Madrigal Pharmaceuticals Inc (MDGL) 2013 Q1 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals first-quarter 2013 earnings 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 and thank you all for taking the time to join us today. With me are Safi Bahcall, our Chief Executive Officer; 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 first quarter of 2013. 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 in expectations 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. Today I will provide quick updates on our ganetespib program and then turn it over to Keith for a financial update. We will then open the call for questions.

Ganetespib, our lead oncology drug candidate is being evaluated in a number of different clinical trials including our 300 patient GALAXY-1 trial and our 500 patient GALAXY-2 trial in second line non-small cell lung cancer. Last September we reported promising interim results from the first 172 patients enrolled in GALAXY-1 and last October we completed our target trial enrollment of 240 adenocarcinoma patients.

An analysis of overall survival from this trial was prespecified for six months from the last patient enrolled. This analysis will be conducted in May and we expect those results will be presented at ASCO in June. At this point, given the proximity to the medical meeting, as I'm sure you understand, we can't comment on any aspect of the trial until after the ASCO presentation.

Earlier this month we announced the first patients were enrolled in our GALAXY-2 Phase 3 trial, a 500 patient global randomized trial evaluating the same regimens as the GALAXY-1 trial with overall survival as a primary endpoint. This study population is very similar to GALAXY-1 but excluding outright progressors to first-line therapy, meaning those patients who experienced disease progression within the first six months of being diagnosed and treated for metastatic disease.

With respect to our other trials, we continue to enroll patients in the ENCHANT breast cancer trial and will be evaluating data from both that trial and our monotherapy trial in ALK+ patients later this year. As we have mentioned before, our strategic focus has shifted, combination therapy is the most efficient path to ganetespib registration and we currently have no further plans for monotherapy development.

The ENCHANT trial protocol has recently been commanded to treat HER2 negative patients with ganetespib in combination with Paclitaxel as a means to enable future clinical development with either taxane, Docetaxel or Paclitaxel, both of which are commonly used in breast cancer. I will now turn the call over to Keith who will review our first-quarter 2013 financial results. Keith?

Thank you, Safi, and good morning, everyone. There were no revenues in the first quarter of 2013 as compared to $0.1 million of grant revenues in the same period of 2012. In the first quarter of 2013 our research and development expenses were $16.4 million as compared to $12.1 million for the same period of 2012. Our first-quarter general and administrative expenses were $3.9 million as compared to $2.6 million for the comparable period of 2012.

In the first quarter of 2013 our net loss was $20.7 million or $0.30 per basic and diluted share as compared to a net loss of $15.1 million or $0.27 per basic and diluted share in the same period of 2012. Based on our current operating levels we expect our cash resources of approximately $90.4 million will be sufficient to fund operations into the second quarter of 2014.

This estimate assumes no additional funding from new partnership agreements or equity financing events. And that the timing and nature of activities contemplated for 2013 and 2014 will be conducted subject to the availability of sufficient financial resources. I will now turn the call back over to Safi for concluding remarks. Safi?

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

(Operator Instructions). Thomas Wei, Jefferies & Company.

Just wanted to ask a couple of things. First on the GALAXY update at ASCO, I know 240 is the target population to analyze, but you were going to enroll this study to a higher number to be able to do some of the prespecified subgroup analyses. Is the data that we are going to see at ASCO only on those first 240 or are you just going to include whatever data you have on all of the patients including the excess patients who have been enrolled?

It's the former. It is only on the approximately 240 patients that completed enrollment and the final patient was enrolled in November. And the total number when that phase of the primary enrollment phase was closed was 254 patients.

254. And what is the total enrollment in GALAXY in the end and when was the last of those patients enrolled for the subgroup analysis?

Right. So there is -- as you mentioned, there is an extension phase specified in the protocol to keep enrolling the biomarker population until you achieve a prespecified number, 80 in one of the groups and 120 in the other group and we are very close to done. In the end it will be probably an incremental 70 patients or so.

That is helpful. And then just a clarification on CHIARA. I guess I wanted to ask have you looked at that data yet and is that what is shaping this development strategy of combination?

No, actually, data is still not mature from that trial. It is really more about understanding the landscape and the opportunities for the drug.

Great. Thanks very much.

Jim Birchenough, BMO Capital Markets.

Congrats on all the progress. Just on the GALAXY-2 study, could you remind us what number of events triggered the first two interim analyses in the final analysis of overall survival and what the powering is around those interims? And related, just is there a futility analysis in one of the interims? Thanks. And I've got a follow-up.

Sure, let me just check with George. I know we have disclosed a certain level of detail; I can't remember the exact level of detail on a number of events or so forth. George?

Yes. Jim, we haven't disclosed the number of events required to hit those interim analyses. The trial is powered to see a hazard ratio of 0.7, its 87% powered to show that. We have said back in our previous corporate presentations that if the treatment effect is in fact manifested at 0.7 we are probably around 40-some-percent powered to stop the trial after the first interim. And then somewhere on the order of 60% to 70% the second. The final would be about 87% -- well, it is 87% for the final.

And then just bigger picture, as you think about initial effort of focusing on certain oncogenic proteins that might be clients of Hsp90 and now it seems like maybe it is more complex and you're looking at targeting phenotypes, can you maybe just provide a broad comment on what you've learned about the role of Hsp90? And should we expect in the future that you will still target markers like ALK or is -- are you just discovering that it's more complex than that and you need to go after phenotypes and that is the better yield?

Jim, great question. We have had many ad boards and interactions with many of the top medical oncologists in the lung cancer field in the US and Europe over the last few months and those kinds of questions have been top of mind. There is very high interest in the lung cancer community over the last few years since the development of EGFR inhibitors and now the ALK inhibitors and growing interest in ROS, RET, MEK inhibitors and agents that target one specific oncogene or one specific pathway.

And so, we are seeing -- we are very interested in that. We will be measuring -- and of course KRAS for many years before that. So we are looking at that very actively both in our GALAXY-1 and our GALAXY-2 trial. Some of those subpopulations are very small. In the Caucasian population ALK and EGFR and ROS and RET are pretty small percentages, KRAS is of course quite a bit bigger.

So we are actively looking specifically at KRAS within both GALAXY-1 and GALAXY-2 because it's the largest mutation that is known today. And we are looking at what you would call exploratory biomarkers, we have a very large gene panel that we are getting both in GALAXY-1 and looking to GALAXY-2 as well that will help identify maybe some novel biomarkers. So though those are of very high interest.

We're seeing very high interest among investigators and cooperative groups for a combination approach. Since ganetespib has a -- it's a very different mechanism or way of targeting those driver oncogenes. And you can think of the ALK inhibitor or the EGFR inhibitors coming and hitting ALK or EGFR in one particular point. But ganetespib takes out the stabilizer for ALK and EGFR and other critical functions.

So what we have seen in the mini discussions we've had over the last several months is a lot of interest in a combination of therapy approach to either ALK or EGFR or KRAS populations and that is something that is under active discussion.

In addition, we have had discussions with folks in the -- who are working on the PD-1 and the PD-L1 programs based on the broader tumor biology effects of ganetespib, on the angiogenic effects, on the effects on metastatic pathways, but also effect on the immune suppression pathways. So I think what you could expect as things develop over the coming year or two is a growing combination approach in certain targeted areas.

Great. Thanks, Safi.

Gene Mack, Brean Capital.

Thanks, Safi. I hate to beat this to a dead horse, but the 240 patients -- the 70 incremental patients that you talked about earlier, that was incremental to the 172 or so that were at ESMO, right, not to the 240 that will be at ASCO, is that right?

No, not quite. So if you go back to September of last year when we locked the database for the presentation at ESMO in September of last year, there were 172 analyzable patients. That was all within the primary enrollment phase. So that is all within the 240 primary enrollment phase.

So we finished the primary enrollment phase by November of last year. So all of that stuff gets subsumed in the primary enrollment phase. After we closed enrollment at the primary enrollment phase in November we opened enrollment in the extension phase which is just for biomarker populations. So after November there is an incremental 70 biomarker defined patients that are the subject of a biomarker analysis. Is that helpful?

Yes, that is perfect. Thank you somewhat for clearing that up. Sorry about that. And then I just wonder if you could comment at all on -- so I guess Memorial Sloan-Kettering is starting a trial combining ganetespib with crizotinib and it looks as though some of those patients may be front line, some of those patients may be second line.

Any ideas on where -- assuming I guess -- that trial -- is there any idea of when they may be able to or may be ready to present any data from that trial and where it may go from there?

So to answer your first question, this trial is in front line patients only, so these are patients with ALK+ lung cancer and they are getting crizotinib for the first time and at that time the combination is given to the patients.

It is an investigative driven trial, an investigator sponsored trial at Memorial Sloan-Kettering. Obviously they have control of the trial; it is not under our control. It has a dose escalation dose filing component. So we really can't really speculate on when exactly the trial will be completed or when the first data will be presented.

Okay and then just finally, Safi, you had mentioned I think earlier in the year something about some new publications on HIF-1alpha that may make it into publication sometime this year. I wonder if you all have gotten any update on that, if there's anything interesting that would be useful ahead of ASCO for investors to be looking at.

Sure. There was a result on anti-angiogenic effects of ganetespib including inhibition of HIF-1alpha and the suppression of VEGF production or secretion from cells, as well as other anti-angiogenic factors. And I believe there is pancreatic models that was presented at ACR by our collaborators who are working in pancreatic.

There is a publication in colorectal that was submitted to a journal. I am not sure of the latest updates, if it has been accepted or -- but I would estimate that it would come out this year. And then there are a number of other collaborations that are ongoing that I would expect be presented later this year on the anti-angiogenic effects of ganetespib.

Great. Thanks so much.

Brian Klein, Stifel.

So I know it is early days in terms of enrollment for GALAXY-2, but can you give us a sense of how many sites are open for enrollment and whether the past few weeks your enrollment is consistent with your expectations?

Yes, you are right, it is probably too early days to get commenting on GALAXY-2. I think what we have said -- I think what we can say is that we have -- of the 15 planned countries we are now open have regulatory clearance in 11 of the 15 countries, which is quite good progress.

Great. And then on the upcoming ASCO presentation, just to clarify -- the analysis has not yet been conducted, is that correct?

That is correct. The analysis for ASCO has not yet been conducted.

Okay. Thank you so much.

George Zavoico, MLV & Company.

Congratulations on another good quarter and progress. A question about your ASCO. It looks like you -- the [asterisk] titles, as you know, have come out and you've got a couple of IST presentations there. So is this a sort of preview of what is to come regarding the announcements of outcomes of IST? I know you don't have a lot of control over what and when is said in there. But this looks pretty promising at ASCO.

Our focus has really been on the GALAXY program and then our next focus is on the breast program. As you say, it is up to the investigators as to what they choose to present on some of the ISTs and I don't think we have yet seen from them what they plan to present.

Okay, good, that's -- look forward to seeing those presentations for sure. Regarding the design of GALAXY-2 then, there are a couple of interesting elements to the design that I wanted to ask you about. One is the stratification in the patient population to balance three key subgroups. Like in GALAXY-1 you are doing it kind of as a Phase 2 or a second phase of enrollment, as you say.

Is that -- first question is whether that is going to be the same for GALAXY-2, whether you are going to enroll the whatever number, I guess, 400 or 500 patients and then look and see if you've got stratification, I mean balance and then add more? That is the first part of the question.

And then the second part is the element that allows you to continue treating patients with the ganetespib after discontinuation of docetaxel. Do you have any -- in any of the prior trials have you done that? Do you have any evidence that that provides additional benefit or prolongation of survival or PFS?

Sure, on the first part of your question what we have is fairly routine stratifications in GALAXY-2 for three factors that are well-known prognostic factors and that is entirely based on the standard reason sponsors do these in the larger trials which is just to ensure balance so you don't get sicker patients in one arm or the other arm.

These are not expected to be -- they are not put in their to be specific biomarkers and there is no extension phase, it is just the standard balance of prognostic factors between arms.

Okay.

Your second question -- does allowing the treatment with ganetespib following completion of chemotherapy -- do we have definitive evidence of clinical benefit? The answer is it is too early to say. We will probably have more to say about that later in this year when we have more data. I don't know, Vojo, do you want to add?

Yes, sure. Hi, George. Doing maintenance therapy with targeted drugs is something that we retain for example (inaudible) first time also continues after the combination with chemo. And you treat generally until progression because these types of drugs by definition tend to be better tolerated and allow for longer release control, longer treatment of patients. And that is what we are doing here.

Okay. Okay, great. Thank you.

Joe Pantginis, ROTH Capital Partners.

Maybe just a quick couple questions on GALAXY-2. I know we just mentioned with George about the stratification. Maybe can you just go back and review for us the rationale for continuing to stratify for the LDH status in that study? And then secondly, just going off an earlier question as well, not looking for sort of enrollment updates but sort of any commentary you can provide with regard to how smooth the transition has been going from GALAXY-1 to GALAXY-2? Thanks a lot.

Sure. LDH is a highly prognostic variable not only in lung cancer but in many tumor types, it is one of the most prognostic, LDH you've got performance status and response to first-line therapy are probably three of the most prognostic variables when you look at impact on hazard ratio. So you want to make sure that they are balanced. Does that answer the first part of your question?

It does, thank you.

Okay and then the second part I will -- sorry, could you repeat the second part of your question?

Sure. Just wanted to -- not looking for enrollment updates on GALAXY-2, just sort of any commentary you can provide as to how smooth the transition was going in between the two studies and the ability for sites to come on board and any hurdles you might be experiencing still that you need to overcome.

Okay, yes, so the transition from the ganetespib study to GALAXY-2 has been very smooth. As Safi mentioned, we obtained regulatory clearance in 11 out of the 15 planned countries. The tradition is as expected, when we open a new country for the Phase 3 component of the program we closed it down for Phase 2 as we planned. And so far it has been going very smooth.

We are incorporating the vast majority of the centers that we work with in the GALAXY-1 study. And that is a tremendous I think advantage because not only are these centers up and running and experienced with the drug, but they also operationally can fit in. So that is really helping the transition.

Thank you. Very helpful.

Robin Davison, Edison Investment Research.

I know it's difficult to discuss the material that is going to be presented at ASCO, but I wondered would it be reasonable to presume that it would be the same analysis that you have done in terms of subpopulations and so on as was presented at ESMO. Or is it quite possible it could be different -- there could be different factors you are looking at?

Obviously it is up to the investigators of the study, but our expectation this is a standard medical meeting presentation just like the ESMO and will feature the standard tables and graphs that you see -- in this case not only for the ITT, meaning the all comers, but also because we have a Phase 3 trial that has started and we have selected a population you will see the full analysis for the ITT and then you will also see the full analysis for the patient population that we've chosen for advancement into Phase 3. That is our expectation.

Great. Also just a small financial one. I know just noticed that the R&D expenditure in the first quarter, is that a good guide to the expenditure over the course of the year now that we've got the sort of GALAXY-2 study underway? Or are there some sort of one-off start-up costs that might give that a sort of misleadingly high figure?

I think that these costs can vary from period to period depending upon the ebb and flow of the trial. So I think it is a good starting point.

Okay, thanks.

Ryan Martins, Lazard Capital Markets.

So for the ASCO analysis (technical difficulty) I guess that is going to be done in May, it is not yet done. So the abstract is going to have data presumably from just what was presented at ESMO or will that be something between what was presented at ESMO and what is going to be presented at ASCO?

I think what you are asking about when you talk about the abstract, are you talking about when abstracts get publicly --

Yes.

-- released before ASCO?

Yes.

Maybe, George, you want to just comment on the process there?

Yes. So, Ryan, our abstract will be released on the day of the presentation, the GALAXY-1 abstract, and that will be on June 3, the morning of.

Okay, thanks. And then just on GALAXY-2, you are excluding the rapid progressors there. I did not see that in the inclusion/exclusion in the trial, the (inaudible) trials. How is that going to be operationalized into the trial? How is that going to work?

Sure. So one of the key eligibility criteria, as was mentioned before, excluding the fast progressors of first-line therapy, and to make it operationally smooth and consistent globally we have chosen to do the cut off by looking at the data diagnosis of advanced disease and at 36 months. So patients who were diagnosed less than six months before study entry, those patients will be excluded and patients will be included that were diagnosed more than six months prior to study entry.

Okay, thank you.

Mike King, JMP Securities.

Thanks for taking my question. A lot of questions have been answered, but I was curious to know will you -- in GALAXY-1 if you had an EGFR activating mutation in the first-line setting and then progressed, are you eligible for GALAXY-1 and will you be able to break out that subpopulation in the ASCO presentation?

The answer is yes.

Okay. And is that part of the entry criteria for GALAXY-2 as well?

No, we are really looking for wild type patients. I mean as you know, we are in the Caucasian population, so at the end EGFR patients are a relatively small percent. And in addition, because there are so many drugs targeting mutant EGFR patients, now those patients are being identified and going into other trials. So it ends up being a relatively small percent and so what we are looking for is a wild type -- meaning not (technical difficulty) mutation.

Not having any prior history of an EGFR activating mutation?

Correct.

Okay. Thanks very much.

Gene Mack, Brean Capital.

Thanks for letting me -- a quick couple of follow-ups. First just on GALAXY-2. Maybe, George, you can comment. What is the level of overlap you are expecting with the centers that enrolled patients for GALAXY-1? And then on GALAXY-1 just a follow-up to the earlier question on abstract content.

Would your protocol have permitted any sort of incremental update between September 2012 when the ESMO data was cut and the February submission of the ASCO abstracts? I'm not asking you what you put in the abstract, just if the protocol would have allowed for any additional incremental being put in an abstract submission if you had chosen to do so. Thanks.

Yes, we can't get into the micro-details of abstracts or not, the technical stuff of what will be presented at ASCO until after the ASCO presentation. Maybe I will turn it over to Vojo for the first one.

Yes so there's a good amount of overlap being between study centers in GALAXY-1 versus GALAXY-2. As I mentioned before, you are incorporating most of the centers that we work with in GALAXY-1, the ones that we have very good experience with and incorporating those centers all in GALAXY-2. And in addition that is significantly expanding to be able to reach the required target number of patients in the specified timeline.

Great, thank you.

Nicholas Abbott, BMO Capital Markets.

A non-GALAXY question, you will probably be relieved to know. And it really is about the strategy for ISTs. You've been very generous supporting numerous ISTs with ganetespib and they cover a wide variety of settings, metastatic, neoadjuvant. Do you have an internal priority list of the ISTs that you are most excited about? And going forward are there any IST programs that you are considering that had you had the resources you would have run those studies internally? Thank you.

I think a great question, Nick. We do in fact have prioritization plan and the medical affairs team works very closely with the clinical and the rest of the executive team to create a prioritization list. It starts with the main therapeutic areas that we are focused in and main indications which is lung and breast cancer.

And because we are very active in interacting with the lung and breast cancer medical community, and because there is quite a bit of data that has been generated in the past and it is accumulating both pre-clinical and clinical, we are seeing a lot of interest and that fits very closely with what we call our core focus. So that gets very high priority internally.

Then there are the next indications and we prioritize based on a number of criteria how closely they fit with our development plans, how well they complement our development plans, our views on -- as well as the investigator's views on probability of success and of course the economics.

If we have a large group, as has happened recently and we'll have more to say about later, that has come with a several hundred patient randomized trial that they are willing to finance and we think it is a high unmet medical need and there's real benefit for patients there that becomes -- and it's we think the safety questions are addressable so that it doesn't raise any undue safety concerns, then that also rises in the priority. So that's kind of a rough sense of how we think about it. You want to add anything, Vojo?

(Inaudible). In addition to that we also look at certain indications of questions whether they're very strong molecular or scientific rationale and high unmet medical needs to explore (technical difficulty) potential new indications for the drug.

Thank you. So how many ISTs do you think will be started this year?

Our plans are after the ASCO presentation to get into the more (multiple speakers) the overall clinical development plan for ganetespib.

Okay, 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 your time and attention today. That ends our call.

Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect.