Cardiff Oncology Inc (CRDF) 2014 Q1 法說會逐字稿

Good day and welcome to the Trovagene first-quarter 2014 financial results conference call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Mr. Stephen Zaniboni, Chief Financial Officer of Trovagene. Mr. Zaniboni, the floor is yours, sir.

Thank you for joining us on our first quarter 2014 conference call. As most of you know, we're focused on developing and commercializing our precision cancer monitoring technology, which can inform oncologists and guide treatment decisions by determining a patient's mutational status and tracking therapeutic response and resistance over time.

We're in the process of expanding the body of clinical evidence supporting our urine-based cell-free DNA mutation monitoring system through collaborations with major cancer treatment centers and integrated healthcare networks.

This year, we expect that the benefits of our precision cancer monitoring technology will become more apparent in terms of its clinical utility and impact on patient outcomes. Our intellectual property estate protecting our technology is strong and growing and includes methods of extracting, purifying, preparing, and detecting cell-free DNA and RNA mutations in urine.

Before moving on, I must remind you of the risks inherent in our business and ask you to consider the following information regarding forward-looking statements. Statements in this call about the Company's expectations, applications of this technology, markets, launch of tests, and other statements that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on management's current beliefs, assumptions, estimates, and projections.

Actual results may differ materially from those projected in the forward-looking statements for various reasons, including risks associated with product and diagnostic test development, government regulation, market acceptance, limited commercial experience, dependency on key personnel, obtaining financing, and other factors discussed in the Company's periodic reports filed with the SEC.

With that said, the format of this call will be as follows. First, our Chief Executive Officer, Toni Schuh, will review the progress we have made year to date. Mark Erlander, our Chief Scientific Officer, will give an update on our clinical collaborations and data presentations at medical meetings.

And finally, I will summarize our financial results and review the Company's goals and objectives for the remainder of the year. A question-and-answer session will follow the call.

I am now pleased introduced Toni Schuh, Trovagene's Chief Executive Officer.

Thank you, Steve. Advancing additional oncogene mutation assays into our CLIA laboratory and developing clinical evidence around our precision cancer monitoring technology remain our highest priorities. In the first quarter, we made significant progress on our goals.

Our most important news since the beginning of this year is the release of our first multiplex oncogene mutation assay, integrating the Company's proprietary sample preparation and primer technologies with next-generation sequencing as a mutation detection platform.

In addition, we've presented important clinical data at the American Association for Cancer Research meeting in April and announced two strategic collaborations with major integrated healthcare networks, US Oncology and Catholic Health Initiatives. Our KRAS mutation assay is the first application of our precision cancer monitoring platform that uses NGS.

And we expect to leverage next-gen technology to scale the development of our oncogene mutation assay and assay panel programs. As a result, we plan to expand our platform to cover broader range of mutations before the end of this year.

The poster that we presented at the AACR meeting in April was the first of a series of clinical study results that we expect to release throughout the year. The initial study, conducted by MD Anderson Cancer Center, demonstrated 88% concordance between a patient's biopsy and the ability of our precision cancer monitoring technology to identify BRAF V600E mutations at any time point.

It's important to note that this was an all comer study, with patients that had many different tumor types, multiple different treatment regimens, and the timing of urine sample collection was variable from patient to patient. We believe that the 88% concordance is impressive and can be further improved in our ongoing studies, which control for the timing of patient sampling and other study design elements.

Our clinical collaboration with US Oncology is focused on detecting and quantifying KRAS mutations to improve the care of metastatic pancreatic cancer patients, particularly when other methods to track those patients and the treatment progress falls short. As many of you know, US Oncology is owned by McKesson and is one of the largest networks of integrated community-based oncology practices in the country.

The collaboration that we recently announced with Catholic Health Initiatives Center for Translational Research was another key milestone, particularly because clinical studies will begin shortly and execution on sample collection and study coordination will be handled by a very capable organization within the CHI system.

The important element of this collaboration is that validation of our precision cancer monitoring platform could lead to commercial implementation within the large Catholic Health hospital system. CHI is the fifth largest integrated healthcare network in the country and provides care to about 22,000 cancer patients per year within its 90 hospitals.

We believe that to succeed at improving the standard of care for cancer treatment, strong clinical evidence and physician experience must be developed to support broad adoption of our technology in the US and by international healthcare systems. Our collaborations with major cancer centers like MD Anderson and Sloan-Kettering as well as large integrated healthcare networks like US Oncology and Catholic Health demonstrate that we are making great progress in this regard.

We now have seven ongoing clinical programs. Executing on our current collaborations and entering into additional agreements remain our top priorities at Trovagene.

As we approach ASCO, the largest oncology meeting of the year, we expect to present data that can help us gain additional attraction in the clinical community. Our Chief Scientific Officer, Dr. Mark Erlander, will review clinical results from the AACR meeting and will also provide insight into studies that could report out later this year.

I am proud of the accomplishments we and our clinic collaborators have achieved so far and I believe that Trovagene's molecular diagnostic platform is positioned to lead the industry in cancer monitoring by tracking cell-free DNA mutations in a completely noninvasive liquid biopsy. We remain focused on the execution of our business plan and are dedicated to helping oncologists to improve the care that they deliver to the cancer patients.

With that, I'll turn the call over to Dr. Erlander.

Thank you, Toni. Trovagene's objective is to demonstrate with our precision cancer monitoring technology the clinical utility of noninvasive near real-time detection and monitoring of oncogene mutations for any tumor type. We continue to implement a clinical strategy that is based on our collaborations with key opinion makers, integrated healthcare networks, and leading pharmaceutical and biotechnology companies.

With these collaborations, we seek to further demonstrate concordance of mutational status between our urine-based diagnostics and tissue biopsy. Further, we also seek to determine responsiveness and potential resistance to therapy by monitoring these patients longitudinally -- that is, over time.

Our diagnostic platform is being designed to provide clinically important information that is beyond the current standard of care, which primarily relies on repeated imaging. In addition to our urine-based BRAF V600E and 7-plex KRAS applications, we are -- which are available to our CLIA certified, CAP accredited high complexity clinical lab -- we currently have 10 active oncogene mutation asset programs in our pipeline, each of which is planned to be transferred into our CLIA lab and become available to clinicians when validation is complete.

Our plan is to develop these single mutation assays as well as several assay panels for the multiple mutations associated with certain tumor types. As Toni previously mentioned, developing our portfolio of assays and panels utilizing next-generation sequencing is highly scalable, and this should allow us to broaden the coverage of oncogene mutations with our precision cancer monitoring platform later this year.

As Trovagene moves forward with several clinical programs in parallel, we recognize that physicians are highly appreciative of the clinical value that our cancer monitoring platform offers. For instance, our collaborators at MD Anderson saw an opportunity to use our BRAF V600E mutation assay in a group of patients with histiocytic diseases, including Erdheim-Chester disease and Langerhans cell histiocytosis, or LCH.

More than 50% of these patients with these histiocytic diseases harbor BRAF mutations. And our collaborators, on their own, began to test patients with our assays. In as many as 60% of histiocytic patients, mutational status is difficult, if not impossible, to detect in a tissue sample. Additionally, most of those diagnosed with LCH are young children.

Because of these challenges, physicians felt that our urine-based BRAF mutation assay could provide a robust solution for the diagnosis and monitoring of these patients for treatment response. These clinicians are investigating our technology in histiocytic patients and while the study is still ongoing in multiple centers, we expect to report clinical data this year demonstrating the utility of our precision cancer monitoring platform in this life-threatening group of diseases.

We believe that strong performance of our assay in this patient population has potential to become the first demonstration of clinical utility in a specific indication. We believe that proving urine-based detection of mutational status in this and in other studies will encourage adoption of our technology in the clinical practice.

With respect to data recently presented at the AACR meeting in April, our collaborator, Dr. Filip Janku from MD Anderson, demonstrated a positive correlation between BRAF mutation monitoring and treatment response using our technology. The 88% concordance between biopsy and our urine-based BRAF V600E assay at any time point showed once again that our assay is highly sensitive for detecting the target mutation for a given patient. And a significant correlation between treatment response and V600E mutation levels in this study also supports favorable clinical utility with our technology.

The results thus far validate our platform and the ability to detect mutations of interest in urine samples with high sensitivity for the purposes of monitoring cancer treatment and response. We remain excited about the data we are developing in our ongoing clinical programs.

And with the ASCO conference beginning later this month, we expect to have a presence at the meeting with two abstracts accepted. Once these study results have been presented, we will update the investment community on the data and their importance.

Additionally, we were recently notified that one of our clinical manuscripts has been accepted for publication in a peer-reviewed journal and two additional manuscripts are tracking for submission later this year. We believe that these papers all have the potential for publication for year end, which should help drive awareness and uptake of our available oncogene mutations monitoring assays.

Thanks for your attention. I will now turn the call over to Steve Zaniboni to present the financial results for the recent period.

Thanks, Mark. Trovagene's financial results for the first quarter are as follows. For the three months ending March 31, 2014, Trovagene reported a net loss of $3.2 million or $0.17 per share as compared to a net loss of $1.1 million or $0.07 per share for the three months ended March 31, 2013.

Operating expenses were $3.4 million for 2014's first quarter as compared to $2.5 million for the same period in 2013. Operating costs include non-cash expenses related to stock-based compensation of $600,000 and $500,000 in the respective periods.

Also impacting the net loss was a non-cash change in the fair value of derivative instruments. For the three months ended March 31, 2014, the change resulted in a gain of $33,000 as compared to a gain of $1.3 million for the same period in 2013. The net cash used in the first quarter of 2014 was $2.9 million.

Shares of common stock outstanding used to calculate per-share results increased 18.9 million shares from 15.5 million shares on March 31, 2013. On March 31, 2014, Trovagene had cash and cash equivalents of $22.9 million compared to $25.8 million on December 31, 2013. We believe that our current cash position will enable us to meet our operating needs into 2015.

For the remainder of 2014, our goals and objectives are as follows: conduct additional clinical studies at major oncology centers and through collaborations with integrated health networks; present and publish clinical results for studies using Trovagene's precision cancer monitoring platform as they become available; complete CLIA development and release additional urine-based solutions for the detection and monitoring of multiple clinically actionable oncogene mutations in parallel; enter into additional R&D collaborations with pharmaceutical companies; and expand and enter into new partnerships with strategic diagnostic and life science companies.

In conclusion, Trovagene is well positioned to leverage its investment in its intellectual property, scientific research, and collaborations to build a better clinical pathway for cancer monitoring. We believe that upcoming data presentations at medical conferences and publications in peer-reviewed journals should begin to drive commercial adoption of our technology later this year.

This concludes our prepared remarks. Operator, we are now ready for the question-and-answer session.

(Operator Instructions) Sung Ji Nam, Cantor.

Was wondering if you could talk about -- now that you have several partnerships, as you kind of further your efforts in terms of clinical validation, how you're thinking about potential standardization of the -- Trovagene's technology as a monitoring tool?

Meaning, are there -- are your partners establishing different endpoints or some sort of cutoffs or anything like that that they're looking for or -- I'm just trying to get a sense of as you're developing and validating and conducting clinical studies, how we should think about how this test might be standardized kind of in a routine clinical setting, if you will.

Sung Ji, this is Toni, so if I may attempt to answer that first and then Mark, you may be able to put color on this. But because monitoring mutation signals in cell-free DNA is a pretty recent ability and people know, frankly, little at this point in time about the kinetics of cancer in a patient as they are treated, the key questions will really be how often and at what point in times you want to sample a patient. And again, that has not been a question in the past, when all you had was a biopsy that you obtained prior to, for example, surgical removal of a cancer.

You did not need to think much about timing of additional samples. And so when you're relying on blood samples, you are also somewhat limited in frequency. But as you realize that urine, as a sample, offers you virtually complete freedom with regard to sampling -- when, how often, how much -- you realize that this is really what you want to optimize in order to get the best possible idea of the qualitative and quantitative changes of that mutational signal over time.

So that's what we are much focused on. Mark, can --

[Duvai], I think that as you know, we have a clinical laboratory -- a CLIA lab. And for our assays -- and this is not unlike any other clinical laboratory -- for an assay, you have a cut point for detection.

In this case, as Tony said, there is a qualitative and a quantitative aspect. There is a qualitative, which is detection, no detection of a particular mutation, and then there's quantitative, which would be relative within a given patient for the relative change.

Now the standardization that you're talking about -- I think it's a great question, because I think today -- as we sit here today, most -- the way that's normally reported is really a percent of a mutation over a denominator of wild type DNA that's present in the patient's cell-free DNA. So I think that that's -- right now, that's really the way that that's being done. This could change, but I think right now, that's really the accepted standardization of how we report a mutation in cell-free DNA.

Okay I just -- just a clarification, though. As you guys publish more data throughout the year, you were talking about additional -- there could be additional customers and further adoption of the tests. I'm just trying to get a sense of are you referring to more partnerships or if there is clinical adoption out there, what kind of protocol would they be using based on the results you are publishing?

Well, so, we are publishing these results because of -- obviously, we want to drive clinical adoption and want to provide to the clinicians the required data that are necessary to understand how and when to use this test and to also justify it.

And then as far as standards are concerned, all we need from the clinician is at the point in time in sampling a certain minimum volume of urine, and the entire sample processing happens at our site.

And there will be no other limitations. There will be no other specifications beyond that. I'm not sure -- did we answer your question or are we not quite hitting it?

No, that's helpful. And then I guess in terms of the 10 mutation assays in the pipeline, I had thought that you would -- I just -- in terms of pacing of the clinical launches, I thought that they would happen at a faster rate, if you will. I was wondering kind of in terms of timing what your strategy might be around launching these additional assays throughout -- for the rest of the year.

First of all, we view this not so much as launching individual assays. We view this as launching a platform that can monitor the mutations that present themselves in a given patient. Because for certain aspects -- for example, to track tumor dynamics -- any mutation provides you with the same type of information to a degree, so we look at that as a platform.

Then the big hurdle for us was can we transition our sample preparation and our pre-amplification approach to next-generation sequencing, which would mean that we then can very aggressively multiplex the detection asset of the assay and that we would also have improved quantitative performance. That's what we have achieved with the 7-plex KRAS assay now. And now we are literally in parallel developing a whole family of primer sets for the sample pre-amplifications.

So we're not looking at this as staging one test to release after the next. We are really -- we have demonstrated that the platform can be successfully combined with next-gen sequencing and now we want to broaden it as fast as possible to essentially both mutations that are known today as having predictive and prognostic qualities. And we want to be very broad in our coverage by year end. Mark, maybe --

I don't have anything to further add. That's -- the issue is really building that platform, initially, of -- in using an NGS approach.

Just a follow-up then. As you are cultivating new partnerships, are your partners -- do they have access to these other assays as well or are they interested in utilizing those assays? It's not just the ones that you have clinically available currently?

They do have access and they are interested in using this. And again, when you look at a mutation, there are two pieces of information that are very important. First is quantitative changes that pertain to tumor dynamics. And for that piece of information, mutations are largely interchangeable.

The second piece -- the second question is the emergence of mutations in a patient that are either indicating resistance to current treatment or that are suggesting that another treatment option might now be advised because it's more promising that this will produce a response. So only for the latter, the specific mutation assay is critical.

For the former, you could say any mutation, even mutations that are biologically not understood today, would be interesting candidates to track tumor dynamics. So as we now expand to specific mutations, such as T790 and the like, of course, they are the specific treatment predictive aspects are driving the clinical interest in the mutation. And yes, these assays are available to clinical studies and are available in clinical studies and these clinical studies are part of the validation process.

I think one thing I would say is that our approach, as you know, has been really to go after what we consider to be -- what is considered in the community as the actionable biomarkers. And even with BRAF and now KRAS and as we now expand this whole portfolio with other mutations to an NGS approach, there's quite a bit of interest simply because these are such actionable biomarkers.

So we have -- and in the BRAF we have -- we've been talking about histiocytic diseases, but we have multiple collaborations in melanoma and colorectal and even lung to even look at some of these, because they are actionable.

And so, I think that that's part of it as well. On the pharmaceutical side or biotech side, they have interest in what we're already doing. They, of course, have some of their own biomarkers they are interested in and discussing with us, so there's actually -- there's a couple of different things going on with those conversations.

And Sung Ji, maybe I should make one comment. Why in this context next-generation sequencing was so important for us. In very simple terms -- when you design the PCR assay, be the conventional PCR assay or digital PCR assay, you have to validate the assay for specificity, because the analytical readout is a nonspecific readout -- it's just a color, if you want -- while next-generation sequencing gets you a specific sequence result.

So from the specificity aspect, next-generation sequencing as a detection platform is vastly easier to handle and just allows you to ramp-up this assay design capacity significantly. And so -- and it's a way -- we look at it as an individual mutation assay as just an application of the platform, right. They all run under the same analytical conditions. Everything is standardized. The only thing that varies is the primary care.

Okay, great, thank you so much for taking my questions.

Yi Chen, Aegis Capital.

My first question is could you give us some color on the timeline for completion of validating clinical studies?

Well, yes, the timeline is 2014. I think it's actually on our website. We actually show these things, but it's a continuum of how assays that are going to be coming out based on -- as Toni was mentioning, our NGS platform. And so we have a series of those assays that are going to be developed and offered in our CLIA lab throughout the end -- to end of 2014 and also into 2015, as well.

But to be specific for 2014, we expect, for example, release of clinical study results -- two sets of data -- to be released at ASCO. We expect this year, three peer-reviewed publications to be published for -- the first manuscript has actually been already accepted for publication and two more are in preparation, so we expect in 2014 the release of a first set of clinical validation studies that we consider suitable to support adoption of these assays in clinical practice.

Okay. And second question is can you comment on the overall state of the molecular diagnostic landscape? Specifically, do you believe that integrated testing modalities, such as foundation medicines, are better or do you think that single test for single disease model is better, such as cancer genetics or Genomic Health?

So maybe I try first and then Mark, you can give some color on that. This, of course, depends very much on the clinical question that you want to answer. If you take a test like Oncotide or Genomic Health, it's a very specific clinical situation.

You have a breast cancer patient post surgery and you have an intermediary classified tumor. And now you have to make a decision whether you want to give this patient chemotherapy or not. So when you want to answer such a specific clinical question, I do not really see how you would be able to answer this without developing a very specific assay.

On the other hand, foundation medicine is entirely built on the realization of the last decade that cancer is essentially a disease of DNA and that the common driver of all cancers are mutations and other genomic changes that are activating certain genes that are essentially driver genes of that cancer. So that is a completely different perspective.

You come to this patient and ask what are the genomic drivers of your cancer? That you then start with a very broad perspective and say, I sequenced 400 or 500 or 300 oncogenes to see what is driving that patient. It's only obvious. So I think these two things coexist.

The question is now in the nuance. How do you implement this in clinical practice? For example, if I have this initial perspective so broad that I will obtain information on mutations that are today not therapy guiding. You could have an argument about whether that is helpful at this point in time.

As a scientist or as a biologist, you always say well, I may not understand that piece of information now; I may understand it at a later point in time, and that's why it's good to have it.

From a pragmatic clinical point of view and from the point of view of cost, you may say well, kind of no. I want to obtain that information when it is established that I can understand that. So that's where the negotiation goes.

And we -- in our view, we are trying to stick with clinical pragmatism, because we believe the competition will be clinical. We say okay, if a patient -- if certain mutations have been confirmed in resected tumor material or in a biopsy, then that's certain that it's interesting to track those mutations in that patient.

And also the type of cancer the patient has will educate us about certain other mutations that you want to be aware of, because they either inform you of resistance or inform you of other treatment options and -- or they are typical for that type of cancer and not so typical for others. So we try to be more in this space.

And our argument is well, as you manage that patient over time, do not optimize so much the width of the picture at one point in time, obtain a more focused picture over time. So that your information richness comes from the qualitative and quantitative changes over time.

And that's, of course, why a cell-free DNA is a superb analyte, because the dynamic changes of cell-free DNA that you observe in a patient's urine -- and, of course, also blood -- they are real time. These are DNA signals from cell death that happened within the 24 hours prior to you analyzing it.

So I guess that was a very long answer to a very pointed question. The answer that I would make that an appointed answer is it depends on the clinical situation. We all have to realize that these tests have to compete based on their clinical benefit, not based on their technological attractiveness.

Okay, thank you.

(Operator Instructions) Well, with no further questions at this time, we will go ahead and conclude the conference call. We thank you for attending today's presentation. At this time, you may disconnect your lines. Thank you and take care, everyone.

Thank you.