Madrigal Pharmaceuticals Inc (MDGL) 2011 Q1 法說會逐字稿

Greetings and welcome to the Synta Pharmaceuticals first-quarter 2011 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Rob Kloppenburg, Vice President of Investor Relations for Synta Pharmaceuticals. Thank you. Sir, you may begin.

Hello, and thank you all for taking the time to join us today. With me are Dr. Safi Bahcall, our Chief Executive Officer; Keith Ehrlich, our Chief Financial Officer; and Dr. Vojo Vukovic, Synta's Chief Medical Officer.

This morning, we issued a press release that reported results for the first quarter of 2011. This release can be found on our website at www.syntapharma.com.

Before we begin, I would like to point out that we will be making forward-looking statement based on our current intent, belief, and expectations. They are subject to certain risks and uncertainties, and I encourage everyone to look at the SEC filings for additional detail.

I will now turn the call over to Dr. Bahcall, after which we will open the floor to questions. Safi?

Thanks, Rob, and good morning, everyone. Today I'll make a few brief remarks, turn it over to Keith for a financial update, and then we'll open up for questions.

Nearly 400 patients have now been treated with Ganetespib, our Hsp90 inhibitor. We continue to be encouraged by the clear signals of clinical activity now seen in multiple tumor types, as well as the favorable safety profile, which is an important differentiating factor.

We have seen a high degree of interest and good enrollment across our clinical programs, including the ongoing trials in lung, breast, gastric, colon, prostate, and several others, as well as good progress in the new trials expected to initiate in the coming months.

This interest is driven by the known importance of this target in oncology and the results we have seen in the clinic with Ganetespib. These include -- first, the objective evidence of single agent activity; and second, the well-tolerated safety. We are seeing tumor responses without the serious bone marrow toxicities or neuropathy seen with chemotherapy, and without the liver or ocular toxicities that have been associated with other Hsp90 inhibitors.

Most immediately, we are now initiating sites for our Phase 2b/3 trial of Ganetespib in combination with docetaxel in second-line non-small cell lung cancer. We expect to enroll the first patient in the next few weeks. There's a lot of enthusiasm for investigators for this trial, and we're confident we'll have early results from the Phase 2b portion of the trial by the first quarter of next year.

Later this year, we'll be initiating new combination trials in multiple myeloma, breast cancer, prostate cancer, AML, and with radiotherapy. All of these trials are either investigator-sponsored or foundation-supported, which helps keep our costs down while continuing to advance and expand the program.

One of the reasons we and others have been so excited about the potential for Ganetespib is its ability to inhibit known mechanisms of resistance or repair to other agents. For example, chemotherapy, certain kinase inhibitors, or radiation. So we are particularly excited about the combination trials that are in the process of initiating.

Our Phase 1 study of Ganetespib in combination with docetaxel in solid tumors has fully enrolled, and we are encouraged by the safety profile that has been seen to date. That safety profile is supportive of the trial we will be initiating in lung cancer. More results from this trial will be presented this summer.

Before turning the call over to Keith, I'd like to make one more comment. We remain committed to concluding one or more partnerships this year. We have three unpartnered assets -- Ganetespib, Elesclomol, and our CRACM Ion Channel Program. We're seeing real interest in all three of these programs, and continue to have confidence we will enter into one or more partnerships for one or more of these programs by the end of this year. As we have previously stated, we favor a regional partnership for Ganetespib and Elesclomol, and are looking to conclude a broader global partnership for the CRAC program.

Our recent financing has not changed our approach to partnerships. From a strategic standpoint, our strong financial position means that we have a stronger negotiating position in these discussions.

I'll now turn the call over to Keith Ehrlich. Keith?

Thank you, Safi, and good morning, everyone. Together with $34.8 million of net proceeds raised in our issuer-directed, registered direct offering of common stock in April 2011, we entered the second quarter of 2011 with approximately $75 million of cash resources.

Total collaboration revenues in the first quarter of 2011 were $1.1 million as compared to $4 million in the same period of 2010. In the first quarter of 2011, our research and development expenses were $9.4 million as compared to $10.2 million for the same period of 2010. Our research and development revenues and expenses were lower in the first quarter of 2011 than the same period of 2010, as a result of the conclusion of the funded research portion of our Roche collaboration in December of 2010.

In the first quarter of 2011, our General and Administrative expenses were $2.7 million as compared to $3.1 million for the comparable period in 2010. In the first quarter of 2011, our net loss was $11.4 million or $0.27 per basic and diluted share, as compared to $9.3 million or $0.24 per basic and diluted share. Based on our current operating levels, we estimate that our cash resources will be sufficient to fund the Company's operations into the second half of 2012.

I will now turn the call back to Safi.

Operator, we will now open the call for questions.

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

Thanks for taking the question. When you talk about having data in the first quarter of 2012, just want to be sure that expectations are set appropriately. What data would we have? Would this be initial response rate or safety? Or what would be -- would it be from all the patients or some subset of patients? What should we expect?

Excuse me, everyone. It appears our speakers line has disconnected. Please stay on the line. One moment.

Our next question is coming from George Zavoico of MLV.

I'm sorry -- Operator, I think Jason Kantor had the question before me. He didn't have an answer -- he didn't have an opportunity to have his question answered. Do you mind going back to him first and I'll wait?

Yes, one moment.

Operator, this is Synta. Can you hear us now?

Yes, we do hear you on the line.

Okay. Maybe as George said, we'll just finish answering Jason Kantor's question. His question was -- setting expectations on what data we'll have in first quarter of next year.

The answer is, we'll have interim results, some initial fraction of the patients of the first-stage. So not all 240 patients; maybe it's 100 patients; maybe it's more than that. And that will be both some safety and initial activity data.

George, do you want to continue with your question?

Okay. Yes, I just -- in your remarks, you mentioned a lot about Ganetespib. I was wondering if you could just give us a brief summary of what your short-term and mid-term plans are moving forward with Elesclomol?

Sure. Hey, George, this is Vojo Vukovic. As we mentioned in the press release, we have put Elesclomol back into the clinic. We have two ongoing trials in AML, and there's a couple of group trials in ovarian cancer ongoing. We're planning on initiating a non-small cell lung cancer randomized trial the second half of this year.

We are currently completing some additional biomarker work, which we believe will be quite helpful in designing and identifying -- design the studies of identifying the patients who are most likely to benefit from treatment with Elesclomol. So as soon as this work is completed, we'll be proceeding with the non-small cell cancer trial.

(technical difficulty) Sorry? Hello?

Yes, we can hear you, George.

Okay. This is additional biomarkers or -- in addition to LDH, correct? I think we talked a little bit about that at the AACR. So this is a better biomarker or more predictive?

Yes. What we have done, really, we -- now with the complete understanding of the mechanism of action for Elesclomol, we are in a position to evaluate the range of biomarkers that are directly linked to the mechanism of action. And we're currently doing that. We have a whole range -- better than a dozen of different biomarkers that are very closely related to Elesclomol's mechanism of action. And therefore, we have the expectation that these biomarkers could actually turn out to be more powerful than LDH.

Okay. And just a follow-on, a quick financial question. A lot of your trials are, as you say, ISTs or cooperative group-sponsored. And I imagine that still is the same for Elesclomol, because you mentioned that's how you're going to move forward with Elesclomol.

I congratulate you on bucking the trend and actually showing lower operating expenses this quarter than a year ago. But moving forward, especially with the initiation of the Phase 3 trial in non-small cell lung cancer, which I'm presuming is not one of the ISTs, how do you guide your R&D and operating expenses for 2012?

Well, we haven't -- this is Keith -- we haven't put out specific guidance on our expenses. Obviously, as you said, as we get into the trials, the expenses would increase in that area. But as some of the other trials that we've been engaged in, in previous quarters, are settling down, that will have some mitigating effect. But as we said, the cash is certainly sufficient to get us into the second half of next year.

And Elesclomol is still being funded by external sources?

There's no assumption in there of external-sourced revenues.

Okay. Thank you.

Shiv Kapoor, Morgan Joseph.

Thanks for taking my questions. Presumably, you're having discussions, ongoing discussions with partners about the Hsp90 program. Could you talk about the flexibility that you might have in your Phase 3 program to make changes, depending on what partner expectations are?

Sure. We've built the program to have a very high degree of flexibility, because it's a two-stage trial, where the results of the first stage -- the large Phase 2b or small Phase 3, the initial portion -- are going to be used to help design the Phase 3 portion or the second-stage portion. So there is an interim point between the first stage and the second stage, between the user smaller Phase 3 and a larger Phase 3, where we are expecting to use the information that we have to adapt the design into Phase 3.

At that point, if we have partnered with a -- if the program has been partnered, and the partner has interests, we can certainly reflect that in that changes to the amendment that we make at the time of the Phase 3 portion.

Robin Davison, Edison Investment Research.

Actually, I just wanted to be clear about that last point that you made. In the post-Phase 2b/3 study in non-small cell lung cancer for Ganetespib, would you be -- do you have the option of expanding it beyond the potential 800 patients, if you had a fair partnership in place and the data supported that?

Yes. The way the trial is designed, we are managing it operationally, and have built into the protocol and built into the understanding with all the sites that we're working with, that we will be conducting the first stage of the trial, and then using the information that we gain from the first stage of that trial -- whether it's which patients are responding the best; which patients are responding the least; any safety issues; where we want to focus -- as well as getting an estimate of the drug effect, which can then be used to adjust the trial size.

You need an estimate of the drug effect to make an estimate of the end that you want, to achieve a certain level of power in your Phase 3. So all of that has been pre-specified that we will be using that data, before we start the second stage of that trial, to finalize the size of that second phase of the trial, as well as various characteristics, such as an inclusion/exclusion criterias and so on.

So that means there is an opportunity to make that second stage of that trial substantially larger, if that's what we decide at the time that we want -- or substantially smaller. That decision will be driven by the data as well as the context at the time if we, for example, have a partner on that program and have a particular preference.

Right. I see. [Getting off] on the sort of expanded Phase 2 program with the investigator and cooperative-sponsored studies of Ganetespib, you've now sort of disclosed the targets that you're going for -- obviously, multiple myeloma, breast, prostate, and AML. Is it likely that those studies would all be with the standard of care in those therapies, [especially Rotezamib], docetaxel, [sotarabine], et cetera? Or are they sort of more unusual indications that that particular investigators are interested in?

Here, Robin. This is Vojo Vukovic. Yes, just confirming what you assumed. When we do combination trials, can attest it will be added to the standard of care that's prevailing in that particular patient population. And the benefits of that approach is that, if you see positive results, it will be immediately set up for a registration approach, immediately following that [single introduction] phase.

Right. Okay. And the fifth one was radiotherapy. Is that likely to be any specific tumor type? Or would that be -- is it sort of just patients that may undergo -- just more exploratory, undergoing radiotherapy?

Yes, sure. We have specific targets -- two tumor types that we're exploring. We are adding [that aspect] to the standard of care, which includes radiotherapy in these settings. And again, like our other studies, this is looking for -- validating the signal relative to safety. And if you see something that's positive, that's good, we can immediately move forward.

Right. Okay. I appreciate we're very close to the ASCO notification day, I suppose. I think we know that the Phase 2 non-small cell lung cancer data is coming out. Do we know of any -- can you disclose any other Phase 2 studies will be reported at ASCO?

Yes. So, in addition to the non-small cell lung cancer presentation, we'll be also presenting on our GIST Study.

All right.

In addition to that, we will be also presenting some Phase 1 data as well.

Okay. Excellent. Just finally, I think, for Elesclomol in non-small cell lung cancer, have you identified which sort of, let's say, treatment line you may be going for? Is it likely to be in, let's say, sort of third-line patients who've -- or is it -- could it be used earlier than that, for example, in this sort of earlier-stage study?

Yes. Actually, it's a very good question. Thanks for this question. A couple of years ago, we have done a pilot study with Elesclomol in non-small cell lung cancer. This study showed some very interesting results and we're following up on that initial signal. And this new trial will be in first-line non-small cell lung cancer patients with squamous histology.

Right. Excellent. Okay. Thank you very much. Congratulations.

[Thomas Najarian], private investor.

Thank you for taking my question and thanks for the conference call. The question on the ASCO meeting for the Phase 2 results of Ganetespib, could you tell me if that's an oral presentation? I assume it is, based on the way you put it in your press release.

And also, for both studies, the GIST and the non-small cell lung cancer, roughly how many patients are in each trial and how long was the average follow-up? Thank you.

Thanks for the question -- actually a couple of questions. I'll try to take them in the [answer] you posed them.

Yes, I think your assumption was correct. Both of these presentations of non-small cell and GIST are very prominent. One is an oral presentation and the other is an oral discussion -- oral poster discussion. We'll be presenting on the non-small cell cancer trial -- still not completely final data, because the trial is still ongoing and the treatment stage for some patients is still ongoing. Then we presented close to 100 patients worth of data, so we'll be presenting a snapshot of the completed trial. And with the GIST, we'll be presenting also a good size of the trial, which is about close to 30 patients.

And the average follow-up in the Phase 2 trial was how long in the lung cancer?

So, the average -- we don't have the numbers yet and we are still working on the numbers as we're finalizing that. Just for your reference, we started a trial last year. And the trial is still ongoing, so we're in the middle of that.

Thank you.

Thank you. This concludes the question-and-answer session. We will now turn the call back over to Safi Bahcall for closing remarks.

Thank you, everyone, for your time and attention today. That ends our call.

Ladies and gentlemen, this concludes today's call. You may now disconnect.