Madrigal Pharmaceuticals Inc (MDGL) 2012 Q4 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals fourth-quarter and year-ended 2012 financial results conference call. Today's conference is being recorded and webcast. At this time, for opening remarks, I will turn the call over to George Farmer, Vice President of Corporate Development at Synta. Please go ahead, sir.

Hello, thank you all for taking the time to join us today. With me are Safi Bahcall, our Chief Executive Officer; Sumant Ramachandra, our new President of Research and Development; Vojo Vukovic, our Chief Medical Officer; and Keith Ehrlich, our Chief Financial Officer.

This morning, we issued a press release that reported results for the fourth quarter and year-end 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 intent, belief and expectation, which are subject to certain risks and uncertainties. Additional detail 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. I will keep my introductory comments brief this morning since we are approaching an important data event and there isn't too much we can say before that data. After my comments, I will turn the call over to Keith for a financial update and then questions.

I mentioned an important data event. We specified in our release and recent presentations what to expect from our GALAXY-1 trial over the next few months. Just a reminder, GALAXY-1 is a global randomized trial evaluating standard-of-care docetaxel with and without ganetespib in the second-line lung cancer setting. We completed enrollment of 252 all-comer adenocarcinoma patients in November of last year. We have a pre-specified overall survival analysis for six months from last patient enrolled, which we expect will be conducted in May. At that time, those 252 patients will have a median follow-up of 9 to 10 months, which will be a fairly mature survival data set.

We are hopeful that we will have the opportunity to present those results at a major medical meeting around that time. But, of course, we can't guide to any specific meeting until we hear about whether or not we have been selected to present.

Since these results will be very important for our future plans of ganetespib, it doesn't make too much sense to discuss future plans right now. We would expect to have more to say about future plans after the results are presented.

As many of you are aware, based on encouraging results from an interim analysis of the GALAXY-1 trial last year, we moved forward with a confirmatory trial, the GALAXY-2 trial, which will enroll 500 patients in the same second-line lung cancer setting with the same design, dose schedule of docetaxel with or without ganetespib. We have opened sites in a number of countries and expect to announce first patient treated within the next few weeks.

As we've described on a number of occasions, the GALAXY-2 trial will be enriched for those patients who showed the greatest benefit from ganetespib and GALAXY-1. A prespecified analysis for GALAXY-1 showed that patients who received a normal course of first-line therapy were the ones who benefited the most from ganetespib.

In other words, those patients who progressed very rapidly through first-line therapy, what are sometimes called, quote, outright progressors, didn't benefit much. The rest did. This design is fairly common in other second or third-line trials in other tumor types with exclusions for primary refractory patients. In our GALAXY-1 lung cancer trial, the outright progressors are about one-third of the total second-line population.

We've been asked a few times if, in our media presentation, we would provide the results for how this enriched population performed. The answer is yes, we plan to do that analysis and provide that data. That is where we are with the GALAXY program; we should have a lot more to say a couple months from now.

A quick update on our monotherapy programs. As we've said on a number of occasions, based on our most recent results and understanding of the science of ganetespib, we see that the combination therapy opportunities -- we see the combination therapy opportunities as the most attractive ones for ganetespib right now and our monotherapy trials have decreased in relative priority.

For our CHIARA trial in ALK-positive lung cancer, we are in the process of completing an initial enrollment phase and collecting the data. We expect to make a decision about the future of that program in the next few months.

In breast cancer, as many of you know, taxanes are a widely used standard of care. We have seen a very high interest from breast cancer investigators in replicating what was done in the GALAXY trial in lung cancer, a randomized trial of taxanes with and without ganetespib.

In lung cancer, single agent docetaxel is commonly used. In breast cancer, docetaxel is also used, but so is paclitaxel. But for our ENCHANT trial, which was originally designed to evaluate monotherapy ganetespib in breast cancer, we are in the process of amending the trial to add an arm evaluating the ganetespib paclitaxel combination in order to enable greater choice in any future breast cancer trials we may do. We should also have more to say about the breast cancer plans a couple months from now. I will now turn the call over to Keith, who will review our fourth-quarter and year-end 2012 financials.

Thank you, Safi, and good morning, everyone. There were no revenues in the fourth quarter of 2012 as compared with $3.4 million in the same period of 2011. Our agreement with Roche, which completed in February of 2012, provided $3.3 million of license revenues in the fourth quarter of 2011 from the amortization of the $16 million upfront payment.

In the fourth quarter of 2012, our research and development expenses were $14.4 million as compared to $10.9 million for the same period of 2011. Our fourth-quarter general and administrative expenses were $3.4 million as compared to $2.8 million for the comparable period in 2011.

In the fourth quarter of 2012, our net loss was $18.1 million or $0.29 per basic and diluted share as compared to a net loss of $10.7 million or $0.22 per basic and diluted share in the same period of 2011. As of December 31, 2012, we had approximately $100.6 million of cash resources on hand, including $59.8 million of net proceeds from the registered direct offering of our common stock in December 2012.

Based on our current operating levels, we expect our cash resources will be sufficient to fund our operations into the second quarter of 2014. Certain new activities contemplated for 2013 will be conducted subject to the availability of sufficient financial resources. I will now turn it back over to Safi for concluding remarks. Safi?

Thanks, Keith. That concludes our prepared remarks. Operator, we will now open the call to questions.

(Operator Instructions). Gene Mack, Brean Capital.

This is Daniel in for Gene. Can you talk about ganetespib's impact on new metastases or if there is a correlation? I seem to recall that there was a less robust PFS benefit observable in GALAXY data relative to what appeared to be emerging for the OS benefit. Is this correlated to metastatic disease and can you remind us if this ties to ganetespib's mechanism? Thanks.

Sure, this is Safi. Yes, in the ESMO data that we presented, in fact, the PFS and overall survival hazard ratios were very similar and in fact, they followed each other very closely in all of the groups where you -- in the enriched population where you saw better overall survival, you also so a better PFS and in the population where there was less benefit, you saw less PFS benefit and less OS benefit. So in fact, they are following each other very closely.

I think what is interesting in this trial -- what's unusual about that is that, in most trials, you see a PFS benefit without as much survival benefit. And you raise a good point, a lot of us and a lot of the folks that we talked to have been focusing on understanding why that is, why we are seeing such a sizable impact on survival.

And the results that were presented at ESMO, that ganetespib appears to be inhibiting the emergence of new lesion growth, that you are seeing a typical pattern of new lesion growth in the control arm, but an atypical pattern of new lesion growth in the combination arm is consistent with the scientific data, the preclinical data, the in vitro data and the in vivo data that shows that the drug is inhibiting or suppressing the growth of new lesions. And that that may be responsible or driving some of the benefit or some of the impact on survival. So that is something we continue to look into and we will have a lot more to say about it over the next few months.

Thanks. That answers my question.

Thomas Wei, Jefferies.

I wanted to find out -- you have already submitted an abstract for ASCO. I guess I am curious -- should we think of that as being a material update of any sort or will we really have to wait until we get to the ASCO presentation for any new insights beyond the ESMO interim?

I know all of you guys have seen this many times before. As we get close to a medical meeting, we can't really comment on any aspect of an ongoing trial or any abstract that may or may not have been submitted. So it is fair to say that the next time you can expect a data presentation would be around the time of ASCO. Beyond that, we really can't comment any more.

Okay, on the interim analysis that we're going to see at ASCO or near the final analysis at ASCO, could you just go through the -- how should we frame our expectations around the different patient populations that you are going to be looking at? And is there -- how should we think of it in relation to the ESMO interim? Are there -- is your expectation that we should basically see the same sort of benefits, just larger number of patients and therefore powering-wise, it would reach statistical significance? Is that a fair way to think of how we should set our expectations?

We would expect to conduct a very similar analysis and presentation that was done at ESMO. So it was a standard medical meeting presentation where you look at the -- all the pre-specified endpoints. That is what was reported at ESMO. And if we do present at ASCO, that is what we would expect to report at ASCO. Does that answer your question, Thomas?

Yes, I guess I'm just curious like how much of the focus should there be on the ITT analysis versus maybe the analysis, excluding rapid progressors?

So, yes, both of those --.

Or are both important?

Yes, both are important. ITT, for obvious reasons, that would be presented, but both of those were presented at ESMO, both of those will be presented -- if we are selected to present at ASCO, then both of those would be presented at ASCO. They are both prespecified analysis and they are both important. ITT reflects the GALAXY-1 trial ITT. And what is particularly relevant about the enriched population is that it is the population being evaluated in the ongoing or currently initiating GALAXY-2 trial. And so that's particularly relevant for thinking about results going forward so that I think will be of particular interest to a lot of people, including ourselves and all the investigators.

I guess I am trying to get a sense, and I'll jump back in the queue after this one, when you look at the data from the ESMO interim and whatever you know about the additional patients that were enrolled through October, is there -- how much do you think that early look at the data on either one of those two populations, ITT or excluding the rapid progressors, could be extrapolated to the final analysis?

It is a little -- I think the data speaks for itself at ESMO. The way to think about it is that the patients with some fairly mature follow-up, meaning patients who had been enrolled or on the study for at least six months, there are approximately 80 patients at that time, even though 172 patients had been enrolled is the snapshot of September. About 80 or so patients had really been enrolled with sufficient time to really get compelling data. We will have roughly 3 times that number at midyear around the time of ASCO -- at the time of the next analysis. So you can think of it roughly as the ESMO data set was roughly 3 times the number of patients that have mature data.

Okay, thank you.

Brian Klein, Stifel Nicolaus.

Great. Thanks for taking my questions. So firstly, I know you are expecting first patient into GALAXY-2 in the next couple of weeks. Do you guys anticipate that you will complete enrollment into the entire trial by the end of this year? And also can you give us your expectations for patient breakdown between US versus Eastern Europe and rest of world?

Sure. No change to our current timelines. We have an ambitious goal of completing enrollment by end of this year and we will certainly be doing everything we can to meet that goal. In terms of the geographic breakout, we anticipate it will be very similar to the GALAXY-1 trial.

Great, thanks.

George Zavoico, MLV.

Thank you, Safi, for the update and taking my questions. A couple questions about some of the ISTs that were ongoing through the last year or two. Can you provide any update on any of those in terms of when you might expect some results? I know the ISTs are under the control of the PI there.

Yes, George, good question. They are under the control of the PIs. We haven't heard a lot from them about the details of timing. I think there are some that have -- that may be presenting in the next few months, but that still hasn't been decided or determined in any final way. So not much information there that we can provide about future ISTs.

Okay. And with regard to the trials that are ongoing, first, ganetespib is a -- as you point out, affects multiple pathways. So with each trial, you are gaining a wealth of information with regard to what pathways perhaps are most affected by ganetespib and perhaps the ones that might be the most relevant to the progression of a particular cancer that you are doing the trial in. You mentioned in your press release that you have got I guess HIF-1alpha and VEGF are two biomarkers that you see considerable affect of ganetespib, but there is multiple others. How deeply are you looking into other pathways that might be affected that could inform and also educate people about the variability of a specific type of cancer?

That is a great question. In fact, we have a lot of ongoing translational research, some internally, but a lot with collaborators. We have about 40 active collaborations at many different centers, primarily in North America, but also increasingly in Europe. We're looking at exactly the type of questions you say, what are the key gene signatures that might predict activity, what are the key pathways that are inhibited that my predict activity or lack of activity.

I can tell you that there are several papers that we expect will be published during the course of this year that will be very interesting. As you say, the inhibition of HIF, the inhibition of angiogenesis are particularly interesting. The synergistic activity is particularly interesting, the affect on the emergence of new lesions is particularly -- and then the metastatic genes, the metastatic phenotype are particularly interesting. And there will be a lot more published on that later this year.

Cool, looking forward to that. That is great. And finally, last question and I think Vojo is going to enjoy this, I am really glad to see Elesclomol in your press release. You mentioned that you got to the prespecified or that GOG got to the prespecified efficacy endpoint to advance to Stage II. What is the next step here? What can we expect coming down later this year or next year with this trial?

Well, the next step is for GOG to move to Stage II of the trial. They, of course, own the data, so we are in some ongoing discussions with them about the timing of next steps and timing of data release and presentation and those discussions are continuing. But the program will move forward with GOG driving it in ovarian right now.

And it is all financed entirely by GOG, is that correct?

That is right. We have a minimal expense -- we provide drug and some minimal expense, but it is primarily all -- all expenses are borne by GOG.

Okay, great. Thank you very much, Safi.

Robin Davison, Edison Investment Research.

Just a few quick ones. I think you quickly said that you were looking at the first-stage results of the CHIARA trial and you had to make a decision there. I am just wondering is that a decision based on the scientific merits of that or is there also a commercial aspect in that decision, whether that (inaudible) taken forward?

Well, there will be three elements. Number one is the clinical data. Number two is the relative priorities compared to other programs at the Company. And number three is landscape. So we look at all three of those and make a judgment about what is the best way to allocate our resources for our programs.

Secondly, on the addition of a combination arm in the ENCHANT study, I'm wondering whether that is -- you are actually sort of increasing the size of the study, so you have got two, for example, 70 patient arms that could be compared or you are reallocating this and it's like 35 patients per arm rather than -- in the two arms. Is it likely to be increased [really]?

It is still all in progress, but the way we think about it now, it is more reallocation given that our interests have shifted less on monotherapy and more on combination therapy. That is probably a better way to allocate our resources.

Right, I see. Just one sort of final one. I'm not sure that you wouldn't do this, but I was wondering whether you have had, within Synta, any further data from the GALAXY-1 study. I mean I don't know whether the 172 patients for the 10th of September cutoff followed up further and whether that informed the decision of the design of the GALAXY-2 or whether the GALAXY-2 design has specifically been made on the basis of the data that was presented at ESMO?

The GALAXY-2 design was based on the data that we had from the interim analysis that was conducted in September of last year.

Right, okay, so there is no further data. Okay, I think that is it for me. Thanks.

Jason Zhang, Edison Investment Research.

I apologize if you have touched on this already. My question is related to the update analysis that we are going to see at ASCO and what is relevant to the [phase] for GALAXY-2. I know I am speculating here. What if your ITT analysis did actually reach statistical significance for overall survival? Is your GALAXY-2 trial design flexible that it can actually incorporate that into the final? Now you of course exclude patients that are fast progressors. If the data actually turns out to be different, the ITT has benefit. Is your trial design flexible that it can incorporate that or is the GALAXY-2 trial design set? No matter what happened to the update analysis, you are going to accrue patients that you are set to accrue and not much change from here?

Sure. GALAXY-2 is designed as a registration study. So unless there is an overwhelming urgent need to make an amendment to that protocol, one generally doesn't want to make amendments to the protocol and one generally doesn't do that. Your question was if we meet the -- if there is a survival advantage observed in the ITT allcomers population in GALAXY-1, that will be interesting, but the more relevant question is not whether the ITT is positive, but is there a difference.

If the outright progressors, the patients who blew through first-line therapy, if they're really not receiving any benefit from ganetespib or any benefit from docetaxel ganetespib combination relative to docetaxel alone, there really isn't any reason to include them. If they are not benefiting from the drug, why include them in a future trial? The real question is going to be, if the patients who got a normal course of first-line therapy are showing a particularly enhanced benefit, that is the right thing to do. You want to give your drug and enroll trials that focus on the patients that get the most benefit from your drug. You want to see the highest benefit to risk profile.

And that is what the FDA has guided consistently over many years and in fact, just in December of last year, they issued another guidance about clinical trial enrichment where that was exactly what they were saying. They are looking for sponsors to try to narrow populations, enriched populations where there is the best benefit to risk profile.

So if one sees around the time of ASCO and we present updated data that, in fact, the rapid progressors are just not benefiting much and the normal progressors us where you see the best benefit, that's a very good validation of the strategy of focusing on the normal second-line patients. Does that answer your question, Jason?

Yes, yes. On that note, could I also explore further and again, the issue of the fast progressor versus slow progressor? In order to -- I'm thinking down the road for labeling, other things that could be considered. Because the timeframe diagnosis certainly can be affected by a lot of things other than clinical presentation, I wonder why the (inaudible) was not set to how long after the patient progressed after the first-line treatment. That to me is a more practical or even more widely acceptable criteria.

No, that is a great question. It's very interesting. We've had a number of discussions, we've met with many of the very well-known lung cancer thought leaders, medical investigators in US and Europe and thought through this point.

The way to think about it is there are essentially four ways in a second or a third-line trial once you are after first-line, there are four ways to focus on essentially normal and more stable patients and try to not include the patients who are extremely rapid progressors who are blowing through first-line therapy who I think most investigators know those patients tend to not have much benefit from any subsequent therapy and tend to die very quickly regardless of what treatment they get.

So historically, there has been four ways to do that in second, third-line trials. Number one is the way that we did in GALAXY-1 and GALAXY-2, which was prespecified, which is the time since diagnosis of about six months. Number two is time since first chemo. So number two ends up being about the same as number one since the time between first diagnosis and the time since first chemo is usually pretty fast. So number two and number one tend to be pretty equivalent.

Number three is time since last chemo. So some trials use either one of the first two and some trials use whether time since last chemo therapy was more or less than three months. You will see that often in breast cancer trials or ovarian cancer trials or sometimes in lung cancer trials as well. It turns out number three is also about the same as number one and number two because duration of treatment in first-line is on average about three months.

And then number four is best response to first-line therapy. So was it a CR, a PR or an SD or did the patient progress? So number four, as it turns out, is also very closely correlated with numbers one, two and three. So these four ways of looking at how do you define a patient who is progressing extremely rapidly and not likely to do very well, they tend to all be about the same. There isn't that much difference between them.

Of the four, in lung cancer, the one that we are using has two advantages. Number one, it was prespecified and it is what we used in GALAXY-1, so there is really no being cute about trying to do something different as you go to the next trial. So it was prespecified. Number two, it is the most objective because things like response in prior -- to the first-line therapy depend on a subjective analysis of CT scans in general.

And then there is a particular change that has happened in lung cancer in the last couple years. It used to be that time since last chemotherapy was a pretty popular way to do this. In lung cancer in the last few years, maintenance, which means continuing to treat patients with maintenance therapy after first-line therapy, has become increasingly common, particularly in the US. So that has made using time since last chemo much more ambiguous and a bit more difficult.

So in discussions with our medical advisors and lung cancer physicians in the US and Europe, when considering those four options, firstly, they end up being about the same. But within those four options, the one that we are using has a number of advantages and so that is why we ended up going with it.

Okay. That was very helpful. That is the best explanation I have ever heard. So great, thank you for that.

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 all for joining us this morning. This concludes the call.

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time and we thank you for your participation. Good day.