Madrigal Pharmaceuticals Inc (MDGL) 2012 Q1 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals first-quarter 2012 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 George Farmer, Vice President of Corporate Development 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 first quarter of 2012. This release can be found on our website at syntapharma.com.

Before we begin I would like to point out that we will be making forward-looking statements based on our current intents, beliefs and expectations, which are subject to certain risks and uncertainties. Additional details can be found in related SEC filings also available through our website.

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

Thanks, George, and thank you all for joining us this morning. Synta has made very strong progress this past year in advancing our lead oncology drug ganetespib, a second-generation Hsp90 inhibitor that we believe is best-in-class. We are very excited about the compound and the potential that we believe this drug has to improve the lives of cancer patients.

Ganetespib has shown impressive clinical activity in patients with lung cancer, breast cancer and other tumor types. Unlike more familiar targeted agents which inhibit one or a small number of pathways, ganetespib inhibits multiple cancer drivers simultaneously.

We have previously discussed the encouraging single-agent activity seen in a diverse range of tumor types and gene profiles, including ALK positive lung cancer, mutant BRAF and mutant KRAS lung cancer and HER2-positive and triple negative breast cancer. Ganetespib is acting like a collection of targeted agents wrapped together into one drug.

We expect to have a lot more to say about the single-agent activity over the coming year as we gather more data in these targeted patient populations.

As we and others have discussed and published on in the past, Hsp90 inhibition reduces the ability of cancer cells to recover from the effects of chemotherapy and other stresses. We have been encouraged by the emerging results from our GALAXY trial evaluating ganetespib in combination with docetaxel in second-line lung cancer. We will have more to say regarding these results later this quarter as we complete the planned interim analysis and discuss plans with medical advisers.

Importantly, ganetespib has shown both the single-agent and combination activity at dose levels that have been well-tolerated without the dose-limiting liver toxicity or ocular toxicity seen with other Hsp90 inhibitors.

I will now turn the call over to Vojo.

Thank you, Safi, and good morning everyone. I would like to start with an update on the Phase II/IIIb GALAXY trial. As a reminder, the GALAXY trial has two stages. The first stage 240-patient Phase IIb portion has been designed to identify the most promising patient population for the second stage Phase III portion based on certain prespecified subpopulations.

We expect this to be the first randomized trial from Hsp90 inhibitor to complete since the beginning of Hsp90 research in cancer nearly two decades ago. This is a strong statement about the safety profile of our compound and its ability to overcome the challenges seen with other Hsp90 inhibitors.

Today I'm pleased to announce that based on a strong early signal of activity we plan to meet with regulatory agencies and advance to the Phase III portion of the trial by the end of the year.

Moving on to ALK positive lung cancer, as many of you know, we presented compelling results for single-agent activity being tested in this population. Responding patients have remained on therapy on average of part one year, with nonresponders still in treatment for 17 months and continuing.

We have recently initiated a global trial that will enroll up to 100 ALK positive crizotinib-naive patients. We expect to have preliminary results from that trial by the end of the year.

While there are a number of second-generation ALK inhibitors in development, what is important to note is that they are all targeted at (inaudible) binding site of ALK. And tested on the other hand X through a distinct and complementary mechanism, which creates an exciting opportunity for combination therapy.

One combination trial has already been initiated by Memorial Sloan-Kettering, and they have been approached by several other institutions and corporate groups contemplating similar trials. We expect to have more to say about additional ALK trials later this year as well. We believe ganetespib is well-positioned to be a lead component of an eventual first-line combination regimen.

In addition to non-small cell lung cancer, ganetespib is also being evaluated as a potential treatment for metastatic breast cancer. Clinical data presented last year provided strong evidence that Hsp90 inhibition is promising for treating both HER2-positive and triple negative breast cancer.

Memorial Sloan-Kettering is planning a trial evaluating ganetespib in both of these indications. In addition, we are initiating a global clinical trial in this patient populations with innovative trial design intended to generate strong proof of concept with rapid data readouts.

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 first quarter of 2012 consisted of $0.1 million of grant revenue. Total revenues in the same period of 2011 were $1.1 million consisting of amortization of an upfront payment under the Roche agreement that was terminated at the end of 2011.

In the first quarter of 2012 our research and development expenses were $12.1 million as compared to $9.4 million for the same period of 2011. Our first-quarter general and administrative expenses were $2.7 million as compared to $2.7 million for the comparable period in 2011.

In the first quarter of 2012 our net loss was $15.1 million or $0.27 per basic and diluted share as compared to a net loss of $11.4 million or $0.27 per basic and diluted share in the same period of 2011.

As of March 31, 2012, we had approximately $57.4 million of cash resources on hand, including $33 million of net proceeds from the public sale of our common stock earlier this quarter.

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.

I will now turn the call back over to Safi.

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

(Operator Instructions). Mike King, Rodman & Renshaw.

Thanks for taking the question. I just wanted to get a little more color on a comment made by Vojo about moving forward into the Phase III portion of the GALAXY trial. Could you give us a little bit of color on -- I doubt you will say anything specific about things, but could you maybe comment about whether [this sometimes] that you were expecting were those in which you saw the activity? And can you also tell us when we might be able to see some of that data presented at a peer reviewed meeting?

It is Safi. Our strategy as a company has always been, as you know, to identify the high activity patient populations that can lead to smaller trials, greater benefit and faster path to approval. That was our strategy in conceiving this Phase II/IIIb design. And that is exactly what we are doing right now.

I can tell you that Phase III will not be an all-comers trial. And we are looking at pre-specified subpopulations where we had strong hypotheses, both preclinically and based on the prior clinical data going into the trial, stratified, prespecified. And those are the signals that we are taking most seriously, and those are the signals that came out very early very strong.

Okay, so you are confirming that you guys -- the hypothesis story was confirmed?

Well, what I can say now is that Phase III definitely will not be an all-comers trial.

We know that.

And we were -- are definitely looking at some of the prespecified subpopulations, and that is where the signal has emerged with the highest activity.

Okay, and can you just let us know when we might see the data from this portion of the GALAXY trial?

Sure. There hasn't been any final decision, as you can imagine, on where to present. We will be meeting with our medical advisers and steering committee at ASCO next month. But ESMO is typically a good venue for those kind of presentations. That is in September this year.

And then just a financial question for Keith. Would this -- the determination to go to Phase III have any effect on your financial guidance?

No, our guidance is what it is. And right now with a Phase III large market unencumbered asset in cancer, with the kind of data that we are talking about here, we think we have got a lot of options.

Okay, thanks for taking the questions.

Jim Birchenough, BMO Capital Markets.

It is Nick standing in for Jim. He is on a flight this morning. Just to follow up on Mike's question, will you need a new companion diagnostic to be developed to go ahead into the Phase III portion or are you relying on what is available in the market?

That is an excellent question. I can tell you we have started discussions with a number of vendors about companion diagnostics. We haven't made any final decisions. And we will certainly have a lot more to say about that later this quarter.

Okay, and then maybe a follow-up. The folks from Moffitt are publishing clinical cancer research this week, I think, on a competing Hsp90 inhibitor, but Hsp90 inhibition all the same -- and in melanoma that was resistant to BRAF inhibitor.

And their conclusion was now -- I will read it to you. For the very first time we have shown that all the signaling proteins indicated thus far in intrinsic and acquired BRAF resistance for clients with Hsp90.

And the point they make in their paper as well is that, unlike ALK positive lung cancer, or CML, where you have gatekeeping mutations, there is no gatekeeping mutation. It is a complete cluster of different mechanisms leading to resistance.

So I know you only have limited resources available, but what is the priority, how do you prioritize which tumor you go after? Obviously, you have already decided to do Phase III lung. It sounds like you have decided breast cancer is next. But what about melanoma?

Vojo?

Sure. As you know, our focus has been consistently in lung cancer. That is where we detected the clinical signals first. We have very strong rationale and clinical signals in ALK positive disease today. We have announced the signal is in a broader patient population.

We have a signal in breast cancer. And, obviously, because of the multitude of targets and potential indications we will be also looking at that quite seriously.

We have to, of course, maintain focus with our development program on the areas where the signal is the strongest, and where we -- in smaller trials we can achieve greater patient benefit and get the drug approved quickly.

By the way, it is Safi. We actually just published today at ACR similar results in melanoma resistance with our drug -- sort of similar findings about inhibiting the resistance pathways. Without getting -- having this call digress into overly technical science, we can only talk about that more offline.

Sure.

But we agree that melanoma is a very promising target. We have a couple of ISTs getting started there. As a company, however, our focus absolutely right now is lung cancer. It is extremely rare to get very strong results in second-line lung cancer. This would be the first time we have a positive outcome. In the final result, if things continue the way they are going, and it looks very encouraging right now, this will be the first doublet to show positive data in lung cancer, not to mention the first positive outcome for an Hsp90 inhibitor in a randomized trial in history. So that is entirely the focus of this Company. That is by far our highest priority right now.

Okay, thanks.

George Zavoico, MLV & Co.

Congratulations on a good quarter. Just a couple of very quick questions. Your R&D went up a couple of million dollars. Is this -- are you going to stabilize R&D or do you think the trial burden that you have for the remainder of the year perhaps you can let us know where you expect the R&D to go?

So, first of all, of course we are comparing Q1 to Q1 of last year. Of course, as you know, we have got a 240-patient trial going right now which made a significant difference. It is actually pretty consistent with the fourth quarter of 2011.

And, again, as you know, the duration of this trial would indicate that most of those costs are frontloaded. And we're well into that trial now, so I think you can draw a conclusion from that.

Okay, great, thanks. And, Safi, you just mentioned a couple of more ISTs getting started. You have got a bunch going on already. Do you mind just very briefly reviewing the ISTs you have got?

We have seen -- there are really two places we have seen very strong activity with this drug. One we are announcing today is in combination with Taxanes, based -- which is consistent with a lot of the original thinking about Hsp90 inhibition as being sensitizing for chemotherapy. And the other is a single-agent activity.

So about half of our trials are in this combination realm and half of our trials are in single-agent. A number of those on the single-agent side are already reported. We had the myeloma trial just start a couple of months ago. We have a combination trial with crizotinib in ALK positive lung that started now at Memorial Sloan-Kettering. And then there are a few more on our website.

And you can expect a few more starting later this year, especially after today's announcement and the growing interest we have seen in the medical community for this drug. We have had over 100 RSVPs already in the last few weeks for our investigator meeting at ASCO in the first week of June.

Wow, congratulations. Thank you very much.

Brian Klein, Lazard Capital Markets.

Thanks for taking my questions. So first of all I just wanted to confirm that you are planning to press release some data or some hint of the trial results from the GALAXY Phase IIb in the second quarter, and ahead of any potential peer reviewed meeting.

We expect -- we do expect to have some additional detail on our interim findings as we complete the interim analysis process and finish meeting with our medical advisers and steering committee to discuss plans with them. We can't commit to exactly what numbers or data will be in a press release right now.

Okay, would you expect though to have a sense of progression-free survival given that you just recently completed enrollment in this phase?

The decisions we have announced today and we have been making are all based on PFS data.

Great. And then looking at the potential Phase III that you are considering, can you give us a sense of what you have learned from the Phase IIb, maybe not in terms of details but how is the trial design going to be impacted by what you have learned in the Phase IIb?

Today we've announced really a topline decision to move into Phase III. We have also announced that the planned interim analysis is ongoing and we plan to review and continue reviewing the data as we get along.

And I think Safi mentioned that the one thing that we can say today is that the Phase III trial will not be at all-comer trial. And that is really the most detail we can share with you right now. Again, just to reiterate one more time, the signal that we see right now is very strong.

Great, thanks. And then lastly, can you perhaps give us an update on partnering discussions and sort of your expectations around timing there?

Sure, and you know what, let me actually just add to the -- your previous question which was -- just because I know we get that question a couple of times in terms of how to think about a Phase III.

While we can't get into details now and there will be a lot more we will say about it over the next month or two, conceptually the larger Phase III studies can be in the range of -- well, when you get to second-line it can be in the 500 or 600 patient or larger. But when you get to the populations where you have high benefit, a strong signal, and especially when they are high unmet need populations with rapid progression, that is when you get to talk about smaller trials that can be maybe half that size. So that is kind of the conceptual framework that we are thinking about.

In terms of partnerships, we have had meeting requests from nearly every major pharma for [aspects]. So we will be meeting with pretty much all of them over the next month or two, and we will give further guidance probably later this year.

Great, thanks a lot.

Mani Mohnindru, ThinkEquity.

Thanks for taking my question. Most of them have been answered, but I am going to say the same thing in a different way and see if I can get further along.

So you said that, if I heard correctly, is the signal that you saw was in the pre-specified stratification category that you had going into the GALAXY trial Phase IIb portion, or can we also expect that the signal could come from some of the bio -- exploratory biomarkers that you were analyzing? Maybe that is my first question.

I can understand why, of course, people would want to know a lot more details about the findings, but I am sure you all could appreciate that we are in the middle of a process. We want to share the findings with our medical advisers and discuss next steps and plans with them. So it probably doesn't make sense for us to get into a lot more detail right now, although we are very excited about it and we would love to share it with you. But we will have a lot more to say about it once we complete the process, complete our discussion and make additional decisions about those plans.

We can tell you that the signals that we are seeing are consistent with our incoming hypotheses and our incoming -- and our prespecified analyses.

Fair enough. And if I may have one quick question on your ALK study that is ongoing. So as I see the study now I see that there are -- the centers are mainly in North America, in the US and Canada. Do you expect to open the trial outside of this region as well in Europe or Asia? And what sort of has been the feedback, given that the trial is open to patients who are ALK inhibitor naive or crizotinib-naive patient population?

Yes, of course, we have seen very strong interest in the oncology community for this trial, in particular out of the US where crizotinib is commercially available. Although as you mentioned, we will be opening also a number of centers. We are very interested here in the US. We have started rolling out the trial and we will be bringing on additional sites globally, meaning Asia and Europe included.

And what sort of are your timelines in completing enrollment in this trial?

This is a 100-patient trial. As you know it is a subpopulation. We haven't provided guidance at this point in time -- in terms of completion, and I think we will be providing more detail around that later in the year.

I see. And if I may just throw in one quick question for Keith. Does your cash use guidance include the decision of Company-sponsored breast cancer trials, the HER2-positive, triple negative breast cancer trials?

Are you asking whether the full trial is included?

Yes.

Yes, to the extent that they are ramping up, yes.

Okay, thank you.

Joe Pantginis, ROTH Capital Markets.

Thank you for taking the question. This is [Luca Pancratov] for Joe. May I ask regarding enrollment in the GALAXY trial, have you seen any trends that would meet or exceed your expectations?

Yes, the recruitment and operational aspects of this trial, they are very interested. And we are very pleased that we remain throughout the conduct of the trial on guidance and on track. So we are happy -- very happy with the interest and the activities that we have had so far.

Yes, and the other question is do you think you can use some of these centers from the GALAXY trial for the planned -- or for the ongoing Phase II study in the ALK positive patients?

Yes, obviously, that is the thinking. We have the opportunity to work with these centers, they can get to know how to handle our drug. And as they see good things coming up from one trial that it will certainly enhance the interest and the commitment to our future trials. And we have actually started actually doing exactly that already.

Thank you. Do you foresee any impact of the approval of XALKORI for the enrollment of the patients in the study -- or crizotinib, right?

I think you're referring to the crizotinib naive study. Obviously the approval of XALKORI in the US is putting certain limitations, as much as you can do in the US. Although we have seen very strong interest here by the US medical oncology community, because they understand the mechanism of this drug, of ganetespib. It is very different to crizotinib or other ALK inhibitors. It is not really competitive, it is really complimentary.

But the strongest interest by far in terms of trial recruitment and accrual is in the regions where XALKORI is not approved and not commercially available yet.

Thank you very much.

Robin Davison, Edison Investment.

I wondered if you could just talk about the practical aspects of moving from the Phase II to Phase III portion? I noticed the 10-Q says you have 150 patients enrolled currently. I just wondered, do you have to complete the first stage before you announce results, and then can you -- how quickly can you move into the Phase III portion after that?

Okay, sure. Just FYI on enrollment at -- we are actually quite a bit above that number now. But just to step back, when we designed this trial, as of you remember, about a year -- close to last year, early part of last year, it was a pretty innovative design. It has got an operationally seamless design where the first -- it was one protocol, with really two portions that are essentially two different trials under one protocol umbrella. The Phase IIb portion being a very -- really like a small Phase III -- it is powered like a small Phase III -- to identify the patients where you get the best activity, and then seamlessly transition into the Phase III portion focusing on those patients.

And now a year, year and a half later, that is actually exactly what we are doing. We have identified that signal. It came quite early, almost surprisingly early because it was quite strong. It came in -- it is coming in prespecified populations and analysis that we have defined when we went into the trial.

And the benefit of that design is that the sites remain open, that we move into the Phase III seamlessly. We file an amendment, which is quite quick. We in fact are seeing interest from new sites. We are adding new sites now, and we will continue to add new sites as the trial expands.

So we expect that transition to actually be, as Vojo was saying, seamless from the perspective of both time to move into that portion of the trial, as well as get those sites up to speed, because many of the sites will already be experienced and have already enrolled quite a few patients.

Sure, right. Okay, I was wondering if you could say a little bit about the planned IFT with Memorial Sloan-Kettering in the ALK positive group, where mostly you have your own [ganetespib] monotherapy, presuming they would look at combination therapy with crizotinib?

Sure, yes, that trial has started. I think the description is on clinicaltrials.gov. I know they have already gotten going. I am not sure there is much more that we can say about it other than many groups have come to us with the idea of combining ganetespib and crizotinib, because they are both have shown in the clinic unusually high activity and durable activity in this patient population with a good safety profile. And at this point quite a few publications have shown that the two mechanisms are complementary.

While crizotinib has tremendous activity compared to chemotherapy in lung cancer, still on average tumors are shrinking 30% or 40%, which leaves 60% or 70% to the tumors still there, which mean there is a lot of room for improvement. So I think that when groups come to us like Sloan-Kettering -- there is another top-tier cancer center getting started now, and there are cooperative groups in US and Europe who have approached us, there is a lot of room for improvement in nd combining those two drugs and the first stage is really identifying the right dose and schedule. Vojo, did you want to add?

No, I think that is exactly right, Safi. I think these studies are very interesting. The two active drugs will be combined, and after a short safety stage to explore the optimal dose schedule they will proceed with a Phase II portion which will generate data quite quickly.

All right, excellent. Finally, I have noticed there is a new study on IST impact in the UK on -- in mesothelioma with pemetrexed. Do you have any sort of observations on that as an interesting new combination with ganetespib obviously?

Yes, as we have said, there is a lot of investigators coming to us, and the number just keeps growing, with desire to combine ganetespib with existing standard-of-care agents. Pemetrexed is widely used in lung cancer. People are aware that we are seeing very encouraging results from lung cancer and want to get prepared for migration to first-line, migration to combining with other agents. And so we have quite a few investigators coming to us for those kinds of trials.

And a key part, as Vojo has mentioned, and we have repeatedly mentioned is the safety profile. It is very hard to combine a really toxic agent. The favorable safety profile you are saying with ganetespib makes it a combination drug of choice.

All right, sure. Great, thanks very much.

Ladies and gentlemen, that concludes the question-and-answer session. I will now turn the conference over back to Dr. Bahcall for closing comments.

Thank you everybody for your time and attention today. It is a very exciting and -- a time for us here at Synta. There is a lot of people at Synta who have worked very hard on ganetespib for many years, many of our collaborators, partners, and of course, the patients and their families who have participated in these trials.

I appreciate your understanding that we are in the middle of a process and wanted to share with you real-time how we are thinking at the Company about the coming year. And I certainly appreciate your patience as we flesh this out, and we intend to communicate more about our plans later this year. Thank you all.

Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect.