Clovis Oncology Inc (CLVS) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Clovis Oncology second-quarter 2015 earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. I would like to hand the conference over to Anna Sussman, Senior Director Investor Relations. Please go ahead.

Thank you, Karen Good afternoon, everyone. Welcome to the Clovis Oncology second-quarter 2015 conference call. You should have received the news release announcing our second-quarter financial results. If not, it is available on our website.

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 archives 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 second quarter and provide an update on our clinical development programs. Then Erle Mast, Clovis' Chief Financial Officer, will cover the financial results for the quarter in more detail. Patrick will make a few closing remarks and then we'll open the call for Q&A, for which Dr. Lindsey Rolfe, our Chief Medical Officer; Gillian Ivers-Read, our Chief Regulatory Officer; and Steve Hoerter, our Chief Commercial Officer, will 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 Act, 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 assumes no obligation to update or revise any forward-looking statement.

Now I'll turn the call over to Patrick Mahaffy.

Thanks, Anna. Welcome, everybody. Thanks for joining us this afternoon. It's really an exciting time here.

We've completed regulatory submissions on schedule for rociletinib in the US and Europe and we're preparing for the potential US commercial launch for rociletinib before year end. We also established a five-year cooperative research and development agreement, known as CRADA with the NCI to explore rociletinib anti-cancer combination therapies which will complement our own combination study plans.

We're also making great progress with rucaparib. In April we received Breakthrough Therapy designation for rucaparib for advanced mutant BRCA ovarian cancer. And at ASCO this year we provided an update of data in both mutant BRCA as well as BRCA-like patients, which I'll describe shortly.

Importantly, with the $298 million equity offering we completed in July, we're well-capitalized to pursue our development and commercial objectives. With Breakthrough Therapy designation in place for two of the three products in our pipeline, and the potential US approvals for rociletinib by year-end 2015 and rucaparib in 2016, we're clearly accelerating toward becoming a commercial biopharmaceutical company.

Before I start, I want to just say how happy I am to welcome Dr. Lindsey Rolfe as our new Chief Medical Officer responsible for preclinical and clinical development and pharmacovigilance at Clovis. Lindsey, the slow-motion six-year coup has finally succeeded. So, I think it's awesome that you've joined us in this role now. She's been with a six years, almost from the beginning.

I'll also note that with the NDA filing as planned, Andrew has moved on to his new endeavor. We're really excited for Andrew. We've loved working with him here. I have a feeling he's spoken to many of you about his new endeavor, as well. It's exciting for him and we wish him absolutely all the best.

Let me start with rociletinib. As mentioned, our regulatory filings took place in the US and Europe before the end of July. There is a validation period before both applications are formally accepted for review. And we anticipate receiving the validations for these filings during the third quarter.

We're also pleased that in July the EMA granted rociletinib accelerated assessment, which can reduce the EMA review time by approximately three months. QIAGEN's supplemental PMA filing for our companion diagnostic for T790M-positive mutant EGFR non-small cell lung cancer is expected to be submitted in the next few days. And we expect that will be reviewed in parallel with our NDA submission.

I'd like to take a moment to recognize the team here that worked so tirelessly to submit these simultaneous filings. It was a huge effort by our pretty small organization and our clinical collaborators. And I'm proud and impressed that we were able to go from IND to NDA in just over three years, ahead of our most optimistic expectations when we started this program.

Our submissions include data from two single-arm studies, TIGER-X and TIGER-2. These data sets have continued to demonstrate compelling and consistent activity and tolerability in patients with T790M-positive mutant EGFR non-small cell lung cancer.

I'd like to take a moment to review some of the specific characteristics of our data set. Our data are derived primarily from Western patients who are heavily pretreated and had very advanced disease. As reported at ASCO, patients at the 500 milligram BID dose enrolled in our studies had received a median of three prior therapies, 74% had progressed on an immediate prior EGFR TKI, and 40% had a history of brain metastases. 84% of these patients were treated at US institutions, primarily academic institutions.

These patients, we believe, our representative of the heavily pretreated patients typically seen at US academic cancer centers, and, given their advanced disease, represent a real test for a novel therapeutic. Our data also show that rociletinib treatment is not associated with the cutaneous toxicities which are the hallmark of wild type EGFR inhibition, such as acneiform rash, stomatitis and paronychia. All of these can significantly impact patient's quality of life, result in treatment discontinuation, and cause patient distress, which may be especially an issue for patients transitioning to a subsequent treatment following front-line therapy where these side effects occur frequently.

Overall, rociletinib is well-tolerated. The most frequent adverse reactions or lab abnormalities reported were diarrhea, nausea, fatigue, QTc prolongation and hyperglycemia. Importantly, the only grade 3 adverse reaction or lab abnormality reported in greater than 5% of patients was hyperglycemia. As a result, we believe our data demonstrate the safety and activity of rociletinib in a uniquely relevant patient population.

Interestingly, as we have discussed previously, we've shown encouraging response rates in the centrally confirmed T790M-negative population, as well. This activity may be related to the anti-IGFR activity from a human metabolite of rociletinib which, of course, is also the cause of the hyperglycemia we sometimes see.

Multiple studies in recent years, most recently by Crystal et al in Science, have been published, demonstrating that the IGF1R pathway plays a role in the development of resistance to EGFR inhibitors and to other targeted therapies. This unexpected but potentially very meaningful finding is now being explored in our TIGER-2 and TIGER-3 studies where we are actively enrolling both T790M-negative and T790M-positive patients.

This brings me briefly to our ongoing development program for rociletinib. We have three global registration studies enrolling in the TIGER program in EGFR mutant non-small cell lung cancer patients.

#TIGER-1, a randomized Phase 2/3 global registration study versus erlotinib in newly-diagnosed patients; TIGER-2, a single-arm study in second-line patients directly after progression on their first and only TKI therapy. Importantly, TIGER-2 includes both T790M-positive and T790M-negative patient cohorts, and includes sites in the US, Europe and Asia. TIGER-3, a randomized comparative study versus chemotherapy in both T790M-positive and T790M-negative patients with acquired TKI resistance.

The Phase 1 study of rociletinib in Japan has completed enrollment and TIGER-J a Phase 2 study in Japanese patients, as agreed upon with the Japanese regulatory authorities, will initiate in the fourth quarter and will examine activity in both T790M-negative and T790M- positive patients.

Finally, as we have discussed, having demonstrated the monotherapy activity of rociletinib, we are now moving forward with a series of combination studies to see if these results can be approved improved upon. We expect that three of these combinations with inhibitors of PD-L1, PD-1, and MEK will initiate in the third or fourth quarter of 2015.

We also anticipate additional combination studies beginning in 2016. And we'll provide details on additional combination studies as we have agreements and protocols in place.

To facilitate and potentially accelerate this exploration, we signed a cooperative research and development agreement, or CRADA, during the second quarter with the NCI to evaluate rociletinib in combination with other anti-cancer therapies over the next five years. This research will be conducted through the Cancer Therapy Evaluation Program, or CTEP, of the NCI. We were honored that rociletinib was chosen to participate in this program.

Importantly, we expect our next update of clinical data to take place at the World Lung meeting in Denver in September. Planned presentations include updated data in the T790M-negative patients, and patients with CNS involvement and many preclinical combinations.

As you know and probably have seen, we just presented a full update of our data set at ASCO. We do not plan to provide full clinical data updates from T790M-positive patients in TIGER-X or TIGER-2 trials during the rociletinib regulatory review process, and thus they will not be there at the World Lung meeting.

Moving to our commercial plans for rociletinib, we continue to prepare for potential US launch by year end. Our marketing, market access, sales leadership and the US MSL teams are in place. Recruiting the leadership of our field sales organization has also completed with that team in place. And we've been extremely pleased with the quality of candidates who've joined us to build a world-class oncology commercial organization here at Clovis. We are now finalizing the recruitment of our sales force and expect to have the full US commercial team, including that sales force, in place next month.

Turning now to our PARP inhibitor, rucaparib. It has also been a great time for rucaparib. We've shown very encouraging activity in a substantial number of ovarian cancer patients, including both germline and somatic mutant BRCA patients, and also in patients whose tumors have other DNA repair deficiencies that cause them to behave similarly to tumors with BRCA mutations. I'll refer to these patients as BRCA-like or those with a BRCA-like signature.

In recognition of rucaparib's activity, in April we received Breakthrough Therapy designation from the FDA for rucaparib as monotherapy treatment of advanced ovarian cancer in patients with BRCA-mutated tumors, inclusive of both germline and somatic BRCA mutations. Rucaparib is the only PARP inhibitor on the market or in development to have received Breakthrough Therapy designation. And to our knowledge, it is the only drug under development for ovarian cancer that has received Breakthrough Therapy designation.

As I noted earlier, we presented updated rucaparib data from two Phase 2 studies in ovarian cancer, ARIEL2 and Study 10, at ASCO a month or so ago. Highlights from these presentations include data from ARIEL2 in platinum-sensitive BRCA-mutant patients demonstrated an overall RECIST response rate of 69%, a disease control rate of 94%, and a median progression-free survival of 9.4 months. Complete responses were observed in 10% of these patients.

Data from ARIEL2 in patients with the BRCA-like signature demonstrated a RECIST ORR of 30%, disease control rate of 73%, and a median progression-free survival of 7.1 months. Further demonstrating the ability of our BRCA-like assay to predict outcomes with rucaparib, only 13% of biomarker-negative patients responded to rucaparib therapy. Overall, approximately 60% of the 204 patients in ARIEL2 were either BRCA-mutant or had BRCA-like tumors.

The response rate for rucaparib was surprisingly consistent in mutant BRCA patients, even for patients who had received multiple prior lines of therapy. Importantly, in 23 BRCA-mutant patients treated with at least three prior lines of chemotherapy, a 61% RECIST response rate with a median duration of response greater than 11 months was observed. What is particularly encouraging in this very advanced population, complete responses were observed in 13% of these patients. These data are especially relevant as it is the population we are pursuing for our initial indication for rucaparib.

These are the highest response rates ever seen in a meaningfully sized mutant BRCA ovarian cancer patient population and the only evidence of activity in a prospectively defined BRCA-like population for any PARP inhibitor. Rucaparib is also well-tolerated with a manageable safety profile. The grade 3/4 treatment related adverse events observed in greater than 15% of patients treated with the recommended 600 mg BID dose were anemia or decreased hemoglobin and fatigue, asthenia and anemia.

Rucaparib is clearly emerging as a differentiated drug that is the subject of a very differentiated development strategy. We're very encouraged by our results, which demonstrate that identification of a tumor BRCA-like signature may identify a broader but still selected population of ovarian cancer patients likely to benefit from rucaparib therapy. No targeted therapies exist today for these patients with the BRCA-like signature. And we are enthusiastic about rucaparib's observed activity in this selected patient population.

Let me briefly now review the rucaparib development program. As we announced last quarter, we expanded ARIEL2 into what is now a registration study for the treatment of ovarian cancer patients who failed at least three prior therapies. We're adding approximately 300 patients into the ARIEL2 extension. And data from the study are expected to serve as the basis of an NDA submission in mid-2016. Our clinicians are very enthusiastic about the data we reported at ASCO, and that is probably influencing the very encouraging enrollment we're seeing in the study.

As an important reminder, the ARIEL2 study prospectively assesses and correlates rucaparib efficacy with the molecular characteristics of each patient's tumor, resulting in three pre-specified subgroups of ovarian cancer patients -- first, those with tumors with germline or somatic BRCA mutations; second, those with the BRCA-like signature we've just been discussing; and, third, biomarker-negative patients.

The ARIEL3 maintenance study continues to move forward and we expect to complete enrollment in the first quarter of 2016. As a reminder, ARIEL3 is a Phase 3 registration study comparing the effects of rucaparib versus placebo. The study will evaluate whether rucaparib, given as maintenance therapy in platinum-sensitive high-grade ovarian cancer patients, can extend the period of time for which a response to a prior chemotherapy is maintained. Efficacy will be assessed in a pre-specified step-down manner, first in tissue-mutant BRCA patients including somatic and germline BRCA-mutant patients, then in a larger group of patients with the BRCA-like signature, as defined and now validated in the ARIEL2 study, and, finally, in all randomized patients.

We are continuing our work with investigators and cooperative groups to explore rucaparib and other solid tumors where mutant BRCA and the BRCA-like signature may play a role. And we can utilize our uniquely validated BRCA-like assay, including exploratory work currently underway in breast and gastroesophageal cancers. We're also planning a study in prostate cancer.

The next update of rucaparib data will be at ECC ESMO in September in Vienna. Planned presentations include an update of the outcomes data from the ARIEL2 study, and the Phase 2 study 10in patients with germline BRCA mutations.

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

Lucitanib has previously demonstrated impressive response rates with manageable side effects in heavily pretreated patients with solid tumors. In 2014 we initiated two Clovis sponsored Phase 2 trials, including a US Phase 2 study in FGF-aberrant patients with advanced breast cancer and a global Phase 2 study in advanced lung cancer patients, also with FGF receptor aberrations. We continue to enroll patients in these studies and expect that the first real update for lucitanib will be data from the breast cancer study at the end of this year.

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

Thanks, Pat. Good afternoon, everyone. Our second-quarter 2015 financial results are included in this afternoon's press release and I'll review just some of the highlights of these results.

Our net loss attributable to common shareholders was $71.5 million, or $2.10 per share, for the second quarter of 2015, and $134.7 million or $3.96 per share for the first half of the year, compared to a net loss of $34.8 million, or $1.03 per share, and $65.5 million or $1.93 per share, for the comparable periods of 2014. The increase in our net loss was primarily due to increased investment in research and development activities in 2015, as well as the lack of milestone revenue in 2015 as compared to 2014.

Research and development expenses totaled $60.3 million for the second quarter of 2015 and $117.1 million for the first half of the year, compared to $28.4 million and $52.6 million for the comparable periods of 2014. And these increases are due to expanded enrollment in the TIGER-X and TIGER-2 studies for rociletinib and the ARIEL2 and ARIEL3 studies for rucaparib, as well as the initiation of the TIGER-1 and TIGER-3 studies, launch preparation activities for rociletinib, and higher personnel costs to support each of these activities.

General and administrative expenses totaled $7.2 million for the second quarter of 2015, and $14 million for the first half of the year. And that compared to $5.3 million and $10.6 million for the comparable periods of 2014. The year-over-year increases are primarily due to higher share-based compensation expense, increased personnel expenses and facility costs and higher professional service fees.

Our net cash burn from operations for the second quarter of 2015 was $57.2 million, and was $106.5 million for the first half of 2015. And as we've discussed on previous calls, we do expect that the quarterly cash burn will continue to increase throughout this year as enrollment in our clinical studies continues to grow and our launch preparation activities for rociletinib expand.

And we ended the second quarter with $377.6 million in cash and short-term investments. This does not include the $298 million that we raised in July through an offering of 4.1 million shares of our common stock.

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.

Okay. Thanks, Erle. A quick summary of some milestones. For rociletinib we intend to continue enrollment in the TIGER studies underway, and we'll commence TIGER-J in the combination studies discussed. Most importantly, we are finalizing recruitment of our sales force in preparing for a potential US product launch for rociletinib by the end of this year.

For rucaparib, we'll continue to enroll ARIEL2 and ARIEL3. We're excited about presenting the final ARIEL2 data in an oral presentation at ESMO in September. And, importantly, we continue to plan for a 2016 to the FDA for rucaparib treatment in ovarian cancer patients who failed three prior lines of therapy.

Finally, for lucitanib, continuing enrollment, and we expect the first update from the breast cancer study by the end of this year.

With that, thanks for joining us. We look forward to seeing many of you here in Colorado at the world Lung and at ESMO in Vienna in September. And I think we'll now open up the call for Q&A.

(Operator Instructions)

Terence Flynn, Goldman Sachs.

Just wondering, now that you submitted TIGER-2, can you give us any perspective just on the data relative to what we've seen with TIGER-X? I know you don't want to get into too many of the details but can you maybe just give us a high-level summary in terms of whether -- patient mix, efficacy, tolerability, and any comparison across the two studies? Thank you.

We see relatively consistent data from all of our studies. I'll remind you that some of the TIGER-2 data that was submitted was primarily supplemental data at 625 and higher doses. The primary dose we are seeking approval for is 500, and that all comes from TIGER-X and the data you saw at ASCO.

Okay. Thank you.

Charles Duncan, Piper Jaffray.

It's Roy in for Charles. A quick question on TIGER-J -- do you expect that to be registrational?

It is a component of a registrational study. It will also include data from the same data set that effectively is in our NDA and MAA. We are required, as all are, to run a specific study in Japanese-only patients. But we were really pleased that the PMDA was encouraging of us to enroll both T790M-posistive and T790M-negative patients in that Japanese-only study.

So, you don't expect to need additional studies after that? And when do you think that could readout?

A lot of it depends on when we start and how fast enrollment goes. I would expect that we'll use that data to submit for approval if not at the end of 2016 more likely early 2017 as the timing of our Japanese submission. Okay. And then do you guys have any target time lines for development in the rest of Asia? We will use the data from the NDA and MAA as the basis of submissions in several other territories, including South Korea, Taiwan -- I won't name them all but those are the two largest -- as the basis of our submissions. So, those submissions will likely go in prior to any Japanese submission.

Okay. Great. Thank you.

Gillian just said to me -- you could say it, too, Gill -- but it will likely be, they will go in after the US approval.

Okay. Great. Thanks.

Eric Criscuolo, Mizuho.

Just filling in for Peter tonight. On the CRADA that you have, can you maybe provide a little more detail as to what type of trials, what type of combos they might be looking at? And are the PD-L1 and the PD-1 combo trials that you had discussed previously, are those part of the CRADA?

They are not. The PD-L1, the PD-1 and the MEK inhibitors, it doesn't mean they couldn't become so over time. But the studies we've referenced in the past that will start in the third and fourth quarters with the PD-L1 and PD-1 and the MEK inhibitor are all studies that were underway and precede the establishment of that CRADA. The CRADA will initiate studies as early as the end of this year, possibly next year.

We will announce what those combos are, hopefully either at one of the fall meetings or at our next quarterly update. We have agreed with them. We actually have to agree before we say anything that we say something that's in a format that they agree. We just haven't done that yet. So, more to come, but they're exciting and not surprising combinations.

Great. Thank you. And then just on the PD-1 and the PD-L1 combo trials, do you have any insight into maybe the differences that you might see between the PD-1 versus the PD-L1 mechanism of action with your drug and maybe why one might work better versus the other?

That's a good question. I think the simple answer is no, there's not enough information out there with other molecules to lead us to believe that there will be a significant difference between one or the other. We're in exploratory mode here.

Okay. Great. Thank you.

(Operator Instructions)

Corey Kasimov, JPMorgan.

A couple for you on roci and one on lucitanib. For the update on the-negative patients at World Lung, how many more incremental patients should we expect to see there? And then, also, from a data standpoint, what's the latest thinking on when you might provide an initial update from the TIGER-1 frontline study?

As to the negatives, it will be -- I don't know the number, I think we presented on about 37 patients at ASCO. I would imagine in this update, in addition to a data set that includes those, it might have anywhere between 6 and 10 more patients, something along those lines. So, it's going to get into the 40s and a number that starts being, I think, not a small number but something that starts looking consistent and clear.

As to TIGER-1, we may try to find a way to provide something on response rate in the fall, but it's hard in the context of the presentations we have for TIGER-1. The only one we're really presenting is a trials-in-progress poster, and you're not allowed in trials-in-progress poster to provide data. So, I think it's more likely that any meaningful data would be available at ASCO.

In particular, Cory, there's no way we would have what everybody would like to see, and which is actually most relevant here, which is PFS data. It's just not mature enough. So, I wouldn't have high expectations for much on TIGER-1 in the fall but I would look to ASCO as a more realistic date.

Okay. And then another on roci -- as it relates to the potential pricing of the drug, how flexible do you think you need to be considering there's a chance that AZ could theoretically beat you to the market by a month or two?

I got taught at CEO school a thousand years ago I'm not supposed to talk about price prior to an approval. So, I'm probably not going to say that much. Obviously price is a concern. It's ever discussed in our industry., I think for targeted therapies that deliver these types of disease control rates and this type of response rate, it's a little bit different than a drug that might work in a fifth or less of the patients who are treated. I do not regard it to be likely that either we or AZ are going to use price as a basis of differentiation. There's plenty to differentiate drug that does not include price.

Okay. And then, lastly, on lucitanib -- I realize this isn't talked about nearly as much as rociletinib or rucaparib -- but with data coming up later this year, I assume at San Antonio Breast, can you just set the stage a little bit for what we might expect? What's the trial designed to show? And maybe what's the best comparator that's in the market today for that drug?

It's a randomized Phase 2 study, where patients were randomized between two doses of lucitanib. They are very advanced breast cancer patients in whom hormonal therapies have stopped working, so this is a later-stage population. Importantly, patients have to have abnormalities of the FGF axis. That's just what you'd expect based on what the drug does.

The primary endpoint is progression-free survival. The study's still enrolling so there certainly won't be a final data set. It will be a preliminary data set. But we hope to be able to show preliminary data on PFS in the initial cohort of patients.

Okay. That's helpful. Thank you very much for taking the questions.

Charles Duncan, Piper Jaffray.

Just a follow-up on Japan. Do you expect to announce the Phase 1 data and when might we see that?

There's not much to say about our Phase 1 data. Just to remind you, our data are remarkably consistent. It was a Phase 1 study, it was a dose escalation study.

It's a tiny Phase 1 study that went very much to plan.

We've never even considered. We've shared it with the investigators and the PMDA and everyone has encouraged us to move forward. There was nothing there. And the dose is the same.

All right. Very good. Thanks.

Okay. With that I think we'll wrap up the call for the day. We'd like to thank everyone for their interest in Clovis Oncology. If you have any follow-up questions you can reach me at 303-625-5022. This call can be accessed via replay of our webcast at www.clovisoncology.com beginning in about an hour. It will be available for 30 days. Appreciate your interest and time. Thank you and have a good evening.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a good day.