Clovis Oncology Inc (CLVS) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the third-quarter 2014 Clovis Oncology, Incorporated earnings conference call. My name is Crystal, and I will be the operator for today.

(Operator Instructions)

I would now like to turn the call over to your host for today, Ms. Breanna Burkart, Senior Director of Investor Relations. Please proceed.

Thank you, Crystal. Good afternoon, and welcome to the Clovis Oncology third-quarter 2014 conference call. You should have received the news release announcing our third-quarter financial results. If not, it is available on our website at www.clovisoncology.com. As 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' President and CEO, will discuss the highlights of the quarter and provide an update on our clinical development program. Then Erle Mast, Clovis' 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, for which Dr. Andrew Allen, our CMO, we also be available.

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 statements. No I will turn over the call over to Patrick Mahaffy.

Thanks, Breanna. Welcome, everybody, for joining us this afternoon. We continued to make good progress during the third quarter. Highlights include the presentation of very encouraging Rucaparib data at ESMO in September, enrolling the first patient in each of our Phase II studies of Lucitanib, and raising more than $275 million through a sale of convertible notes in September.

Let me start with a discussion of current plans for Rociletinib. We look forward to providing the next update of Rociletinib clinical data during the 26th EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics in Barcelona in two weeks. Since the data were accepted as a late-breaker abstract and will be included in the ENA Press Program, the abstract will remain embargoed until the day of presentation, which is Friday, November 21.

We know there is a quite a bit of interest in these data, and we look forward to sharing them with you at the meeting. Accordingly, and as you suspected, we will not provide any data updates on today's call. But please plan to join us for an investor/analyst update call on Friday, November 21 at 2 PM Barcelona time, or 8 AM Eastern time, for a webcast conference call to describe the clinical data presented for Rociletinib and Rucaparib at ENA, which will be followed by a Q&A session.

Now that we have entered Phase II pivotal studies with Rociletinib, the data presentation at ENA will focus primarily on our selected dose of 625 milligrams twice daily, where we see very compelling activity with an improved safety profile.

Moving onto our TIGER program underway, we continue to be very pleased with the rate of enrollment underway for the Phase II expansion cohorts, also known as TIGER-X, in patients with EGFR-mutant non-small cell lung cancer, as well as TIGER2, and we remain on track for data from these studies to serve as the basis for an NDA submission in mid-2015. Following interactions with EMA, we also now plan on submitting an MAA in Europe in a similar timeframe.

These expansion cohorts are testing the activity of Rociletinib in two patient subsets. The first in patients who were T790M positive directly after progression on their first and only TKI therapy, which is similar to our TIGER2 study design. And the second in T790M positive later-line patients after progression on their second or later TKI therapy, or subsequent chemotherapy.

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

In the very near term, since we have already opened several sites, we expect to enroll our first patient in the Phase II portion of TIGER1, for a randomized Phase II/III global registration study versus Erlotinib in newly diagnosed EGFR-mutant patients. And lastly, in the next few months we intend to initiate our global TIGER3 study of Rociletinib, a randomized comparative study versus chemotherapy in T790M positive and T790M negative patients with EGFR-mutant non-small cell lung cancer and acquired TKI resistance. As we have noted, we remain impressed by the level of activity we have seen in T790M negative patients, which we will also discuss further at the meeting in Barcelona.

Rociletinib is the only EGFR-directed therapy that has been shown to spare wild-type EGFR in clinical studies. Inhibition of wild-type EGFR is associated with cutaneous toxicities, such as rash, stomatitis, and paronychia, all of which may significantly impact patients' quality of life, can result in treatment discontinuation, and can cause patient distress.

We believe this aspect of Rociletinib's clinical profile represent a significant point of differentiation from approved EGFR inhibitors and from those currently in clinical development. As you may remember, Rociletinib was granted breakthrough therapy designation earlier this year, and we remain on track to submit an NDA by mid-2015. Once again, we look forward to providing updated data in two weeks at the Triple Meeting in Barcelona.

Turning now to Rucaparib. We were very pleased with the data presented at ESMO in September from the Phase II expansion cohort in ovarian cancer patients with germline BRCA mutations and the genetic data from the ARIEL2 treatment study in ovarian cancer. The data show compelling results, with a disease control rate of 93% in ovarian cancer patients with germline BRCA mutations. 82% of patients achieved a RECIST and/or CA125 response, and 71% achieved a RECIST partial response.

No other PARP inhibitor has shown this level of activity in a robustly-sized mutant BRCA ovarian cancer patient population. And in fact, few drugs in any solid tumor population have shown this magnitude of response. Equally encouraging were the preliminary genetic analysis data from ARIEL2, which show the tumor analysis via next-gen sequencing can identify a broader, but still selected, population of ovarian cancer patients who may benefit from Rucaparib therapy.

This broader group of patients also have DNA repair deficiencies in their tumors, although their actual BRCA genes are normal. We in the clinical community, or at least of those of us in PARP-land, refer to this as BRCA-ness, or BRCA-like. No targeted therapies exist today for these patients with BRCA-ness, and we are enthusiastic about the potential to demonstrate Rucaparib's activity in this patient population.

We will provide the first prospective clinical outcomes data ever in a predefined BRCA-ness population from the ARIEL2 study at the 26th EORTC-NCI-AACR symposium on Molecular Targets and Cancer Therapeutics in Barcelona. It will be presented as an oral plenary presentation the day before the Rociletinib data I mentioned earlier. These data also be included in the ENA press program. Therefore, the abstract will remain embargoed until the day of presentation, which is Thursday, November 20.

Incidentally, we were very pleased that both of these programs, Rociletinib and Rucaparib, were chosen to be highlighted by the EORTC-NCI-AACR symposium as a part of their press program. Pretty cool for a relatively small company.

We continue to actively enroll patients in both studies in the ARIEL program, which includes the Phase II treatment study and our registration-focused Phase III maintenance trial. ARIEL2 is our global Phase II single-arm open label study, prospectively designed to identify molecular features that predict sensitivity to Rucaparib, using DNA sequencing to evaluate each patient's tumor.

As described earlier, this prospective study is effective and correlates Rucaparib's efficacy with the genotype and phenotype of each patient's tumor. And these data will inform the final definition of BRCA-ness for the ARIEL3 registration site. 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 BRCA mutations, the BRCA-ness patient.

Rucaparib is a very active drug, and emerging data from the ARIEL2 studies support our approach to identify patients with BRCA mutations, as well as BRCA-ness. With the inclusion of BRCA-ness patients, our target patient population could potentially include up to 50% to 60% of serous ovarian cancer patients.

Lastly, the Phase II RUCAPANC study of pancreatic cancer patients with BRCA mutations is ongoing. We expect to provide an update from this study at ASCO next year.

Turning now to Lucitanib. Lucitanib is our oral, potent inhibitor of tyrosine kinase activity of FGF, VEGF, and PDGF receptors. Lucitanib is unique among tyrosine kinase inhibitors, being developed for cancer therapy, and effectively targeting these receptors with minimal off-target activity. This selectivity profile allows Lucitanib to provide a potential benefit to cancer patients by targeting multiple pathways of tumor development.

Thus far, Lucitanib has demonstrated impressive response rates with manageable side effects in previous trials of heavily pre-treated patients with solid tumors. We initiated two Clovis-sponsored Phase II trials during the third quarter, including a US Phase II study in treatment refractory FGF-aberrant patients with advanced breast cancer, and a global Phase 2 study in advanced squamous lung cancer patients with FGRF1 amplification. We continue to enroll patients in these studies, and expect that the next update for Lucitanib will likely be ASCO or San Antonio in 2015. Now let me turn the call over to Erle to discuss third-quarter 2014 financial results and guidance.

Thanks, Pat. Afternoon, everyone. Our full financial results are included in this afternoon's press release. So I'll focus my comments on just some highlights. And let me start with our cash position. We ended the third quarter with $516.6 million in cash, and then that reflects the sale of $287.5 million of the 2.5% convertible senior notes that we completed in September. Our operating cash burn for the third quarter totaled $35 million, and it was $85 million for the first nine months of 2014. We continue to expect that our operating cash burn for 2014 will total approximately $120 million, and that we will end the year with approximately $480 million in cash.

Now, turning to now our operating results. We reported a net loss for the third quarter of $39.6 million, or $1.17 per share, and $105.1 million, or $3.10 per share, for the first nine months of 2014. Our research and development expenses totaled $35 million for the third quarter, and $87.6 million for the first nine months of 2014. Both of these amounts increased over comparable amounts from 2013, due primarily to the initiation of the ARIEL2 and ARIEL3 studies for Rucaparib, an increase in the number of patients that are enrolled in the ongoing TIGER-X study for Rociletinib, the initiation of the TIGER-2 and the Japanese Phase I studies for Rociletinib, and then finally increased manufacturing of clinical drug supply for both the Rociletinib and the Rucaparib programs. Now as a reminder, the development expenses for Lucitanib are being funded by Servier, our partner, so its addition to our portfolio has had no impact on our R&D costs for 2014.

Total operating expenses include non-cash charges of $6.3 million for the third quarter and $21.5 million for the first nine months of 2014 for share-based compensation expense, and amortization of an intangible asset and accretion of contingent purchase consideration, both of which are associated with our 2013 acquisition of EOS. And with that, I'll turn the call back over to Pat for some closing remarks. And then we'll open it up for Q&A.

All right. Thanks Erle. Briefly on anticipated near-term milestones for Rociletinib, obviously the updated ENA in two weeks. And in the next few months we intend to initiate the randomized comparative TIGER-3 study of Rociletinib versus chemo in non-small cell lung cancer patients with EGFR-mutant disease and acquired TKI resistance.

Importantly, we're actively preparing our first NDA and MAA for submission in mid-2015. And continue to build out our commercial and medical affairs leadership to prepare for a potential US product launch for Rociletinib at the end of 2015.

For Rucaparib, we'll present the first clinical outcomes data from the ARIEL2 treatment study at the ENA in two weeks. And we will continue to enroll patients in 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 II study of Rucaparib in pancreatic cancer patients with BRCA mutations.

And finally for Lucitanib, continue enrollment in our Phase II studies in the US in patients with treatment-refractory FGF-aberrant breast cancer and the global Phase II study in patients with metastatic squamous non-small lung cell cancer with FGFR-1 amplification. With that, thank you for joining us today. And we'll look forward to any questions you may have.

(Operator Instructions)

Ravi Mehrotra, Credit Suisse.

Thanks for that update. Pat, I'm going to respect your wishes not to push you on data we're going to get at Triple, and read your body language. Although I would like to know whether you're leaning to the left or right, right now?(Laughter)

[It's all] too political.

I thought I'd ask two rather basic questions to get us on the same page. For rucaparib, thanks for that nice sound-bite you gave us on what BRCA-ness is. Can you just expand on that a little bit more, and give us your hypothesis to why rucaparib uniquely looks like it has activity in that population?

And secondly, any color on the commercial set-up for 1686 by the end of next year? A number of people involved, the size of that sales force, a medical liaison team? Thank you.

Let's start with BRCA-ness and its importance as a driver of defining patients who will benefit from rucaparib. Andrew, you want to start with that?

Sure. Thanks for the question, Ravi. Genetic instability is one of the hallmarks of cancer. And a deficiency in tumor cells of their ability to repair DNA is quite common. And there is one particular type of DNA repair deficiency that is very important because it combines with PAR inhibition to produce so-called synthetic lethality. That means if you treat a cell that is healthy with a PARP inhibitor, it is fine. But if you treat a cell that has so-called homologous recombination deficiency, or HRD, which is a particular type of DNA repair defect, than that cell will enter apoptosis.

So what we are trying to do clinically is to identify patients who have this particular DNA repair defect, and then treat them with the PARP inhibitor. Obviously in the hope that we will induce tumor apoptosis, tumors shrinkage, clinical response, and a great outcome for a patient.

Now, the phenotype of DNA repair deficiency can be induced by many different gene changes and gene alterations. The best-known is BRCA mutations, or BRCA mutation as the aficionados will term it. And so we've known for a while now that if you take a tumor cell that has defective BRCA1 or BRCA2 function then, and you treat that cell with a PARP inhibitor, the cell will die. And we've seen that clinically, that if you take patients with germline BRCA mutations who have ovarian cancer, they have a very nice response rate to PARP inhibitor therapy.

Now, the response rate we have seen with rucaparib is higher than what has been described with most of the other PARP inhibitors, many of who haven't really elaborated meaningful data sets in this context. So certainly I think we can say that rucaparib is a very effective PARP inhibitor [which is] associated with an extremely high and impressive clinical response.

But BRCA is just part of the story, as I've mentioned. And so the question is, are there patients who have other genetic abnormalities that lead to the same phenotype of DNA repair deficiency, and therefore will also experience clinical responses when treated with a PARP inhibitor? And that concept of BRCA-ness simply refers to a patient or a tumor cell that behaves as if it has a BRCA mutation, but in fact the BRCA genes are normal. It's something else that's inducing the same phenotype that leads to the same benefit from PARP inhibitor therapy.

Now, it is not a new idea. It's been around for a while. But what's been challenging is to develop a systematic molecular diagnostic that can be applied to patients in a sensible timeframe and identify who can respond to drug. And that's obviously what we've been working on for a while now with our partners Foundation Medicine. And we shared the genetic data at the ESMO meeting, showing that following our definition of BRCA-ness, that somewhere around 35% to 40% of high-grade serious ovarian cancer patients, who are the most common types of ovarian cancer patients, will have this BRCA-ness signature, which is actually more than those that have a BRCA mutation.

And what we will be showing at the EORTC meeting in a couple weeks are the first clinical data where we test rucaparib against patients prospectively defined to have the BRCA-ness signature. And obviously what we're looking for is whether indeed the response rate to rucaparib is higher in those who are BRCA-ness positive versus those who are what we term biomarker negative, meaning that they don't have the BRCA-ness signature and they have normal BRCA genes. And that's obviously what we're looking for to sharing in Barcelona.

Great. And talking about commercial (inaudible)?

Yes, Ravi. You ask as we are looking out next year, and as you mentioned, our hope is that we will be launching rociletinib sometime in the second half of or late 2015. So we are in the process now of doing all of our sales force sizing. And as you pointed out, the role of medical affairs for this launch and this product, as it is all oncology products, is very important.

We haven't settled on the number of reps we have. As is common with companies promoting in solid tumors to the community clinics where many of these patients are seen, our rep will probably be in the 100 range, plus field-based management. The MSL sizing, again they will have a very important role for us in the rollout of this drug and will be around, probably in the 15 or so MSLs. Again, plus management over that. So that's consistent with what you probably see with other solid tumor oncology companies. And that's a pretty good estimate of where we are today, and we will be refining that territory alignment and sizing here over the next few months.

Brian Klein, Stifel.

First Pat, you mentioned that you are considering filing in Europe in a similar timeframe to the US. So just wanted to get a sense of exposure of European patients to 1686 versus US. Maybe you could just give us percentages there?

It is higher. As you all I think you are aware, virtually all of our data presented to date have been in Western patients, which I think is really critical because those are known to be the hardest to treat with EGFR inhibitors compared to Asian patients. The majority have been in US patients, 15%, perhaps 20% in European so far. But that as we open more sites in Europe, that mix is going to emerge somewhat differently, I suspect. I don't know, Andrew, what do you think? 30% or 35% will be in Europeans and 65% or so in Americans by the time we submit?

There is Southern Hemisphere as well, and obviously Asia will be participating, and is participating now, in particular TIGER-2 studies. So the blended global mix of patients that go into the dossier will probably be -- it will be -- the largest group will probably be the US, still. Europe will be second, but then there will be (inaudible) I think, from Asia, and Australia being just one country, obviously be relatively small, although we do have good uptake in Australia. So I think it'll be a truly a global mix of patients, which obviously is optimal for a global set of applications when we launch this.

Okay, great.

Also, Brian, there's no issue with whether the n of Europeans is sufficient enough for the ENA.

I guess what I wanted to ask next is really, is there a difference in the front-line therapy and the response to 1686 in terms of Tarceva versus Iressa?

No. We don't see any evidence of that.

Okay. And then maybe one final question. Any update on the rucaparib trial in pancreatic cancer?

Well, it enrolling. I think the most realistic date where we would expect to have data from that trial is ASCO. We certainly will hope that at ASCO we're able to provide an update.

Yaron Werber, Citi.

This is actually [Tennen] on for Yaron here. Two quick questions. I was wondering if you could give us an update on ARIEL3 on enrollment timelines? And just remind us when you'd be releasing data from the BRCA mutant and BRCA-ness cohorts. And whether those would be at the same time, or if they be released separately. And then just a quick follow-up.

So if you mean the BRCA mutant and BRCA-ness cohorts for ARIEL3, we would intend to release those at the same time. As to enrollment, it's going fine. And I imagine that we will complete enrollment sometime in the next 12 to 15 months, is kind of realistic for us.

Terrific, okay. Then just real quick follow-up. Do you have a sense about how much follow-up in terms of PFS you'll need from the TIGER2 study at the time you'll file for 1686?

We do. We have a good understanding with FDA, and we feel confident that with that understanding we will meet our mid-2015 filing date.

Okay. But I'm not clear, how many months of PFS you would need when you'd be filing, or you'd be able to expect?

Just to be clear, it was not clear to you purposefully.

Okay, understood. Thanks so much.

Charles Duncan, Piper Jaffray.

Hi. It's Roy for Charles. Thanks for taking the question. Sorry. I guess not as respectful as Ravi. I'm going to press a little bit on the data coming up. I thought I heard Pat say the presentation will focus on the 625, the BID dosing. Is that correct?

We will primarily focus on the 625. It's frankly the only relevant data. To your awareness and understanding, and to our view, investigators' view of the data. Because it is expected to be our go-forward and commercial dose.

So the PFS curve, we can maybe expect to see is probably going to be a different n than the 40 seen at ASCO?

Well, again, this isn't the call to describe what we're going to be presenting at the Triple meeting. We look forward to the presentation. And you'll get an update at that meeting.

Can you tell us the difference in time between the date at ASCO and the Triple meeting? What's going to be presented?

ASCO was about four months ago, right? Realistically, it will be an update based on data we have around this time.

Okay, great. Then sorry to beat a dead horse. I've been going over this with Anna and Breanna, but the PFS curve estimate, not the curve estimate, but the sentence you guys had at ASCO about a 12-month median estimate. I just want to be 100% clear that that's not derived from a formal process or an equation, it's simply an -- but based on not having reached a median?

It was a moment in time, and that was the estimate at the moment in time. We had not reached the median at that time.

Peter Lawson, Mizuho.

(Technical difficulties) just around rucaparib and the test, just wondering if you could talk us through the competitive advantage you see using Foundation's BRCA-ness test versus, say, Myriad's BRCA test (inaudible) DNA scarring HIV test? Do you see a large opportunity by using Foundation's test, or just around the choice, and color around that would be great.

I guess I would just say that we have enjoyed now a two-year or longer, and always very positive relationship, with Foundation, who have done for us a superb job. I don't have anything to say about Myriad. They're certainly a good company and they certainly have good capabilities. We have been working with Foundation. So I won't make any qualifications about those two.

I will tell you the significant meaningful, meaningful advantage we have is by working with Foundation for these many years and interacting with FDA about the design of the assay, and thinking hard about the best way to apply it, we have reached the point where we are running prospective studies. Prospective studies with a BRCA-ness assay. And I will just say that I think what is most meaningful is that word prospective in the design and characteristic of our trial. As you're well aware, retrospective analyses are not viewed very favorably by regulatory agencies.

Do you see a larger opportunity, a larger market opportunity, for using that BRCA-ness test versus BRCA plus HRD?

I don't have the ability to qualify the size of what Myriad or a competitor believes the size of an alternative definition of BRCA-ness population would be. I'm not capable of doing that. I can tell you that in the data we have so far, as Andrew mentioned, we've seen a sort of -- we know it's about 25% of patients who are mutant BRCA, both germline and somatic. It appears that it's another 30% to 35% of patients who, using our definition, can be described as BRCA-ness.

Great, thank you. Then Phase 3 data for rucaparib, when could we see that?

I'm sorry, Peter. I didn't hear that. Some what data?

I'm sorry. Phase 3 data, so the ARIEL3 data. When could we see that?

I think that's realistically a 2017 event.

I guess finally the TIGER studies. Which one's going to yield data first?

The studies that are yielding data that you can see as we go along are the TIGER-X and TIGER2 studies, each of which will contribute patients to on the ASCO presentation we will give. And that ASCO presentation will be, I think, primarily what is the basis of what we will have or we will submit to FDA. If you are asking about TIGER3 or TIGER1, which of those do I think will emerge first, I am pretty confident, for a variety of reasons, that it will be TIGER3.

TIGER3. Would that be kind of 1Q 2015 or something?

I don't think -- TIGER3 hasn't started to enroll yet. So we're not going to have data in 2015. I think for TIGER3, assuming we enroll in the very early part of next year, and we would anticipate 12 to 18 months enrollment time. Data within two-ish years of the initiation of that study sounds realistic. Kind of depends on the pace of enrollment in the study, but that feels realistic to me.

And so the ASCO data, that would be, what, TIGER1, Phase 2?

The ASCO data will be data from TIGER-X and TIGER2. I don't know if we would -- it is open-label to us. So the Phase 2 portion of TIGER1 is open-label to us and would be available to us. ASCO feels early to me for anything other than sort of a trial-in-progress, trial-design type poster. More realistic I think for data would be the World Lung Meeting is in Denver in 2015. That sounds like a good place to be presenting the initial data from the Phase 2 portion of TIGER1. That feels realistic.

Cory Kasimov, JPMorgan.

Two of them for you. First of all, how clearcut of a decision was it for you to pick the 625-mg dose to take forward? Maybe if you were to go back to ASCO or your early data and break out the safety efficacy profile of that dose relative to the others you've tested, can you comment on how differentiated this one was?

Andrew just called me up and said it's 625. That's how I remember it. Andrew, was there more than that?

Just a tad.

I will start, and then Andrew will finish. What I'm happy about is that we did go through a high dose. We explored that high dose. And I'm talking in sort of a 1,000, but particularly a fairly large number of patients at 750. And we're able to contrast that relatively large number of patients at 750 with patient at 500 and at 625.

And we were able to make a decision based on not a 3 x 3 Phase 1, but a much larger number of patients that described to us with better clarity the tolerability, the relative tolerability, and efficacy and relative efficacy of those doses. And 625 emerged as -- I was going to call it a Goldilocks dose, that I don't mean to dismiss it. It is true that at 750 we saw a range of side effects that demonstrated to us that in a competitive environment, were not necessary, given the efficacy. And at 625 we see and hear -- we do not just see the data, but we hear from our clinicians that it is a very well-tolerated dose, and the physicians are pleased with the efficacy they are seeing.

It was the benefit of looking at a pretty robust data set and being able to make that choice. I think at some level, given the tolerability and the general ease of use a physician see at 625, then you do bias towards a slightly higher dose than we see at 500, although that is also a very efficacious dose. Just in a belief that we still believe even in targeted therapies a little bit higher is generally a little bit better in terms of efficacy. Andrew?

I think you've covered it all.

As a follow-up, now that you have the TIGER1 study up and running in the front-line study, do you have any plans to evaluate 1686 in an adjuvant setting?

We certainly have had, and I'll call them discussions, but they shouldn't be called anything other than brief discussions. It's an agenda item. I think we'd like to get confidence of this activity in the front-line setting first, and of course, that will come from data from the Phase 2 portion of TIGER1. Probably next on our list beyond TIGER1 and TIGER3 is not an adjuvant study, but combination studies, primarily in second-line patients to begin with. And those we will initiate shortly. So it's out there, but it's not something we're focused on immediately, Cory.

Bob Ai, Wallachbeth Capital.

The first one is, I remember back a few months, you mentioned the potential pondering with the PD-1 drug. And I thought you said you intended to give an update around year end, maybe similar time that the European meeting. Is that still the case, or is there any change since then?

Just to clarify, we said with an immunotherapy agent.

Right.

And our intent remains that over the course -- we hope at the Triple meeting, these collaborations take a while to put together sometimes. So either at the Triple meeting, or certainly within the next -- to your point, by the end at the year. So we remain on track for that.

Then the other one is about the 1686, and I look at TIGER2. I noticed that one of the criteria is trying to avoid the exacerbation of QT elongation. And I didn't see anywhere mentioned that sugar or glucose or hyperglycemia. Can you talk about -- share with us your thoughts on why it was not included? I understand, would think that for patients, diabetic patients, the one thing that's good is that because they're monitoring their blood level much more closely than nondiabetics. So maybe it's not an issue for them. But I don't know whether -- is there anything addressed that in the protocol?

I just want to be really clear. We do not exclude, do not exclude, patients with diabetes, to the point you made (multiple speakers)

That's what I noticed, was not included in the exclusion criteria.

No. Andrew, anything you want to add to that?

No. Simply that in the minority of patients who develop temporary drug-induced hyperglycemia, it's a very straightforward phenomenon that can be readily managed with a single oral agent. And therefore we've had no reason to exclude any patient from the trial based on pre-existing diabetes, for example.

And as you correctly said, they're actually very straight forward to manage. They just keep monitoring their sugars. And if there is a change in therapy required, it's pretty easy to institute. So we treat all comers, essentially, apart from the usual exclusionary criteria in clinical trials of patients who had very poor performance status, for example. But otherwise, these are very open and inclusive trials.

Terence Flynn, Goldman Sachs.

Two from me. In the past, I know you guys have talked about the potential that a metabolite of 1686 might be inhibiting the IGF pathway, and that could be driving the hyperglycemia, but it might also have a beneficial impact on efficacy. Just wondering if you guys have anything additional that you've learned over the past several months, either pre-clinically or clinically that you care to share? And then just on the OpEx run rate going into 2015, is this quarter a good number to think about, or is there going to be a pretty significant step-up, given the expansion of the TIGER program? Thanks.

Andrew, hold off a second on the IGF1R question, and we'll answer the OpEx.

Hi, Terence. It's Erle. Yes, as we look into 2015 overall compared to the run rate where we are, it will definitely go up. As you put out, we have clinical studies that are either just getting started now that will be much more mature next year. And then again, depending on the timing of submissions and preparations for a potential launch, we will have those kind of costs as well. The run rate you see now, it will increase significantly as we move into 2015 for both clinical trial activity, and again, assuming everything stays on plan as we expect, for launch preparation activities as well.

And Andrew, you want to talk about IGF1R?

I think I would just (inaudible) on, Pat. We will be talking about this in a little more detail at the EORTC meeting in two weeks. And obviously we've not put outside of the public domain. So I would just waiting until then.

Howard Liang, Leerink Partners.

Do you know the frequency of HR (inaudible) BRCA-ness? I suppose this will be based on cell-line data in other tumors, such as breast cancer or those that tradition have not been candidates for PARP inhibitors.

Andrew?

We can estimate that. We don't use cell-line data. What we use are public domain cancer genome data, such as the Cancer Genome Atlas. And that does present full genomic characterization of, as you know, typically 200, 300, 400 different patients with the particular tumor of interest. They include the necessary genetic data that allow us to make an assessment using our algorithmic approach as to what fraction of patients do have BRCA-ness, as well as BRCA mutations.

The caveat is that the vast majority of specimens for those databases are surgical resection specimens of newly diagnosed patients undergoing attempted curative surgery. And we know that tumors evolve during the course of therapy. And therefore the original specimen and the tumor that one is dealing with when you're treating a late-stage patients whose is treatment-experienced and is often three, four, five years out from their original surgery, that specimen typically is not the same as the original surgical resection specimen.

We've been learning from our studies in our clinical programs where we've been doing fresh biopsies as well as collecting our carbon material that there is some differences that are very germane. And obviously those are proprietary to us because we are the only institute that we are aware of that is doing the work to collect fresh biopsies and also obtain the archival specimens. And understand how signatures evolve over time and over the courses of treatment.

So we've done this work, obviously extensively in ovarian, where we are now repeatedly prospectively testing the algorithm. We have done in-silica work in other tumor types, and I won't give you the boring laundry list, but suffice to say there is a BRCA-ness population that is identifiable in other tumor types. And we're discussing ways to test our hypotheses clinically prospectively using in particular some collaborations with academic networks, for example. [And I'm] sure we will disclose those once we've made concrete progress on agreements. But it is an area of active interest for us right now.

For TIGER1, can you discuss the design with regard to powering, whether this will be a adaptive design? Or would this be based on the results of Phase 2 portion of the trial?

Go ahead, Andrew.

Yes. You phrased those as if they're alternatives, but we are actually doing an adaptive design based upon the Phase 2 data. So it's an adaptive sample size reassessment whereby we set off believing that the Phase 3 study should initially be quite large, obviously because we don't know any better. Then we will complete the Phase 2 part of the study. We will continue enrolling into the Phase 3.

So from the site point of view, this is a seamless Phase 2/3 study. But we obviously will be collected the Phase 2 data. And at various points we will then analyze the Phase 2 data plus early stage Phase 3 data, such as they are. And we will make an assessment as to the observed efficacy of rociletinib versus erlotinib.

Based upon those data, we can then resize the Phase 3 study so that we're neither overpowered nor underpowered to detect the appropriate treatment effect, and end up with a successful Phase 3. Obviously it's the most efficient way that one can run a study, given as of today, none of us know how good these drugs will be in a head-to-head against sort of first-generation TKIs in a front-line setting.

And so you have two choices. You either guess as to what you think the treatment effect is going to be. Or you take observed data and you adapt your Phase 3 size accordingly/ And we've taken the latter approach.

And just to be clear, and I know Andrew meant this. But to be clear, that sizing decision would be based on rules established and then applied by an IDMC. We will not have any visibility to what's happening in the Phase 3. We will be completely blinded.

That means that we will -- it would not be communicated to us?

The Phase 2 data will be, the Phase 3 will not.

Okay.

The Phase 2, we will provide you an update and then you can form your opinion about the data from the Phase 2 portion of the study. But obviously once the veil goes down on the Phase 3, then we will just report out at some point data from that study.

Do you have an estimate on the timing of the Phase 2 data?

It will come all, as I mentioned earlier, I think the first presentation of that is likely to be about a year from now at WCLC in Denver.

With no further questions, I would like to turn the call back over to Breanna Burkart for closing remarks.

Thank you, Crystal. We thank each of you for your interest in Clovis Oncology today. If you have any follow-up questions, please call me at 303-625-5023. This call can be accessed via replay of our webcast on our website beginning in about one hour, and will be available for 30 days. Thank you again for your time. Bye-bye.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a great day.