Clovis Oncology Inc (CLVS) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2014 Clovis Oncology earnings conference call. My name is Jackie, and I will be your operator for today.

(Operator Instructions)

I will now like to turn the conference over to Ms. Anna Sussman, Senior Director and Investor Relations. Please proceed.

Thank you, Jackie. Good afternoon, everyone. Welcome to the Clovis Oncology second-quarter conference call. You should have received the news release announcing our second-quarter financial results. If not, it's available on our website. As a reminder this conference call is being recorded and webcast. Remarks can 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, our President and CEO, will discuss the highlights of the quarter and provide an update on our clinical development program. Then, Erle Mast, our Chief Financial Officer, will cover the financial results for the quarter and comment on the Company's outlook for 2014. 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 plans. 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 date on which they are made, and Clovis undertakes no obligation to update or revise any forward-looking statement.

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

Thanks, Anna. Welcome, everybody. Thanks for joining us.

We made significant progress during the second quarter. Highlights include the receipt of breakthrough designation for CO-1686 in May, data updates in ASCO in late May or June and the continued advancement of our clinical development programs, with the initiation of multiple clinical studies during the quarter. Importantly, these include the initiation of the TIGER2 study for 1686, which together with the Phase 2 expansion cohorts will form the basis of our NDA submission planned for mid 2015.

Let me start with 1686, which was recently assigned its proposed international nonproprietary name, or INN, rociletinib, which I will attempt to use going forward. I plan to stumble several times between the two names during this call.

At ASCO we announced the most recent update of rociletinib completed clinical data, which continues to demonstrate that rociletinib is a very active and well-tolerated drug. The highlights of the data presented at ASCO include the following: A 58% objective response rate was achieved in a valuable, centrally-confirmed T790M-positive patients treated with a therapeutic dose. 90% of that patient population achieved disease control, defined by disease stabilization or an objective response. The median duration of response could not yet be determined in the T790M- positive patients and similarly median progression-free survival, or PFS, has not been reached. However, follow up for some patients now exceeds one year.

These data continue to mature and we remain extremely encouraged by the impressive durability of benefit we are seeing. Potentially longer than the median PFS observed in newly diagnosed patients treated with front-line TKIs, such as erlotinib. This reinforces our belief that inhibition of IGF-1R by a metabolite may be contributing to this. equally or perhaps even more encouraging is response rate in PFS we see in patients with brain mets present at the time of enrollment.

As you know, brain mets become more common as the disease progresses and to have clear evidence of meaningful activity these patients is very good news. We look forward to providing an update of rociletinib met data during the 26th EORTC AACR NCI symposium on molecular targets and cancer therapeutics in Barcelona in the November.

As we discussed at ASCO rociletinib is well tolerated. We have seen no evidence of systemic wild-type EGFR inhibition, side effects of which can include rash, pruritus, and paronychia. The most common adverse events were nausea, hyperglycemia, diarrhea, vomiting and decreased appetite and these we were mostly Grade 1 and 2 in severity.

Given the profile of the drug emerging from our studies, investigators are extremely enthusiastic about moving the rociletinib program forward rapidly, ensuring it can be approved and made available for the large number of patients for whom it may provide benefits.

As such we are very pleased with the rate of enrollment underway for the Phase 2 expansion cohorts from in patients with EGFR mutant, non-small cell lung cancer as well as TIGER2. We remain on track for these studies to serve as the basis for an NDA submission by mid 2015.

These expansion cohorts are testing the activity of rociletinib in two patient subsets. The first, in approximately 150 to 200 patients, who are T790M-positive directly after progression on the first and only TKI therapy, similar to our TIGER2 study design. The second in approximately 150 to 270 T790M-positive later line patients after progression on their second or later TKI therapy or subsequent chemotherapy. Both cohorts are reporting doses of 500 mg, 625 mg and 750 mg.

During the second quarter, we initiated the TIGER2 study, a global registration setting for rociletinib in patients with EGFR mutant non-small cell lung cancer. More specifically, this trial exams T790M-positive second-line patients directly after progression on their first and only TKI therapy.

There are two additional global studies in the TIGER program for rociletinib initiating soon. In the very near term, hopefully this month, we expect to enroll our first patient in the Phase 2 portion of TIGER1, a randomized Phase 2/3 registration study versus erlotinib in newly diagnosed EGFR mutant patients. We've been really pleased at the overwhelming interest and participation in this study, and now expect the Phase 2 portion will enroll the planned 200 patients in about six months.

Later in 2014 we intend to initiate TIGER3, a randomized comparative study versus chemotherapy in patients with EGFR mutant non-small cell lung cancer and acquired TKI resistance. Based on data to date, we have chosen a dose of 625 mgs BID for each of these studies.

Last for today's discussion of rociletinib, but by no means least, during the second quarter we were granted breakthrough therapy designation for the drug for the treatment of mutant non-small cell lung cancer in patients with the T790M mutation after progression on EGFR-directed therapy.

Turning now to rucaparib, we were pleased with the Phase 1 data presented at ASCO. And we look forward to providing an update on the Phase 2 treatment data in germline BRCA mutant ovarian cancer at ESMO this fall. We are actively enrolling patients in both studies in the ARIEL program, which includes the Phase 2 treatment study and our registration-focus Phase 3 maintenance trial.

ARIEL2 is our global Phase 2 single-arm open-label study designed to identify molecular features that predict sensitivity to rucaparib, using DNA sequencing to evaluate each patient's tumor. The study assesses and correlates rucaparib efficacy with the genotype and phenotype of each patient's tumor. And these data will inform the final definition of homologous recombination deficiency for the ARIEL3 registration study analysis.

To our knowledge, we are the only company seeking to prospectively demonstrate a PARP inhibitor's activity in a molecularly-selected ovarian cancer population beyond germline BRCA mutation. This is the BRCAness patient. If successful, we believe it will meaningfully differentiate rucaparib from its competitors.

We are very encouraged with enrollment and results to date with ARIEL2, which is demonstrating consistently strong results from patients with BRCA mutations. In addition, we are seeing clear evidence of very good activity in BRCAness patients, whose BRCA genes are normal, and little to no activity in biomarker negative patients, supporting our hypothesis. We think data from this trial will change the way the community will think about patients who may benefit from rucaparib, the only PARP inhibitor that seeks to prospectively demonstrate this broader and targeted activity in a clinical study.

ARIEL3 is our global randomized double-blind Phase 3 registration study that compares the effect of rucaparib versus placebo. The study will evaluate whether maintenance rucaparib therapy can extend the period of time for which disease is controlled after successful chemotherapy in platinum-sensitive ovarian cancer patients. The study will utilize pre-specified step-down efficacy analysis, first in BRCA mutant patients, then in the broader HRD population as defined by the ARIEL2 study, and then in all comers.

Rucaparib is a very active drug and data support our approach to identify patients with BRCA mutations, as well as BRCAness or other DNA repair defects that may be addressed with rucaparib therapy. With the inclusion of BRCAness patients our target patient population will potentially include more than 50% of women with serous ovarian cancer.

During the quarter will also initiated the Phase 2 RUCAPANC study of pancreatic cancer patients with BRCA mutations. This study is based on the partial responses observed in two germline BRCA-mutant pancreatic cancer patients treated with rucaparib, each of whom had failed traditional chemotherapy.

Turning now to lucitanib, our potent inhibitor of the tyrosine kinase activity of FGFR1-2), VEGFR1-3, and PDGFR alpha and beta. Lucitanib has demonstrated impressive response rates with manageable side effects in previous trials of heavily pre-treated patients with solid tumors. We hold exclusive US and Japanese rights and have a collaboration agreement with Servier, the holder of European and rest of world rights for the global clinical development of the drug.

Our development program for lucitanib is initially targeting solid tumors with FGFR pathway activation, including breast and squamous non-small cell lung cancers. In addition to the Servier-sponsored studies in advanced breast cancer currently under way, we preparing to initiate two Clovis-sponsored trials in the very near term -- a US Phase 2 study in treatment refractory FGFR1 or 11Q amplified patients with advanced breast cancer; and a global Phase 2 study in advanced squamous lung cancer patients with FGFR1 amplification.

Data on lucitanib were presented at ASCO and were largely familiar to many of you. But we were pleased to receive an oral presentation for the introduction of lucitanib to US physicians. The next update of data for lucitanib is likely ASCO 2015.

Now let me turn the call over to Erle to discuss second-quarter 2014 financial results and updated guidance.

Thanks, Pat. Afternoon, everyone. We reported a net loss for the second quarter of 2014 of $34.8 million or $1.03 per share, and $65.5 million or $1.93 per share for the first half of 2014. Research and development expenses totaled $28.4 million for the second quarter of 2014 and $52.6 million for the first half of 2014.

Each of these amounts are up considerably from the comparable periods in 2013 due to the increased enrollment in the ongoing Phase 1-2 non-small cell lung cancer study for rociletinib, as well as the initiation of the TIGER2, the Japanese Phase 1 studies for rociletinib, and the ARIEL2, ARIEL3 and RUCAPANC studies for rucaparib. As a reminder, the devolvement expenses for lucitanib are currently being funded by Servier. So, it's addition to our portfolio had no impact on R&D expenses for 2014.

Total operating expenses include non-cash charges totaling $6 million for the second quarter and $15.2 million for the first half of 2014 associated with share-based compensation expense and the amortization of and intangible assets and accretion of contingent purchase consideration, both of which are associated with our 2013 acquisition of EOS.

Our net cash burn for the second quarter of this year totaled $30.4 million, and that was up from $19.6 million for the first quarter of 2014. This increase is primarily due to the $13.6 million milestone payment that we received from Servier in the first quarter associated with the lucitanib program.

As of June 30 we had $273.2 million in cash and cash equivalents. And we had 34 million outstanding shares of our common stock. We continue to expect cash burn for 2014 will total approximately $120 million. And that we'll end the year with approximately $200 million in cash.

With that, I'll turn the call over to Pat for some closing remarks, and then we'll open it up for Q&A.

Thanks, Erle. These are the anticipated milestones for the remainder of the year. For rociletinib, we intend to initiate additional studies in the TIGER program for non-small cell lung cancer, which include the following -- the Phase 2 portion of the TIGER1 registration study in newly diagnosed EGFR-mutant patients, and the randomized comparative TIGER3 study of rociletinib versus chemo in patients with EGFR-mutant disease and acquired TKI resistance. We also plan to present updated data at the [triple] meeting in November.

Rucaparib, we'll continue enrollment of the ARIEL2 treatment study and ARIEL3 maintenance study in platinum-sensitive ovarian cancer patients, with BRCA mutations and other DNA repair deficiencies, as well as the Phase 2 study of rucaparib in pancreatic cancer patients with BRCA mutations. We plan to present updated data at ESMO in September and potentially again at the triple meeting in November.

And, finally for lucitanib, we intend to initiate our Phase 2 studies of lucitanib in selected patients very soon. These include the US Phase 2 study in patients with treatment refractory FGF aberrant breast cancer, and the global Phase 2 study in patients with metastatic squamous non-small lung cancer with FGFR1 amplification.

In summary, we're actively preparing for our first NDA by mid 2015, as well as building out our commercial and medical affairs leadership to prepare for a potential product launch for rociletinib at the end of 2015. And we continue to be very encouraged by the data we are generating.

With that, thanks for joining us. I should note, Andrew Allen, our Chief Medical Officer, of course, is on the call, as well. And with that we will open the call for Q&A.

(Operator Instructions)

Cory Kasimov, JPMorgan.

Hi, guys. This is actually Whitney on for Cory. Just a question on the rociletinib update expected in November. What should we be looking for there in terms of patient numbers, average duration, et cetera, versus ASCO?

It's a little early to predict exactly what we'll be presenting I think you should expect a presentation that is generally consistent in format with what we presented at ASCO. One thing that I do want us to do is show a more mature PFS from the Phase 1 experience. And then, of course, we will show PFS as it's emerging from the blended population. But we're piling patients on and so that's the only way you'll be able to get a clear view of PFS with some degree of maturity.

Great. And then in terms of the expansion cohorts, are you getting any early feedback just around hyperglycemia and whether it is easily managed as you thought it would be?

Yes. And yes. We get very little discussion of it now with clinicians. As we've said, it is easy to manage with Metformin and it is well managed with Metformin, and that's what we're seeing in clinical practice.

Great. Thanks for taking the questions.

Yaron Werber, Citi.

This is [Kumar Ahzyne] for Yarrone. Thank you for taking my questions. So in a brain mets patients you are seeing two responses. Can you please comment on the levels of 1686 you're seeing in the brain in animal models? And also are you planning to do any higher studies in these patients with brain mets?

We don't spend a lot of time looking at animal models with brain mets because we don't think they're predictive of the human experience. And clinicians don't either. What really matters is clinical data. And what we're seeing in the patients with brain mets is, as I noted here, exceptionally encouraging from the data we've seen so far.

What was the second part of your question?

Are you planning to do any higher dose studies in those patients?

We have interest on the part of clinicians in looking at some sort of higher dose or, more likely, pulse dosing. We have not formally decided to do that. But there's a great degree of interest on the part of clinicians in doing so, and we manage, normally, to live up to what they desire. So I would be surprised if we didn't.

Thank you.

Barney Clayne, Stifel.

It's Brian Klein. First a question on the selection of the 625-milligram dose for TIGER1 and TIGER3. Can you walk us through what criteria you used to make that dose selection, please?

Andrew?

Sure. It was mostly clinical data that has informed that decision. The initial Phase 1 study, like most Phase 1 studies, is in relatively small numbers of patients. And it's very hard with well-tolerated drugs to really get a strong sense of where the optimum dose exactly sits. And so, treating more patients at the various doses is the only way you can truly choose between doses.

We've been relying mostly upon clinical data to inform that selection of the optimum dose. And obviously what we're trading off is efficacy on the one hand and toxicity on the other hand, and trying to find the sweet spot where we retain all efficacy but we minimize toxicity. It's that approach that led us to 625 milligrams BID.

Great. In terms of those two studies is there an opportunity to either dose escalate or dose intensify if the patient isn't responding after a certain amount of time?

It depends on the phase of the study. Obviously the later the phase the more flexibility you offer physicians early on when one is more cautious because you have less drug experience. You do not allow such flexibility. But in later studies we typically do permit escalation, if deemed appropriate. Obviously, we've cleared doses all the way up to 1,000 milligrams BID as being safe for the Phase I study, and therefore we have cover for dose escalation from 625, if it's regarded as appropriate.

Brian, one thing if I can chip in, too. One thing to remind you is we have basically equivalent efficacy across all of these efficacious doses, including 900mgs of the free base, 500 mgs BID, 625 and 750. I don't think at 625 we're trading off any efficacy. It's a very active drug and contributed to have 90% disease control rate that we reported at ASCO and before.

Great, thanks for that additional color. Just one final question. Is the data that you're generating right now between expansion studies and TIGER2 sufficient for a European filing, as well? Thank you.

Yes.

Great.

Terence Flynn, Goldman Sachs.

Thanks for taking the question. I was just wondering with respect to TIGER1, if you can remind us if you plan to top line any of the data from the Phase 2 portion of that trial. And if so, is that going to be response rates or will there be also some PFS data? Thank you.

The data are open to us. And to remind everybody the way the trial works, the Phase 2 portion is for us to learn about activity, including PFS, versus erlotinib, and apply that to the Phase 3 portion. And, as such, those Phase 2 patients will not be a part of our NDA submission.

So, we have access to all that into. And we will share all those data with you at scientific meetings. At the appropriate forum as early as -- not certain -- but as early as ASCO next year, we may provide an initial view of data from the Phase 2 portion of that study. And, clearly, we won't have mature data at the time but as the data mature we will continue to provide updates. We know that's important to investors.

Okay, thank you.

Howard Liang, [Clovis].

It's Howard Liang with Leerink. Regarding rociletinib, are you looking at, are biomarker studies looking at IGFR reception activation to look at what patients might be appropriate?

We're not yet at that point. There are two issues. One is that the selection of patients based on IGF1R, that [parker] activation has been difficult because the reagants are tricky to develop for appropriate clinical use. That's issue one.

Issue two is that it's not clear that the role of IGF1R will be apparent early on in the patient's clinical course. The data that are in the literature suggest that the role of IGF1R may be less in terms of driving active tumor proliferation in a fast growing clone, but more about being responsible for cells sometimes persistor cells which is related to stem cells.

And so, perhaps the reason we're seeing similar response rates to AZD9291 is that both drugs are acting through T790M inhibition. But then it's the emergence of acquired resistance to the drug through those persistor populations and complex heterogeneity of the tumor clone that is leading to selection that, in the case of 9291 perhaps is allowing RGF1R to be a very active pathway driving faster relapse. Whereas with 1686 and its metabolites that pathway, that opportunity is suppressed.

That may not be apparent in the baseline biopsy, obviously, in a patient that hasn't yet been exposed to the drug. So, it's a complex field and obviously we're doing work in that area but nothing is yet ready for prime time.

And, Howard, if I could add, there's no need for us to do further selection. By selecting for T790M we're getting a 90% disease control rate. It's pretty hard to do better than that. So, it isn't evident to us to underscore what Andrew just said, that we would ever need to select beyond it.

Great. Another question -- are you doing anything different in the management of hyperglycemia in the Phase 3 studies as compared to the earlier studies?

No. The good news is that we've learned with our investigators that we can easily manage it with Metformin. And, so, in all of these studies we'll recommend the use of Metformin when symptoms emerge, or when glucose levels rise. Having learned this in the context of the Phase 1, we can now apply it to our further studies.

Thanks very much.

Peter Lawson, Mizuho Securities.

With CO-1686, rociletinib, from the ASCO data, did you get any pushback from oncologists around the side effect profile? And then, secondly, did the data help accelerate the enrollment rates?

I can't qualify whether the data have helped enrollment rates. They were very good and they remain very good. So, I don't -- we have, in general, at the clinics where we are enrolling, where we already have IRB approval, waiting lists for participation in our studies. So, at some level, I don't know that they could have done more to drive it. There was already a great amount of enthusiasm for the drug within the community based on prior presentations. We clearly are very pleased with our enrollment.

With regard to pushback on side effects, not really. What most believe, like Tom Lynch said at the meeting -- in fact, everyone we speak to -- what we do with managed side effects, if we have data we'll manage the side effects. It's not uncommon to see -- it's very common, in fact, to see side effects emerge with new therapies. Obviously Avastin is a $6 billion drug and when it was launched there was anxiety about the hypertension it caused. And physicians became very adept at treating hypertension because they were getting great benefit from the drug.

So, we're completely comfortable with our positioning of this drug. And fortunate that we have really one side effect, and that one side is very easily managed with Metformin. That's pretty rare. We are in very good shape with this drug and our interactions with other clinicians about the management of the side effects.

Thank you. And then just on rucaparib, the ESMO update, is that around the HID biomarker validation study in ovarian? Or is that some additional Phase 1-2 data?

The ESMO poster that's been submitted and accepted is around Phase 2 data from the single-arm study in germline BRCA-mutant platinum-sensitive ovarian cancer. That's a very homogeneous patient population that we have been treating essentially to credential the drug to show its merits against the target population of germline BRCA-mutants. We're obviously all the whole class of drugs has activity. That' s the focus at ESMO.

Obviously the more exciting data will be related to the ARIEL2 study where we step outside of that narrow arena and begin to show activity in patients who have normal BRCA genes but have this alternate mechanism that leads to the same biology and hopefully, therefore, will lead to good efficacy of the drug in that population.

Just a follow-up, then -- additional data, what would that be that is being presented at the triple around rucaparib?

Our intention in the fall -- and obviously we have to be a little bit cautious because not all of the data has been accepted yet -- but our intention is to show our preliminary clinical data from the ARIEL2 study in the patients so far enrolled. And it's a decent number of patients. The study has been enrolling extremely well.

Thanks much.

Charles Duncan, Piper Jaffray.

Hi guys, this is Roy. Andrew kind of answered this question, but regarding the ARIEL2 data, have you seen clear evidence in the BRCAness patients? Have you guys locked won the HRD profile pretty well? Is it still moving around what the data look like in terms of that?

We have a preliminary definition which we have put into the statistical analysis done for ARIEL2. This is a pre-specified analysis. That is performing very well in the data we have so far.

Now, we reserve the right to modify that based upon the complete ARIEL2 data. That obviously in large part is why we're doing the ARIEL2 study. We should not and do not need to lock it down yet. We have time.

Because the primary goal, obviously, of the classify is to analyze patients in the ARIEL3 study which is underway, as you know. And we are blinded to ARIEL3 data and therefore we have the opportunity to continue to work on the classifier, and only to lock it down in principal relatively near to the end of the ARIEL3 study. For various reasons, one likes to try and lock it down before the very end of the blinded study, but nonetheless we have time is on our side to get this right. And so, as I say, we've got the preliminary classifier, provisional classifier that we're using today that's working well, but we may tweak it a little bit based on complete ARIEL2 data.

Okay. And can you just remind me briefly how you determined that pre-specified criteria? How you got the predefined criteria.

It was mostly done using public domain data from the cancer genome atlas. In 2011 they published the genotypic analysis of over 200 patients, and actually the data has grown since then, together with clinical outcome data.

Now, none of those patients had received PARP inhibitors, but they all received platinum. And as you know, there's biologic commonality between the response to platinum and the response to PARP. It's not perfect but there is some commonality there.

And so we used outcome on platinum as the proxy for outcome on PARP inhibitor to define the first pass definition of the classifier. That's what we have prospectively coded to ARIEL2. But obviously we reserve the right, as a say, to tweak it for the definitive ARIEL3 study.

Okay, great, thank you.

Ravi Mehrotra, Credit Suisse

This is actually Koon asking a question on behalf of Ravi. Regarding the NDA filing in mid 2015 is there specific patient number that the FDA is going to be looking for that's going to be part of that submission? And then my other question is, in terms of combination studies, what types of other mechanisms or molecules are you contemplating in pairing up with 1686? Thanks.

Quickly, we have a clear understanding with FDA of what will be in our package. And that helps inform our timeline of mid 2015. We have not, choose not, to disclose what that agreement in detail is, as all smart companies do.

Secondly, we are planning to -- we have an active effort with collaborators now, very interested collaborators, in defining our combination program. And our intent at the triple meeting will be to announce the details of our combination trial plans. And some of them may initiate by the end of this year. But we'll detail all of them at the time of the triple meeting in November.

Thank you very much.

Ladies and gentlemen, that concludes today's Q&A session. And with that I would like to hand the call back to Ms. Sussman for closing remarks.

thank you. We thank everyone for your interest in Clovis Oncology today. If you have any follow-up questions please call me at 303-625-5022. This call can be accessed via replay of our webcast at clovisoncology.com beginning in about an hour. Again, we appreciate your interest and time. Thank you. Have a good evening.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. And have a great day.