Madrigal Pharmaceuticals Inc (MDGL) 2011 Q4 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals fourth quarter and year-end 2011 earnings 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 Communication at Synta Pharmaceuticals. Please go ahead, Sir.

Good morning 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 fourth 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. This past year we made strong progress in advancing our Hsp90 program. Including establishing single-agent clinical activity and showing that we have successfully overcome the main challenge that has held back the Hsp90 field over the past few years, getting a molecule that is both potent and has a good safety profile. I will start with a quick summary of where we are and then Vojo will take you through some of the details.

Over the coming months our primary focus with Ganetespib is our three company-sponsored trials which have been designed to generate meaningful near-term data read-outs that will help de-risk the path to NDA. The first is the trial we are now initiating in patients with ALK+ lung cancer. This is an area which has grown in interest tremendously over the past five years since the mutation was first identified. Over the past eight months, since the presentation of our results at ASCO last year, there has been a rapidly growing awareness that Hsp90 inhibition is active in these patients. Importantly, Hsp90 inhibition is complementary to direct ALK inhibition by crizotinib or other ALK inhibitors rather than competitive. This raises the exciting possibility of a combination regimen with profound, durable clinical benefit.

As Pfizer has noted recently, there is the potential to add on to crizotinib and extend duration beyond the 10 to 12 months seen in clinical trials. Our ALK trial is evaluating single-agent Ganetespib. Our GALAXY trial is evaluating the combination with Docetaxel and second-line lung cancer. There is a strong rationale for combining with Taxanes and we have designed a two-stage trial in which the first stage will help identify the most sensitive patient populations to take forward to the second stage.

Finally, we have seen good evidence of activity in both triple-negative and HER2+ breast cancer, so we are initiating a trial in both these populations. Vojo will provide some greater detail on the Ganetespib program in a few minutes and you can expect announcements with more detail on trial design once the ALK breast trials have started to enroll.

With regard to partnerships, as is clear from the timelines we have described, there are several near-term Ganetespib data readouts. We are continuing discussions with various pharma who have expressed a strong interest, but we do not expect we will conclude a partnership before the interim GALAXY data readout and we will not be updating guidance until after that time. The same is true for our CRAC program. We continue to be in active discussions with interested parties and we will update guidance on timing later this year. I will now turn the call over to Vojo who will provide an update on our clinical program. Vojo.

Thanks, Safi. Like all of us at Synta, I'm excited by what we have seen with Ganetespib so far and plans we have developed for the coming year. The two most important findings to date are the confirmation of the favorable safety profile and the strong single-agent activity observed in patients with certain tumor gene profiles.

Let me start with the safety which has been [currently] realizing the full potential of Chaperone inhibition for treating cancer. Over 500 patients have been treated to date with Ganetespib with regular, ongoing integrated safety reviews. Results of these reviews is consistent with what we've seen in the past. [We have not seen] the serious liver or common ocular toxicities reported with other Hsp90 inhibitors and we do not see the neurotoxicity, bone marrow toxicities, or alopecia characteristic of many chemotherapies. The most common adverse event has been grade 1 or 2 diarrhea which is transient, usually lasting one or two days, and manageable with standard supportive care.

On a single-agent activity, results we are seeing in ALK+ patients, speak for themselves. All of the ALK+ patients in our Phase 2 trial had received several prior regimens, including combination chemotherapy, typically lasting for 10 to 12 weeks. None of the patients responded to any prior treatments. The PR's achieved Ganetespib tested in 50% of ALK+ patients lasted an average of close to one year. This is an exciting breakthrough similar to what we have seen with [crizotinib] in the early results. The combination of these two observations pronounced, durable antitumor activity together with a safety profile that is viewed as better than many chemotherapies, even many other types of agents, is very promising both for the future of this drug as monotherapy and for the ability to combine with many other anti-cancer treatments.

Now, on to what is next. Let me add just a few comments about the first trial Safi mentioned and we can discuss more if there are questions. For our ALK program it had some initial interactions with drug [regulatory] agencies and we intend to have an ongoing dialogue as we gather more data about the activity, safety and the choice of companion diagnostics. Right now we are initiating what will be an approximately 100-patient trial with a [goal of] response rate end point. This is quite similar Pfizer's initial approach. We do expect to begin enrollment in the next few months and we will issue an announcement with more details at that time.

We've also received many requests from investigative groups to conduct trials in ALK+ patients either as a single-agent or in combination. We have recently been informed that the first such combination trial with Ganetespib plus crizotinib received IRB approval at a major cancer center here on the East Coast and is expected to start enrolling patients in the next few months.

Regarding our GALAXY trial, enrollment is going well with completion of the 240 patients from the first stage Phase 2b portion, as well as the first interim data review expected in Q2. We expect the center analysis to analyze safety and efficacy on between one-third to one-half of the 240 patients. The purpose of the analysis is to guide our discussions with regulatory agencies and planning for the Phase 3 portion to minimize delays in transition between Phase 2b and Phase 3. I will now turn the call over to Keith Ehrlich who will briefly review our financial results.

Thank you, Vojo, and good morning, everyone. Total revenues in the fourth quarter of 2011 were $3.4 million. Total revenues in the same period of 2010 were $4 million. Our agreement with Roche, which concluded in February 2012 provided $1.9 million of cost sharing reimbursement revenues in 2010. $3.3 million and $1.1 million of license and milestone revenues in the fourth quarters of 2011 and 2010 respectively, from the amortization of the $16 million up-front payment.

In addition, we recognize $1 million in the fourth quarter of 2010 for grand revenues earned and paid under the Federal Government's Therapeutic Discovery Tax Credit program. In the fourth quarter of 2011, our research and development expenses were $10.9 million as compared to $9.3 million for the same period of 2010. Our fourth quarter general and administrative expenses were $2.8 million as compared to $3.1 million for the comparable period in 2010. In the fourth quarter of 2011, our net loss was $10.7 million or $0.22 per basic and diluted share as compared to a net loss of $8.8 million or $0.21 per basic and diluted share in the same period of 2010.

As of December 31, 2011, we had approximately $40 million of cash resources on hand. In January and February of 2012, we raised an additional $33 million of net proceeds for the public sale of our common stock. Based on our current operating levels, we expect our cash resources will be sufficient to fund operations into the first half of 2013. Certain new activities contemplated for 2012 will be conducted subject to the availability of sufficient financial resources. Safi.

Thanks, Keith. I will now open the call to questions and discussion. Operator.

Thank you, Dr. Bahcall. We will now be conducting a question and answer session. (Operator Instructions) Thank you. Our first question is coming from George Farmer from Canaccord. Please proceed with your question.

Thanks for taking my question. Can you comment a little bit more on the design of the ALK study? Tell us more about how you intend to does ganetespib and when do you think we will get a first interim look from that trial?

Sure. Hi, George. Thanks very much for the questions. This is Vojo Vukovic. The trial, as we mentioned, will be approximately 100 patients. It will be giving ganetespib as monotherapy. The dosing schedule will be established previously. We have proof of concept in the previous monotherapy non-small cell trials. We are expecting to have some data in some patients by the end of the year, as we have previously guided.

Okay. Regarding the GALAXY study, do you expect that there will be any ALK patients in that first cohort? And, if not, what do you think is the best genotype that we should be paying attention to?

So, in the GALAXY trial we are including all comers, so we do expect there will be some ALK patients among them. We will be collecting tumor tissue, we will be doing genetic profiling, and we will be able to identify those patients, and, obviously, we will look at subgroups, including ALK, as well.

Okay. Great. Thanks very much.

Thank you. Our next question is coming from [Mony Mohundro] from ThinkEquity. Please proceed with your question.

Thank you for taking my question. A follow-up on the GALAXY trial. So, if I heard correctly, Vojo mentioned that we probably see data from one-third to one-half of the patients, around 80 to 120 patients in second quarter, is that right?

Hi, Mony. Thanks for the question. Yes, that is right.

And, so what is the status of the enrollment currently? How many patients are enrolled and just to get an idea of how quickly you're enrolling the trial and, in fact, at a later half of the year, like when can we expect to see data?

Okay. Yes. We don't typically guide as to what the current accrual status is, but what we really guide instead is, really, when we expect to complete the recruitment. We previously mentioned that we are targeting completion of recruitment in the second quarter, and we are on track for that.

Okay. And one quick question. You also have a number of trials ongoing, third-party trials ongoing with ganetespib in prostate, gastric, pancreatic cancers to name a few. When can we see any readouts from these trials, if you have any idea?

These readouts will come throughout the year and continue into next year. These are obviously third-party sponsored trials, so we don't have so much control over timelines, but we do expect to see some readouts this year and then into next year, as well.

Alright. Thank you.

Thank you. Our next question is coming from Brian Klein from Lazard Capital Markets. Please proceed with your question.

Great. Thanks for taking my questions. Going back to the ALK study, are you planning to enroll those patients in the United States, or is it targeting Europe patients?

Yes, that is a global trial and we do have a number of well-known US centers that will participate. But this is essentially a global trial.

Great. And then on GALAXY, when might you expect to present the interim data in a medical forum?

We have announced that we will present the data as soon as we do interim analysis, which is scheduled for the second quarter, and will typically present such data at the medical meeting.

Okay. Are you expecting to present that at ASCO, or is that going to be some time later in 2012?

ASCO is a reasonable venue, but we don't really confirm presentations before our submissions are accepted.

Thanks. And then lastly, you guys have done quite a good job of containing your costs as you are ramping up enrollment and continuing to start new trials. Can you give us a sense of what you expect your R&D spend to be for next year?

Well, our current run rate, as you can see, has been pretty steady for the last couple of quarters, and going into this year it's pretty much on track with that. I think as we see some of these accruals ramping up you will also, as you know, we have other trials going on that would be coming down over time. So, we would expect to see it at a fairly steady rate when looked at over the course of the year.

Great. Thanks a lot.

Thank you. (Operator Instructions) Our next question is coming from George Zavoico from MLV. Please proceed with your question.

Hi Safe, Keith, Vojo and Rob. Good quarter. Congratulations on the progress you have made. Keith, I guess this question is more directed towards you. You said that your current operating costs will carry you through one -- first half of 2013 and that certain new initiatives would be subject to cash availability. I am presuming that the certain new initiatives don't include the ALK positive, or the HER2 or HER-positive and triple negative. That is included in your R&D costs there, or --?

Yes. We have factored those in. A lot of what we are trying to say here is, of course we have -- expect the timing of all of our trials to follow our plan, but they don't always, and, accordingly, we have to leave some leeway there.

Okay. And then with regard to CRAC and elesclomol, is that still pending outside funding for the most part, is that correct?

Yes.

Okay. I'm looking forward to the second quarter with the GALAXY results. Thank you very much.

Thank you. Our next question is coming from Robin Davison from Edison Investment Research. Please proceed with your question.

Thank you. Hello and greetings from London. First of all, I was wondering whether the ALK study is likely to be a phase 2 or whether you might be contemplating some sort of adaptive design a bit like the GALAXY, where there could be a phase 3 component included if you get the right results?

Our intention is really to drive this program with this study to registration.

Right. Okay. Would it be a phase 2 or phase 3? Seems a small point.

Robin, if you take a look at what Pfizer did, their studies were certainly called phase 1 and phase 2, but they were used for accelerated approval. So, that is kind of the model that we are following.

Right okay. Just with the GALAXY, I'm wondering whether, given you are starting ALK and breast cancer studies, it seems more likely that the second phase would be reduced from the 640 patients that you had envisaged, so you are expecting to target a smaller subgroup and, therefore, it is smaller study in total?

That will be data driven, Robin. It really depends on what comes out of GALAXY. As you know, we have two co-primary end points. One is all-comers ITT, one is the KRAS subpopulation, and we're looking at a few other promising biomarkers that we and investigators have determined to be relevant. If we do see, as you say, very pronounced activity, then the next trial could be quite a bit smaller.

Right. Okay. Is it possible you can take us through how the readout will come? Because, obviously, we know that you have got to in course 2 the interim (inaudible) on possibly 120 patients. Will that actually shape the thinking, or will you really need the results from the 240 patients, which, obviously, comes in the second half before you can go ahead with the second stage?

That will be data driven again. It really depends if we are seeing -- there is a subpopulation or are particular biomarker or gene profile which really has dramatic activity and we really want to flesh that out, or we're very comfortable with what we are seeing in the interim.

All right. Okay. Just finally, I'm wondering if you could give me an idea on the sort of size in terms of numbers of patients of the breast cancer study you're envisaging starting this year?

Not at this time. We will have more to say, probably next quarter.

All right. Great. Okay, thanks very much.

Thank you. (Operator Instructions) Our next question is coming from [Mony Mohundro] from ThinkEquity. Please proceed with your question.

Hi. A quick financial question clarification. So, your Roche amortized revenues have been obviously accelerated and your DOD grant has kind of come to an end. So, for the foreseeable future in the absence of any new partnerships we will not see anything in the revenue line, is that correct?

That would be a correct assumption.

Thank you. That was all.

Thank you. Our next question is coming from Dave Harmon from UBS. Please proceed with your question.

Good morning. Good to see the results that are there. My question is sort of three-part. In the last two annual meetings the Company said that they would have a collaboration in 2010 and 2011. It's now 2012, and there's no sign of a collaboration, and as of this morning the Company offices are saying that there is no collaboration in the foreseeable future.

How is your cash constrained in terms of your ability to accelerate tests if you get really good results. How are you going to finance all of these tests without a collaboration, and why is an Asian collaboration that you have talked about for the last two years no longer in the picture? Or is there something going on here that we don't see?

It's not quite accurate. We are in active discussions, we've been in active discussions and we continue to be an active discussions, and our strategy hasn't changed. I would say there are two things. One is, with ganetespib we are obviously getting very close to data.

It's not impossible that we would do a small regional strategic partnership before then. That's something we are still considering, but we in the Pharma that we are talking to are obviously very interested in seeing the results from that data. So, our discussions are still ongoing, and our strategy hasn't changed to really focused on regional partnerships.

With our CRAC program we have, in fact, been getting to very advanced stages of discussions. We did receive some new information from our prior partner, Roche, in the last month that will take time for us and our partners to digest. So, we think we have some very promising candidates there. But the data we got in the last month or so it's just going to need a little more time to digest.

Thank you.

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

That concludes our call. Thank you all for your time and attention today.

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