Madrigal Pharmaceuticals Inc (MDGL) 2012 Q2 法說會逐字稿

(technical difficulty) Pharmaceuticals second-quarter 2012 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 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, our Chief Medical Officer.

This morning, we issued a press release that reported results for the second 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 some forward-looking statements based on our current intent, belief and expectation, 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. The past few months have been very exciting here at Synta and we have a lot more news expected over the coming months, including clinical results that will be critical for how we think about registration for ganetespib, our lead drug candidate for cancer.

Ganetespib is being developed along two distinct but complementary paths. As a monotherapy for the treatment of certain genetically defined cancer populations and in combination with chemotherapy in broader patient populations.

These approaches are evaluating two distinct mechanisms of ganetespib. The monotherapy approach evaluates the ganetespib ability to suppress certain oncogenes known to drive the growth of specific tumors, such as ALK or HER-2, and combination approach evaluates the chemo sensitizing ability of ganetespib. Ganetespib is very effective at inhibiting certain proteins which drive resistance to chemotherapy. These include hypoxia induced factor or HIF, as well as several DNA repair and cell cycle proteins.

I'll start with where we are and what's coming up in our combination therapy program. You may remember that our Phase 2b/3 GALAXY trial has quite an innovative design. The first stage of this trial is neither a classic oncology Phase 2 trial, nor is it designed as a classic Phase 3 trial. It is a 240-patient biomarker signal-finding lead-in to the Phase 3 portion of the study. The Phase 2b portion is effectively a dress rehearsal for the Phase 3 portion, designed to identify patients most likely to benefit. We invest more early on to de-risk later on.

From an interim analysis conducted in June, we identified three meaningful signals in GALAXY, all based on prespecified hypotheses. The first hypothesis is enhanced activity in patients with elevated levels of LDH, an enzyme that can be a marker of hypoxia, which means low oxygen. We specified this hypothesis because hypoxia is a well-known driver of many aggressive tumor properties such as angiogenesis and metastasis. Because ganetespib is very good at shutting down the hypoxia pathway, we were looking for enhanced activity in tumors where these hypoxia pathways are more active. And that's what the interim analysis showed.

The second hypothesis is enhanced activity in patients with mutant KRAS, which is based both on the underlying biology and the activity we saw with ganetespib in other clinical trials. While the results are quite early there, we're also seeing an encouraging trend in this population.

Finally, the third signal we have seen in GALAXY to date is a difference in activity profiled between patients with adenocarcinomas and squamous cell histology, similar to what is seen with VEGF or angiogenesis inhibitors. This is consistent, again, with known preclinical experiments with ganetespib, which shows that it inhibits angiogenesis and it inhibits VEGF. So what we're seeing is encouraging early evidence that ganetespib is changing the biology of tumors, that ganetespib is making tumors less aggressive, less metastatic, less angiogenic and more sensitive to chemotherapy.

The data we have are, of course, early. And this is clinical development; we have to stay tuned for the end of the trial. We expect mature results for the Phase 2b portion in the first half of 2013.

In the near-term, we have been asked if we can provide details on what to expect at the ASMO oncology meeting at the end of September. An updated interim analysis is planned for September. We expect there will be incremental information compared to June, since there is just a three-month difference since the prior analysis. Until this new analysis is complete and reviewed with investigators and the presentation is finalized, we cannot provide additional guidance.

In the longer term, based on our current estimate, we expect we would be in a position to file an NDA or a new drug application for registration in 2014.

Switching to our monotherapy trials in genetically defined cancers, we have recently initiated our global KRAS study in ALK-positive lung cancer, and our global ENCHANT trial in HER-2 positive and triple negative breast cancer. We are excited about the potential for ganetespib to provide benefit to patients in these targeted indications and are looking forward to results from both over the coming several months.

Finally, we have been very pleased with the feedback and reaction from the medical community since we presented GALAXY interim results at ASCO. The favorable safety profile in a randomized trial, which is consistent with the data from many prior studies with ganetespib, together with the evidence of broad antitumor activity, has shown to many that ganetespib is positioned to be the first Hsp90 inhibitor to be available for patients. This is reflected in the many requests we have received over the past several months for cooperative group studies, foundation-supported studies and investigator-supported studies.

We have been very pleased that in the past quarter four such studies began enrolling patients, including studies in lung, breast and rectal cancers as well as multiple myeloma. All of these are at top-tier academic centers and we expect all of these to advance both the science and the clinical development of ganetespib.

[Broad said], ganetespib third-party-supported trials plant the seeds for future expansion of this program. These are future applications above and beyond the most direct next set of trials for ganetespib, which include certain genetically defined cancers, as well as expanding more broadly into the taxing indication including lung, breast, gastric, prostate, ovarian, and head and neck cancer.

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

Thank you, Safi. Good morning, everyone. There were no revenues in the second-quarter 2012 as compared to $1.4 million of revenues in the same period of 2011, which consisted principally of amortization of an upfront payment under the Roche agreement that was terminated at the end of 2011. In the second quarter of 2012, our research and development expenses were $11.3 million as compared to $10.4 million for the same period of 2011.

Our second-quarter general and administrative expenses were $2.9 million as compared to $2.9 million for the comparable period in 2011.

In the second quarter of 2012, our net loss was $14.6 million or $0.25 per basic and diluted share as compared to a net loss of $12.5 million or $0.26 per basic and diluted share in the same period of 2011. As of June 30, 2012, we had approximately $44.7 million of cash resources on hand. In July 2012, the Company raised approximately $25.8 million in net proceeds from the sale of its common stock in a registered direct offering to certain of its directors, including its largest stockholder. These shares were sold directly to these directors without a placement agent, underwriter, broker or dealer.

Based on our current operating levels, we expect these cash resources of approximately $70.5 million, which includes the recent financing, will be sufficient to fund operations into the second half of 2013. Certain new activities contemplated for 2012 and 2013 will be conducted, subject to the availability of sufficient financial resources.

Thanks, Keith. That concludes our prepared remarks. I will now open the call to questions and discussion. Operator?

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

I had just a couple of related questions. Safi, just to be clear, you gave a tentative timeline to file an NDA in 2014. And I'm assuming that's going to be on the basis of GALAXY or whatever extension you might undertake from that, rather than a monotherapy sort of ALK-positive patient population strategy.

Right. That's consistent with what we've said before, that we expect final data from the first half of GALAXY, the phase 2b portion, in the first half of 2013. And we would expect final data from the second portion of GALAXY in the first half of 2014.

Okay, so I guess you are not giving any hope for a kind of an orphan registration a la crizotinib type of strategy?

It's too early to get visibility on the CHIARA ALK trial or the ENCHANT breast trial with the targeted indications. Once we have a little bit more data from those trials, we would get more visibility into the regulatory pathway. The GALAXY trial just is -- has a pretty clear, direct timeline.

Right, okay. And then, just given that you are going to be doing studies in genetically distinct tumor types, can you comment about whether you guys have adopted a biomarker and companion diagnostic strategy yet? Or are you waiting to see how that all plays out?

It's a good question. For the monotherapy genetically defined indications, you need companion diagnostic strategy. The FDA has been, and AMA has been very clear about that recently. So that is part of the development plan. So we work with identified vendors and work hand-in-hand with vendors to have a companion diagnostic that can be filed simultaneous with any potential registration. So, you think about that going into the trial.

Right. Some companies publicize who they are working with. Are we going to expect the same from Synta at some point?

Yes, down the road as we get a little bit further into those trials, we would discuss that.

Mani Mohindru from ThinkEquity.

Thanks for taking my questions. I actually have a couple of them. One, on your Phase 3 portion or the second portion of the GALAXY trial, based on the information you have in hand, what design are you going after? Are you going after -- Would you expand into just all avenues, or would you expand into KRAS or LDH? Like what can we see, because that will determine how many patients you would need to enroll in each subcategory.

And then I have a follow up.

No, that's right, that's a good question. We are actively discussing that right now. We plan to discuss that with the regulatory agencies, discuss that with advisors. And once we have made a final decision, we will communicate that.

Okay, and in terms of -- you have a number of investigator-initiated or cooperative group-sponsored trials. What should we focus on, which ones from your preclinical work are the most important ones that we should be looking for in terms of next data set?

It's hard for us to really identify or highlight any one of them. I think we receive many requests, many more requests than we can actually support. So the ones that you see have initiated or are about to initiate are the ones that we think have a strong scientific rationale and create some very interesting potential to learn both about the underlying science and underlying biology of how ganetespib interacts with the drivers of that particular disease, as well as can really move the program forward.

I think we've seen a lot of interest in the breast and lung cancer community, and the breast cancer community because there's a fairly long history or a fairly recent history of encouraging results with Hsp90 inhibition. And while that was focused several years ago primarily on the HER-2-positive patients, we have seen quite a bit of interest in hormone-positive disease. We recently started a randomized trial there. It was initiated by a Dana Farber and Sloan-Kettering group.

And then in the triple negative disease, another combination trial is getting started at Sloan-Kettering. So a lot of interest in the breast cancer community. Clearly because of the GALAXY results and investment we've made and lung cancer, a lot of interest in the lung cancer community. Because of the results that we and others have demonstrated in ALK-positive disease, a lot of interest in looking in combination in ALK-positive disease and then in other genetically defined indications within lung such as a BRAF, ROS and RET, where Hsp90 inhibition has shown a lot of promise.

Okay, and one final question. So, in terms of -- you obviously have breast linked to a large number of trials that you are doing, embarking on like big programs in breast and lung. But I was trying to understand from your commercialization or development strategy going forward, when do you absolutely need to partner these programs, especially like when you -- for lung, do you anticipate that you can go ahead and file on your own in lung, as a first initial indication even before you partner? Or do you absolutely feel that you need to find a partner before you are ready to make that commitment?

No. I think that it's a little too early to say right now if we could file on our own or we have to have a partner. I think we are in a position, fortunately, that we are in late development. We have quite a bit of encouraging data in a couple of directions. And where we are in development, it's not that far or that hard to get to a registration package. It is something we feel comfortable and confident we can do on our own. So we're certainly not in a position we feel we have to partner. We have the support of, as you can see from our last financing, our Board for what really represents a long-term commitment and belief in the program and our ability to advance the program to registration and commercialization.

That doesn't mean that we would never partner the program; it just means that we have many options available. And as we've done in the past, we engage in discussions. And right now, there are quite a few very actively interested parties that we are talking to. We engage in those discussions and systematically think through our opportunities in a pretty rational way, what makes sense for shareholders, what makes sense for the drug, what makes sense for patients.

That is very helpful. Thanks.

Robin Davison.

First of all, the updated interim analysis or the second interim analysis that you intend to present at ASMO -- is that based on the same 114 patients that were in the original analysis? Or will it actually be more patients that are included in the study at that point in time?

It will be incrementally more patients.

Right, okay. Have you had any more data from the first analysis? For example, only two thirds of the patients have been screened for KRAS at that point in time. I don't know whether -- I'm wondering if you've seen any difference in the data, based on a larger number of patients.

We haven't done the next interim analysis yet. But as you say, there will be some more -- both some more patients and some more follow-up from earlier patients. So both of those we would expect to have additional data on by ASMO.

Okay, just another thing I was wondering about -- in fact, in the Phase 2 data for monotherapy in non-small-cell lung cancer, you had a number of squamous patients. I'm wondering, is there any way, if you take those patients out because we know that the drug is not effective in that group, that you see any significant difference in the responses that you have seen?

The data that was reported at the end of June was entirely in the adeno data set.

Is that for the monotherapy study?

I'm sorry, for the GALAXY study that we reported end of June. In the -- all the prior Phase 2 study which was reported a year ago at ASCO -- I just actually don't remember off the top of my head what the adeno versus squamous breakout was. If I remember right, I think in there we also reported -- we certainly expanded the cohort in adeno only, in that study. But we can take a look at that and get back to you later.

Oh, sure, right. Okay, just moving on, on the Phase 3 portion of the GALAXY study, do you know at this point whether you are likely to have an interim analysis?

On the Phase 3 study, are we likely to an interim analysis? Was that the question?

That's the question, yes.

We haven't gotten that far in the planning of the Phase 3 or that specific, in terms of finalizing the design, where we could communicate that publicly. Once we have finalized the design, then we will communicate that level of detail.

Right, okay. Just finally, I think you have guided that you expect to get interim data from the CHIARA study in the second half of this year. I'm presuming the study has only just started, so it must be the end of this year. But what specific data are you likely to be able to see at that point?

What we have said is we expect to have some preliminary results. And since the trial's just initiated fairly recently, I wouldn't expect a lot of patients. I would say fairly initial, preliminary results in a small number of patients is what we will have internally. And I just want to be clear; we have not guided to presenting at a particular medical meeting. It's a little too early to decide on where and when and how those results will be presented. As we get a little bit further, we will give more specific guidance on when, where and how the CHIARA and ENCHANT data will be presented.

George Zavoico from MLV & Co.

Congratulations on the progress you've made and initiation of the ALK-positive lung cancer trials today. I just have a very general question regarding how you are monitoring ganetespib and its penetration into tumors, for example, or Hsp90 activity -- sort of just a general question, really.

That's a very good question, George, very interesting question. As you know, in patients it's fairly difficult to get into that level of detail of pharmacodynamic markers, particularly inside a tumor, because that would require doing repeat biopsies in patients, which is fairly problematic in the course of a clinical trial. We look at -- we have done some of that work. What you do in some of our trials, some of the investigators, particularly where there are tumor types that are more amenable to biopsy -- in lung cancer, for example, it's much more difficult. But in other tumors, it's a little more possible. In that case, there is some early -- there is some exploring of how are the client proteins inside a tumor, Hsp90 client proteins inside a tumor, being affected. Are they -- how much are they being down regulated and how long do they stay down?

So in the clinic, we are looking at that. That's above and beyond sera markers, which are obviously much easier to measure. But then, in our preclinical studies, we have a number of trials, a number of preclinical studies not only in your fairly standard xenograft models in rodents but also in canines, so in dogs with naturally occurring tumors. And there we're looking quite specifically at some of the pharmacodynamic markers and we are getting, I would say, quite a bit of interesting information from that.

Yes; with the multitude of client proteins, I imagine it's quite a task to try and ferret out for each tumor type, especially since it might be different for each tumor type.

Yes, we would agree.

Yes, yes. Well, thanks very much and look forward for the continuing interim results. It looks like you are going to have a very interesting second half.

Mike King from Rodman & Renshaw.

Thank you. My follow-up was actually asked and answered, thanks.

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

Thank you, everybody, for your time and attention today. This ends our call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. Thank you.