Dare Bioscience Inc (DARE) 2016 Q2 法說會逐字稿

Welcome to Cerulean's second-quarter 2016 conference call. This call is being recorded. My name is Bessie, and I will be your operator today. With us from the Company are Chris Guiffre, CEO; Gregg Beloff, CFO; Adrian Senderowicz, CMO; and Alejandra Carvajal, EC.

Mr. Guiffre, please proceed.

Good afternoon, everybody. And thank you for joining us this afternoon. Let's start with the comment from Alejandra on forward-looking statements that may be made during the call.

Certain remarks that we make during this call about the Company's future expectations, plans and prospects constitute forward-looking statements for 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, August 4, 2016.

Thanks, Alejandra. The Cerulean team has made strong progress since our last quarterly call advancing both of our clinical candidates, CRLX101 and CRLX301. I'll start today's call with two topics that are probably on most of your minds.

First, we look forward to the readout of our randomized RCC trial this quarter. Our CRO has notified us that we have reached 70 events, which is the prespecified number of events in the protocol required to trigger a readout. Therefore, we expect to receive tables, listings and figures shortly, and we expect to provide top-line results soon thereafter. I want to be clear that we do not have data in-house yet, but we will begin a quiet period after this call and continue the quiet period until such time as we announce the top-line data.

Second, we are proud of the fast-track designation in platinum-resistant ovarian cancer that we received last month based on data from just nine patients in our trial with the GOG Foundation. We presented these compelling data in an oral presentation at the experts meeting on gynecologic oncology 2016. Adrian will go into a bit more detail on these findings in just a few minutes.

So today's 101 update will focus on 101's two lead indications, RCC and ovarian, as well as our collaboration with AstraZeneca and the NCI. As we await the RCC readout in the coming weeks, it's important to understand the attractive market opportunity. Since our last earnings call, lenvatinib was approved for second-line RCC treatment, joining nivolumab and cabozantinib as approved second-line agents, all in the last nine months. We have predicted all three second-line approvals, and we are glad to see better options in first- and second-line RCC. With nivo being used in first line and the two new TKIs being used in second line, we anticipate significantly better outcomes for first- and second-line RCC patients, leading to more patients in need of treatment in third and fourth line, thereby increasing our addressable market, which currently is 10,000 to 15,000 patients per year in the US alone.

We chose to go into third and fourth line because we anticipated how crowded first and second line would become, and we were not aware of anyone else actively developing in third- and fourth-line RCC. We also chose to go into third and fourth line because the seven agents that are used in that setting provide little treatment benefit.

Finally, we chose to go into third and fourth line because late-stage patients need better-tolerated treatment options. Our strategy appears sound, and we hope the data from the current trial will support moving into Phase 3 so we can seek approval to address the significant unmet need in third- and fourth-line RCC.

On the heels of RCC, we are developing 101 in a second important indication: platinum-resistant ovarian cancer. First, we generated impressive monotherapy data in late-stage platinum-resistant ovarian cancer. Then we studied 101 in combination with Avastin and saw even greater benefit than with 101 alone. Next, we began the current trial of 101 in combination with weekly paclitaxel, and we did this in collaboration with the GOG Foundation. In May, Adrian gave an oral presentation of the results from the Phase 1b portion of that trial at the experts meeting on gynecologic oncology 2016.

At this point, I will turn the call over to Adrian to walk you through those results.

Thank you, Chris. In my oral presentation I spoke about the Phase 1b portion of the ongoing study. 101 at this recommended Phase 2 dose was active and well-tolerated, with weekly paclitaxel at this recommended Phase 2 dose. We believe 101 will be the best-in-class topo 1 inhibitor in ovarian cancer and in other indications where topo 1 inhibitors like topotecan and irinotecan are commonly used. This is exciting because others have attempted to combine topotecan with paclitaxel but have not been successful due to severe toxicity. There is a profound need for a better-tolerated topo/paclitaxel combination to treat ovarian cancer.

In the nine Phase 1b patients we saw a synergistic antitumor effect for the combination, with five patients achieving a partial response. In general, weekly paclitaxel has a 20% to 25% response rate in platinum-resistant ovarian cancer patients. 56% of our Phase 1b patients achieved a partial response, which is particularly striking given that they were second- through fifth-line patients with a median of three prior therapies. The treating physicians were excited about these results, and so were we.

I'd like to draw your attention to two findings I think are important. First, one of the Phase 1b patients has a complete disappearance of tumor masses. She had previously been treated with paclitaxel, carboplatin and doxil. Then she tried our combination and experienced 100% tumor shrinkage by the end of cycle four. Due to her detectable CA-125 levels, her results did not constitute a complete response under the gynecological cancer intergroup criteria.

Second, five of the Phase 1b patients previously progressed on Avastin, and three of these patients achieved a partial response on our combination. Patients who fail Avastin represent an area of particularly high unmet medical need in platinum-resistant ovarian cancer, so seeing a roughly 60% response rate -- and these are all-comers -- or in patients with higher Avastin is very encouraging to me.

All these early data suggest that this combination is very active. This profound tumor shrinkage was associated with significant decrease in CA-125 levels in approximately 33% of patients, validating the tumor responses. And these results were achieved with an impressive safety profile. (inaudible) neutropenia was observed in only one patient.

This outstanding data led us to amend the protocol to enroll additional patients who have failed Avastin treatments. We would like to enroll a total of about 30 patients in the study, and enrollment under the amended protocol opened in late July.

To date, we have enrolled 18 patients. We expect to provide data from the second group of patients at ASCO in October. Based on what we have seen so far in this trial, we have decided that the 101/paclitaxel on combination is our preferred combination in platinum-resistant ovarian cancer. And we have scheduled an end-of-phase-2 meeting with FDA this fall to discuss our trial design for a proposed pivotal study.

As you know, based on the data from the first line patients in the study, we were awarded fast-track designation. We appreciate the FDA's acknowledgment of 101's potential in an area of significant unmet medical need, and we look forward to working closely with FDA to bring a new treatment option to women living with this disease.

With that, I will turn the call back over to Chris.

Thank you, Adrian. Before I turn to 301, here's a quick update on the collaboration with AZ and NCI. Dr. Aneesh Thomas, the PI at NCI, has dosed the first patient with 101 and LYNPARZA. He did that in May. He has also enrolled the first cohort, and he has seen no DLTs so far. It's important to note that we are early in the dose escalation at this point, and we will continue to update you as we progress in dose escalation.

Now let's turn to 301. In June, we announced that 301 had advanced into Phase 2a using an every-three-weeks dosing schedule. Now both of our platform-generated NDCs are in Phase 2 clinical development. In parallel, we continue to explore dose escalation of 301 given weekly in the Phase 1 portion of the trial. We have successfully dosed three patients at 25 migs per meter squared, which represents the cumulative dose of 75 migs per meter squared given in the every-three-weeks dosing schedule. This dose level was generally well-tolerated by all three patients, and all patients received at least eight weekly doses without the need of dose interruption.

We are currently dosing patients at 35 migs per meter squared weekly. This is more drug in a given three-week period than the 90 migs per meter squared in the every-three-weeks schedule, which was discontinued due to DLTs. So far, we've seen no DLTs at 35 migs per meter squared weekly schedule, and we will continue to dose-escalate 301 with the weekly schedule until an MTD is declared.

Before I ask Greg to provide a financial update, I will quickly share some developments with our platform technology. Our platform has put two NDCs into Phase 2 clinical development so far, and now our technology is being expanded into two new frontiers, which we recently presented at the AACR Engineering and Physical Sciences and Oncology special conference. The AACR presentation highlighted our work with multi-drug NDCs. These MNDCs allow us to combine two different payloads in one NDC to vary drug ratios to empirically determine maximum therapeutic benefit. This is similar to what Celator did so successfully with their nanotechnology before they were acquired by Jazz.

We also presented data on antibody NDCs. These ANDCs provide improvements over traditional ADCs by controlling the release of both drug and antibody using our NDC linker technology and also by attaching 300 to 400 payloads molecules per antibody instead of the three to five payload molecules that can be attached to an average antibody using ADC technology. We believe these new applications of our technology represent potential long-term value drivers for our Company, not just for developing new proprietary programs but in forging partnerships with larger organizations interested in accessing this cutting-edge technology.

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

Thanks, Chris. I will now highlight our financial results for the second quarter of 2016, which are included in the Form 10-Q that was filed after market close today. For the second quarter we had a net loss of $10.9 million, compared to a net loss of $9.9 million for the second quarter of 2015. We had $47.2 million in cash and cash equivalents at June 30, 2016, and we believe that this cash is sufficient to fund our planned operations into the second quarter of 2017. And, if necessary, we can reduce or defer operating expenses to fund our operations into the third quarter of 2017. Obviously, we will need to raise additional capital to continue to fund our long-term operations, and we expect to do that at some point in the next 12 months.

In the first half of 2016, we achieved four previously stated milestones. We reported top-line data from the ongoing ovarian trial with the GOG Foundation of 101 plus weekly paclitaxel. We dosed the first patient in the Phase 1/2 trial of 101 and LYNPARZA. We presented 301 clinical data at TAT, AACR and ASCO. And we dosed the first patient in the Phase 2a portion of the 301 trial. We are focusing our guidance on the key milestones in the second half of 2016, and we expect to report the following events between now and year-end.

We will report top-line data, both PFS and ORR, from our randomized Phase 2 trial of 101 in combination with Avastin in third- and fourth-line metastatic RCC. We will present data at ESMO from the second group of patients from the Phase 1b2 trial of 101 in combination with weekly paclitaxel in platinum-resistant ovarian cancer. And, finally, we will present at ESMO data from an ongoing Phase 1 trial evaluating weekly dosing of 101.

With that, let's open the call for Chris, Adrian and me to take your question. Destiny, please prepare the queue.

(Operator Instructions) Joe Pantginis, ROTH Capital Partners.

I'm going to ask this question somewhat facetiously and ask, am I missing some regard to the RCC indication. There's a [Bayer] case out there right now that asks, in some of our discussions and we have talked about it, about there is no market for third and fourth line. But I don't understand why that's the case, especially with your comments today regarding the new drugs for first and second line, patients living longer. Eventually, these patients would relapse and therefore provide you with more patients. So I guess the question is, what am I missing on that Bayer case?

Joe, I wish I could answer it for you. I've asked the same question myself. I think that we have been very clear since the time we did test the waters road show meetings before we went public that we think third and fourth line is a very attractive opportunity because it is a meaningful market opportunity to begin with, where there is very little competition. And that market opportunity was likely to grow because of the anticipated approvals that we saw coming down the line. All three of those approvals have happened in the last nine months, and I happen to view that as very good news for kidney cancer patients. I also happen to view it as very good news for us in our drug.

But I will acknowledge for you -- I think you said the Bayer case. I will acknowledge for you that I do think that some folks on Wall Street have viewed RCC as basically taken care of as a result of these three approvals. I happen to disagree with that, but only time will tell. And I wonder if Adrian would like to add anything because I don't know what else I can say other than what I've said many times before on this topic.

Thank you for the question, and I have the same feeling. I can tell you that what we are observing and we will observe in RCC, having many more patients in third and fourth line, has happened over the years for multiple other solid tumors. And even heme malignancies such as multiple myeloma, colon cancer, breast cancer, where patients are living longer because there are better first- and second-line therapies, so the market has grown. And we believe that RCC, that's going to be exactly the case. So, thank you.

No, that's really helpful. And if I could just follow up a little separately here, obviously one of the potential advantages of these NDCs here are the safety profile. And you are starting to accumulate data to show that. So I guess, what are the real advantages here, obviously, besides efficacy, especially when you are looking to combine with PARP inhibitors to be able to show additional safety or a safety benefit?

I will take the safety consideration for RCC first, and then we can discuss about the PARP. Another issue that is important for RCC is, as you know, the majority of treatments are TKIs, including lenvatinib and (inaudible) TKIs. And one of the mechanisms for resistance is the up-regulation of HIF-1 alpha. And it makes a lot of sense that for patients that progress because of HIF-1 alpha over-expression, that we come on third and fourth line with our combination that actually gets rid of HIF-1 and HIF-2 alpha. So that's one of the biological reasons why it makes a lot of sense.

Beyond the safety, we have more than 400 patients. And as you know, we believe we have the best topo 1 inhibitor in the clinic, particularly regarding safety profile. And we have minimal bone marrow toxicity, minimal GI safety that allows us to do combination studies not only with LYNPARZA, but we are planning to do other combination therapies with multiple chemo regimens. And we believe that if that is the case, we will be able to be the best and replace, actually, all other topo 1 inhibitors in the clinic.

That's very helpful. Thanks a lot, guys.

Michael Schmidt, Leerink Partners.

This is (inaudible) on behalf of Michael Schmidt. My first question is on regarding potential pivotal study for CRLX101 combo with paclitaxel. Can you provide more color on the current thinking on endpoints and on patient enrollment criteria? For example, what percentage of patients you guys are thinking to enroll who have failed to prior Avastin therapy?

Okay, of course we will be glad to provide that. I'm going to turn it over to Adrian. I just want to start, though, by underscoring that nothing is finalized until we launch the study. And certainly nothing is finalized until we have our end-of-phase-2 meeting with the agency, which we are not going to have until this fall. So, what we can tell you right now is our current thinking, but that is subject to change. So with that lawyerly disclaimer, and my apologies for doing so, I will turn it over to Adrian to give you the answer you're looking for.

Thanks for the question. It's a very important question. In general, when we do a pivotal study, we try to mimic what kind of clinical studies you have in Phase 1 and Phase 2. So, you can imagine that we are going to try to not deviate significantly from what the patient population we have been treating. And certainly, one of the highest unmet medical needs is post Avastin. However, as Chris stated very clearly, we will be exploring different potential populations and design at the end-of-Phase-2 meeting.

However, there are a few things that are clear, at least from us, is that the control arm will be most likely weekly paclitaxel. And a very accepted end-point for approval in pivotal studies is PFS. So those are the two things that are very clear, and I hope I was able to address your question.

Yes, sure. That was very helpful. And my second and last question -- after Lucentis the positive top-line data we saw from Tesaro's PARP inhibitor in their NOVA study -- I was wondering if it changes the current strategy and priorities for you guys, specifically related to what indication to pursue with 101 and LYNPARZA combo.

It's a great question. And I just want to start off by congratulating our friends at Tesaro. Those are outstanding data, and it's more evidence that PARP inhibitors are an important new treatment option for patients. We have been saying that for a while, and we are glad that other companies are generating the data to support our views in the space and our claims. But Adrian, do you want to make any specific comments?

Well, again, we congratulate, again, Tesaro's folks because they have a very interesting opportunity, a maintenance for patients who are cisplatin-sensitive. So, certainly, our space is mostly in platinum-resistant patients. But more importantly, that combination can be used not only in ovarian cancer patients with other tumor types such as [super]-negative breast cancer. We can consider in pancreatic cancer that has (inaudible)-deficient patients and many other tumor types that we can expand the ovarian indication and other tumor types. So we believe that we can enhance the potential Tesaro opportunities in ovarian and many other indications.

Thank you. Thanks for taking my questions.

Sure. And I think the key point there, just to be very clear, those data are generated in platinum-sensitive patients. We are focusing in platinum-resistant.

At least initially.

Yes.

John Newman, Canaccord.

Looking forward to the upcoming data.

So are we.

I just had two questions. The first question is, Chris, I just wondered if you could remind people, given all of the attention that the PARPs are getting, with Medivation being in an M&A process and PARPs already approved, could you remind us some of the properties for 101 that are different and allow combination where a lot of other agents are not able to be combined?

And the second question is just relating back to one of the first questions on the call, which is there has been a lot of discussion about third-line positioning for 101 and how that's a small market opportunity. But is there anything that would prevent you from testing in combination with PD-1s going forward? I think you are already looking at that, but I just wanted to touch on that a little bit. I know you talked a lot about this, but I just thought I would ask.

All right. Let's take them one at a time. First, you want to talk about PARP, and I'm glad to do it. I think we should all thank AstraZeneca, Tesaro and Medivation for drawing attention to this new, important class of drugs. Just even a couple years ago, you didn't hear much about PARP when you heard a loud chorus of PD-1, PDL-1, maybe some CAR-T. But PARP has certainly gained a lot of momentum with the approval of LYNPARZA, which was the first approved PARP inhibitor; and then with Tesaro's terrific data and with Medivation doing a wonderful job, I think, of shining a light on just how valuable their PARP inhibitor could be if it were owned by some other company.

So with all that said, remember that PARP inhibitors prevent DNA damage repair. That is a very important mechanism, and that is why they are such an interesting class of drugs. But just imagine how obviously synergistic it would be to combine a PARP inhibitor with a drug that actually damages the DNA. So if your PARP inhibitor is going to prevent the DNA damage repair, an ideological combination is a topo 1 inhibitor, which damages the DNA.

So you don't have to take my word for that because I'm not the only person who believes that makes sense. And we at Cerulean are not the only people who believe that makes sense. Many people have tried combining topo 1 inhibitors with PARP inhibitors because of the obvious potential synergy there. And there have been some successes pre-clinically, but there have been nothing but failures clinically because of the synergistic tox that occurs.

And I'm not going to go too deeply into this, but I want to just walk you through it in a couple steps to show you why prior attempts have failed and why we and the NCI and AstraZeneca are bullish about our current attempt.

So, whenever you combine a topo 1 inhibitor with a PARP inhibitor, you get synergistic cell killing. That's a fact. You get it anyplace that you have the combination of the two agents. What you'd like is the synergistic cell killing in the tumors. What you don't want is synergistic cell killing in the bone marrow. So when you try combining any PARP inhibitor that you would like with any of the other topo 1 inhibitors, what you get, unfortunately, is synergistic bone marrow tox. That has been what has played these combinations. Okay?

When you combine a PARP inhibitor, and we have combined with more than one PARP inhibitor pre-clinically -- when you combine a PARP inhibitor with 101, you can avoid that bone marrow tox because essentially 101 spares the bone marrow by clearing the bone marrow in about 24 hours. So when you dose with 101 and then wait to dose with the PARP inhibitor, by the time you dose with the PARP inhibitor there is no 101 left in the bone marrow but there is 101 still in the tumor. And then, voila, you get the synergistic cell killing where you want it in the tumors and not in the bone marrow where you don't.

That's why we believe that what we are working on right now could be very important not just for us but the entire PARP class and the entire class of patients who would benefit from the first clinically relevant PARP/topo combo. So before I answer your second question, does that cover it? Or maybe does that go into more detail than you even wanted?

No, that makes a lot of sense. Thank you.

Okay. So then you mentioned PD-1. Is there any reason why we couldn't test with PD-1? The answer, of course, is no. One of the things we do with our NDCs is we design these NDCs to basically target tumor, spare healthy tissue and enable combinations. And to date, we have tried a number of combinations and we haven't yet found one that doesn't work, that's not tolerable. So that doesn't mean that we will go 100% and all combinations will work. But we see no reason why you couldn't combine with PD-1 or PDL-1, just like we see no reason why we couldn't do other chemo combinations or other DNA damage repair combinations.

But since you asked about immuno-oncology, I'll just remind you that at AACR we presented a poster for the very first time showing that we were actually working in the lab in this space. Prior to that, we only talked about angiogenesis combinations, chemo combinations and DNA damage repair combinations.

Our fourth pillar is immuno-oncology combinations. We are excited about the data we presented. We got a lot of attention at AACR because of it. That was all good. But it is just our very first step into a new frontier. So it's premature to say where we will go in the clinic in combining with IO agents. But I can tell you we continue to work in the lab to understand the pros and cons of combining with a number of different agents including a variety of IO agents.

Great. Thank you.

(Operator Instructions) (inaudible).

Apologies for playing the devil's advocate here, but could you talk to the contingency plan, assuming you hit your hazard ratio of 0.3 as opposed to 0.4? Will that, in your mind, justify a move to Phase 3?

Sure. I think it's a good question, [Debji]. Obviously, at this point for me, all I can really say on that point is that we have been excited to see this data for a while now and we continue to be excited. And we expect that that data will support us going into Phase 3. If it does, then I think the question that you raised is moot. If it doesn't, then I think you are welcome to ask me that question once I see the data, and I will tell you why or why not we think it supports going into Phase 3.

And one more thing, then. The control cohort has got a range of different physician choice treatments. Right?

Yes.

Can you just lay out the potential scenarios in terms of the expected PFSes for the five or six different agents that could be potentially used in this setting?

Sure. In the Phase 2 study that you are asking about, there was dealer's choice and a total of seven agents were eligible. So there are four TKIs that are used in this setting. There are two mTORs. And there is Avastin. So those are the seven agents.

Debji, I wonder if you could put your phone on mute. We are getting some real bad feedback on this end. Thank you.

So, again, there are seven agents. If you look at the data that's available to us -- randomized data, single-arm data, retrospective analyses -- you see a fairly clear picture that, regardless of what you use in third and fourth-line RCC, you are going to see about 3.5 to four months of PFS, and you are going to see about 2% to 4% response rate.

So we will find out very soon what the control arm does in our study, but we designed the study under the assumption it would deliver about 3.5 months of PFS. And we have not seen any literature since the design of this study to date that would contradict that assumption.

Thank you, and good luck.

And at this time I am showing no further questions. I would like to turn the call back over to Mr. Guiffre for closing remarks.

Okay. Thanks, everybody, for joining us today. We look forward to reporting on continued progress in November. Have a good night.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.