Oncternal Therapeutics Inc (ONCT) 2005 Q1 法說會逐字稿

Good morning everyone and welcome to the GTX Incorporated first quarter 2005 financial results conference call.

[OPERATOR INSTRUCTIONS]

For opening remarks and introductions, I'd like to now turn the call over to Mr. Henry Doggrell. Please proceed.

Thank you and good morning. On behalf of GTx, I'd like to welcome you to our first quarter 2005 financial results conference call. By now you should have received a copy of the company's press release. However, if you do not have a copy and wish to review it, you may access the press release on our Web site at gtxinc.com.

You may also access a replay of the conference call on our Web site until May 5, 2005. With me today are Dr. Mitchell Steiner, Vice Chairman and Chief Executive Officer, Marc Hanover, President and Chief Operating Officer, and Mark Mosteller, Chief Financial Officer.

Following this introduction, Dr. Steiner will highlight the company's clinical and corporate achievements during the first quarter. Then Mr. Hanover will review the company's financial performance for the same period. Dr. Steiner will then discuss the company's anticipated 2005 milestones and the progress of the company's corporate programs in greater detail.

Once they have finished, we will open the call for questions. Before we begin, I'd like to remind you that the following discussions contain certain statements that are forward-looking, including answers to questions at the end of the formal remarks. These statements are only predictions and are based upon current expectations.

Forward-looking statements involve risk and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in our forward-looking statements as a result of these risks and uncertainties. These and other risk factors are discussed under "Additional Factors That Might Affect Future Results" in our annual report on Form 10-K filed with the SEC on March 24, 2005.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any change in events, conditions or circumstances on which such statements are based.

Now I'll turn the call over to Dr. Steiner.

Thank you Henry. Good morning and thank you for joining us today for our first quarter financial results conference call. I would like to begin by highlighting three of our significant achievements in the first quarter of 2005. We have initiated a pivotal multi-center phase III clinical trial of Acapodene for the prevention of prostate cancer in high risk men.

We have presented the positive results of our Phase IIb clinical trial of Acapodene for prostate cancer prevention at the Multi-Disciplinary Prostate Cancer Symposium sponsored by ASCO (ph) in February of this year. Incidentally, there was an entire morning session devoted to prostate cancer prevention in which our data was independently presented by Dr. David Boxley (ph).

In addition, our work was corroborated by the NCI Canada high grade PIN study in over 200 patients, again, demonstrating that high grade PIN patients are at high risk for prostate cancer. We have successfully completed a Phase I single ascending dose clinical trial for Ostarine.

And as a consequence, we have initiated a Phase I multiple ascending dose clinical trial, Ostarine, to which GTx has exclusive rights, is our second SARM compound for the GTx team and successfully moved from discovery into clinical trials.

Shortly, I will discuss our anticipated milestones for the remainder of 2005, and the progress of our corporate programs, but first, Marc Hanover will review the financial results for the first quarter of 2005. Marc?

Thanks Mitch. GPx's financial performance for the first quarter of 2005 was in line with expectations. In the first quarter ending March 31, 2005, GTx reported a net loss of $9.1 million, compared with a net loss of $5.8 million for the same period last year. Revenues for the first quarter of 2005 were $687,000, compared to $52,000 for the first quarter of 2004.

The first quarter revenues for 2005 were comprised of net sales of FARESTON, which is marketed for the treatment of metastatic breast cancer and collaboration income from our partner, Ortho Biotech, a subsidiary of Johnson & Johnson, for andarine, one of our proprietary SARM compounds.

FARESTON net sales were $353,000 and costs of goods sold was $245,000, while the collaboration income from Ortho Biotech was $334,000. Research and development expenses increased the first quarter of 2005 to $7.3 million from $4.4 million for the first quarter of 2004.

The $2.9 million increase in research and development expenses was primarily the result of the company's continued investments in the following clinical programs: a pivotal Phase III clinical trial of Acapodene for the prevention of prostate cancer in high risk men; a pivotal Phase III clinical trial of Acapodene for the treatment of serious side effects of androgen deprivation therapy; and a recently completed Phase I single ascending dose clinical trial for Ostarine and preparatory expenses for the Phase I multiple ascending dose clinical trial of Ostarine, which is now underway.

In regard to general and administrative expenses, for the first quarter ending March 31, 2005, general and administrative expenses increased to $2.5 million from $1.6 million for the first quarter of 2004.

The increase in general and administrative expenses was due primarily to the higher personnel costs as the company expands its operations, as well as increases in insurance costs, professional fees, and patent expenses. At March 31, 2005, the company had cash and cash equivalence of $55.6 million. I would also like to remind you that the company has no long-term debt and has no warrant.

At this time, Mitch will discuss anticipated milestones during the remainder of this year.

Thanks Marc. We are making excellent progress in our corporate programs and there are several key milestones which we expect to take place over the course of the next eight months. The data from our Phase IIb clinical trial, which demonstrated that Acapodene reduces the incidence of prostate cancer in high risk men, has been chosen by ASCO for two presentations.

As many of you know, the ASCO meeting will be held in Orlando in May of this year. We will also be making five presentations of our expanded data set from the same trial at the American Urological Association meeting in San Antonio also held in May. Peer review recognition of this important work makes me particularly proud of our clinical trial investigators and GTx scientists.

The SPA for the Phase III clinical trial for prevention of prostate cancer in high risk men was refiled with the FDA in late February, and we are waiting to hear from the FDA. Progress is being made in identifying markers for a blood or urine based PIN test through our diagnostic collaboration.

This will allow us to assess the estimated 9.4 million men between the ages of 40 and 69, who harbor (ph) high grade PIN, but do not know it. Our enrollment for the pivotal Phase III clinical trial of Acapodene for the treatment of serious side effects of androgen deprivation therapy is on track. We expect to have over 130 clinical sites and plan to be fully enrolled by Q3, 2005.

As planned, we expect to report in the second half of this year interim analysis (ph) data of bone mental (ph) density in the first 200 patients who have completed one year of treatment from the ongoing Phase III clinical trials of Acapodene for the treatment of side effects of androgen deprivation therapy for advanced prostate cancer.

We are also working with our partner, Ortho Biotech, to continue to clinically advance andarine, our first SARM. We plan to complete a Phase I multiple ascending dose clinical trial for Acapodene, our second SARM, to enter the clinic by late summer. We plan to initiate a Phase II clinical trial in the second half of this year.

Our discovery program continues to develop into advanced new compounds to sustain our pipeline in serums (ph), SARMs and anti-cancer drugs. This steady and successful progress of our four clinical programs and our discovery program is a direct result of the tireless and dedicated efforts of the GTx team. I want to personally express my appreciation for their passionate drive to achieve our goals.

Thank you for your attention. And operator, we are now ready to take questions.

Thank you sir. Ladies and gentlemen, today's question and answer session will be conducted electronically. If you would like to ask a question, you may do so by pressing the star key, followed by the digit one, on your touch-tone phone. Please disengage your mute function on your speakerphone to allow your signal to reach our equipment.

Again, it is star, one, for your questions. We'll pause for just a moment to assemble our roster.

Our first question comes from the line of Eric Schmidt with SG Cowen. Please proceed.

Good morning everyone. Mitch, just a point to clarify the timelines on the PIN Phase III trial. I thought you said complete enrollment in Q3 of '05. I had thought we were looking at early '06 completion of enrollment. Are you proceeding ahead of expectations or what's going on there?

Hi Eric. The answer is the Q3, '05 is the same guidance we've given for the Acapodene for ADT (ph) trials, not the PIN trial.

Okay, take it back then.

Okay. But the PIN trial is still on track for the first quarter of '06, so that hasn't changed. So for the ADT trial, we remain on track for Q3, '05 completion of enrollment.

Thanks for the clarification there. On the Ostarine development, either these Phase I trials for single dose or multi dose, is it possible to get any bio-marker data that might indicate you're having the biological efficacy that you expect?

You know, because these two drugs - these two studies, the Phase I single ascending dose and multiple ascending dose are primarily for safety, and because part of the effort that these trials was to try to understand, you know, what is the appropriate dose, you know, pd (ph) type stuff.

I will tell you that we do build in, you know, bio-markers or surrogate markers to look for activity, but that's sort of a secondary end point. But it does give you some clues about which dose you would pick, for example, for your Phase II.

So those are built in, but again, it depends on making sure that the dose range, if you pick your Phase I, is going to show that. And if we do see bio-markers that make sense, then obviously we're going to share that with everybody.

Okay. And then last question is just on andarine. Any update on J&J's progress there?

Yes. I mean, we continue to work very closely with our partner, J&J. We're advancing along the clinical and preclinical route. As you know, both have to take place as you move down the clinical pathway and all I can say at this point is that it's moving in the right direction and we remain, you know, committed to the project going forward. So hopefully we'll see more progress over the next two months.

Thanks a lot. Good luck.

Thank you.

As a reminder ladies and gentlemen, that's star, one, if you'd like to ask a question.

Your next question comes from the line of Joel Sendek with Lazard. Please proceed.

Thanks. Let's see. On the SPA (ph), if you refiled that in late February, shouldn't you be hearing soon? And if so, how important will that be and when will you issue a press release on it? Thanks.

Thank you Joel. The question basically is, where are we now with the SPA and how will we communicate both the approval of the SPA and what the contents of the SPA would be? And to answer the question, we have refiled the SPA with the FDA in the latter part of February.

We have pretty much answered every question that the FDA has raised and so we feel pretty good about our response to the FDA's comments. Having said that, it is a process, it is a regulatory process, and we have really no control over that except to say that we are in contact with them on a constant basis as you would imagine.

At this point, you know, as soon as we hear from them, we will issue a press release and the press release will say, we've heard from, you know, we got the SPA and these are the - this is now the clinical trial design that you can count on and this is the timeline.

But at this point now, as I mentioned before, we do believe that the first look at the data will be not appreciably different from the original SPA that we submitted, but again, Joel, as soon as we know, we'll go forward. In terms of the impact of what we're doing now, the trial is well on track.

We have screened almost 250 patients and the trial officially kicked off, as you know, in late January, so in just a short period of time. There is a lot of momentum out there with these high-grade PIN patients looking for a clinical trial and more so, because we now have some pretty positive Phase IIb data to support why you'd want to be in a confirmatory Phase III trial.

Do you know if the screen process is going well? It was going so well, or you're not quite far enough long to change your guidance on enrollment?

No. We think we're on track. I mean, you know, could I say we're going to be earlier? We're always going to try to be earlier, but we're definitely on track.

Okay. Then I have a financial question too on FARESTON. The gross margin, I know its tiny numbers, but still, the gross margin seemed very low, or lower than what we were assuming. I'm wondering if there was a reason for that and if you're going to - the gross margins are going to increase on that product?

And then the second question is, just looking at some IMS (ph) data on the drug, it looks like the sales, at least for February, have gone down the last couple of months and I'm wondering whether we should expect that to reverse itself or not? Thanks.

Hey Joel. To answer your question, the first one first, in regard to the cost of goods and in terms of the margin per se, the margin as it is right now in FARESTON is what we expect to see going forward until which time and after we start selling Acapodene for a prostate cancer indication.

Then the margins should go back to - to be significantly higher as we would have expected and as you are aware of, that we've discussed with you before. As it relates to the sale, the sales for the first quarter to date are not indicative of what we expect for the year.

Now having said that though, we do expect sales to be less than what we saw in 2004, which frankly is a continuing trend that we have seen over the last three-to-four years where we've seen declining sales revenues in FARESTON primarily because of the competition in the marketplace from the Aroma Taste (ph) inhibitors.

Obviously, management is continuing to make sure that our expenses are commensurate with our current sales level efforts.

Okay. Thanks.

Again ladies and gentlemen, if you'd like to ask a question, that is star, one.

At this time, I'd like to turn the call back over to Dr. Steiner for closing remarks.

Thank you operator. We would like to thank you all for your continued interest in GTx and we look forward to providing you with updates on our future progress. Thank you again for joining us on today's call.

Ladies and gentlemen, thank you for your participation on our call. This concludes the conference and you may now disconnect.