Curis Inc (CRIS) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2010 Curis earnings conference call. My name is Chris, and I will be your operator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to our host for today, Mr. Mike Gray, Chief Financial Officer and Chief Operating Officer. Please proceed.

Okay. Thanks, Chris. Good morning and thanks for joining us, everybody. Today we will provide a corporate update and discuss our second-quarter 2010 financial results.

Before we begin, as always, I'd like to advise you this conference call contains forward-looking statements regarding Curis' future expectations, plans and prospects within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the expected progress of our Phase I clinical development candidate, CUDC-101, and our timetable for selecting an additional development candidate from our targeted cancer programs; statements regarding our and our collaborators' expectations concerning the further development of our hedgehog pathway inhibitor program under collaboration with Genentech and Roche; as well as our Hsp90 technologies that are licensed to Debiopharm, including the timetable for clinical trial design, regulatory filings and other clinical development milestones under those programs, and finally, our expected 2010 R&D expense and year-end cash position.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including risks relating to our ability to successfully advance the research and clinical development of our targeted cancer programs, including CUDC-101, Genentech's ability to successfully advance clinical trials of GDC-0449, and Debiopharm's ability to progress Debio 0932 through Phase I clinical testing and beyond; competitive pressures; our ability to maintain our proprietary rights; our ability to successfully continue our collaborations with Genentech and Debiopharm, as well as to enter into new collaborations on favorable terms, if at all; unplanned operating expenses; our need to raise additional funds to finance our operations; and other risk factors described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and in other reports that we periodically file with the SEC.

We caution you that we are making these forward-looking statements as of today, and that we may not update any of these statements even if events and developments subsequent to the date of this call cause these estimates and expectations to change.

I would like to now introduce Dan Passeri, Curis' President and Chief Executive Officer, who will discuss our corporate highlights and will provide an update on our pipeline. Following Dan's remarks, I will return to review our financial results for the second quarter of 2010, and then we will open it up for Q&A. Dan?

Thanks, Mike. Good morning and thank you for joining us today.

Second quarter of 2010 has been a challenging period for Curis. As we previously announced, our collaborator, Genentech, recently advised us that its Phase II clinical trial with GDC-0449, which is a first-in-class hedgehog pathway inhibitor in metastatic colorectal cancer, failed to meet the study's primary endpoint of extending progression-free survival from randomization to disease progression or death in study patients who received GDC-0449 in addition to the current standard of care, when compared to those patients that received only the current standard of care treatment.

As we're all aware, drug development is a highly risky and uncertain endeavor. And while we were certainly very disappointed by these results, we remain hopeful that the clinical development strategy designed by Genentech and Roche will clarify a path forward for GDC-0449.

Genentech and Roche designed the clinical development program for 0449 to explore several distinct mechanisms of action and tumor types in order to get a better understanding of the drug's potential applications.

We are very pleased to have a partner with the development acumen and financial capacity and capabilities of Genentech to provide for additional shots on goal, so to speak, with this first-in-class compound. So despite this setback, we remain optimistic about 0449's prospects.

Genentech is evaluating 0449 currently in advanced ovarian cancer, in advanced basal cell cancer, or BCC, and has indicated that it expects to initiate a Phase II trial in operable BCC. These trials should provide more information on 0449's potential in cancer in different settings since the hedgehog pathway is believed to act via different mechanisms of action in these tumor types. We expect to have more data from the compound very soon.

Although we do not have any information to report here today, we expect that results will be available from the ovarian cancer trial in the very near term, and we expect to communicate the topline results within the month of August.

Furthermore, we are also encouraged by the National Cancer Institute's efforts to evaluate 0449 in several other tumor types. Under its collaboration agreement with Genentech, several studies in various cancer types are planned or are ongoing by third parties, which we believe should provide further data regarding 0449's potential in other cancer types.

We also continue to focus internally on our proprietary pipeline of drug candidates, which continues to make good progress, particularly our lead candidate, CUDC-101, for which we recently completed a Phase I dose escalation study; initiated a Phase Ib expansion trial in patients with advanced refractory head and neck, gastric, breast and liver cancers; and we expect to initiate a Phase I/Phase II clinical trial in head and neck cancer during the fourth quarter of 2010.

Also during the second quarter, our licensee, Debiopharm, initiated a Phase I clinical trial of our Hsp90 inhibitor, designated Debio 0932, on which we earned a $3 million cash payment in July upon Debiopharm's treatment of the fifth patient in this study.

Lastly, we continue to advance our preclinical research efforts and anticipate that we will select a new development candidate later this year.

Turning to a full review of our pipeline, I would like to provide further detail on the development program of GDC-0449. I'll then briefly discuss our other partnered asset, Debio 0932, which is the subject of a license agreement between Curis and Debiopharm. And I will then review our recent progress and plans for our proprietary programs, exemplified particularly by CUDC-101, before turning the call back to Mike to review our second-quarter financial results.

As I just mentioned, we recently announced negative topline results from the Phase II clinical trial conducted by Roche and Genentech of GDC-0449, which was used in combination with Avastin and chemotherapy -- specifically FOLFOX or FOLFIRI -- in first-line metastatic colorectal cancer patients. We expect the data from this Phase II study to be presented at a future medical meeting.

Despite the disappointing results of the Phase II colorectal study, we believe that Genentech and Roche remained committed to the hedgehog program. Genentech is currently conducting two other clinical trials with GDC-0449, including a pivotal Phase II trial in advanced and metastatic BCC, and a Phase II clinical trial in advanced ovarian cancer.

Although we do not have any information to report here today, we expect results from the ongoing Phase II clinical trial in advanced ovarian cancer patients to have a report out in the very near term, and we expect to communicate the topline results within the month of August.

Roche has indicated that it expects results from the pivotal Phase II clinical trial in advanced BCC in the first half of 2011, and has also stated that it plans to initiate a Phase II clinical trial in operable BCC patients during the second half of 2010. We look forward to these important milestones.

In particular, we expect that Genentech will share topline results from the ovarian cancer trial and that we will communicate these results, again, within the month of August. The trial was initiated by Genentech in December of 2008 as a single-agent maintenance therapy in which 0449 is being evaluated in approximately 100 patients with ovarian cancer in second or third complete remission. So these are patients that have responded to therapy, have gone into remission, and the cancer reemerges for the second and third time.

This is a randomized, placebo-controlled, double-blind, multicenter Phase II trial. Patients are randomized in a one-to-one ratio to receive either 150mg daily dose of GDC-0449 or placebo and are stratified based on whether that cancer is in a second or third complete remission.

The primary endpoint of the trial is progression-free survival. Secondary outcome measures include overall survival, measurement of hedgehog ligand expression in archival tissue, and the number and attribution of adverse events.

Genentech designed this Phase II trial to investigate whether 0449 may help to delay and/or attenuate tumor regrowth in a maintenance setting following clinical remission of cancer after a second-line chemotherapy treatment for recurrent disease.

We are also very enthusiastic about the prospects of the pivotal Phase II clinical trial of 0449 in basal cell carcinoma, in which approximately 100 patients with locally advanced or metastatic BCC are being evaluated in a single-arm, two-cohort global clinical trial.

One cohort includes all patients with histologically confirmed RECIST-measurable metastatic BCC. The second cohort includes histologically confirmed locally advanced BCC that is considered inoperable by the treating physician. All patients receive a daily oral dose of GDC-0449 at 150mg per day. The primary endpoint in this study is to measure patient response to 0449 therapy.

Roche has projected that results from this ongoing pivotal study will be available in the first half of 2011. And assuming positive data, Roche has further stated that regulatory submissions for 0449 in advanced BCC could also occur in 2011.

Just to underscore, there's currently no standard of care for patients with these types of BCC -- that is, for advanced or metastatic BCC. And we'd be extremely pleased and proud to be part of a potential therapeutic alternative that could benefit these patients.

Roche also indicated that it intends to initiate a Phase II clinical trial of 0449 in operable BCC patients in the second half of 2010. And we believe that the expansion into operable BCC patients has the potential to significantly expand the commercial potential of 0449. Genentech is currently working to define the trial design, and we expect that we will provide further updates on this trial once it has been initiated.

Lastly, we are very pleased with the continued progress of the collaboration between Genentech and the National Cancer Institute. As a means of gaining additional clinical insight into 0449, Genentech and the NCI entered into a collaborative relationship in 2009 allowing the NCI to explore 0449 in additional cancer types and situations in terms of drug combinations that are not presently being evaluated by Genentech or Roche. And there are now several additional clinical studies planned or ongoing under this arrangement with NCI, and we look forward to those results as they emerge. Further detail for all of the GDC-0449 clinical trials are posted to clinicaltrials.gov.

I'd like to now briefly turn to our other partner program, which is a synthetic small-molecule Hsp90 inhibitor development candidate designated as Debio 0932. This candidate is being developed by our licensee, Debiopharm, under our August 2009 agreement. Under this agreement, we granted Debiopharm a worldwide exclusive royalty-bearing license to all of our Hsp90 inhibitor technologies, including Debio 0932.

Debiopharm initiated a Phase I clinical trial of 0932 in April. In July, Debiopharm notified us that they had treated the fifth patient in this Phase I clinical trial, which earned us an additional $3 million cash payment for the achievement of this development objective -- basic objective of getting a milestone if the fifth patient was showing that it was well tolerated in the first cohort dose, and that the first patient of the next dosing cohort had also made it through without any unwanted toxicity.

This transaction represents an important source of nondilutive capital to Curis, and we have secured a total of $13 million in proceeds under this agreement since it was signed last summer.

The next milestone we're eligible for under the agreement is upon Debiopharm's treatment of the fifth patient in a Phase II clinical trial, assuming the compound successfully completes the ongoing Phase I trial, and that Debiopharm advances Debio 0932 into Phase II clinical testing.

I just want to underscore that we have been highly impressed with Debiopharm's capabilities, capacity and efforts to date, and we look forward to providing you with further updates regarding 0932 in the future.

I will now provide you with an update of CUDC-101, which is a Curis wholly-owned first-in-class HDAC, EGFR and HER2 inhibitor product candidate, which we have specifically designed to disrupt cancer networks, to combat resistance by simultaneously inhibiting multiple and what we believe is potentially synergistic cancer targets. CUDC-101 is the lead drug candidate from our multi-targeted cancer programs, and we recently completed a Phase I clinical trial in patients with advanced refractory solid tumors.

As our first multi-targeted inhibitor in clinical development, we believe that CUDC-101 is exemplary of our approach, which aims to enhance the therapeutic effect and durability of clinical response by attacking cancer cells at multiple nodes or points of intervention.

We believe this has been demonstrated clinically, where many companies are now using combinations of drug to achieve this basic concept, and we believe that 101 may represent a potential breakthrough in this approach.

Data from the Phase I dose escalation study determined that 275mg per meter squared represents the maximum tolerated dose, or MTD dose, of CUDC-101. The Phase I trial was designed as an open-label dose escalation study of CUDC-101 in patients with advanced refractory -- that is resistant -- solid tumors. The primary objectives of the Phase I trial were to evaluate the safety and tolerability of escalating doses of CUDC-101 and to establish the MTD and dose-limiting toxicities.

Secondary objectives were to assess the pharmacokinetics, to evaluate pharmacodynamic biomarkers, and to assess any efficacy and ability of 101 to effectively inhibit the respective targets -- HDAC, EGFR and HER2 -- in this patient population.

The study was conducted at two clinical sites within the United States and enrolled 25 patients across several dose-escalating cohorts. We are extremely pleased with the clinical results to date, which demonstrated that the drug has the potential for a favorable safety profile and that it can disrupt the intended cancer targets, as evidenced by clinical biomarker data.

We have demonstrated promising evidence of antitumor activity at doses ranging from 150mg per meter squared and 275mg per meter squared, including one confirmed partial response that was achieved in a gastric cancer patient at 275mg per meter squared in a stable disease of greater than three months, which was seen in a refractory advanced breast cancer patient at 150mg per meter squared.

Two additional patients that had head and neck cancer, including one with salivary gland adenocarcinoma and one patient with tongue squamous cell carcinoma, exhibited antitumor activity with a decrease of greater than 20% in their respective target lesions. This early clinical data provides us with what we believe is an attractive therapeutic dosing range therapeutic window.

We believe that CUDC-101 also exhibited an acceptable safety profile in the Phase I dose-escalation study, with the most frequent adverse events being Grade 1 to 2 -- and that is mild to moderate -- which included fatigue, vomiting, shortness of breath, fever and dry skin. I want to underscore that rash was also observed at the 275mg per meter squared level, and dry skin was observed at all dose levels. And as you're aware, skin effect is a known effect of EGFR inhibition. That is basically a biomarker of EGFR inhibition.

We anticipate that the study's principal investigator, Dr. Anthony Tolcher of the South Texas Accelerated Research Therapeutics, or START, will present our Phase I data at the 22nd EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics, which is being held in November of this year in Berlin, Germany.

While we are encouraged by our Phase I results, we are especially looking forward to two additional clinical studies -- CUDC-101, including a Phase Ib expansion cohort study of 101 -- and this is going to be in patients with specific tumor types, including gastric, head and neck, breast and liver cancers, and the Phase Ib expansion cohort is meant to basically give us some insight of activity in a broad set of specific cancer types, which we believe is underscored by both preclinical and clinical observations; and a Phase I/Phase II clinical trial in head and neck cancer patients.

The reason we are focusing on head and neck is severalfold. We had really strong preclinical data in head and neck cancer cell lines. We had two responses that -- nonconfirmed responses that we saw in the clinic with head and neck cancer. And we believe this patient cohort represents an attractive population regarding their current therapy, which is radiation and chemotherapy, where they go in daily for seven weeks. So we believe that this patient population represents an attractive focus for us with 101 with our limited resources.

So we look forward to the expansion cohort and initiating the Phase I/Phase II. We believe that these studies will provide us with additional important clinical information for CUDC-101.

I'm pleased to report that we initiated a Phase Ib expansion study yesterday. We plan to enroll approximately 40 additional patients under the Phase Ib expansion study at five to eight study centers, and we plan to treat at the established MTD of 275mg per meter squared.

The primary objective of the study are to compare the safety and tolerability of 101 at the MTD in subjects with specific advanced solid tumors when the drug is administered either on a five-day-per-week schedule, where we will have one week on and one week off; or three-times-a-week schedule, which will be three weeks on and one week off. This will give us greater understanding of the drug's activity under different settings.

The secondary study objective objectives are to evaluate the efficacy of 101 in subjects with advanced and refractory solid tumors, to assess the pharmacokinetics and to evaluate the pharmacodynamic biomarkers of 101 in these patient populations.

We are also anticipating the initiation of a Phase I/Phase II clinical trial of CUDC-101 in head and neck cancer patients by the end of 2010. While the study design is ongoing, we currently expect that we will conduct a randomized, two-armed trial in which patients will receive cisplatinum and radiation plus or minus CUDC-101.

The primary objectives of the Phase I portion of the study are to evaluate the safety and tolerability of 101 when administered in combination with cisplatinum and radiation. The Phase II part of the study will seek to evaluate whether the addition of 101 can improve the efficacy and durability of cisplatinum and radiation therapy. The rationale for this is to underscore that -- and there have been third-party reports -- that both HDAC and EGFR inhibition may be synergistic with radiation therapy.

We have selected head and neck cancer as our first indication for potential Phase II testing for several reasons, as I've articulated. 101 demonstrated biological activity on the two patients with head and neck cancer in our Phase I study, including a mixed response in the head and neck cancer patient at 150mg per meter squared dose level, with tumor reduction of over 20% after just four weeks or two cycles of study drug administration, and another head and neck cancer patient at the 275 mg per meter squared dosing level.

Second, our internal in vitro and in vivo preclinical data, as I previously stated, is very strong in head and neck cancer, exemplified by data in seven head and neck cancer cell lines that include some of the highest potency observed of the cell lines in which 101 was tested.

We also believe that our internal data is supported by published literature, as I just stated, demonstrating that both EGFR and HER2 are often implicated in the head and neck cancer patient, but also that EGFR inhibition and HDAC inhibition are putatively and potentially synergistic with radiation therapy.

So we are working hard to complete the protocol of this Phase I and Phase II study, and we look forward to our anticipated announcement of the trial initiation later this year.

In addition to these clinical updates, I am pleased to report that our scientists published a paper in the prestigious journal, Cancer Research, that describes the potent anticancer activities of CUDC-101. We believe that this publication reflects the high quality of science being conducted by our scientists here at Curis.

With regard to our preclinical pipeline, our research group continues to advance two primary classes of molecules, including a series targeting HDAC, PI3-kinase and mTOR, and another class that targets HDAC and BCR-ABL. And we expect to select a development candidate from our preclinical programs in 2010. The primary focus is for the HDAC/PI3-kinase compound to be selected within that timeframe.

Before turning back the call to Mike, I would like to note that we are fortunate to have had Dr. Mark Rubin recently join our Board. Mark brings extensive clinical development and medical, commercial and scientific expertise to the Curis Board. He has held executive-level clinical development positions with Bayer Schering Pharma, Schering AG and GlaxoSmithKline, and we look forward to working with him.

I'd like to now turn the call back over to Mike for financial discussions, and following Mike's remarks, we will open the call for questions.

Okay. Thanks, Dan. I will spend a couple of minutes on second-quarter 2010 financial results.

For the second quarter of 2010, we reported a net loss of $2.1 million or $0.03 per share on both a basic and fully diluted share outstanding basis as compared to a net loss of $4.2 million or $0.07 per share on both a basic and fully diluted share outstanding basis for the same period in 2009.

Revenues for the second quarter of 2010 were $99,000 as compared to $63,000 for the same period in 2009. Operating expenses for the second quarter of 2010 were $4 million, and that's compared to $4.3 million for the second quarter of 2009.

Within operating expense, R&D spending was $2.2 million for the second quarter of 2010 as compared to $2.3 million for Q2 2009. The increase was primarily attributable to lower spending on Debio 0932 as a result of licensing this program to Debiopharm in August of 2009. All subsequent development costs have been assumed by Debiopharm for that program.

Offsetting the decrease, we've continued to spend on our other targeted cancer programs in search of another development candidate, as Dan just mentioned, focusing in on HDAC/PI3-kinase programs.

G&A spending was $1.8 million for the second quarter of 2010 as compared to $2 million for the same period in 2009. The decrease was primarily due to nonrecurring legal costs incurred during the second quarter of 2009, which were related to an arbitration proceeding that we settled during the first quarter of 2010.

Other income was $1.8 million for the second quarter of 2010 as compared to $100,000 for the same period in 2009. The increase from the prior year represents the change in the fair value of a warrant liability established in connection with our January 2010 registered direct offering, primarily the result of a decrease in our stock price from March 31 to June 30, 2010.

As of June 30, 2010, our cash, cash equivalents and marketable securities totaled $44.9 million, and there were 75.6 million shares of common stock outstanding.

I'd just like to briefly update some of our earlier financial guidance as it relates to R&D expense and our expected year-end cash position. First, as a result of lower-than-anticipated expense associated with CUDC-101 and other development candidates, we expect that our research and development expenses will be between $10 million and $13 million for 2010. We had previously estimated that these expenses would be between $13 million and $17 million.

As a result of lower-than-anticipated R&D expenses just mentioned, as well as a $3 million payment that we've earned under our license agreement with Debiopharm in July of this year, we expect our 2010 year-end cash, cash equivalents and marketable securities will be between $38 million and $40 million, again as of December 31, 2010. We had previously estimated this amount to be between $30 million and $35 million.

So that concludes our collective prepared remarks, and we will now open the call for questions. Operator?

(Operator Instructions). Jason Kantor, RBC Capital Markets.

I don't have a lot of questions. You ran through a good deal of it. Explain to me exactly what changed that made you change your R&D guidance.

I think a couple things. First of all, it took us a little bit longer to complete the Phase I CUDC-101 study that anticipated earlier this year, which triggered sort of -- so there are two main assets. One is CUDC-101 and the timing at which we started the Phase Ib and which we will start now the Phase I/II. Earlier in the year, we had projected both of those, probably a little too aggressively, but to start earlier in terms of forecasting our cash. I would much rather have a more aggressive assumption as it relates to cash life than have to provide an update on year-end cash that went the other way. So we've always tried to be a little bit conservative in that respect.

So the delayed -- modestly delayed finish to 101, dose-escalation Phase I trial has sort of delayed a little bit beyond where we wanted to start the Phase Ib, which we've just started, as Dan mentioned yesterday, and we issued a release on that.

And then also, we expect now that the Phase I/II trial, which I had forecasted some costs to start accruing in second quarter, will now really start accruing in probably Q4, when that study starts.

Secondly, I had also included in our model that we would have selected a development candidate earlier in the year, and so we would have started incurring some reasonably significant preclinical costs, including GLP toxicity and some of the [GNP] manufacturing costs, in Q2 for the PI3-kinase inhibitor. It looks like those are just going to be shifted out into the second half of the year. So those are the main drivers of the change.

And with the CUDC-101 program, and also with the Debio 0932 program, when do you think the earliest we could see some kind of significant proof of concept from either of those programs might be?

I think with 101, it really depends what one considers proof of concept. We are hopeful that we will get a broader survey in several tumor types in the Phase Ib. And I'm not sure that would meet the requirement of proof of concept, but I think it would give us a high degree of confidence that we are seeing activity in these specific tumor types.

Sure. When is that likely to happen?

You know, I would say realistically end of the year, or first half of 2011, more likely, to be conservative, first half of 2011.

Yes, I would say that's more realistic as well, because we have -- we initiated with the first site, which is Mary Crowley in Dallas, yesterday. We will start -- we are expecting to launch the second site for the Phase Ib next week and then continue to add sites up to the five to eight sites that we want to have running the study.

One of the things, if you recall, in the Phase I, that kind of slowed us down was that we had two centers. One center enrolled, off the top of my head I would say 22 out of 25 patients, and the other center was really behind in the enrollment process, and it just slowed us down.

I think we are going to get through that -- get through these 40 patients in a much quicker timeframe, assuming that we are successful in getting these five to eight sites up and running in the near term. And we do have a lot of interest from different sites, so I expect we should be able to do that.

And then on the classic proof-of-concept Phase II data, second half 2011 to first half 2012 with the Phase II on head and neck.

Ted Tenthoff, Piper Jaffray.

Great, thanks very much. And I apologize if you touched on this a little, but, you know, I know it's still early with the colorectal data. But as you are starting to go through it, how much of this is Genentech sharing with you? Is there anything that is popping up for reasons -- maybe that the trial didn't work? I just think from a biological basis, the support is probably a little bit lower in colorectal than ovarian. And is there any potential read-through into other solid tumors from that study?

Yes, thanks, Ted. Well, what we can comment on is the following. So there was a clinical researcher at ASCO that made a comment about potential concern about the dosing cycle having to do a combination with chemo, that there's a possible effect of the chemo having an impact on hedgehog's effect. And that's just a hypothesis. Right now, there's no further granularity on possible rationale for the fact that we didn't see a distinction in the treatment cohorts.

And that's as much as we can hypothesize, Ted, at this point, that it's possible that chemo and Avastin are quite effective in terms of a -- I think it's 10-month average to progression-free, and that the chemo debulks the tumor. Well, fundamentally, it's also going to change the biology of the tumor that is under that chemical insult. And it is possible that you need to have a drug holiday and then give hedgehog. We just don't know.

So I think that's what's attractive about the way Genentech has structured these various trials. And the NCI collaboration affords an opportunity to look broadly at a number of tumor types under different settings to potentially gain further insight into what situations, what settings, what conditions have the potential for a therapeutic response with the inhibitor.

That's very helpful, and looking forward to the ovarian data, and keeping my fingers crossed.

Thank you. We are as well.

Ren Benjamin, Rodman.

Thanks for the very thorough overview. Just looking at CUDC-101, and I know you mentioned when you think that some sort of results might be available, but how do you envision or how do you see the remaining sites? I think you mentioned five to eight sites coming online. Will they all pretty much come online by the end of this year?

And because you are targeting about 40 patients, are you specifically giving up the number of patients per tumor type? So if you get X number in liver and X number in gastric, once you reach that number, you're done? Or are you just hoping to enroll 40 patients, and as long as those are the indications that are coming in, you are fine with that?

This is Mike. The objective is 10 per tumor type, more or less. I think we have a little flexibility on that to get, particularly on the upside, to get more data from beyond 10 patients. But we do want to target 10 patients for tumor type.

In terms of sites, so I mentioned we have one, Mary Crowley in Dallas, that's up and running. We will initiate another site next week. And then just from where we are in a contract process with a few other sites, I do feel very confident that we'll get our sites up and running by the end of this year. And hopefully, depending on how August -- August can be a bit of a slow month for getting contracts done. But I'm hoping that we can hit the five by the end of this quarter and then cap out with the remaining few in Q4.

And what does it -- internally, you must have a metric, because it's only 10 patients per tumor type. What sort of metric are you using internally? Will it be primarily response rate, and you're looking for one or two? Or are you looking for something that hits it out of the park? What is it that's going to give you guys the confidence to move forward within a particular tumor type?

So there are many aspects of the rationale, and I'd say -- so one of the primary objectives, Ren, is for us to be able to survey tumor types that we believe there is a strong rationale for prospective response under different settings. So one of the things we're looking at is two different dosing regimens. So we want to learn how the drug behaves in terms of the PK, but also the pharmacodynamics.

So will we see a distinction between five days straight on, five days off, versus -- it actually turned out to be nine days off with the weekends -- versus every other day for three straight weeks and then a week off?

So it is important for us to survey that, particularly with the current formulation, where having the prospects of an every-other dosing regimen makes it more attractive. Ideally, we would like to get down to two days a week. So it gives us an insight on how the drug behaves both from a PK standpoint and a PD standpoint.

And then it is looking at the specific tumor types to see what type of responses. And really what we're trying to do is build a body of data that will give us the rationale for either approaching a large pharma for an attractive partnership structure where we can get access to greater resources to expand out broadly, or rationale that we may need to raise further capital for use of proceeds to add greater value. And we will play those out strategically.

Our key objective is to balance the risk profile, the capital requirements profile with the value proposition. And we're always trying to do that. So that's one of the things we're looking at with this trial design, is to get a broader survey to demonstrate the potential of broad application of this drug.

And can you just remind me why you decided to take these two particular dosing regimens -- picked these two dose regimens to evaluate as opposed to just some other one?

Yes. Part of it is, part of the rationale was predicated on our preclinical PK observations, where the drug is degraded relatively quickly in most plasma. And that's because of the HDAC moiety. And that's actually been widely observed with a broad number of HDAC inhibitors, particularly hydroxamic acid-base. And it's known that murine species have hydrolases in a serum plasma that degrade the hydroxamic acid quite readily. So we felt that hitting the tumor hard for five consecutive days had a certain rationale to it.

And now, the other dosing schedule of every other day, we want to look at, now that we are seeing good tolerability -- that was partly also the rationale of hitting it five days straight -- we wanted to get a sense of how well is this drug tolerated.

Just to give context, there was a growing body of evidence from preclinical third-party research demonstrating potential synergy, that when you combined HDAC inhibition with EGFR inhibition, that had been attempted in the clinic and had to be terminated because of exacerbated toxicities. And we felt one of the things we needed to demonstrate was that this drug, given to a patient every day for five days straight, can be tolerated at therapeutic doses. And we believe we achieved that.

And now we are looking at the every-other-day dosing schedule, because we believe there is a prolonged PD effect with the HDAC inhibition, where it has an epigenetic or transcriptional regulation effect that is more prolonged. And we want to get a survey of that dosing schedule to show, A., it is well tolerated, but also that we can see a therapeutic effect at a periodic dosing cycle.

So we are just trying to gain as much insight in the drug's behavior as we can. And we believe by doing this broadly, surveying different situations, different tumor types is a much more prudent, rational approach to building a body of data that a multinational pharma would find attractive and derisked than just going for broke on one indication and one dosing schedule.

Fair enough. Just switching gears to the Debio compound, I think Jason asked the question, but maybe I didn't hear the answer. When do you think that you might get the initial safety or efficacy results from the ongoing trial?

Yes, so thank you for bringing that up again, because I inadvertently didn't answer it. So, sorry, Jason. Yes, so that's in the dose escalation phase right now of -- it's every-day dosing right now.

Yes, they are doing two cycles. One is every other day, and they've recently initiated the every-day dosing cycle as well, dose escalations. I think the fastest timeframe that those would read out, and they've also built into the Phase I -- Phase Ib component within this protocol. So I think you're looking at --

12 to 18 months.

Yes, probably late next year.

So, about late last year to start getting the first initial bits of data, or have you guys talked about how this could be -- the data could kind of come out in part?

I think the only likely part that would come out would be after the Phase I dose escalation was done. I don't think that Debiopharm would want to disclose things piecemeal. But (multiple speakers)

And so it is the Phase I dose-escalating part that will come out in the next 18 months or so?

I would say that would be done sooner, Ren. And then I would think the Phase Ib -- like, all combined, Phase Ia and Phase Ib is a total 12 to 18 months probably.

Got it. (multiple speakers). Okay. Then I guess just switching gears to GDC-0449, you mentioned that the data for the colorectal study will likely be presented at an upcoming medical conference. Do you have any idea if it will be this year or will we have to wait till next year at ASCO? Do you know the conference that it will be presented at?

And has anyone done -- either you guys or Genentech -- done any sort of a responder analysis to look at those that did respond with the combination of Avastin, chemo and GDC-0449, just how the progression-free survival was for those patients?

So the analysis of the patient population, all that was communicated to us is that it did not meet the endpoints. So we don't know if there is any discernible observations in a detailed analysis. And I think that's what will be reported on, Ren. So we are not aware of anything at this time.

Ren, the first half of your question is we expect that it will be a conference this fall, but I think right now we need to leave it at that.

Okay, okay. And then, just talking about ovarian, like, you mentioned in your prepared remarks, there is clearly that different mechanisms of action that are being evaluated with these three different trials. And the BCC trial, I think most of us will agree, is the one that has the highest likelihood of success, and maybe the CRC has the least likelihood of success. Ovarian, at least in my opinion, coming right in the middle in testing what I think is a very important mechanism-of-action question about the hedgehog inhibitor.

Based on what you've known or know from the CRC trial, are you guys thinking any differently about the ovarian study? Are you equally as positive regarding the study that's going forward, or are you more sort of cautiously optimistic?

That's a very important question. And so there is no insight from the colorectal that takes or puts into question the rationale on the ovarian, because they are different settings and also potentially different mechanisms. So the colorectal was a combination hitting the cancer hard at multiple levels, and it was a tall order. And that was a paracrine, fundamentally a paracrine mechanism to see if you could enhance the durability of the response by blocking the upstream inducer of angiogenesis. And no difference was observed.

The ovarian -- so as I stated, there is the potential issue of the sequence of dosing, and possibly the observation that hitting it with a potent chemotherapy for debulking and Avastin and the hedgehog antagonist is too much of a tall order, and the chemo was affecting the biology of the behavior of the cells, where hedgehog is no longer going to have an effect. That's a theory.

If that has any merit, we should see that play out with ovarian, where ovarian is being hit with chemo, the patients are responding, it is debulked, and then in a maintenance as a single agent, you are trying to prevent the tumor from reemerging. And as you know, it has this putative tumor stem cell involvement, where hedgehog is known to be involved in stem cell proliferation. So it has both sort of an autocrine stem cell mechanism potential and a paracrine influencing the stromal microenvironment application.

But I think as a single agent, we will get a survey under a different setting, and that's very important. So I don't think the observations in one raises concern that it reduces the prospects in the other. I think they are completely distinct, statistically isolated settings. So we eagerly await to see what the results look like, Ren.

Okay. And then just one final question regarding the preclinical candidates. Clearly, there has been a lot of interest around PI3K inhibitors, and there's been a lot of talk in previous AACR conferences about the importance of combining something like an HDAC inhibitor.

Do you plan to aggressively go out, once you have picked or identified a lead candidate, to aggressively go out and seek a partner for this program, like you did with the Hsp90 program? Or is this something that you would like to at least develop on your own for maybe the Phase I study before seeking a partner?

Yes, a very important question. And it has a number of components to it. The way to answer it is, it really depends on our circumstances and situation. If we have the capacity and capital to hold onto it to add greater value, I think we would prefer to do that, because we do believe this is a very attractive space. We have been -- our scientists have really been working very hard at designing a compound that we believe has the potential to be best in class and is in a growingly competitive arena. And we think that this PI3K/HDAC aspect to it will give it a real competitive positioning.

We are looking to have an oral formulation, and hopefully we are successful with that. We have encouraging results to date. We have some very potent classes of compounds. And now what we are doing is finding the right therapeutic potency and toxicity ratio.

So our objective would be to be able to take it at least through Phase I, because one of the questions about PI3K as a novel yet invalidated -- or I should say unvalidated target is the toxicity profile. And we think the Phase I is a very important aspect for us to navigate through.

So the short answer is, Ren, if we have the resources, we would like to hold onto it.

Perfect, guys. Well, congratulations, and good luck with the results.

We really appreciate it. Thank you.

(Operator Instructions). Ling Wang, Brean Murray.

Thank you for taking my question. Just to follow up for the ovarian cancer trial, I understand you can't give out -- won't give us any data today, but I was wondering whether you can share with us what data will be included when Genentech reports their top line this month -- will it include the [PSI] data, or might it include some of the secondary endpoints? And also, at this time, can you share with us the statistical assumptions for this trial?

So on the first part of that question, it would be a release that would be top line based, so either positive -- met or did not meet primary endpoints. So there wouldn't be secondary data, although the expectation would be that that data would also be presented at a conference. And again, we are expecting that that would be during this year, not waiting until 2011.

Okay. And also, by the way, do you have any insights on when we might see the Phase I investigator-sponsored pancreatic cancer trial for 0449?

We don't, Ling. We are hopeful that will be forthcoming, but we don't know when.

Okay, thank you. And good luck with the ovarian cancer trial.

There are no further questions at this time.

Okay. Well, thanks, everyone, for joining us on the call. And we specifically want to thank our employees for their dedication and hard work; our directors; and obviously, our investors for their continued support. And we look forward to providing all of you with further updates on our pipeline in the upcoming months and look forward to giving you updates when they become available. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.