Oncternal Therapeutics Inc (ONCT) 2005 Q2 法說會逐字稿

Good morning everyone and welcome to the GTx, Incorporated second quarter 2005 financial results conference call. Today's conference is being recorded. For opening remarks and introductions I will turn the call over to Mr. McDavid Stilwell , Manager of Corporate Communications for GTx. Please go ahead.

Thank you and good morning. On behalf of GTx, I'd like to welcome you to our second quarter 2005 financial results conference call. We released our results earlier this morning through the news wires.

If you do not have a copy of the release and want one, you will find it on our web site at gtxinc.com. We will have a replay of this call available on our web site until August 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 second quarter clinical and corporate development. Next, Mr. Hanover will briefly detail our financial performance for the second quarter and the first half of the year. Dr. Steiner will then discuss our remaining 2005 milestones and the progress of our corporate program.

We'll then open the call for questions. Before we begin, I will remind you that information discussed on this call may include forward-looking statements. And such statements are subject to the risks and uncertainties we discussed in detail in our report filed with the Securities and Exchange Commission, including in our annual report on form 10K and particularly within the section of the 10K entitled, Additional Factors that May Affect Future Results.

We expressly disclaim any obligation to release publicly any update to forward-looking statements made during this call. And now I'll turn the call over to Dr. Steiner.

Thank you McDavid. McDavid joined us earlier this month as Manager of Corporate Communications and he will be heading up investor relations for GTx. And McDavid has five years of investment experience as a securities analyst for a hedge fund in New York and before that he worked five years as a business journalist.

He has an MBA from Harvard Business School and Bachelors degree from St. Johns College in Annapolis, Maryland. We're very fortunate to have McDavid with us and I'm sure he's looking forward to working with each of you.

I want to thank everyone on the call for joining us today for the overview of our second quarter financial results. I would like to begin by highlighting several points. First, enrollment in our pivotal phase three clinical trial of ACAPODENE for the treatment of side effects of androgen deprivation therapy, also known as ADT, is on track for completion by the end of third quarter.

The fact that we are seeing other major biotech and pharmaceutical companies beginning to address osteoporosis in men, or ADT, gives us further confidence that this is an important unmet medical need that has a large market potential. We, however, remain well positioned for this competition. As ACAPODENE is the only agent that is oral and that may be beneficial not only for osteoporosis but also for other side effects of androgen deprivation therapy.

We presented the positive results of our phase two b clinical trials of ACAPODENE for the prevention of prostate cancer in high risk men at the recent annual meetings of ASCO and the American Neurologic Association. We have been pleased with the peer review recognition and the broad reception of the trials results. The excitement over the data and the positive press coverage have had positive effects on patient enrollment in our pivotal phase three study for the use of ACAPODENE in the prevention of prostate cancer in high risk men.

As per protocol, in June an independent drug safety monitoring board met and they evaluated the safety from both the ADT and PIN ACAPODENE phase three clinical trials. The committee concluded that there were no safety issues and the clinical trials should proceed as planned. Next month, we will complete a phase one multiple ascending dose clinical trial for ostarine. Ostarine, to which GTx has exclusive rights, is the second SARM compound that the GTx team has successfully moved from discovery into clinical trials.

We will present our scientific data from the phase one multiple ascending dose trial early this fall. Preparations are underway for phase two clinical trials which we expect to initiate in the fourth quarter of this year. 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 second quarter and the first half of 2005. Marc.

Thanks Mitch. GTx's financial performance for the second quarter and first six months of 2005 was in line with expectations. For the three and six months ended June 30, 2005 GTx reported a net loss of $10 million and $19.1 million respectively. That compares to net losses of $4.5 million and $10.3 million for the same periods in 2004.

Revenues for the second quarter and first six months of 2005 were $1.8 million and $2.5 million dollars respectively, compared to $1.1 million for both the second quarter and first six months of 2004. Revenues for the second quarter and first half of 2005 included $1.5 million and $1.8 million of net sales of FARESTON, which is marketed by GTx for the treatment of metastatic breast cancer.

We expect annual net sales of FARESTON to be about $3 million. We also received collaboration income for andarine from our partner, Ortho Biotech, a Johnson and Johnson subsidiary. Research and development expenses increased in the second quarter and first half of 2005 to $8.6 million and $16 million respectively from $4.2 million and $8.6 million for comparable periods last year.

The increase for both periods was primarily the result of the company's continued investment in the following clinical programs. First, the pivotal phase three clinical trial for the use of ACAPODENE to prevent prostate cancer in high risk men. Second, the pivotal phase three clinical trial of ACAPODENE for the treatment of serious side effects of ADT. And last, the phase one single and multiple ascending dose clinical trials of ostarine.

With regard to general and administrative expenses, for the second quarter and six months ending June 30, 2005, G&A expenses increased to $2.6 million and $5.2 million respectively from $1.6 million and $3.2 million in the prior year. The increase in G&A expenses for both periods was due primarily to higher personnel costs as the company expands its operations as well as increases in insurance costs, professional fees and patent expenses.

At June 30, 2005 the company had cash and cash equivalence of $48.1 million, and I should add no debt and no warrant. At this time, Mitch will discuss anticipated milestones during the remainder of this year.

Thanks Marc. I would like to point out several milestones in corporate developments we anticipate for the remainder of the year. Our enrollment for the pivotal phase three clinical trial ACAPODENE for ADT is on track. We have over 130 clinical sites and plan to be fully enrolled by the end of third quarter this year.

As planned, we expect to report in the fourth quarter the interim analysis of bone middle density data in the first 200 patients who have completed one year of the phase three clinical trial of ACAPODENE for the treatment of ADT side effects. The clinical development team has been working on implementing a blinded clinical extension study of the current phase three trial for the use of ACAPODENE for the treatment of ADT side effects.

The purpose of the study is to further evaluate ACAPODENE's effects on fractures over a longer period of time and to cancer survivor data. This is important because as it has been reported, men who develop fractures have on average a life expectancy 39 months shorter than men who do not have fractures. Preventing fractures may potentially have a favorable impact on survival.

This extension trial may further enhance our product in the market place. As we mentioned in the first quarter conference call, the revised SPA for the phase three clinical trial for the use of ACAPODENE to prevent prostate cancer in high risk men was filed with the FDA in late February. In the second quarter our application was transferred from the agency's Division of Reproductive Neurologic Drug Products to the Office of Oncologic Drug Products.

We are still waiting to hear from the FDA on its status. In the meantime we are still on schedule for a first quarter 2006 completion of enrollment of this phase three clinical trial. We will complete a phase one multiple ascending dose clinical trial for ostarine next month.

The multiple ascending dose phase one study was done not only in healthy young males but also in elderly men. We will report our scientific top line data later in the third quarter this year. We plan to initiate a phase two clinical trial in the second half of this year. Ostarine has many potential indications. Although we have focused on Andropause indication, there may be an opportunity for a quicker path to market based on the results we expect from our multiple ascending dose study.

I will discuss these details at a later date. Since going public more than a year ago, we have met or exceeded the milestones we have presented to you. The steady and successful progress of our clinical programs is the direct result of the tireless and dedicated efforts of the GTx team.

Our discovery program continues to develop into advanced new compounds to sustain our pipeline in SERM's, SARM's and anti-cancer drugs. I want to personally express my appreciation for the passionate drive of the GTx team to achieve our goals. Thank you for your attention, and Operator we are now ready to take questions.

Thank you.

[OPERATOR INSTRUCTIONS]

Our first question comes from Eric Schmidt from SG Cowen. Please proceed.

Good morning guys. Just a couple more questions, Mitch, on the PIN trial. Looks like you're on track to finish the enrollment on time, I was just wondering if you're willing to again provide us with an update as you did on your last quarter call in terms of how many patients have been screened and how many might already might be enrolled?

Eric, sure, I'd be more than happy to. As you know, what happens in the clinical trial process is that you enroll your patients and you hit sort an exponential enrollment towards the end. But even having said that we have had a great start on our clinical trial in terms of enrollment. I think a lot of that has to do with the fact that, one, we used many sites that were already in our phase 2B study and had experience in this kind of study. And also the positive momentum that we got based on the press coverage at ASCO, the AUA and the fact that the data was quite positive in the phase 2B study.

With that all said, you know, we kicked the trial off, as you know, in the first quarter - late first quarter of this year. And now we've screened almost 650 patients. So that's a lot of patients considering that puts us well on track for hitting our first quarter of '06 enrollment.

OK. And realizing that, you know, you're still working out these details with the FDA. Is there anything new that we should know about in terms of the trial design, the end points, the statistics, et cetera?

Nothing new except to tell you that a lot of the FDA waiting has been process, moving from one division to the next division. And so there's really nothing new from that standpoint. But we're not expecting anything new. My promise to you is as soon as we hear, we plan to make sure that the trial design is crystal clear and that you know not only the end points and the, you know, percent that we need to hit and exactly the details of the FDA.

So, you know, we'll get that to you as soon as we know.

OK. And then last question I may be, you know, reading too much into the Q2 first (ph) on sales. But have you seen any impact on sales trends in the last, you know, six or so weeks of the quarter post the ASCO presentation? Or is this just a choppy quarter for other reasons?

Marc?

Sure. Hey Eric. You know in the first quarter we ended taking that whole process over and therefore the beginning was slower than we anticipated. The second quarter had a much larger sales number, obviously, and a lot of that had to do with us getting all of our distribution agreements in place and so forth.

And so, as I mentioned, our annual number looks like it's going to be approximately in the $3 million range.

So asked a different way, Marc, you're not seeing - you don't believe any (inaudible)?

I think the better - this is Mitch speaking now. I mean, I think it's going to be hard to assess that except that, you know, we do have data there showing that the 60 milligram is the wrong dose. And that underscores our point going forward that we believe that no matter what happens to FARESTON 60 milligrams, that the scientists are going to be focusing on the 20 milligram dose in a favorable way.

So it really works, I mean, I'm happy to see that we're moving in the direction where people are recognizing and supporting the scientific data.

OK. Congrats. Thanks for taking my call.

Thank you Eric.

Our next question comes from Joel Sendek from Lazard Capital Markets. Please proceed.

Hi. Thanks. Let's see. My first question is on the ADT trial. So could you give us some more background on what this interim look will entail? How high of a hurdle you have to hit? And what kind of difference you're looking for? And if you don't hit the interim look, what would be the next timeframe?

Thank you Joel. First of all, the trial, the ADT trial is designed under an SPA. So it's under an approved SPA. The SPA states that this is a two year trial. The number of patients per ARM is 600 patients per ARM.

We are expecting an 8% per year fracture rate, and that's for placebo fractures in the placebo ARM giving a total fracture rate of 16% at the end of the study in the placebo ARM. We're looking for a 40% reduction in fractures in the treatment ARM.

And you only get one look, so there's no interim analysis look. So you get one look at the end and if we - and so the hurdle that we're trying to face, the 40% reduction in fractures at one year, excuse me--2 years. Having said that, if you look at the post-menopausal women data and in particular if you look at SERM's like fluoxetine in their three year study.

They showed a 2 to 3% increase in bone middle density in women and that translated to a 50% reduction in fractures. In our phase two study, albeit it was a small study, it showed a 3.5% increase in bone middle density after six months of treatment. Which clearly puts us in the same range as a 2 to 3% increase in bone middle density as we've seen in post-menopausal women.

As you know, men on androgen deprivation therapy, which is castration, you know, are essentially post-menopausal women in terms of what their bones do. So the hurdle that we have to hit, in summary then, is a 40% reduction in about a 16% rate of fractures. Now having said that, Joel, also implementing an extension trial. And the extension trial is taking the same exact patients, keeping them blinded, lowering them into an extension trial for an additional three years.

And we will continue to look at fracture data in a blinded fashion. So that, one, if we hit at the end of - and we have high confidence it will hit at the end of the two year period. It gives us another opportunity to look at year 4, year 5, excuse me--year 3, 4 and 5. So we can see the, you know, again being able to tell folks, you know, what is the increasing benefit of the drug. And then also allows us to capture survival data which will be another way to differentiate us in the marketplace.

OK. So effectively you're building in an opportunity to not necessarily have a backup plan if you don't meet the two year end point, but provide further evidence and support the use of the drug beyond 2 years to keep it current in the market place?

That's exactly right. And then on top of that we're capturing survival data because you need this if you look at a study longer to get survival data. So if you think about it, if we complete enrollment - to say this a different way. When we complete enrollment in third quarter this year, we will have some patients that, in fact, this November starting this extension trial.

So we could have, you know, patients with data as late as, you know, 5 years out even at the time that we go in for, you know, looking at the data for the first trial. In other words, the top cat trial. The trial intended to be SPA.

So, in other words, the pivotal phase three trial will have patients that roll out and we'll be capturing data and have that data. So it will be supportive data, #1. #2, it will allow us to have data to further differentiate us in the market place from the standpoint of fractures and how long to treat patients. And then, finally, if we can get any survival data we could have 39 month cushion.

Because as you know Taxatier had a 2.4 month extension in life. Can you imagine, you've got 39 months to play with. This could make a major difference in the way these patients are treated.

OK. And then on the PIN trail with regard to the SPA, can you at least confirm that the transfer to the Oncology division has taken place and that the folks in that area are diligently working with you now?

Yes. I will tell you that GTx is in constant and periodic contact with the agency. So we are tracking it as well as anybody from the outside can track looking in. And I will tell you that I can confirm that it is in the - it has made a nice transfer, smooth transfer, into the Oncology division. The Oncology division is reviewing it in a diligent fashion.

And that all goes well. So from the standpoint of what their doing on their end. So it is a process. We're working with them from a standpoint of just sitting here in the sidelines waiting. But there is no - I can confirm that it's being worked on and that we should hear from them hopefully in a timely basis going forward.

Thanks.

[Operator Instructions]

Our next question comes from Buddy Lyons from Stanford Group. Please proceed.

Hi Mitch. Could you just refresh us on once both trials, ADT and the PIN trial, are actually enrolled, how long they actually continue to receive results? And if it was, you know, if you maintain this sort of enrollment rate and things are positive, when might we see NDA's for both of these?

Yes. Let me start with the ADT trial. The question here is, OK, if all goes as planned when will we expect to see data? So for the easier one to answer, of course, is the one that we already had the SPA approved and that's the one for ADT. The ADT trial will have a fully enrolled third quarter of this year.

Which means last patient out would be third quarter 2007. And if that's the case then we're looking to file the NDA in early '08. And remember now, this is not you're post typical NDA because GTx already holds the NDA for FARESTON, which is the active ingredient in the ADT trial. So it's really more like a supplemental NDA.

So - and we have also been told that since this is an unmet need that there would be an accelerated approval review, which means a six month review. And that kind of helps you out in terms of deciding when an approval would be possible.

So, again, early '08. For PIN, we're planning to have it fully enrolled first quarter of 2006. And what I have told everyone is that we do not believe that the first look at the data where the potential for approval would be appreciably different from the first SPA that we had told everybody, which means that if that's the case then sometime around - let's see if we had done first quarter, then sometime around the first quarter or so of 2008 we will have an opportunity to look at the PIN data.

And then based on that, you know, file with the FDA. That would put us more towards the second half of '08.

OK. Thank you.

Dr. Steiner, we have no further questions, sir. I'll turn it back to you for closing remarks.

Thank you. Ladies and gentlemen, today's - thank you Operator. We would like to thank you all for your 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. You may now disconnect. Everyone have a wonderful day.