor inhibitor and the tech point inhibitor by antibody.

We are encouraged by the results from our emerging immuno oncology program and look forward to additional data from this program at the American Association for Cancer Research, or AACR meeting next month.

With that, I will now turn the call over to Susan who will review our fourth quarter 2015 financial results.

Thank you, Tom. As I mentioned earlier our fourth quarter 2015 financial results were included in our press release provided earlier this afternoon. Research and development expenses were $8.2 million for the three months ended December 31, 2015 compared to $9.1 million reported in the same period of 2014.

The decrease in research and development expense from 2014 to 2015 was primarily attributable to lower expenses associated with CCX168, due to the completion of the AAV Phase II Clear Trial in the fourth quarter of 2015, and CCX140 due to the completion of the diabetic neuropathy Phase II clinical trial in 2014. These decreases were partially offset by higher expenses associated with CCX872, reflecting continued patient enrollment in the ongoing pancreatic cancer trial. General and administrative expenses were $3.4 million in the three months ended December 31, 2015 compared to $3.2 million in the same period in 2014.

The increase in 2014 to 2015 was primarily due to increases in intellectual property -related expenses and professional fees. Total shares outstanding at December 31, 2015 were approximately 44.2 million shares. Cash, cash equivalents and investments totaled $76 million at December 31, 2015. Lastly, let me highlight our 2016 financial guidance. Our projected cash utilization for 2016 is expected to range from $40 million to $50 million.

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

Thank you, Susan. Our achievements during 2015 have set the foundation for an exciting year ahead. In mid-2016 we expect to complete our Phase II clinical program for CCX168 in AAV and subsequently provide an update on our pilot study with CCX168 in the atypical hemolytic uremic syndrome, AHUS, as well as report initial overall objective response data for CCX872 in pancreatic cancer early immuno oncology program.

By the end of the year, we had to have conducted end of Phase II meetings across multiple programs, CCX140 in diabetic neuropathy, as well as for our CCX168 AAV development plan in the US and the EU. This will allow us to begin Phase III trials with CCX168 later this year. Also by the end of the year we will report initial progression free survival data for CCX872 in pancreatic cancer.

We have maintained a great deal of momentum across our clinical operations and we have moved forward the less visible, though no less important supportive efforts of our off clinical functions within the Company such as preclinical, manufacturing and QA, QC efforts. We expect 2016 to be a transformational year for ChemoCentryx, one that solidifies our status as a late stage company.

I will now turn the call back over to the Operator so that mu may take a few questions. Operator?

(Operator Instructions) Anupam Rama with JP Morgan.

Hi, guys, it's Eric in for Anupam this evening. Thanks for taking the question. Just a quick one looking ahead to the end of Phase II meeting in AAV, I know from the sounds of it, it sounds like you believe a non-inferiority endpoint using BVAS compared to standard care might be sufficient for approval.

On the efficacy side, I'm just wondering what your latest thoughts are around showing 168 differentiation from the standard of care in terms of safety, what endpoints would be focused on there and what level of safely relative benefit you might think is clinically meaningful?

So to be very, very clear; the regulatory precedent to date, and by the way I'm delighted to be joined by Dr. Petrus Bekker, our Chief Medical Officer who will provide some other color around this.

But the Rave trial with Rituximab is the only Phase III precedent to which we can appeal, if you will, and that really, fundamentally provided the evidence that Rituximab could be offered as an alternative to cyclophosphamide as a statistically noninferior alternative. Now the numerical superiority was evident, it was 64%, I believe whether Rituximab arm versus 53% for the cyclophosphamide arm. By the way, all those arms got the standard high dose chronic steroid part of the regimen and that's of course the part we are focused on with 168.

The entire approval package based on that Phase III trial fundamentally just resolved around having an appropriate alternative and there was no requirement as far as I know and, Pirow, you'll correct me if I'm wrong, to show a difference in safety overall. And in fact if one reads the initial Rave study, the notable finding is that the overall safety was not improved, which by the way, help solidify the notion of the role that steroids were the bad actor and premature, that is first year death after diagnosis, which occurs in about 11% to 18%.

From that and other literature the single biggest cause, steroid induced infections, by the way, but as far as we can tell no requirement for registration to show a safety difference. We'd expect that we would start seeing differences over the course of a few months, but I don't think registration will need to include that component.

Pirow, you probably have some more thorough thoughts on that.

Yes, since the treatment period in the Phase III study will obviously be longer, we will have a greater opportunity to evaluate [apis] events not commonly associated with chronic high-dose steroid use, for example; fractures, new onset diabetes, and hypertension, glaucoma, cataracts, bodyweight increase, et cetera. So we are planning to evaluate that, obviously, in Phase III. And anticipate based on all the literature was steroids that we'll see those kinds of effects appearing more in the control group.

And just maybe a follow-up question on AHUS; just wondering if you could get a little bit more specific around timing to data there. Should we be thinking, perhaps, second half instead of first half?

I think that's correct. We are working there with an academic center collaborator, and so the analysis of the data we have decided collectively would be much higher quality if we wait for all the patients to be dosed and do a contemporaneous analysis of all the data, so yes I would say the second half is probably the guidance I would give you at this point.

Eric Schmidt with Cowen and Company.

Is there a medical meeting or a publication date that you're targeting for presentation of Clear data?

Yes, Eric. We are hoping we can get in perhaps even to the ERA, EDTA meeting. Is that your current thinking, Pirow?

Yes; I believe that's in April, so we've started an abstract visit in May. In May.

We would hope to get a publication potentially even simultaneously with that meeting, that's what we are working towards, but we can't give you any definitive dates on that just yet.

And then on Classic, what's rate limiting to reporting those data and will that also just be in an initial press release and conference call format or how are you thinking about that toward midyear?

Since we fully enrolled the trial, we are limited only by getting the last patient out through his 12 weeks of therapy and then analyzing, obviously, collectively getting the database together and then analyzing the data. So we've been saying that that will happen sometime towards the middle of the year in the second quarter, but other than that there really are no rate limiting factors there. We should be able to present it.

So that still could be Q2 then?

Yes. That's correct.

And on 872, Tom, looking forward to the data with Folfirinox in pancreatic cancer, what kind of PFS or response rate hurdle would you set for being able to show something interesting activity-wise realizing that it's still quite early?

I'm going to give you an initial response and then Pirow's probably got a more thorough one, but as you probably know there was some clinical validation for inhibiting CCR2 in pancreatic cancer with another compound in an investigator led study investigator was Professor David Linehan a surgical oncologist then at Washington University, they presented 12 week data. They were using an old Pfizer insight compound and they were limited to 12 weeks of dosing for what ever reason.

But their 12 week data on objective response mostly as an imaging endpoint was quite interesting and certainly seem to be higher than historical standards. We think, we've been told that that paper might be in press and we'd be very keen to see the details once the publication comes out because certainly the 12 week data that we get, we want to make sure that we are comparing apples to apples to how Professor Linehan and his colleagues did their assessment of their response rates, but we'd like to benchmark our response to theirs and be plus or minus a few percentage of that response at 12 weeks.

Naturally, that is just a gateway to getting the 24 week data, and I know Pirow's been thinking about that a little bit more, albeit somewhat cautiously because it's always difficult to say in evolving cancer therapeutic space.

But, Pirow, what do you think about this?

So historically we're fulfilling our progression free survival data come out to about 50% at week 24, and so the study being relatively small with CCX872, we anticipate or hope for a progression free survival rate of 60%-plus. That would certainly give us some confidence that going forward would give us a good progression free survival rate.

And I am not showing any further questions from the queue. I would like to turn it back to Dr. Tom Schall, President and CEO, for closing remarks.

I'd like to thank everyone again for joining our call today. We look forward to sharing our progress, our accomplishments, as well as the opinions of leading clinicians at an upcoming investor day in New York City. Additional details on that will be available shortly and I look forward to seeing all of you there. And thank you for joining us today on our call. Goodbye.

Ladies and gentlemen thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day, everyone.