Madrigal Pharmaceuticals Inc (MDGL) 2011 Q3 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals third-quarter 2011 financial results conference call. Today's conference is being recorded and webcast. At this time, for opening remarks, I would like to turn the call over to Rob Kloppenburg, Vice President of Investor Relations and Corporate Communications at Synta Pharmaceuticals. Please go ahead, sir.

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 third 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 statements 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 thank you all for joining us this morning. We've had a busy and exciting quarter, with a lot more to come over the next few months and next year.

As many of you know, we have seen compelling data with ganetespib. This is a clinically active compound. Results from over 400 patients treated to date have shown favorable safety and good tolerability.

As we described in our press release, we've been building a platform for multiple significant data readouts next year. First, we'll have multiple data readouts from our GALAXY trial in second-line lung cancer. This trial will randomize 240 patients and is essentially several trials in one. The trial is highly powered to see activity in the full ITT population.

In addition, we'll be looking at certain prospectively specified subpopulations, specifically mutant KRAS, squamous cell carcinomas, and one other biomarker, each of which represents a high unmet need, and for each of which we expect a sufficient number of patients to see a compelling signal. Trial enrollment in the US and Europe is moving along well, with no change to our previous guidance of targeting enrollment completion by March or April of next year, and the first interim data review around that time as well.

Next, as some of you know, in our Phase 2 lung cancer trial, we saw very strong signal in lung cancer patients with the [out-trans] location. Four out of eight patients, all relapsed or refractory, experienced durable, objective responses with ganetespib. An additional three out of eight experienced tumor shrinkage or disease control.

A reminder -- this was single agent, not combination, and of course in pretreated lung cancer it is rare to see such a high response rate. This is a very exciting opportunity, and we are in the process of initiating a trial in this indication.

We've also received many proposals from investigator groups to give them our drug for trials they will sponsor in ALK-positive patients, either single agent or a combination. We expect one or more such third-party sponsored studies will start in 2012, in addition to our Company-sponsored study.

Our third major program is a trial in two types of breast cancer. We are quite excited by this trial, based not only on the single-agent responses we've seen in breast cancer with ganetespib, in both HER2-positive and triple negative, but because 17-AAG produced a positive signal in Herceptin-refractory patients. Those results for 17-AAG were published earlier this year.

And finally, we have cooperative groups and a foundation sponsoring randomized trials in AML and in myeloma, respectively. So next year will be quite a big year, with multiple opportunities for data that have the potential to define more than one registration path in some very large markets. We will announce more details on upcoming trials as they initiate.

With regard to partnership discussions, our most advanced discussions with potential partners center on global rights to our CRACM Ion Channel Program as well as regional rights to our ganetespib program. We believe these discussions could lead to a partnership this year or early next year.

I will now turn the call over to Keith Ehrlich, who will briefly review our financial results.

Thank you, Safi, and good morning, everyone. We ended the third quarter of 2011 with approximately $51 million of cash resources. 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.

We expect to end 2011 with between $37 million and $39 million of cash, cash equivalents, and marketable securities.

Total collaboration revenues in the third quarter of 2011 were $1.1 million as compared to $3.4 million in the same period of 2010. In the third quarter of 2011, our research and development expenses were $10.8 million as compared to $11 million for the same period of 2010.

In the third quarter of 2011, our general and administrative expenses were $3.1 million as compared to $2.6 million for the comparable period in 2010. In the third quarter of 2011 our net loss was $12.7 million or $0.30 per basic and diluted share as compared to $10.3 million or $0.25 per basic and diluted share.

I'll now turn the call back to Safi.

Thanks, Keith. I'll now open the call to questions and discussion. Operator?

(Operator Instructions). George Farmer, Canaccord.

Hi, Safi, how are you? Hi, Rob. I want to just ask you about the Phase 2 trial in lung cancer with ganetespib and how you are identifying these patients to fall into the different stratified subgroups. So, are you genotyping the patients prior to study entry, or will they have been genotyped prior to beginning frontline therapy?

Hi, this is Vojo Vukovic. I'll take the question. As we have said before, in our Phase 2b study we're treating all comers, so all patients secondline non-small-cell lung cancer are eligible. And we're collecting tissue from all patients to do the genotyping, and also collecting blood to do pharmacogenomics. So we are basically looking at those biomarkers and we are stratifying patients accordingly.

But they have not been previously genotyped when they were originally diagnosed with their disease. Is that correct?

Yes. Some may have that information, but the majority of the patients have (multiple speakers).

Okay. Are you taking crizotinib failures, by any chance, in your study?

Those patients are eligible.

They are. Okay. All right, I'll hop back in the queue.

Joe Pantginis, ROTH Capital Partners.

Thanks for taking the question. A couple of quick questions. When you talked about potential registrational paths, obviously the number one answer to drive your decisions will be clinical data. I was just curious if there were any other potential factors in getting to a decision about where to go from a registrational path standpoint?

And then just a second question. When you discuss your current partnering talks, maybe you could remind us what kind of characteristics you're looking for in a partner? Thanks a lot.

Sure. In terms of registrational path, as you said, it's really going to be driven by the data. The goal is to get this drug approved. We have an active drug; we want to get it to patients. So we'll take a look -- we've highly powered the study so that we can very clearly get meaningful data that will de-risk the program and create a follow-on trial, or a registration path, that is very clear and based on very solid data that will be clear to us, that will be clear to regulators, that will be clear to the investigators.

In terms of what we are looking for in a partner, we have several ongoing discussions for several different programs. For our CRACM Ion Channel Program, we are looking for a partner who has strength in the inflammatory disease area, which is the focus of that program, particularly development and commercial expertise, and we're looking for a global partner.

In the discussions we're having on ganetespib, we're focused on maintaining rights for ourselves at this stage in the game, and so that -- we're focusing on Asia and regional partnerships.

Okay, thank you very much.

Brian Klein, Lazard Capital Markets.

In regards to the GALAXY trial, can you give us some sense of what your expectations are for the first interim look in March or April? Are we going to see just safety data, or will we have some sense of response rate?

Sure, I'll take the question. Yes, we'll certainly have the first interim analysis, as mentioned, in the March/April time frame. The primary objective would be to look at safety and tolerability. But we'll be also looking for signs of activity.

In the first interim, we will probably be focusing more on disease control rate, which is an established measure of activity, early activity of the drug. And we'll be looking at other endpoints, including response and PFS, at later times.

Great. And can you just remind me when you think we might have the topline final data for that trial? Is it sometime in the second half of 2012, or is it a 2013 event?

We're expecting topline final data in midyear, in the summer time frame.

Great, great. And then moving on to your planned trial in the ALK indication, I'm not sure if you clarified whether you were planning to pursue that as a single agent or as a combination trial. Could you maybe give us some more details on that planned trial?

Sure. Over the past couple of months, five, six months, we've been in numerous discussions with the top lung cancer doctors around the world in the US and Europe and Asia. We've seen very strong support, very strong interest. We have also received numerous proposals for trials -- small trials, large trials, single agent, combination.

So currently, what we have stated is, we're looking into running a Company-sponsored trial, but we'll be also looking to initiate one or more trials that we do not sponsor, [whether that be an] institution or [cooperative group]-sponsored trials.

Great. Thanks a lot.

George Zavoico, MLV.

Hi, everyone. Congratulations on a good quarter. Clearly, you've generated a tremendous amount of interest from sponsors outside of Synta in these trials of ganetespib. In your press release, you've listed a number of potential trials that are going to be forthcoming, or possibly forthcoming. And you've already got a lot going on already.

Could you just sort of briefly overview where you are with ISTs now, and the ones that you are planning on? So you're going to have close to, you know, probably more than a dozen trials going, if all goes according to what you say, by, say, midyear next year?

That's right, George. Hi, this is Vojo. Yes, we've consistently maintained that [investors could sponsor] trials, particularly focusing on top-notch institutions, the top-notch scientists and clinicians, will help the program, and that's really what we've been seeing so far.

This has enabled us to have a broad program at low cost. [Southeast] trials have been ongoing for a while and produced data. So, for example, the breast cancer trial that will be presented later this year has certainly produced data and provided a foundation for some of the plans that you mentioned -- so, going forward.

So, we see that will create value. And in the second bay of these trials that are currently ongoing, in terms of initiation, we are broadening and going into combination trials. We've mentioned some of them. And we are still keeping a very good focus on controlling the costs, because these trials are low cost and provide us with additional opportunities to drive the [total value] program.

How many ISTs do you have ongoing, like, right now?

We have currently active more than a dozen.

More than a dozen. Okay. Wow. Any update whatsoever on elesclomol in the last quarter?

Elesclomol? We've done some really good preclinical work. We'll be presenting some of that work at the upcoming [triple] meeting in San Francisco in about 10 days' time. So, I think the data is really good, very interesting. How much can we disclose, Safi, here?

We are really focused on ganetespib right now. We have a bird in hand, which is obviously a clinically active drug. It's been in a lot of patients; the safety profile is pretty well established. We have very high interest.

So, right now, although we like what we've seen with elesclomol, our scientists and a number of external groups who are working on it have clarified the mechanism, that it's an extremely intriguing mechanism. In terms of how we're investing Synta resources, it's focused almost entirely on ganetespib. And elesclomol is being developed a little more with the aid of external resources.

Okay. I look forward to seeing the data. Thank you, gentlemen.

Robin Davison, Edison Investment Research.

Thank you. Hello there. Greetings from London. I'm wondering what is the sort of size of the study in the ALK positive group, and whether you might even be able to make that a sort of pivotal study so that you could see potential registration on the basis of that study?

Well, as Vojo mentioned, we've seen -- it's just very unusual when you have such an extremely high response rate. A lot of folks have not only looked at the clinical data, and we have some additional data now, but they've been working with our drug preclinically in combination with crizotinib.

So that's what's generated a lot of interest in US, Europe, and Asia. And because of where we are, we have treated 400 or 450-plus patients. We have the safety profile. We have seen durable single-agent responses. In particular, the ALK signal was very strong.

At this stage, most companies would be thinking, how do we get to registration? So as we have shaped and thought about our program -- and as Vojo mentioned, we don't expect this to be one trial. We expect to have a portfolio of trials around this opportunity. I think this opportunity is a lot bigger than many people realize.

You are, with these drugs, just like with Gleevec in CML, or with Rituxan in NHL, or with Herceptin in breast, I think the -- this is a well-defined patient subpopulation where the new drugs that are coming out, the ALK inhibitor class, [our] class, had the potential to alter the course of disease and begin treating prevalence rather than incidents, in which case you become a very sizable market.

So we're very excited to go there. And because of that, we've developed a number of trials in parallel, designed to really understand and capture that opportunity and benefit patients in a number of different ways.

So, I can't get into a lot of details until the trials are announced and all the things are signed off. But you are right in the sense that any -- ourselves and any company in this stage would really be thinking very much about how to get to the endzone, how to get to registration in this population.

Right, okay. Just thinking about what you were saying earlier about elesclomol, I was wondering whether, realistically, it would be fair to assume that you would need to sign the regional partnership that you are envisaging for you to do further studies. I mean, it's -- I'm thinking that the resources are now being shifted towards this ALK positive opportunity internally within Synta. Is that a fair assumption?

Well, yes. What we said is that our Synta resources, our Company resources, are directed towards ganetespib today, and that includes the ALK, that includes the larger lung trial, the GALAXY trial, as well as the upcoming breast trial, where we have also seen very promising data and are also getting a very high interest in the breast cancer community.

And elesclomol -- you are right, we are investing less of our Company resources today, but more external resources, and you're also right that we have, in general, always run Synta in a financially careful and conservative manner. We wouldn't run programs that we didn't think we were well financed to complete.

Sure. Okay. And finally, I noticed in the announcement you are expecting the results of the investigator-sponsored Phase 2 in breast cancer to be presented. Is that the final results from that study? It presents in December at the San Antonio conference.

Yes, so this trial is an investigator-sponsored trial. It was conducted in a highly pretreated, heavily treated patient population that's refractory to all standard and [promised to] medical treatment.

We've seen intriguing signs of activity. We do not have full insight into the data set. It's an investigator-sponsored trial. We know the top line, and this trial will be presented, you know, the data that's current at hand will be presented at the upcoming San Antonio breast cancer meeting.

Okay. Excellent. Thank you very much.

Mike King, Rodman.

Good morning, and thanks for taking my questions, guys. Just to continue to follow up on the ISTs, let's, for example, say that the AML or the myeloma trial were to be -- show a positive signal. What's, then, your strategy?

Do you guys then have to go back and replicate the results seen in those trials before moving forward with a registration-directed trial, or do you think you would then kind of merge it into the ongoing clinical development plan for ganetespib?

Yes. As we mentioned before, our [IC] program started early. It encompasses both Phase 1 and Phase 2 trials. We're carefully selecting credible, strong institutions and also investigators. So, we have great confidence that the data that's generated in the ISTs is meaningful and [totally] relevant data.

As an example on how we translate those findings into our clinical development plan, we mentioned breast. But also, I think one thing that was announced today is that, on the basis of an earlier trial that we conducted in [terms that it's accomplished parts of the] AML study that has piqued the interest of a large [corporate] group in Europe, and consequently they are planning on conducting a large randomized AML trial, which has, clearly, the potential to become a clinical study.

This is Safi. What I would add is that we -- they're two different things. We do have some -- quite a few individual institution trials. But the two that you mentioned, the AML and myeloma, we highlighted because they are being run as randomized multicenter trials. So they are comparable to what a company might do. So, if we had meaningful positive data from there, we would certainly very strongly consider a registration path in either one of those areas.

Right. I wouldn't say they are necessarily directly comparable to what a company might do. I mean, you know, you would probably use central, you know, central review on scans and things that they might not do for, you know, to comply with some of the FDA standards. But, okay, I kind of get where you're going with this. But in terms of other trials in single center, is it just a matter of deciding what to do based on the data reports?

Yes. I would say institution -- individual investigator institution trials we interpret as signal finding. They give you an interesting clue, and then you want to run randomized or more thorough Company-sponsored trials. And then these hybrid things, the AML and myeloma, are somewhere in between.

So how does that factor into your partnering? Obviously, I would think you would want to have some cost pickup of trials that may be anticipated down the road.

Not totally sure I --?

Well, in other words, if you are trying to partner ganetespib, and you have a certain clinical development plan, but there is a fudge factor for studies that are going to read out positively that you might not necessarily incorporate into your clinical development planning. Is that something that you can anticipate as far as extracting value from a corporate partner so that these things might get -- the costs might get picked up, that you don't have to burden yourself with the full cost of taking an indication forward that you didn't anticipate?

Well, in the very positive -- in the positive surprise that you have a trial that you didn't think was planning on working, but it did work, I think you're in a very nice situation. But, in terms of who would pay what in a partnership, that varies. We have seen -- we've had discussions in the past and ongoing with a whole range of possible terms.

Typically, what you do is you agree on a general concept or a principle of a percentage split, and then you have a steering committee, on a quarterly or semiannual basis, converge on an R&D plan. So, if you're in a partnership that's global, your R&D steering committee, which would be equal -- typically equal representation, would need to converge on what are the trials that are going to be funded.

And then, there are partnerships where there are all sorts of provisions. You put in a minimum spend, you agree up front this is the investment that the partner would make -- so there's a whole range of different ways to flesh out the level of investment on a partner in the program.

Okay, thanks. I'll get back in queue.

Thank you. That concludes the question-and-answer session. I will now turn the conference back over to Dr. Bahcall for closing remarks.

Thank you, everybody. That ends the call for today.

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