Clovis Oncology Inc (CLVS) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the quarter-one 2013 Clovis Oncology, Inc. earnings conference call. My name is Karen and I will be your operator for today. At this time, all participants are in a listen-only mode, and we will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

I'd now like to turn the call over to Breanna Burkart, Senior Director of Investor Relations. Please go ahead.

Good morning, and welcome to the Clovis Oncology first-quarter 2013 conference call. You should have received the news release announcing our first-quarter financial results. If not, it is available on our website at www.clovisoncology.com. As a reminder, this conference call is being recorded and webcast. Remarks may be accessed live on our website during the call and will be available in our archive for the next several weeks.

The agenda for today's call is as follows -- Patrick Mahaffy, Clovis's President and CEO, will discuss the highlights of the first quarter of 2013 and provide an update on our clinical development programs. Then, Erle Mast, Clovis's Chief Financial Officer, will cover the financial results for the quarter in more detail and comment on the Company's outlook for 2013. Patrick will make a few closing remarks, and then we will open the call for Q&A.

Before we begin, please note that during today's conference call we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our financial outlook and expected business plan. All of these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the day on which they are made, and Clovis undertakes no obligation to update or revise any forward-looking statements.

Now, I will turn the call over to Patrick Mahaffy.

Thanks, Breanna. Good morning, everybody. Thank you for joining us. We made pretty important progress during the past quarter in each of our clinical development programs. And in particular, I'm pleased to share with you the first time details of our development of an improved formulation for CO-1686. During the first quarter, we initiated a study in healthy human volunteers, comparing the pharmacokinetic properties of a new tablet formulation, which is a hydrobromide salt form of the drug, to our current capsule formulation.

I'm happy to say the tablet formulation is consistently demonstrating much higher plasma exposure levels, and substantially reduced variability in humans compared with our current capsule formulation. I'll speak more about this shortly.

For rucaparib, we believe we're very close to identifying a dose; and, therefore, nearing the end of the Phase I portion of our monotherapy study.

Let me take this opportunity to highlight our plans and expectations for the clinical development program for both 1686 and rucaparib for the remainder of the year. CO-1686 is our oral targeted small molecule covalent inhibitor of the mutant forms of epidermal growth factor receptor, or EGFR, for the treatment of non-small cell lung cancer. 1686 targets both the initial activated EGFR mutations as well is the dominant resistance mutation, T790M. And, as a result, it has the potential to treat non-small cell lung cancer patients with EGFR mutations, both as a first-line and as a second-line therapy.

Because 1686 was designed to spare wild-type or normal EGFR, it also has the potential to cause a lower incidence of toxicity, such as skin rash and diarrhea, that are normally associated with other EGFR inhibitors. In March 2012, we initiated the first human clinical study of 1686 at a dose of 150 milligrams per day. We have continued to dose escalate for the year, and we are currently dosing at 900 milligrams twice daily.

As we discussed previously, at the current 900 milligrams BID dose of the capsule formulation, we are beginning to see trough plasma levels above a therapeutic threshold for a reasonable period of time. We have already provided an update that includes some color on progressively better patient outcomes as we get to these higher doses, including symptomatic relief and signs of clinical benefits. Given the fact that ASCO is only four weeks away, we're going to limit our comments on this Phase I study. But we do look forward to providing you a more detailed Phase I update in Chicago at ASCO in four weeks.

It is important to note that, in this ongoing Phase I study, we have not yet determined the maximum tolerated dose, or a recommended Phase II dose. What I'd like to do is discuss more specific details of our formulation efforts for 1686. As I stated, during the first quarter, we initiated a study of 1686 in healthy human volunteers, comparing the PK properties of a hydrobromide salt tablet formulation with the current capsule formulation in use today in the ongoing dose escalation portion of the Phase I/II study.

Based on data collected to date, the tablet formulation has demonstrated plasma exposures approximately 3 times greater than the capsule formulation, dose for dose, as well as greatly reduced variability. These data suggest that the tablet formulation can be administered at significantly lower oral doses to achieve higher and more predictable exposures in patients compared to the current capsule formulation.

Based on these very encouraging data, we intend to transition to the tablet formulation for all 1686 studies beginning at about August of this year. Until that time, we will continue to enroll patients in the ongoing Phase I/II study at the current dose of 900 milligrams BID with the capsule formulation. Since, as I've already noted, the maximum tolerated dose, or MTD, has not yet been achieved, we will resume dose escalation with the tablet formulation when it becomes available in the next couple of months.

We currently expect to resume the dose escalation at approximately 300 milligrams BID with the tablet, which relates to the exposures seen at 900 milligrams BID with the capsule. At this point, there is no single toxicity that we are seeing, including any evidence of wild-type EGFR inhibition. So thus far, we do not yet have insight into what our dose limiting toxicity will be. Thus far, 1686 appears to be a very well-tolerated drug.

We expect to achieve the recommended Phase II dose, and will then initiate the Phase II extension cohorts with the tablet formulation by the end of the year. The two cohorts include a study of 1686 in approximately 40 non-small-cell lung cancer patients who have progressed while on treatment with EGFR directed therapy, such as Tarceva or IRESSA, and have developed the T790M resistance mutation. We expect to initiate this study by the end of 2013.

Secondly, a study of 1686 in an expansion cohort of newly diagnosed patients who expressed the activating mutations of EGFR, which we expect to initiated by early 2014. If, by inhibiting both the activating mutations of EGFR and its dominant resistance mutation, T790M, we are able to demonstrate a meaningful progression pre-survival benefit compared to what has been seen to date for Tarceva and other TKI therapies, we would be in a position to move 1686 into a frontline or first-line development program.

Pending data from the second-line T790M positive cohort, our goal is to commence our registration study in the second half of 2014 in this population. We also plan to initiate a Phase I study of the tablet formulation in Japan early next year.

Turning now to rucaparib. Rucaparib is our oral potent small-molecule inhibitor of PARP-1 and PARP-2, which we are exploring has both a monotherapy and in combination with chemotherapeutic agents in ovarian cancer patients who are predisposed to PARP inhibitor sensitivity. We've been pleased with the progress in both our ongoing monotherapy and combination chemotherapy Phase I/II studies, as well as our investigator-sponsored monotherapy in combination chemotherapy trials.

Our Phase I/II monotherapy study continues to advance, and we believe we are close to the end of the Phase I portion of the study. Currently dosing at 480 milligrams twice daily, we are pleased with the plasma levels, the evidence of efficacy, and disease control that we have observed to date. Once we have achieved a recommended Phase II dose and schedule, we will then expand into the Phase II portion of the study to assess the efficacy of rucaparib in patients with ovarian cancer associated with germ-line mutation in the BRCA genes.

We will provide an update from the Phase I portion of the Phase I/II monotherapy study, as well as data from the Phase I study of rucaparib in combination with carboplatin, at ASCO in June. Again, and as a reminder, this is an ongoing Phase I study and we have not yet determined the maximum tolerated dose or a recommended Phase II dose for rucaparib.

In the second half of 2013, we look forward to initiating two studies for rucaparib. One, a single arm biomarker study in women with relapsed platinum-sensitive high-grade serous ovarian cancer to begin in the third quarter to inform the definition of homologous recombination defects, or HRD, for the pivotal study. And the pivotal study itself, a global registration switch maintenance study in platinum-sensitive ovarian cancer patients, with efficacy analyses prespecified in populations defined by deficiencies in BRCA and other DNA repair genes, to begin during the fourth quarter.

Now I'll turn the call over to Erle to discuss first-quarter 2013 financial results and guidance for the year.

Thanks, Pat. Morning, everyone. Our full financial results are included in this morning's press release, so I'll direct my comments to highlights for the first quarter of the year. We reported a net loss of $15.7 million, or $0.60 per share, for the first quarter of 2013 compared to a net loss of $19 million, or $0.86 per share, for the first quarter of 2012. This decrease in our net loss from the first quarter of 2012 is due primarily to a $4 million charge for required in-process research and development expense recorded in the first quarter of 2012 associated with the achievement of a development milestone for CO-1686.

Research and development expenses totaled $12.1 million for the first quarter of 2013. Now, this represented a 34% sequential decrease from R&D expense for the fourth quarter of 2012. And this decrease was due to the termination of development activities for CO-101 at the end of last year. And, finally, our total operating expenses for the first quarter of 2013 included $1.8 million of share-based compensation expense.

Our net cash burn for the first quarter of 2013 totaled $14.5 million. And we ended the quarter with $129.6 million in cash, and 26.2 million outstanding shares of our common stock.

Now I'd like to discuss our financial guidance for 2013. We've updated our cash burn guidance for the year, and now expect to burn between $60 million and $65 million for the year, and to end 2013 with approximately $82 million in cash. Now, the reason for the increase in our cash burn guidance for the year is the acceleration of clinical trial and drug supply costs from what we expected in 2014 into 2013, as we advance the clinical development programs for CO-1686 and for rucaparib.

Now I'll turn the call back to Pat for some closing remarks. And then we'll open it up for Q&A.

All right. Thanks, Erle. So, our anticipated milestones for the remainder of the year -- for 1686, we plan on completing the dose escalation portion of the ongoing Phase I/II study to establish the optimal dosing schedule; transitioning to the tablet formulation of 1686, once it becomes available in the third quarter; to initiate the Phase II expansion cohorts to assess efficacy in second-line T790M non-small cell lung cancer patients late this year, and in first-line non-small cell lung cancer patients in early next year; an overall advance to the clinical development program in order to initiate a registration study in second-line T790M positive patients in the second half of 2014.

Now, to rucaparib. We also plan to complete the dose escalation portion of the ongoing Phase I/II study to establish the optimal monotherapy dosing schedule; initiate the Phase II expansion cohort to assess efficacy in selected ovarian cancer patients; advance the development of a companion diagnostic to identify the patients most likely to respond to rucaparib; and initiate both a biomarker study and a pivotal study in platinum-sensitive ovarian cancer patients in the second half of 2013.

Lastly, for our mutant cKIT inhibitor program with Array, we intend to identify a product candidate by the end of this year or during the first part of 2014.

In summary, we are pleased with the progress we've made in the development of these programs. And we very much look forward to providing you Phase I updates from both of our clinical development programs at ASCO next month.

And with that, we'd like to thank you for joining us today -- oh, and happy birthday to my son, Ryan, who turns 19 today.

And with that, I'll be happy to answer any questions you ask.

(Operator Instructions). Cory Kasimov, JPMorgan.

Hi, this is Whitney on for Cory. Thanks for taking the questions. Wondering if you can give us a little color on what data we'll be seeing at ASCO; maybe how many patients we'll have data on for both drugs, and the duration of treatment?

Well, all of us are inclined to be pretty circumspect about what we say is going to be presented at ASCO, given anxieties that it could affect the presentations themselves. On 1686, there will be data on approximately 40 patients that have been treated to date, including, of course, at the very low doses that we started in the Phase I study.

On rucaparib, it is a slightly larger number. I think there will probably be data in the combination study on around 35 patients or 40 patients, and a similar number for the monotherapy trial. What you will see is data on PK safety, and any observations of efficacy observed to date, at the time we present those data.

Okay, and what's the -- to date? What's the date of cutoff for that?

It'll be middle- to late- May.

Okay. Pretty real-time, then. Okay. And then for rucaparib, what kind of toxicities are you starting to see at 480 that are making you think you're close to finding the MTD there?

I think it's driven more by the exposure levels. If we were to predict the MTD, it would probably be nausea. We had one case at 360. We have not observed it yet at 480. We have not seen any meaningful amounts of myelosuppression yet. So it probably will be nausea as the MTD. But we haven't achieved the MTD yet, so I can't say that with certainty.

Okay, great. Thanks for taking the questions.

Marko Kozul, Leerink Swann.

Hi. Good morning. So my first question is also on 1686. Pat, I wanted to ask how we should read into the updates that you're providing this morning regarding continuing dose escalation with the bromide salt formulation, and having clarity on starting a pivotal trial in 2014. Previously, on the last call, you indicated tumor regression was being observed. Would you say the objectives for ASCO have been met?

My second question related is whether toxicity to date has remained consistent with only grade 1, grade 2 tox observed so far.

So, as for whether we have achieved what we had hoped to achieved by ASCO, yes. At some level, we would've thought we would have achieved a dose by now. We have not. That, in the end, is good news. We have not achieved a dose, because we are not seeing toxicities that would hinder our ability to continue to dose escalate. So I'm actually really pleased with what you're going to see at ASCO. I'm particularly pleased that, in a very short period of time compared to others who have transitioned to an improved formulation of TKIs, we are going to move in real-time to a formulation that has a meaningful improvement in pharmacokinetic properties; not the least of which is the improvement in exposures, but also the fact that this variability that you often see with poorly absorbed TKIs has been reduced. And it's been reduced primarily by bringing up the absorption in all patients. So it isn't just that we're getting higher absorption in a small number of patients. In all patients, we get better absorption, which has great impact on our ability to dose at an effective dose for the majority of patients treated.

So we're really pleased with this transition, and happy that we'll be able to continue to dose escalate with this improved formulation; ideally, achieving a dose by the end of the year, putting us in a position to rapidly enroll the expansion cohort, and clearly putting us in a position to initiate, based on data, the registration study in the second half of 2014.

I won't speak much to details of the ASCO presentation, Marko. You will see the presentation there. We will only reiterate that we do not see evidence of wild-type EGFR inhibition. And that because we're able to continue to dose escalate, we clearly have not seen any evidence that we've achieved an MTD.

Thanks for that, Pat. Based on what you know today about 1686, do you have any preliminary thoughts on what a pivotal trial design might look like?

Well, we have a couple of options, and they're going to be based less on what we see to date -- and which I'll remind you, is with a drug that we have not yet achieved the Phase II dose -- but what we see in the expansion cohort. The two options that we believe would be available to us are as follows. One is, in the event we see an encouraging response rate, -- and I don't know what encouraging means exactly; there are different numbers that investigators, or even people internally would say -- but, clearly, if we had a response rate that started with a 3, we think there's a realistic chance that we could follow the path that Pfizer took with crizotinib, which is an accelerated approval based on a relatively modest number of patients -- call it around 200 -- in a single arm study, looking at response rate for this very clear unmet medical need.

In the event the response rate were to be lower than that, which I'm not predicting, but if it were in the 20s, say, I think it's more likely a registration study would be a head-to-head against chemotherapy. I think that chemotherapy would probably be ALIMTA. And the end point would be a negotiation with FDA -- whether they would accept PFS as an endpoint in that second-line study, or whether they'd require survival, or whether they would accept PFS as an endpoint for accelerated approval and require a complementary survival study.

What we hope, obviously, is that we would be able to follow that crizotinib path on a single arm study, which of course would be somewhat faster. In any event, we will run the head-to-head study against ALIMTA because that would be required as the confirmation study.

Terrific. Just one more quick one, and then I'll jump back in queue. Can you talk a little bit about the market opportunity you see for 1686, the market that it would potentially address?

Well, I can talk about patient populations. There are, in United States and Europe, about 15% of lung cancer patients develop that non-small cell lung cancer because of mutations in EGFR. Half of those -- so 7.5%, or about 15,000 a year -- develop the T790M mutation as the cause of their failure on Tarceva or other TKIs. In Japan and other Asian territories, for reasons that are not clear to me or to anybody that I know, the epidemiology is different. 30% to 35% of patients with non-small cell lung cancer develop that cancer because of mutations in EGFR; and, again, half of those, or 15%, ultimately fail on TKIs -- more likely IRESSA in Asia -- because of T790M mutation.

So, in the second-line setting, we address an annual population in the United States of 15,000 or so; a larger number than that in Europe, just because of the population being larger. And in Asia, a kind of unusual skewing of the population, which is at least the size, if not larger, than that in the United States -- actually markedly larger when you include all of Asia -- because the epidemiology is different.

What we hope and believe, based on the preclinical data we have so far and the tolerability we have seen thus far, is this drug very clearly has an opportunity to be positioned as a first-line therapy that would replace existing therapies. Because, one, we hope it can yield a longer duration of progression-free survival by inhibiting that dominant resistance mechanism from emerging, or mutation from emerging; and, secondly, because if we are able to maintain this good tolerability, it clearly would be far better-tolerated than an afatinib or a Tarceva or other TKIs.

Since those two drugs, to date -- Tarceva and IRESSA -- total at least $2 billion-plus in annual revenues, we think we have every opportunity, with more up-to-date pricing, to be a very large drug in the event that we address that population adequately.

Pat, thanks for taking the questions. I'll jump back in queue. Thanks.

(Operator Instructions). Ravi Mehrotra.

Thanks for taking my question. Firstly, Pat, please pass my best wishes on to Ryan for his birthday.

I'll make sure he gets that.

I hope he has a good time tonight. On the Phase I/II dose escalation for 1686, you previously talked about QD versus BD for the old formulation. For the new formulation, are you still looking into that? Can you give us any granularity on the shape of the PK curve? So we simply divide by three, as you flagged in your press release, for the new formulation. Again, sticking with the tablet formulation, can you walk us through what steps are required for you to actually start using that? Is it just further stability tests, or is it just manufacturing ramp-up? I'll come back to you with more after you've answered those.

Well, let's see if I remember them, first of all. It will be also be BID. The half-life is about the same as it is -- it is the same as it is for the current formulation. So we anticipate going right to BID dosing.

Secondly, it's always more complex than just dividing by three. But dividing by three is good enough. We will present some of these data -- we would intend to present some of these data at ASCO and provide a more detailed update of the PK profile. But dividing by three is pretty safe right now, as a place to start in terms of determining the profile of the drug.

And then, as to timing, it's driven not by stability or other tests, really. It's about getting manufacturing completed, for one; and two, just the timing of IRB approvals to change the formulation, which we anticipate will take place in and around July. So the goal is to get into patients with the tablet formulation, not necessarily at all centers -- because IRB approval, as you know, come in a staggered way. But by that middle or so of August, we would hope to begin studies in patients at the 300 milligrams or so BID with the tablet formulation.

Okay. And just two quick follow-ons. Any developments on the Roche molecular diagnostic tests? Are you still expecting a PMA with the NDA? Rucaparib, the HRD study -- how many patients will enroll into that? Will you just basically put everyone who's gone on rucaparib into that? And, finally, if you can just tell us whether there is a PR for 1686, that would be great.

(Laughter). What was that last question, Ravi? I don't think I heard it.

Something about PR, I don't know. Well, if it's right, right?

Yes, absolutely. And I honor the effort, I really do. And so, first, as to the HRV study, we're going to enroll about 200 patients in that study. And that will begin in the third quarter. Ravi, as I was giggling about your second question, I forgot your first -- oh yes. With Roche, everything is on track. We continue to work with them on the diagnostic. And we anticipate that what has now been analytically validated will be clinically validated over the course of our registration study. And then they will file the PMA at the time we file the NDA for approval.

Okay. I look forward to seeing you at ASCO.

Me, too.

Marko Kozul, Leerink Swann.

Thanks for taking the follow-ups. I wanted to ask if you have any thoughts or understanding as to how indolent T790M tumors might be. In other words, early-stage patients generally respond or fail -- or fail to respond to IRESSA and Tarceva therapies in certain time frames. Do you have any sense as to whether we should expect T790M patients to follow this pattern of time to response? Or might the bulk of responses be observed with a different time course? Thanks.

You know, I think it's too early for us to answer that question. I think that's a question that is -- that will be easily answerable when we get to a dose and we are treating patients in the expansion cohort. It feels too early. Our patient population is highly variable. The median number of cycles for therapies for these patients have been on, treatment with prior therapies, is around five. So we've got a pretty advanced pool of patients, as is common in a Phase I study.

I think our Phase II -- one, will be at a dose; two, at the tablet formulation; and, three, we'll be in much more strictly defined population of pure second-line patients who have only had -- and then failed -- Tarceva or another TKI. So, I'm not trying to dodge your question, Mark; I just don't feel I have enough information to answer it.

I appreciate that. And maybe one on the competitive landscape tack. Could you talk a little bit about other candidates that are specific for T790M patients, such as AZD9291 and dacomitinib? And then the others, some areas of differences would be terrific. And also, do you have any sense of as to why the AZD9291, all the sites are ex-US, mainly in Asia?

(Multiple speakers) Well, I can speculate. So, first of all, we don't know a lot about the AZ compound. We don't know more than you do, because they have never presented it at any scientific forum. So we don't have any sense of the preclinical data, or how it behaves, or how it's directed. I have heard from an investor, who apparently heard it from AstraZeneca, that it is similar to the Gatekeeper compound. So that implies to me it is a covalent inhibitor of EGFR, which is intriguing.

As to why they are in Asia -- well, first of all, there is a large population of patients with these mutations in Asia, as I discussed earlier, so it's not totally surprising. And, secondly, their relationships are probably pretty strong in Asia, because IRESSA is really used primarily as the dominant TKI in Asian territories. So, it doesn't really surprise me, but I can't say any more than that. It's all speculation.

As to the competitive landscape beyond AstraZeneca, I'll just reiterate that afatinib -- which now is in front of the FDA for first-line mutations of EGFR, and showed about an 11-ish month progression free survival versus 4.5 or so for chemotherapy -- does, in preclinical models, show activity against T790M. However, they have not been able to show that in patients, because they have a greater inhibition for wild-type EGFR than they do for T790M.

And while they can dose over that in mice with great toxicity, they can't get to an effective dose for T790M in patients as a monotherapy. They just have not been able to. There are data that have shown a response when you combine Erbitux with afatinib in T790M positive patients. That response also includes patients who do not have the T790M mutation. So there's some mechanism at play there that perhaps we don't fully understand.

One thing we do understand is that is a wickedly toxic combination, and may never become eligible -- available for patients; and if it did, would be limited to those who can tolerate the synergistic EGFR wild-type inhibition that causes brutal diarrhea and rash.

So, from my standpoint, we remain in the lead for development of an inhibitor of T790M, with a compound whose merits you can clearly evaluate based on the vast number of preclinical presentations we've made, and the early signs that we've shown you from the Phase I study in humans.

Thank you for that. And maybe just one on rucaparib. Some of the other PARPs are generating excitement by moving into breast cancer. While rucaparib is very squarely focused on ovarian cancer, I wanted to ask about any plans you might have in the future to go beyond ovarian into other tumor types.

And second to that, the foundation medicine and companion diagnostic, would this only be applicable to ovarian cancer, or might it be used for other indications as well? Thanks.

What we're doing with foundation is very specific to ovarian. The applicability of it to breasts, I do not know. But the genes we're looking at, the HRD genes, have been associated with ovarian. And the biomarker validation study we are doing will be clearly associated with ovarian responsiveness to rucaparib. So, there may be a great amount of overlap, but right now, you can think of that as being limited to ovarian cancer.

We have not determined where to go, in addition to ovarian. We have purposefully chosen, thus far, not to pursue a trial in breast. We are intrigued by certain other tumor types where HRD may play a role, most notably prostate; but it's very early days for us. And we will limit, certainly in 2013, and probably for a while, our development activities to ovarian.

This is a very robust program we have with the biomarker validation study, as well as with the Phase III study. So that will be our focus for now.

Pat, thanks for taking the questions.

Of course.

Thank you. That is the end of the Q&A session, ladies and gentlemen. I would now like to turn the call back over to Breanna for closing remarks.

We thank each of you for your interest in Clovis today. This call can be accessed via replay at our webcast at clovisoncology.com beginning in about one hour, and will be available for 30 days. Again, we appreciate your interest and time. And thank you, and have a good day.

Thank you for your participation in today's conference. That concludes the presentation. You may now disconnect. Thank you, and enjoy the rest of your day.