Oncternal Therapeutics Inc (ONCT) 2005 Q3 法說會逐字稿

Good morning everyone, and welcome to the GTx Incorporated Third 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 third quarter 2005 financial results conference call. We released our results earlier this morning through the newswires. If you do not have a copy of the release and want one, you will find it on our website at gtxinc.com. we will have a replay of this call available on our website until November 17th 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 third quarter clinical and corporate development. Next, Mr. Hanover will briefly detail our financial performance for the quarter and for the first 9 months of the year. Dr. Steiner will then discuss our remaining 2005 milestones and the progress of our corporate programs. We'll then open the call for questions.

Before we begin, I'll remind you that information discussed on this call may include forward looking statements and such statement are subject to the risks and uncertainties we discussed in detail, in our reports filed with the SEC. Including in our perspective supplement filed October 12th 2005 pursuant to 424B5, we expressly disclaim any obligation to release publicly any updates to forward looking statements made during the call.

And now, I'll turn the call over to Dr. Steiner.

Thank you McDavid. I want to thank everyone for joining us today for the overview of our third quarter financial results. I would like to begin by highlighting several accomplishments. We reached our patient enrollment goal in schedule, for our pivotal phase 3 ADT trial of Acapodene for the treatment of the serious side effects of androgen deprivation therapy for advanced prostate cancer. We have approximately 1365 patients enrolled in this trial in over 130 sites in the United States and Mexico.

We received our SPA from the FDA for our pivotal phase 3-PIN clinical trial of Acapodene for the prevention of prostate cancer in high-risk men who have high-grade tin. This SPA provides us with a regulatory clarity for this indication including the trials design and the required endpoints, does now mean that both of our late state Acapodene clinical programs, Acapodene 80 mg dose for ADT and Acapodene to 20 mg dose for PIN are being developed under SPAs with the FDA.

We've completed and reported top line results from our phase 1 multiple ascending dose trial where our leads on Ostrine. Over 160 healthy and elderly men have participated in the Ostrine phase 1 clinical trials. In these phase 1 clinical trials Ostrine was well tolerated with no drug related serious adverse events and Ostrine demonstrated anabolic activity without certain unwanted androgenic effects by stimulating the prostate or the skin's oil glands. We have selected those to be tested in phase 2 clinical trial which will be initiated this quarter to acute muscle wasting or involuntary weight loss associated with serious burns.

Last month, we successfully completed the public offering of common stocks adding approximately $46 million, in cash, to our balance sheet. This cash allows GTx to continue clinical development of Acapodene and Ostrine through the first half of 2007. What does this mean for us? We could have Acapodene final data from the phase 3 ADT clinical trials and be preparing our NDA. Ostrine, we could have phase 2 proof of concept and final data from our phase 3 trials for the burn indication as well as preparing this NDA. As you can see, during this period of time these value drivers can provide GTx with multiple business alternatives.

Shortly I will discuss the progress of our corporate programs and give you more information about our anticipated milestones for the remainder of 2005 and the first half of 2006. But First Marc Hanover will review the financial results for the third quarter and the first 9 months of 2005, Marc?

Good morning. GTx's financial performance for the third quarter and first 9 months of 2005 was in line with expectations for the 3 and 9 months ended September 30, 2005, GTx reported a net loss of $9.9 million, and $29 million respectively. That compares to net losses of $5.1 million, and $15.5 million for the same period in 2004. Revenues for the third quarter and first 9 months of 2005 were $622,000 and $3.1 million respectively, compared to $377,000 and $1.5 million for the third quarter and first 9 months of 2004.

Revenues for the third quarter and first 9 months of 2005 included $288,000 and $2.1 million of net sales of Fareston, which is marketed by GTx for the treatment of metastatic breast cancer. We also recognize collaboration income for Andarine from our partner, Ortho Biotech, a Johnson and Johnson subsidiary. Research and development expenses increased in the third quarter and first 9 months of 2005 to $8.5 million and $24.4 million respectively, from $4 million and $12.6 million for comparable periods last year. Our expenses have increased, because we have successfully advanced all of our clinical programs. We now have 2 phase 3 pivotal clinical programs, and we are entering 2 phase 2 clinical trials.

With regard to general and administrative expenses for the third quarter and 9 months ending September 30 2005, G&A expenses increased to $2.3 million and $7.4 million respectively from $1.8 million and $5 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 September 30, 2005, prior to raising approximately $46 million in our recently completed public offering, the company had cash and cash equivalents of $37.8 million and I should add, no debt and no warrants.

I will now turn the call back to Mitch.

Thanks Marc. I would like to share with you some of our corporate developments and discuss the milestones we anticipate for the remainder of 2005, and the first half of 2006. Later this quarter, we will release top line results of the bone mineral density, that's BMD, interim analysis of the first 200 patients to complete 1 year of the phase 3 ADT trials. Although bone mineral density is a secondary end point of the trial, a higher bone mineral density correlates with a lower fracture risk, which is the primary end point of the phase 3 ADT trial.

We have confidence in this interim BMD analysis because we had previously shown increases in BMD in ADT men, in 2 separate phase 2 clinical trials using Acapodene with only 6 months of therapy. As you can see this is an important event in the ADT trial and we look forward to updating you towards the end of the quarter.

For the phase Acapodene PIN trial, we are tracked to reach the 1260 patient enrollment goal for the first quarter of 2006. We have over 120 clinical sites in the United States and Canada participating in this trial. Furthermore, we're working with 4 diagnostic companies to develop a non-invasive PIN test. These collaborations are going well. One of these collaborations has resulted in a prototype of a urine based PIN test. This test will need to be further validated with samples from our completed phase 2B and ongoing phase 3 clinical trails.

We are truly excited about this scientific progress. A urine PIN test will allow us to further expand our market to the more than 15 million men who harbor high-grade PIN and do not know it. What's really interesting here, is that we started with 3 collaborators, 3 diagnostic company collaborators, and now we have 4 and we continue to be contacted by other diagnostic companies that are working on this PIN indication to have access to our samples.

For Ostrine, this quarter we are initiating our phase 2 clinical trial. The strategy is that we'll allow us to -- the strategy that will allow us to expeditiously get to market with our first in class SARM is to initially pursue the treatment of involuntary weight loss that results from serious burns, and this will be the first indication.

Burn victims often loose as much as 20 pounds of muscle within 2 weeks following a serious burn. A burn indication will facilitate clinical development, and it is acute therapy with shorter clinical trials that represents a great unmet medical need and has a high benefit risk ratio. Again, I want to take a moment to stress how rapidly Ostrine is being developed and commercialized. Now the first half of 2006, we will have proof of concept and dose finding data from our phase 2 clinical trial, and by the second half of 2006 GTx plans to be in a pivotal phase 3 program for burns.

Clinical data from these burn trials will also provide the proof of concept data to allow GTx to further develop Ostrine for other acute and chronic muscle wasting conditions. For Andarine, our second SARM, we are working closely with our collaborators, Johnson and Johnson and we're in the planning stages for a phase 2 clinical trails. GTx has enjoyed its working relationship with the Johnson and Johnson team, and we look forward to our continued progress. We are currently in active discussions with potential partners for both Acapodene and Ostrine, and I will update you about the progress -- our progress in the future.

Our objective to partnering, is to do a partnership with the right partner, at the right time, with the right deal. And finally, since going public, more than 20 months ago we have met or exceeded our company's milestones. The steady and successful progress of our clinical programs, is a 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 SERMs, SARMS and anti-cancer drugs.

I want to personally express my appreciation to the passionate drive of the GTx team to achieve our goals. I want to thank you for your attention, and operator we are now ready to take questions.

Thank you.

[Operator Instructions].

And your first question comes from the line of Eric Schmidt of SG Cohen.

Good morning everyone. Mitch, just looking for a little bit more detail, if you can provide it, on the Ostrine phase 2 trial design, timing of dosing, endpoints, things like that? And then -- I don't know if there is anything else in the pipeline it seems like you've brought pretty much everything into the clinic, but just wondering what else you might be working on behind the scenes in your labs?

Very good. Thank you Eric. The answer to your first question, which is give you a little more clarity on the phase 2 design. This is a 60 patient trial. It's being done with a placebo arm and 2 treatment arms. These are patients that have significant serious burns, as you know these are the patients that lose about 20 pounds of muscle in 2 weeks. The trial design is set up in such a way that we will get 2 types of information.

The first type of information is protein synthesis, and the way this is done is that these patients are injected with an amino acid isotope and a baseline of protein synthesis that's measured at the beginning of the trial and then 14 days later you come back and repeat the amino acid isotope infusion and you get what's called an FSR, a fractional -- basically a fractional synthesis rate.

That's what FSR stands for and that is a very sensitive way to give proof of concept of whether or not you truly have a protein synthesis or anabolic activity. I will tell you that other drugs that are anabolic, that are weakly anabolic compared to Ostrine for example, have been positive in this assay. And given that it's a 14 day component, if you will, of the phase 2 it means that we could be looking for this proof of concept data in the first part of the first - first part of next year.

The second part of this study is the more traditional lean body weight measurements as well as -- as well as muscle performance and that will be expanded to the full 60 patients, and the patients will be basically measured at 30 and 60 days. And that's why that data will come up later in the first half of '06. So we have several shots on goal if you will, in terms of getting good data that will allow us then to expand into a phase 3 program with (inaudible) as in multiple possible endpoints, i.e. protein synthesis; two, a weight. Three, a lean body weight measured by DEXA. Four, hospitalization stay. Five, wound healing, looking at the donor site where they get the skin grafts from. And then finally six, muscle performance. And all of those things can be used to power a phase 3 program.

In terms of your second question, which is -- it appears that you've taken most of your pipeline and moved it clinically, and I appreciate that because that in itself is a feat. But I will tell you that our pipeline is rich, we do have Prosterine (ph) which is a BPH drug. It is a SARM, but it's a neutral SARM in the sense it doesn't effect muscle and bone, but it does shrink the prostate in our preclinical studies. That is ripe to move forward when it's the right time. We also have anti-cancer drugs that are being developed for hormone refractory prostate cancer, and that's in the pipeline.

And our company has really done an excellent job, understanding from a basic science standpoint nuclear hormone receptors, so its not just estrogen and testosterone but glucocortacoids and other nuclear hormone -- receptor ligan, and that has continued to bear new compounds that, at the right time with the right resources will continue to move forward.

Great. Thanks a lot Mitch.

Thank you.

And your next question comes from the line of Matthew Jacobson (ph) of Black Diamond Research.

Hi guys, thanks for taking my question. I was wondering if you could just clarify something for me. In the release today about the PIN trial it said that, efficacy will be event driven, and you believe the analysis will be within 24 months of completing enrollment. And when I look back on your release when you initially got the SPA, back in September. You said that you'll evaluate efficacy at 36 months, and have an interim look at 24 months. I was just wondering if you could clarify what the exact process is going to be for the data analysis here?

Okay I want to make sure -- say that last part of your question, I'm sorry.

So looking at what you said today in the release that its going to be even driven, the efficacy analysis of the PIN trial, and then comparing that with what you said in your SPA press release, where you said it will be evaluated at 36 months and then an interim look. Can you just kind of clarify what the exact process is going to be here?

Sure, thank you Matt, I appreciate the question. The SPA press release that went out was not as clear as it could have been. So, I'd like to take a moment to see if I can make it clear. We received the SPA from the FDA that clearly outlined the clinical design and the required end points of the trial. The trial is event driven, that's an important concept because there's 2 pieces of this trial that you have to keep in mind. The first piece is efficacy, and the second piece is safety. And what happened in that press release is we kind of got them both mixed up, so no body knew where we were looking at efficacy and when we're looking at safety.

To make it clear, it is event driven. Event driven is related to prostate cancer incidents detected by biopsy, by prostate biopsy. That means every time a patient develops prostate cancer that counts as an event. The trial is powered on these events. So, being an event driven trial you have -- we're looking -- we're monitoring constantly the number of aggregate events that occur in the placebo, plus the treated, because it is blinded. When we hit approximately 201 events, then GTx will look and do what's called an interim analysis -- interim efficacy analysis. Okay? That can happen literally any time up to 24 month, because you're not waiting on time you're waiting on number of events.

Sure.

So, that's an important consideration because if you wait for 24 months, then theoretically you have to lock down the database and wait for every patient to get past the 24 month point, its not done in that way. What that means is that if you complete the enrollment in the first quarter of '06 and were in track to do that. You could theoretically be looking anytime before 24 months because if you look at the cancer rate that's projected in the trials, about 33%, in aggregate.

Right.

We would have 1260 patients, you can have as many as 400 events.

Sure.

So, we're looking at 281, you can see that from an efficacy standpoint the trial would be -- the primary end point can be looked at certainly before and close to the 24 month period of time when you think you can have those events. That is an efficacy end point and according to the FDA's SPA we can file on this efficacy end point if we need it. Okay? And then when we do file this efficacy end point, usually it takes about 3 months to 4 months to actually prepare the NDA and file the NDA, because it is a cancer indication, typically it has a 6 month review.

During the review process you're required to submit a 4 month or 120 day safety update, and based on those numbers GTx will have over 90% -- in fact 99% of their patients beyond 30 months in the trial, and certainly a majority of the patients beyond 36 months in the trial, because you've got to count all those patients that are in the trial today, and have been in the trial for this past year that are going to be hitting the 24 month and 36 month biopsy point.

So there'll be plenty of safety data at the time that we file our first interim analysis data if it hits. So, there'll be no delays in that regard. So, probably the best way to look at it is to just focus on the efficacy interim analysis as being the driver in this trial. And so, we're looking for that data and -- as the trial approaches its 18 to 24 month period.

Great thanks a lot for the clarification Mitch.

Sure think, thank you.

[Operator Instructions].

And your next question comes from the line of Joe Sendek of Lazard Capital Management.

Okay hey, thanks a lot. I was just wondering on the ADT trial. Beyond the upcoming bone mineral density analysis. In the event that that doesn't show any benefit, will you assess bone mineral density at a later date as well?

Really I'll tell you -- first of all that's a great question, the questions basically is if you're close by no cigar in your BMD analysis at this next point that we're going to be looking at it, and the end of this quarter, would we go back and look at bone mineral density.

Let me begin by saying that SERMs in general have a less of a magnitude of bone mineral density changes than bisphosphonates do for example. But I will tell you that SERMs have better quality of bone at least because it appears that at lower bone mineral density difference you have a great fracture reception. For example Reloxapine (ph) in postmenopausal women showed a 3% BMD improvement after 3 years, and that translated to a 50% reduction in fractures. We're looking for a 40% reduction in fractures.

So the answer to your question is that, first of all we did 2 phase 2 trials, shorter trials and showed the difference in bone mineral density so what the important thing for us to look at is the delta in the 2 patient groups. But assuming -- take the case scenario where we don't see a difference, i.e. was a year long enough to look at the data? I guess at that point because it is, at this point still considered a safety measurement, we could have the drug safety monitoring board reevaluate that going forward.

But I'd rather that I think what we should be doing instead is focus on the fracture data because that's the primary endpoint, and we are monitoring the aggregate number of fractures and it also a clinical trial that has a number of events that you can go back and look at the data when it hits a certain number of events. So, I guess it's a long way of saying Joe, we're just going to have to sit back and assess what our next steps are going to be once the BMD data comes back and just talking out loud, we have several options. One, is to look again at BMD, and two is to just go ahead and just monitor fractures. But I'm -- at this point and I can tell you that it is the company's expectation that our phase 3 BMD looking basically, 5 times more patients than we looked at in one of our phase 2s should come in with an increase in bone mineral density.

Okay, that's helpful. Then on Ostrine, couple questions there, I'm wondering if that burn trial is imminent or you still have some work to do before you start it? And then once you start it, I'm not really familiar with trials run in burn patients I'm wondering how challenging the enrollment process will be?

Both excellent questions and I appreciate them. The first one is that its very imminent, I mean we -- we've filed -- we've already filed our IND, and as you know we did the phase 1 studies in Ireland, so that we could make sure that the drug had activity and it was safe, and then go through the US regulatory which is what we're doing now which is very customary, customarily done. The protocols written, the key opinion leaders have already commented on it. The regulatory process i.e. IRVs and stuff like that is being done now, so its very imminent. And we're on track to have this trial started in this quarter, and we're feeling pretty good about it.

The second part of your question was, how challenging is enrollment? Well, I didn't realize this but we did a full market evaluation of the burns indication, but at the same time we did an evaluation for feasibility in terms of clinical enrollment. Did you know that the burn patients are essentially sent to about 100 centers across the United States? In order words, they may end up in their primary care facility, but if they have serious burns they end up in a specialized burn center.

There are about 100 in the United States, and about 20 that are very, very active. And a typical burn center will have 355 to 400 admissions a year, and most of those patients end up on a clinical trial of some sort. In fact, I'm being told that if you have a clinical trial for example in a primary care's office, you may see -- if there's a hundred patients that are eligible for your trial, they may enroll 2 or 3 of those hundred patients. But in the burn center, they're seeing more numbers like 70 or 80% of these patients are in fact enrolled in clinical trials, because there's nothing out there for them right now, and they're sick patients. So, it appears that the "ratio" of patients eligible for a clinical trial, and actually put on a clinical trial is pretty high in burn centers.

Another thing, and this is unfortunate but I'm hoping Ostrine is beneficial, because then I feel a lot better as an American. It turns out that there are soldiers that are being burned in Iraq from these roadside bombs are shipped to Galveston Texas and for further treatment. And unfortunately, they're seeing more burns than they typically would because of the war, and this is an opportunity for us to play our part in testing a potentially promising agent.

Good, that's great detail, thanks a lot.

(Operator Instructions)

And at this time you have no further questions. I would now like to turn the call back to Dr. Steiner for closing remarks.

Thank you operator. We'd 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. Operator?

Ladies and gentlemen, thank you for your participation in our call. This concludes the conference call.