Dare Bioscience Inc (DARE) 2014 Q2 法說會逐字稿

Good afternoon and welcome to the Cerulean second-quarter 2014 conference call. This call is being recorded. My name is Crystal and I will be your operator for today.

With us today from the Company are Oliver Fetzer, President and Chief Executive Officer, and Chris Guiffre, Senior Vice President and Chief Business Officer. Now I'd like to turn the call over to Dr. Fetzer. Please proceed.

Thank you, Crystal. Good afternoon, everybody, and thank you for joining us. With me this afternoon is Chris Guiffre, our Chief Business Officer.

Let me start out by saying how pleased I am to be hosting Cerulean's first quarterly conference call as a public company. This is an exciting milestone for the Cerulean team, and since I know they're listening in, let me thank them for their creativity, determination, commitment, and hard work, all of which allowed us to become a public company and all of which will help us to compete as a public company.

On today's call, I will give you an update on our business activities in the second quarter, then Chris will give you a brief financial update, and, finally, we will answer your questions.

Before we begin, I will ask Chris to comment on forward-looking statements that may be made during this call. Chris?

Thanks, Oliver. Certain remarks that we make during this call about the Company's future expectations, plans, and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC and can be accessed on our website.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

Oliver, back to you.

Thanks, Chris.

Today, I will update you on the continued progress on three ongoing trials and the initiation of an important new trial for our lead candidate, CRLX101. But first, since this is our first quarterly call as a public company, I will also spend a few minutes on introducing you to the technology platform that has already created two product candidates.

Imagine the following -- a potent anticancer aid that after injection moves through the bloodstream largely shielded from normal tissue. Over time, the anticancer agent selectively targets tumors, and once inside the tumor tissue, the anticancer agent is actively taken into tumor cells. Finally, the anticancer agent is slowly released inside tumor cells, not just in the tumor tissue, to provide durable inhibition of its target.

Does that sound like an attractive approach? We believe that it is. That is what Dynamic Tumor Targeting is all about. Dynamic Tumor Targeting, as its name suggests, is a remarkably dynamic process in which our product candidates are nanoparticles with anticancer payloads that circulate in the bloodstream and reach the tumor. They cross the cell walls of tumor cells. They slowly release the anticancer payload from within the tumor cells, hitting intracellular cancer targets for a prolonged period.

The goals of Dynamic Tumor Targeting are intuitive -- to improve activity by selectively concentrating the anticancer payload in tumors and providing a sustained payload release inside tumor cells to improve safety by reducing systemic distribution of the anticancer payload.

The benefits of Dynamic Tumor Targeting are just as intuitive -- to selectively attack tumor cells, reduce toxicity by sparing the body's normal cells, and thereby enabling therapeutic combinations to improve treatment for people living with cancer.

Our Dynamic Tumor Targeting Platform allows us to create nanoparticle-drug conjugates, or NDCs. Much like antibody-drug conjugates, or ADCs, NDCs are a relatively new class of drugs that have significant potential to improve treatment for people living with cancer.

Similar to an ADC, an NDC contains a potent anticancer payload that is chemically conjugated toward targeting moiety. For ADCs, the targeting moiety is an antibody that docks to receptors on the cell's surface. For NDCs, the targeting moiety is a nanoparticle that is too large to slip through the pores of normal blood vessels, but is small enough to slip through the pores of the immature new vasculature present in tumors.

In both cases, the anticancer payload is attached to the targeting moiety by a linker.

There are a number of nanoparticle technologies and nanoparticle companies, but we do not know of any other company that make NDCs. That said, we fully expect that other companies will enter this space over time because of the potential that NDCs have to impact cancer treatment in a meaningful way, just the way ADCs are doing. We think that trend will resemble what happened in the ADC space, where many companies entered the ADC space after they saw clinical successes from Seattle Genetics and ImmunoGen.

So when you think about Cerulean, we hope that you will think of us as a platform-based, product-driven company, and we hope that you will appreciate the potential of our platform.

The first NDC from our Dynamic Tumor Targeting Platform is CRLX101, which is in Phase II clinical trials. The second NDC from our platform is CRLX301, which is expected in the clinic by year-end.

Now let me turn to CRLX101. CRLX101 is an NDC with a cancer-seeking payload that has shown activity in multiple tumor types, both as monotherapy and in combination with other cancer treatments. CRLX101 appears to be well tolerated in more than 200 patients treated to date.

CRLX101 is differentiated by its durable inhibition of two important cancer targets -- topoisomerase 1, or topo 1, and hypoxia-inducible factor-1 alpha, also known as HIF-1 alpha.

The evidence of CRLX101's Dynamic Tumor Targeting is extensive. We have pictures of intact nanoparticles penetrating deeply into mouse tumors one week after injecting them into the bloodstream. More importantly, we have pictures of CRLX101 nanoparticles from a trial with gastric cancer patients where one can see CRLX101 nanoparticles in tumor tissue, but not in the adjacent normal tissue.

Moreover, to date, we have seen a relatively benign toxicity profile for CRLX101 in more than 200 patients, demonstrating the ability of Dynamic Tumor Targeting to spare normal tissue even with a highly toxic payload, such as camptothecin.

In fact, CRLX101 volume of distribution is only about the volume of the bloodstream, showing that it circulates in the blood and reaches tumors, but does not extensively distribute to normal tissue the way most anticancer drugs do. And maybe most importantly, we have seen CRLX101's ability to durably inhibit HIF-1 alpha, thanks to its slow intracellular release, whereas other members of the camptothecin class, such as topotecan or irinotecan, only inhibit HIF-1 alpha in a transient manner.

CRLX101 inhibits topo 1, a commercially-validated cancer target in HIF-1 alpha, which has recently been identified as a master regulator of multiple cancer cell survival pathways. These pathways frequently become upregulated as a consequence of administering standard of care cancer treatment, particularly those that create low oxygen or hypoxic conditions, such as anti-angiogenic agents or radiation therapy.

To our knowledge, there are no other durable and combinable HIF inhibitors either in clinical development or commercially available.

Leveraging CRLX101's topo 1 inhibition, HIF inhibition, and apparent combinability, we are conducting three single-arm clinical trials to detect objective signals of activity, specifically objective response rates and pathologic complete responses, from which we can make informed go or no go decisions about whether to or not to progress into randomized trials in those indications.

We call these single-arm studies Clinical Proof of Principle trials. The first of these Clinical Proof of Principle trials has in fact already met its goal, which is why we have initiated a randomized trial in renal cell carcinoma, or RCC, and more on that later.

All three of our ongoing Clinical Proof of Principle trials are co-sponsored by leading US academic centers and Cerulean. All three of these Clinical Proof of Principle trials are combination trials in tumor types where the inhibition of HIF in combination with other cancer treatments appears particularly important. They leverage CRLX101's favorable safety profile to date by allowing us to exploit synergistic, multi-target inhibitions.

Avastin, for example, is widely used for the treatment of several cancers and has been shown to upregulate HIF-1 alpha. As mentioned, the upregulation of HIF-1 alpha has been linked to drug resistance and resistance to radiotherapy.

The first Clinical Proof of Principle trial combined CRLX101 with Avastin to treat patients with relapsed RCC. This Phase Ib/2 study is being conducted at UPenn and Thomas Jefferson. The RCC combination trial is co-sponsored by UPenn and Cerulean. The PIs for the trial are Dr. Stephen Keefe and Naomi Haas.

This very important RCC combination trial established for the first time in humans that CRLX101 can be combined with Avastin. No dosing down was required, so CRLX101 is dosed at its MTD with Avastin at its commercial dose. Both drugs are administered every two weeks via IV infusion.

These Phase Ib safety data were the basis for advancing into the Phase II portion of the trial and also were the basis for a Phase II combination trial at the Harvard teaching hospitals evaluating CRLX101 in combination with Avastin in relapsed ovarian cancer.

In addition to establishing combinability for the CRLX101/Avastin combination, the RCC combination trial showed a signal of provocative activity in the first 11 patients. These data were included the S-1 registration statement of our IPO.

For those of you who read the S-1, you may recall that CRLX101 achieved a 27% response rate in the first 11 patients in a setting where standard of care provides a 2% to 4% response rate. Others of you may have seen tolerability and activity data from this trial presented at the AACR-NCI-EORTC triple meeting in October 2013 or more recently at ASCO GU in February 2014 or AACR in April 2014.

In those first 11 patients, there were no DLTs observed, and investigators observed three partial responses among these highly pretreated patients and a median progression-free survival time of 7.6 months, well in excess of the 3.6 months typically achieved by standard of care in this setting.

The strong data from this first Clinical Proof of Principle trial led to a go decision to move forward in pursuit of a label in relapsed RCC. As a result, we raised money in our IPO to fund a randomized trial of CRLX101 in Avastin in third- and fourth-line RCC.

The design for this randomized trial is based on extensive discussions with leaders in this investigational space. These leaders recognize that while multiple drugs have been approved in RCC in recent years, they're all from two classes of compounds, the tyrosine kinase inhibitors and mTOR inhibitors, and they are indicated primarily for first- and second-line therapy.

These KOLs also recognize the striking unmet medical need that exists in the third- and fourth-line space where there are no effective treatment options. Following the recent failure in a Phase III global registration trial of the Novartis compound dovitinib, the de facto standard of care in this space remains sorafenib.

Our randomized trial in the third- and fourth-line RCC is being run by recognized leaders in this arena, such as Robert Motzer from Memorial Sloan Kettering Cancer Center; Robert Figlin from Cedars-Sinai Medical Center; Nick Vogelzang and Tom Hutson, who are affiliated with US Oncology.

110 patients will be randomized to receive either the combination of CRLX101 plus Avastin or an investigator's choice of standard-of-care comparator, which in many cases is likely to be sorafenib. We and our investigators hypothesized that a CRLX101/Avastin combination can improve objective response rates and PFS compared to standard of care.

Our trial is powered to detect a 2.3 months or greater improvement in PFS of CRLX101/Avastin combination versus the 3.5 months PFS we expect from the standard of care arm in the approximately 90 CSL RCC patient subset of this trial.

We're happy to announce today that we recently launched the trial as promised. We have begun screening patients and anticipating announcing the treatment of the first patient in the near future. We are adding sites with an intention to work with around 30 US sites. We expect randomized data from this trial by the end of 2015.

The second Clinical Proof of Principle trial combines CRLX101 with Avastin to treat patients with relapsed ovarian cancer. This Phase II study is being conducted at MGH, Dana-Farber, Brigham and Women's, and Beth Israel Deaconess.

It follows a successful monotherapy trial of CRLX101 in relapsed ovarian cancer patients at those same four hospitals. The ovarian combination trial is co-sponsored by MGH; Genentech, which is providing the Avastin; and Cerulean. The PIs for the trial are doctors Carolyn Krasner and Mike Birrer.

We're optimistic about the ovarian combination trial for a number of reasons. I will highlight two for you. First, the precursor monotherapy trial of CRLX101 conducted at the same Harvard teaching hospital has met its primary PFS-based endpoint. In results presented at the most recent ASCO meeting, there were seven patients achieving six months of PFS or better, four patients achieving RECIST partial responses, and two patients remaining on study following greater than one year of therapy.

The monotherapy activity shown by CRLX101 in this refractory setting, third- to sixth-line patients, was encouraging to both us and the investigators at the Harvard teaching hospital and it fueled our shared enthusiasm to add a second arm to the study to evaluate the CRLX101/Avastin combination in second- and third-line patients.

Second, before we launched the combination trial, we asked our colleagues at Genentech if they would be willing to co-sponsor the trial by providing the Avastin. They agreed, based on a review of the preclinical synergy data in ovarian cancer models between CRLX101 and Avastin. They are generously providing the Avastin, which is not reimbursed in ovarian cancer. We greatly appreciate Genentech's support.

We expect to see preliminary data from the ovarian combination trial around year-end, and we expect to be able announce a go/no go decision in the first quarter of 2015 regarding whether we will move forward in a randomized Phase II combination trial.

The third Clinical Proof of Principle trial combined CRLX101 with capecitabine and radiotherapy to treat patients with nonmetastatic rectal cancer. This Phase Ib/2 study is being conducted at UNC, Indiana University, Rex, and Wake Forest. The rectal combination trial is co-sponsored by UNC and Cerulean. The PIs for this trial are doctors Andy Wang and Joel Tepper.

This trial is particularly exciting for us because it allows us to explore the use of CRLX101 in a setting where it could significantly impact cure rates. Unlike settings where CRLX101 would be used to treat metastatic disease, this early setting is one where complete eradication of the primary tumor before it spreads correlates well with cures and long-term survival.

Complete eradication is known as pathologic complete response, or pCR. The current standard of care is capecitabine in combination with radiotherapy, which is referred to as chemoradiotherapy, or CRT, followed by surgery. This standard of care generally affords patients a 15% to 20% pCR rate.

We are adding CRLX101 to chemoradiotherapy in the hope that we can significantly improve the pCR rate and therefore significantly improve cure rates, since CRLX101 is both topo 1 and HIF-1 alpha, both of which are important targets in this setting.

We are encouraged by the fact that prior clinical studies have shown that adding irinotecan, a marketed topo 1 inhibitor that acts as a radiosensitizer, to chemoradiotherapy drives up pCR rates to 21% to 37%, depending on the study. Unfortunately, though, that regimen has not been adopted in clinical practice due to the severe GI toxicities caused by irinotecan.

Fortunately, however, we have a topo 1 inhibitor that appears to be better tolerated than irinotecan, and so we have optimism that we will be able to combine the standard of care and drive up pCR rates the way irinotecan did, but without the limiting toxicities caused by irinotecan.

In fact, the first dosing cohort of CRLX101 at 12 milligrams per square meter has been completed and patients are currently being dosed at CRLX101's monotherapy MTD of 15 milligrams per square meter. The first cohort was at one dose level below CRLX101's MTD and no issues in combining CRLX101 with the standard of care at that level were observed.

Based on preclinical work showing HIF inhibition well below the MTD of CRLX101, we believe that this is very encouraging news. We know we can combine CRLX101 with capecitabine and radiation, at least 12 milligrams per meter squared, a dose that may already be therapeutically relevant.

We are also encouraged by the fact that CRLX101's durable HIF inhibition should help prevent resistance to chemoradiotherapy. When radiotherapy starves tumors of oxygen, it increases HIF levels, and increased HIF levels can lead to drug and radiotherapy resistance.

For three reasons, we see this rectal cancer combination trial as a perfect fit for CRLX101. We believe that, first, CRLX101's durable HIF inhibition can interrupt the resistance loop that I just mentioned.

Second, CRLX101's topo 1 inhibition can act as a radiosensitizer to improve the effectiveness of chemoradiotherapy, just as irinotecan did.

And third, CRLX101's seemingly favorable safety profile should allow it to avoid the toxicity problems that occurred when irinotecan was added to chemoradiotherapy.

We expect to see preliminary data from the rectal combination trial around year-end and we expect to be able to announce a go/no go decision in the first quarter of 2015 regarding whether we will move forward in a randomized Phase II combination trial.

After this thorough update on CRLX101, let me transition now to our second product candidate, CRLX301. We believe that our Dynamic Tumor Targeting Platform will be a product engine that fills our pipeline. When we acquired the technology, we also acquired the first product candidate, CRLX101, created with the technology.

But we had hoped that the technology would allow us to create additional product candidates. CRLX301 is the first example of how our platform is achieving our aspirations in this regard. We applied the technology to create an NDC that incorporates docetaxel as its payload.

We experimented with a number of linkers and we ran a series of preclinical experiments that led us to nominate CRLX301 as our second platform-generated product candidate.

We were encouraged by experiments showing that CRLX301 delivers approximately 10 times as much docetaxel into tumors compared to commercial docetaxel, while maintaining high drug level in tumors for prolonged periods of time, unlike commercial docetaxel.

But we asked ourselves, does that matter? In other words, if docetaxel is as good as it can be, then would putting 10 times as much of it in tumors even matter? Or maybe putting docetaxel in an NDC would increase activity, but it would also cause some unanticipated toxicities.

Thankfully, we saw outstanding results in multiple xenograft models where CRLX301 showed activity that was better than or at least as good as docetaxel in each model. And just as importantly, we saw tolerability that is consistent with our expectations of the platform. Specifically, we saw improved tolerability relative to docetaxel, and when we conducted GLP tox studies, we saw a similar PK profile to what we saw with CRLX101.

We are eager to move CRLX301 into the clinic and are glad that our IPO has provided the funds to do that. The GMP manufacturing line is underway and we expect to begin dosing patients in two sites in Australia as soon as the GMP run is complete.

With that, I will turn the call over to Chris for a quick financial update, and then we will take your questions. Chris.

Thanks, Oliver. Let me briefly highlight our financial results for the second quarter of 2014, which are included in the quarterly report on Form 10-Q that was filed earlier this afternoon.

For the second quarter, we had a net loss of $7.4 million, compared to the net loss of $4.9 million for the second quarter of 2013. The increase in net loss for the 2014 period was due principally to recording of a loss on extinguishment of debt of $2.5 million.

Our 2014 convertible notes were converted into common stock at the IPO at a 22.5% discount from the IPO price. The discounted conversion price generated the loss on extinguishment of debt at the IPO date.

We ended the second quarter with cash and cash equivalents that totaled $64.3 million. We continue to expect that we will have the cash necessary to fund four key clinical milestones -- one, Clinical Proof of Principle combination data in relapsed ovarian cancer; two, Clinical Proof of Principle combination data in nonmetastatic rectal cancer; three, randomized clinical proof-of-concept combination data in relapsed RCC; and four, Phase I monotherapy data for CRLX301.

We expect to have cash runway into the first quarter of 2016 if we do not commence additional randomized trials in either relapsed ovarian cancer or non-metastatic rectal cancer. However, we're optimistic in both indications that we will be able to make positive go/no go decisions in the first quarter of 2015, in which case we would expect to raise money to fund randomized trials in those indications.

With that, let me turn the call over to Oliver, who will lay out the key milestones we expect to achieve in the remainder of this year and in 2015.

Thanks, Chris.

The first key milestone for Cerulean after going public was to launch the randomized trial of CRLX101 in combination with Avastin in third- and fourth-line RCC. That was a major use of our IPO proceeds, and I'm glad to report that we have achieved that milestone.

The next milestone we expect to achieve this year is to launch the Phase I trial for CRLX301 by year-end. That trial also represents the use of our IPO proceeds and we are confident that we are on track.

Next, we expect to have clinical signals of efficacy, what we call Clinical Proof of Principle data, for CRLX101 around year-end in both relapsed ovarian cancer and nonmetastatic rectal cancer. That means we should be able to announce go/no go decisions in both indications in the first quarter of 2015.

As we look to the second half of 2015, we expect to have Phase I data for CRLX301 by the end of the year. We're excited about the prospect of promising clinical data from the second candidate from our Dynamic Tumor Targeting Platform.

Last, but certainly not least, we expect to have (technical difficulty). This is a very important milestone for us in that it will represent a transition from Clinical Proof of Principle data to clinical proof-of-concept data where CRLX101 in combination with another cancer treatment compares favorably to standard of care in a well-controlled, randomized trial.

As you can tell, it will be an exciting 18 months ahead, and we look forward to reporting success on these milestones.

With that, we will open up the call for your questions. Crystal, please prepare the queue.

(Operator Instructions). Michael Schmidt, Leerink.

Thanks for taking my question. I was wondering, will you provide any more data from the single-arm RCC trial?

Thanks for joining the call and thanks for your question. Yes, when that trial is completed we will, of course, read out on it, but as we have said before, we have already reached the most important decision go/no go hurdle that triggered the randomized RCC trial. But yes, once that trial is completed, we will read out on it.

Okay, and how many patients, just to reminder, are you planning to enroll in that single-arm study?

That RCC single-arm trial was sized for 22 patients.

Okay, got it. And then, with regards to the randomized combination study in RCC, are patients required to have failed both VEGF and mTOR inhibitors or are there other criteria that are being used for enrolling those patients?

All of them will have had a prior -- everybody at this stage will have had VEGF inhibitors given. The vast majority will have at least one tyrosine kinase inhibitor. They may have had even two tyrosine kinase inhibitors, but particularly if you are a fourth-line patient, you would imagine the typical (technical difficulty) to be two tyrosine kinase and probably an mTOR inhibitor in fourth line.

In third line, you will have either two tyrosine kinase inhibitors or tyrosine kinase plus mTOR. That depends a bit on the patient.

Okay, so there is -- some patients will not have [to use] mTOR inhibitors, it sounds like?

Yes, that is true, because particularly in the United States, if you are a third-line patient, entering third line, your two prior lines may very well have both been tyrosine kinase (technical difficulty)

Okay, thanks. Lastly, I think Genentech announced a PDUFA date for Avastin in ovarian cancer, based on the AURELIA study, this November, and I was wondering if potential approval in the US -- I was wondering what your thoughts are on that and whether that would impact your potential relationship with Genentech in any way? Thank you.

Michael, on the Genentech relationship, of course, I can't speculate on that at all at this point. We are encouraged by the AURELIA data in that it shows, on one hand, that you can combine Avastin with chemo and it seems to drive PFS.

The OS benefit was statistically not significant in that trial, so I'm going to be very curious to see what the FDA will do. As you pointed out, the PDUFA date is not in the too distant future, so the ability for us to see our own data, the PDUFA data on AURELIA, I think is a very nice confluence, which is why we are saying that by the first quarter next year, we will be in a pretty good position to lay out where we are going to go with the combination.

Okay, great. Thanks so much.

(Operator Instructions). John Newman, Canaccord.

Thanks very much for taking the question. Could you guys talk a bit about the tumor types that you might enroll in the CRLX301 study?

I was also curious if you could discuss maybe the cutoffs or what you would like to see in the rectal and ovarian indications that would allow you to proceed forward. Thank you.

Thanks for joining the call and thanks for your questions, so let me try to take them one at a time.

For 301, it's a traditional Phase I design initially where we are looking at solid tumors in general, so it's not restricted to particular tumor types. As we will then progress further with the trial, the current plans are that we will then enrich for specific tumor types later on, but initially it is just a standard Phase I solid tumor patient population.

The signals that we are looking for in the ovarian trial is -- most importantly here what we are looking to see is objective response rates for the combination that then also is a durable response, so a 20% threshold in ovarian cancer in this patient population for an objective response rate would be the hurdle rate we have talked about in the past as something that we would be very excited if we can cross that and go north of 20%.

Then for the rectal cancer trial, when you look at the standard of care again in the non-metastatic rectal cancer disease, you will have capecitabine and radiation as standard of care being administered. Unfortunately, that pCR rate is only 15% to 20%, so we believe that there is a fair amount of headroom to improve on that.

What we would like to see with our combination trial by adding onto that standard of care is to move significantly north of that 15% to 20% rate. One cutoff point that you can think of that we have talked about in the past is about a 30% or higher rate would be very exciting for us.

Great, thank you very much.

(Operator Instructions). I am showing no further questions at this time. I'd now like to turn the call back over to Dr. Fetzer for any closing remarks.

Thank you very much, Crystal, for the transition here, and I want to have all of you -- thank you very much for joining us. We look forward to reporting on the continued progress the next quarter and wish you a good night.

Thank you for attending the Cerulean second-quarter conference call. You may now disconnect.