Oncternal Therapeutics Inc (ONCT) 2006 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2006 GTx Incorporated Earnings Conference Call. My name is Twanda, and I will be your coordinator for today. [OPERATOR INSTRUCTIONS]

I would now like to turn the call over to Mr. McDavid Stilwell, Director of Corporate Communications. Please proceed.

Thank you, and good morning. On behalf of GTx, I'd like to welcome you to our Fourth Quarter and Year-End 2006 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 March 6, 2007. 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 fourth quarter and full year 2006 clinical and corporate developments. Next, Mr. Hanover will briefly detail our financial performance. Dr. Steiner will then discuss our plans for 2007 and make closing remarks. We'll then open the call for your questions.

Before we begin, I'll remind you that information discussed on this call may include forward-looking statements, and such statements are subject to the risks and uncertainties we discuss in detail on our reports filed with the Securities and Exchange Commission, including in our prospectus supplement filed December 13, 2006 pursuant to Rule 424(b)(5). We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call.

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

Thank you, McDavid. 2006 was an excellent year for GTx. The Company achieved important milestones across all three clinical development programs and made strong progress in the execution of our corporate strategic goals.

For the Phase III androgen deprivation therapy with ADT clinical trials Acapodene 80 milligrams, we conducted a lipid interim analysis that showed Acapodene 80 milligrams may lower cholesterol. This builds confidence that Acapodene 80 milligrams may treat other serious side effects of ADT, in addition to osteoporosis.

For the Phase III PIN clinical trials Acapodene 20 milligrams, we surpassed our enrollment goal of 15 months and now have approximately 1,500 patients in the trial. The rapid enrollment of this large trial reflects the greater awareness of the elevated risk of high grade PIN, the motivation of high grade PIN patients to be on this trial, and the great interest neurologists have in preventing prostate cancer in these high risk patients.

For the Acapodene asset, we forged an important strategic partnership with Ipsen, by licensing to them European Acapodene rights. Ipsen is a great partner for GTx. With their ADT drug Decapeptyl, they have become a European leader in prostate cancer marketing.

For ostarine, a first in class SARM, in a proof of concept Phase II clinical trial, ostarine met its primary endpoint of increasing total lean body mass and a key secondary endpoint of functional performance in 120 patients treated for three months. Moving ostarine from the laboratory bench to proof of concept within two years has allowed GTx to maintain its lead in the critical development of the first SARM.

Finally, we raised after expenses $57.4 million in a registered direct equity offering in December. At year-end, we had approximately $120 million in cash, which is currently projected to provide sufficient funding through the first quarter of 2009. This time frame will allow us to obtain Phase III ADT, Phase III PIN, and a Phase IIb ostarine clinical data.

As a result of these achievements last year, GTx enters 2007 in a position of strength.

In 2006, there was greater awareness of the multiple side effects of ADT, as evidenced by the attention in both the scientific literature and the lay press.

In addition to the well-established fact that ADT may lead to osteoporosis and fractures, the Washington Post, USA Today, and The Boston Globe ran front-page stories on a large scientific study conducted at Harvard Medical School that revealed that prostate cancer patients of ADT are also at greater risk with cardiovascular disease and mortality.

Low estrogen levels are known to adversely affect lipid levels and may be one of the reasons for the association of this increased cardiovascular risk with ADT. In June, GTx conducted an interim analysis of lipid profiles of the first 197 men to complete one year of the Phase III ADT trial. It should be noted that half of these patients were already on [stats].

The interim analysis showed that prostate cancer patients on ADT treated with Acapodene 80 milligrams when compared to placebo had a highly statistically significant decrease in total cholesterol, LDL, triglycerides, and a reduction in the total cholesterol to HDL ratio.

The Phase III lipid interim analysis follows an earlier Phase III interim analysis of BMD, that's bone mineral density, in the same patient cohort, in which prostate cancer patients treated on ADT with Acapodene as compared to placebo demonstrate statistically significant positive changes in BMD at each of three skeletal sights measured; the lumbar spine, hip, and femoral neck.

As you can see, Acapodene now has differentiated itself from potential competitive osteoporosis drugs by being able to address other important side effects of ADT, in addition to osteoporosis. Given Acapodene's mechanism of drug action, it may also ameliorate two additional side effects -- hot flashes and gynecomastia, common reasons for drug non-compliance.

Currently, there are no FDA approved drugs that specifically treat any of the side effects of ADT. We believe that Acapodene 80 milligrams with its potential to treat multiple serious side effects of ADT, and being in oral formulation, will have a very strong competitive product profile.

The Phase III ADT clinical trial is proceeding on schedule. The last patient will complete the trial at the end of November. Once GTx receives the data, we will evaluate it and prepare the public release of the trial results.

Later this week, on Friday afternoon, February 23rd, at the ASCO Prostate Cancer Symposium in Orlando, Florida, in back-to-back podium sessions, Dr. Matthew Smith, an Associate Professor of Medicine at Massachusetts General Hospital Cancer Center, will present the Phase III ADT interim analysis of BMD, and Dr. Bruce Malkowicz, a Professor of Urology at the University of Pennsylvania School of Medicine, will present the Phase III ADT interim analysis of lipid profiles. GTx has also been notified that these presentations have been selected to be part of an ASCO press briefing the morning of February 23rd.

Now, the Phase III clinical trial evaluating Acapodene 20 milligrams for the prevention of prostate cancer in high risk men with high grade PIN is also progressing as planned. In May 2006, we attained our enrollment goal of 1,260 patients. There are now 1,500 patients enrolled in the trial, including those enrolled in two safety sub-studies required under the SPA with the FDA.

Although the Phase III clinical trial is designed as a three-year study, the SPA allowed, after a certain number of prostate cancer events have occurred, for an interim efficacy analysis. We anticipate there will be sufficient events to conduct this interim efficacy analysis by the end of the first quarter of 2008.

If the interim efficacy analysis reveals that Acapodene 20 milligram treatment both reduces prostate cancer and achieves the pre-specified level of statistical significance, GTx will proceed with following a new drug application.

We believe the prevention of prostate cancer in men with high-grade PIN represent a large commercial market opportunity. Each year, 115,000 men are diagnosed with high grade PIN, and there are 1.1 million men that currently have biopsy confirmed high grade PIN. There are another approximately 14 million men in the United States who unknowingly harbor high grade PIN.

A non-invasive test to detect high grade PIN from urine or blood may help to identify these men who are at high risk, who otherwise do not have any other warning signs as a reason to undergo a prostate biopsy. We are collaborating with five diagnostic companies. Progress is being made in the development of this test.

In 2006, we announced that Gen-Probe is evaluating the potential of its PCA3 assay to detect high grade PIN. Another company, MacroArray Technologies, has identified a molecular marker specific to high grade PIN called the ABCA5 protein, and they have developed a polyclonal antibody ELISA test to detect high-grade PIN patients from the urine test. The ELISA test has been evaluated in over 100 patients. The identification of an ABCA5 protein and the results of an ELISA test were reported in this month's Clinical Cancer Research journal.

A reliable urine test would help identify men at risk of prostate cancer who otherwise have a normal serum PSA. This PIN urine test could dramatically increase the potential market for Acapodene 20 milligrams. An independent Data Safety Monitoring Board, DSMB, evaluates unblinded safety data every six months from both of the Phase III clinical trials. The most recent DSMB meeting was three weeks ago. After reviewing the safety data of nearly 2,900 patients, the DSMB recommended that both trials should continue as planned.

In December 2006, we announced the clinical results of the first SARM ostarine to enter a Phase II proof of concept clinical trial. This was a placebo controlled randomized dose finding Phase II clinical trial in 60 postmenopausal women and 60 elderly men with 0.1, 0.3, 1, and 3 milligrams of ostarine given for three months. The primary endpoint was total lean body mass as measured by DEXA, and the secondary endpoint was functional performance determined by stair climb test.

Ostarine met both of these primary and secondary endpoints. Even with no prescribed diet or exercise regimen, subjects treated with ostarine demonstrated a dose dependent increase in total lean body mass with a 3 milligram cohort achieving an increase of 1.4 kilograms compared to placebo and that p value is less than 0.001.

Treatment with ostarine also resulted in a dose dependent improvement in functional performance in the stair climb test. With ostarine 3 milligram cohort achieving a clinically and statistically significant improvement in speed with a p value of 0.006 and power within a p value 0.005.

Ostarine demonstrated its tissue selectivity by achieving these anabolic effects without affecting serum PSA, prostate, sebum production, hair and skin, and serum LH, pituitary. Ostarine was well tolerated and no SAEs were reported.

In the fall, GTx has discussions with multiple divisions of the FDA to understand the regulatory requirements with several indications that were under consideration for further clinical development of ostarine.

Based on those discussions and the Phase II results, GTx has selected cancer cachexia as the initial indication and muscle wasting associated with chronic kidney disease and end stage renal disease as the next indication.

The endpoints required for approval by the FDA for both of these indications include total lean body mass and functional performance, and ostarine achieved both of these endpoints in the Phase II proof of concept trial. We are planning to initiate the Phase IIb cancer cachexia clinical trial by summer of 2007 and the Phase IIb chronic kidney disease and end stage renal disease muscle wasting clinical trial later in the year.

GTx also believes ostarine has the potential to treat other muscle and bone wasting diseases, including osteoporosis and frailty, each of which represents large potential opportunities. And ostarine was conceived, synthesized, and developed by GTx, achieving clinical proof of concept with ostarine as an important implication for GTx.

In a test to the depth of our expertise in the discovery and development of novel, selective small molecular hormone therapeutics, therapeutics that clearly have application outside of men's health. This success challenges the very identity that we have established for ourselves as a men's health biotech company.

Even though we will primarily maintain our focus in urology and oncology, GTx is evolving into a company that develops selective nuclear hormone receptor modulators, targeting hormone pathways to address a myriad of unmet medical needs in both men and women.

On April 17th, from 11 a.m. to 2 p.m. at the Regency Hotel at 540, Park Avenue in New York City, GTx will host an Analyst Day. We plan to accomplish the following.

One, to provide an update by our lead principal investigators, Dr. Matthew Smith, an Associate Professor of Medicine in Massachusetts General Hospital Cancer Center for the Phase III ADT clinical trial, and Dr. Samir Taneja, Associate Professor of Urologic Oncology at the New York University School of Medicine for the Phase III PIN clinical trial.

In addition, Dr. Mark Sterns, Chief Scientific Officer at MacroArray Technologies will discuss the status of and their plans for the urine diagnostic test for high-grade PIN. Second, GTx will give more clarity on our clinical plans and timelines to develop ostarine and other SARMs.

In order to provide a better background of information for the indications we are pursuing for ostarine, we have invited several clinical experts to attend. Dr. William Evans, Professor of Geriatrics, Physiology, and Nutrition at the Donald Reynolds Institute on Aging at the University of Arkansas for Medical Sciences will present top line and additional data from the recently completed Phase II ostarine clinical trial.

Dr. Michael Schuster, Associate Professor of Medicine, Division of Hematology and Medical Oncology at the New York Hospital and Cornell Medical Center, will discuss cancer cachexia, and Dr. [inaudible], Associate Professor of Medicine at Vanderbilt University Medical Center, will discuss muscle wasting and chronic kidney disease and end stage renal disease. And finally, we will provide an update on our preclinical pipeline and the new clinical programs that you can expect over the next 12 to 18 months.

Now, I would like to turn the call over to Marc Hanover.

Good morning. The details of our financial results for the fourth quarter and the full year 2006 are included in this morning's press release and are available on our website. I will focus primarily on the highlights.

Our fourth quarter net loss of $4.7 million included the recognition of the remaining deferred revenue of $3.1 million from our collaboration with Ortho Biotech, which was terminated by mutual agreement in December.

As a result, our full year 2006 net loss of $35.5 million or $1.14 per share was below the range of our previously stated guidance. We ended the year with cash and cash equivalents of $119.6 million. We estimate that current cash resources will be sufficient to fund our operations excluding the cost of product launches through the first quarter of 2009.

Our cash run rate may be extended into the latter part of 2009 if we are able to sign an Asian Acapodene partnership, receive milestone payments from Ipsen, or qualify for additional expense reimbursements from Ipsen.

For 2007, we anticipate a net loss within the range of $45 million to $55 million. The budget for 2007 includes the continuation of the two Phase III Acapodene clinical trials and the two ostarine Phase IIb clinical trials, which will be initiated this year. I will now turn the call back to Mitch.

Thanks, Marc. Looking ahead, the next 12 months should be transformational for GTx. In the fourth quarter, the last patient will complete the Phase III ADT trial and GTx will evaluate the data and prepare the trial results for public release.

By the first quarter of 2008, we anticipate a sufficient number of cancer and prostate cancer events will have occurred to allow GTx to conduct the interim efficacy analysis in our Phase III PIN clinical trial.

If successful, GTx could file two NDAs starting in 2008. Furthermore, because cancer cachexia potentially has a more expeditious clinical development and regulatory path, ostarine may provide a third near-term revenue opportunity. GTx stands on the cusp of making the transition to commercialization.

Before we turn to questions, I want to remind you once more that GTx will host an Analyst Day on April 17 from 11 a.m. to 2 p.m. at the Regency Hotel at 540, Park Avenue, New York. At this meeting, we look forward to updating you further on our progress and we hope you will join us.

Operator, we are now ready to take questions.

[OPERATOR INSTRUCTIONS] Your first question comes from the line of Eric Schmidt with Cowen & Company. Please proceed.

Good morning. Congratulations on all your 2006 accomplishments. Mitch, I'm wondering if you could provide a little bit more information on the Phase III PIN trial, specifically when enrollment will actually be completed, when you will close that study?

And then, with regard to the two safety sub-studies, can you talk about exactly what the goal of those two sub-studies are and how patients enrolling in the sub studies might be incorporated in the efficacy analysis as well?

Yes, Eric. Thank you for the question. The question basically is to talk about the Phase III PIN trial. Let me take a step back and remind you that the Phase III PIN trial under an SPA is a cancer event driven trial. That means it's not dependent on last patient out, it's basically on hitting the right number of events.

In order to hit those right number of events, the statistics that we have quoted was based 1,260 patients. Those 1,260 patients are fully randomized into the study. In fact, we have over 1,500 patients fully randomized into the study. With that said, we also have a projected dropout rate of 25%, but the actual dropout rate is about 12%.

So that means the number of patients that are "at risk" for developing prostate cancer that can contribute to a number of cancer events required to take the first interim look is greater. So, that puts us in a very favorable position because, if it's time driven, then we are hoping that we are going to be able to even beat the conservative estimate that we should see enough events by first quarter of 2008.

Now, why do we have over 1,260 patients in the study? And the answer kind of gets to your second point, Eric, and that is that every single patient that enters these two sub studies, which I will go through in a moment, are all also part of the general study and contribute directly to efficacy. The two sub studies that the FDA asked for under the SPA, one was to look at bone mineral density in these patients.

As you know, we are using Acapodene actually to treat bone mineral density in our Phase III ADT trial and that's approximately 200 patients. And then, the second sub-study is an ocular sub-study, which is basically looking at cataracts in patients that are in this study. As you know, in our Phase IIb, we looked at 514 patients for a complete year and did extensive ocular examination and saw no change.

The reason the FDA is requiring this is because serums added -- as a class have been implicated as contributing to cataract formation. But remember, this is in older patients which most of them already have cataract and the studies that subsequently have come out of Tamaxofin and for even Toremifene in women have not bore out the fact that they are any more contributory to cataracts than anything else that's out there.

So we are not worried about that, but we want to make sure that we are cleaning up our label and to make sure that we don't -- that we have the best label that we possibly can. It makes sense to go through with that.

So, none of the sub-studies will affect the timeline that we have put forward for the Phase III trial, for PIN, and we are just excited that it has just added more patients to do study, so that we can hit our efficacy endpoint with more robust numbers.

Okay. Have you closed the finishing enrollment in those two sub-studies, Mitch?

Yes. So, the trial is essentially -- the two sub-studies are essentially enrolled. The reason I say that way is because there is two parts to enrollment, the screening and then there is the actually randomization into the trial. We have been told by our folks in clinical operations that every -- all the necessary screens have been accomplished and now it is just the technical part of getting them enrolled. So, we are essentially done.

Okay. And then, have you disclosed or could you disclose the number of cancerous events in this study that you need to do your interim analysis?

I have said it before. Based on 1,260, that's the important -- that's the important point, based on 1,260 patients, we are looking for 281 events and if we hit 281 events and show a 30% reduction, that will achieve the p value that we need to file -- that p value is p value of 0.001.

We have a 89% power to hit that. With that said, now you add a dropout rate of 12%, not 25%, and an additional 300 patients roughly that you -- that we added based on the sub-studies that count towards efficacy, then two things happen. One, the power goes up and with more patients; hopefully the timing to get to those number of events will be sooner.

Okay. And then, last question is on the futility analysis that occurred about three weeks ago -- sorry, the safety analysis

[They didn't] make difference.

Yes. I am wondering if there was -- I don't think there had been any futility analysis in the prior DSMB checks, but was there --?

Yes, the DSMB charter does not allow for futility analysis mainly because fracture events are sporadic in a cluster. So, you really have to go through the whole trial to look at that and we did not build that in.

With that said, it is purely a safety analysis and that's important, why, because one of the concerns with estrogenic compounds including serums is an increase in thromboembolic events and we have asked the DSMB to specifically look at that safety event and the fact that they have told us to continue as planned gives us great confidence that this is -- this should not be an issue as we go forward.

Okay. And last question is just on your partnership plans with ostarine, has anything changed there?

Let me tell you, there is unbelievable interest in ostarine, and at a recent meeting in January, I said the activity around ostarine is great. Part of it is because once you have human data in hand and you have got proof of concept data in hand, and all the potential markets that ostarine can go into, we are seeing a myriad of large and medium-sized pharmaceutical companies that are approaching GTx.

Now, with that said, we also have $120 million in the bank and we are -- we have got FDA clarity as well as more clinical clarity in terms of the indications that we want to go into and we have picked indications that we can take ourselves, so that we are not dependent on a large partner, for example, cancer wasting and end stage renal disease -- chronic kidney disease, we can do that.

But, osteoporosis and frailty, we would need a partners. So, we purposely picked opportunities and indications that we can take forward ourselves, so that we don't have to do a partnership unless the partnership truly is beneficial for our shareholders.

Great. Thanks a lot.

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

Thanks. A couple of questions. First is just a clarification. On Acapodene, the safety studies, those patients are above and beyond the 1,500 that you have in the regular efficacy study?

No, that's part of it.

They are part of it?

Yes, they are part of it. So, the way to think of it is there is 1,260 patients that we needed to hit statistically randomized at the study for the statistics that I have been quoting.

Yes.

All right. Then, when we fill the sub-studies, then we are at 1,500 patients, but all of the patients count in the efficacy analysis, which means --

Understood.

Yes. I won't go through it again.

Yes, sorry to -- for not catching that. Okay. And then, the other question I have is since you have two potential NDA filings within a couple of months of each other if the data were good, even though they are different doses, is there any way to streamline those filings with regard to the safety, or are you viewing it as two separate applications?

And that's the first part of the question. The second is, are you going to wait on the PIN study in order to get the ball moving on the ADT study if that comes in positive first? How are you thinking about all that?

Say that last question again, I am sorry, I missed that one. Are we going to wait on the PIN study before we do anything with the ADT study?

Yes. Will you wait on it or does it make any sense to, from the perspective of facilitating a review at the FDA --

Well, I hear what you are saying; let me see if I can help you. First of all, the ADT -- I am going to take a step back and walk you through this. First of all, we own the NDA because we -- for FARESTON.

So, the NDA for FARESTON contains the bulk of the information that is required for submission and we can cross reference and copy a lot of those areas and put -- a lot of that information and put it into the modules that are required for the NDA, which means that the NDAs for the 80 milligram Acapodene and the 20 milligram Acapodene will have more in common than different.

So consequently, we have already started because we already have the NDA to begin to populate those modules for both of those NDAs, so that when we get the clinical data for the Acapodene 20 for PIN and the Acapodene 80 for ADT, all we have to do is drop in those sections, okay?

So, you are absolutely right; we will streamline it. But, the other thing you have to realize is that the ADT trial is going into different division than the PIN trial. The PIN trial goes to oncology; the ADT trial is going into metabolic endocrine.

So, that also facilitates the review in the sense that the clinical portion could all -- the other portions that are going to be reviewed by the same groups at the FDA. It is the clinical components and the safety components of the NDA that support the clinical components that will be -- will be germane to those particular divisions, so that makes sense.

Now, really, we are in a great position, not to have to wait for anything except to get the clinical data and if the clinical data comes in for those particular trials, this dropped them into this kind of generic NDA that we are extracting and putting together today. The biggest part, you will appreciate this, of this NDA, in fact is the pharmacovigilant/safety information that you have to provide with the NDA.

And in fact that this is not a new chemical entity means we have worldwide literature that would probably make up the most of our NDA to support the safety of our drug going forward. Compared to a chemical entity, you have out there, the only safety you have are your clinical trials.

Right. Okay. And then, thanks, Mitch. And then, a question on -- actually two questions on ostarine. The first is, is there any precedent for a cancer cachexia pivotal trial? I know these aren't necessarily pivotal, but that's kind of my next question, which is if there isn't, could the Phase IIb study that you are running potentially support a filing?

Yes. I mean, the Company's position is that we are going to -- we are taking the more traditional approach that you are going it Phase IIb and then with the Phase IIb, you are going to do your Phase III that will be confirmatory. But, the truth of the matter is when you have data in hand, then it becomes a discussion between the Company and the FDA.

So, I think the safe thing to say is the Company is going to do a Phase IIb. We are going to give you the -- we are going to give you the details of the Phase IIb, but the fact that the Phase IIb is being run with the exact same endpoints that are going to be expected in the Phase III clinical trial and the fact that we are going to make it robust and large enough and the fact that we are picking a group that there is high benefit risk ratio, I think it puts us in that bucket if you will that there will be more room for discussion to get the drug to patients, then something that would be for a lifestyle change for example, in which case, you are focusing more on safety and going through these trials. We are going to design the Phase IIb study as a robust Phase IIb study.

And are there any precedents?

There's lots of precedents, I will give you an example. The precedent most recently was Pfizer got approval for their Phase II study for the drug for renal cell carcinoma based on the time to progression and if you remember, they went to the FDA -- this is our Phase II. Then we are going to do a Phase III. So, the oncology division and this is recent and this is based on Onyx's drug being successful and right behind it came this other one. So, there is precedents.

But in cancer cachexia?

No, cancer cachexia we are the first.

Okay.

So, there is not going to be precedent. We will be setting the precedent. But in the oncology division where cancer cachexia goes into, there is precedents.

Understood, okay. Thanks a lot.

Your next question comes from the line of Meg Malloy with Goldman Sachs. Please proceed.

Thanks very much. Just one quick follow-up. Mitch, could you remind us what your assumptions are in terms of fracture rate, which is I guess the primary endpoint in the ADT study? Thanks.

Okay. The question is fracture rate assumption. So, the assumption is and it is based on the Melton paper and all, in which 8% per year, a total of 16% over two years, these patients have clinical fragility fractures. There is a one-to-one -- there is a one-to-three correlation between the number of vertebral fractures compared to fragility fractures.

To say in another way, for every one fragility fracture that's non-vertebral there are three vertebral morphometric fractures. We didn't care about that; we just made it one-to-one. So, if you made it one-to-one, the Melton paper by the way was in ADT patients, you would expect the assumption would be an 8% per year or 16% vertebral morphometric fracture rate at two years.

So, that's how the study was designed and the assumption is that we would see a 40% reduction in fractures at the end of the study and remember, the BMD, we hit a 2.3% increase in BMD in the lumbar spine.

And as we compare that to the [Avista] trial, they were able to show a 55% reduction in vertebral fractures in post-menopausal women that hadn't had a prevalent vertebral fracture. So, who are anyway near that will be in good shape. Having said that, we made sure that the trial was large enough to accept assumptions that would be lower than 16%. So, there is lot of room for us to hit the p value that is required under the SPA.

Thank you. Just to ask that another way, I mean if you hit a 30% reduction, would you -- would there be a chance to achieve good -- show a statistically significant difference?

Yes, it's all based on the p value, right?

Right. Maybe we can get more specific, I mean I would presume that's 80% or 90% power in a 0.05 p value, so the 40% reduction?

That's right. There is a p value that's 0.05 and -- but you have to ask some questions a different way and that is that, is there is precedent in the osteoporosis drug world for drug being approved at 30% because anything greater than 30% and the answer is yes. So, you wouldn't be setting precedent, if we hit between 30 and 50%, we are going to be in the sweet spot that the FDA has approved drugs before.

What about the power of the study though?

We have -- we have enough -- we have enough power in the study. We do have enough power in the study to see the p value hit 0.05 based on a 30% reduction. What is important to us at the end of the day is number of events. And so, in order to support a 30% reduction, your number of events have to be pretty robust.

I don't -- so why do you say a 40% reduction is your target then?

That's under the SPA.

Okay.

With the SPA, we agreed -- in the SPA, you have to agree to certain parameters. So, we agreed to p value 0.05, a 40% reduction and that's how we did our numbers.

Okay.

But, based on that, Meg, as you know us, we went ahead and made sure that we had more than enough patients because assumptions are never 100%. If the assumptions are more than what you expected, then everybody is happy; if it is less than what you expected, then you want to make sure you have enough patients to carry you.

Great. Now, that's perfect, thanks. Thanks -- thanks very much.

And the next question comes from the line of Howard Liang with Leerink Swann. Please proceed.

Thanks. Can you talk about what kind of Phase IIb trial that you are planning for ostarine?

Howard, thank you for the question. I will answer it two ways. The first is that we are really spending a lot of time from a statistical and scientific standpoint to come up with the best trial that we can come up with.

We have already had a key opinion leader meeting with approximately ten key opinion leaders, roughly about ten key opinion leaders in the area of cancer cachexia and they met members at the end of January. That was a wonderful meeting.

We also had a great meeting with the SPA and the oncology division again to get regulatory clarity. And then internally, we are turning -- churning the statistics and understanding the clinical sides and what they could yield in terms of numbers of patients.

So, our goal is by April when we have our SARM Day, if you will, or the Analyst Day, we will be able to in great detail give you the trial design. I will also tell you that by that time we would have filed the IND and have gotten comments back on the IND. That's our goal, so that when we go through the trial design, you are going to see pretty much what's been agreed upon between GTx and the FDA, and then now it is just a matter of hitting our timelines.

Having said that, what I can tell you is we believe it is going to be a three-arm study, placebo versus two treatment arms. We believe the treatment phase of the study will be between four and six months and we also believe that the number of subjects will be in the order of about 150. Again, don't hold me to that, Howard, but that kind of gives you a range of what we are thinking about today. But, this will crystallize as we get closer to our SARM Day.

Great. Another question is, do we know how ostarine is metabolized and I guess really the question is, is there any need to do another dosing study for renal patients?

Yes, it is a great question. The answer is we know very well how ostarine is metabolized. It's about 99% metabolized by the liver, very little makes its way into the urine as metabolized. So, we would not have to -- we don't believe we would have to do any dose changes in chronic renal disease or in end stage renal disease.

Nonetheless, we are doing internally some animal studies to basically confirm what we already know from the metabolism study. So, our feeling at this point is there won't have to be a dose difference as we move into this next indication.

Okay, great. And then just a last question, so that I understand it correctly, did your comments about PIN trial de-powering, so the lower dropout rate as well as a larger sample, that wouldn't change the powering of the interim analysis, because it still has 89% power? Just -- it could be hurt here, but the likelihood of success will still be the same, wouldn't it?

Yes, remember that power also includes a number of events, right. So, if all of a sudden fourth quarter of the year -- of this year, we are sitting with instead of 281 events, 400 events.

But, you wouldn't -- but, I thought the interim analysis is event driven, so you would need to do analysis after 281 events?

Yes, you can do the [anytime] math with 281 events.

Okay.

Okay. I mean, remember, the goal here is to find out how much information the trial provides you at that point. So, for example, with 1,260 patients, we would have 60% of the information in at the point we hit 281 events.

So, if you have more patients and more events, then you can -- it becomes the Company's luxury almost, when do you pull the trigger and do the interim analysis to be sure if you are going to hit your p value 0.001.

The other thing that affects the power is the effect size. And of course our effect size is built at 30%. And if the effect size turns out to be greater than 30%, then that p value will be more robust. So, power only helped us as we plan for the trial, but once the trial was starting and you look at the data, then power is irrelevant then it becomes just what your p value is.

Can you comment how does it evaluate that you are seeing right now compared to your trial assumption?

Yes. So, the Company's position has been not to comment on event rates, but what I can comment on is that we are -- that we are -- that the trial is progressing as expected and that we are still on track to provide -- to be able to do the interim analysis in the fourth quarter and certainly by the first quarter of 2008. So, that tells you that we are on track.

Great. Thank you very much.

Thank you.

[OPERATOR INSTRUCTIONS] Your next question comes from the line of Mike King with Rodman & Renshaw. Please proceed.

Good morning guys. Thanks for taking the question. Just wanted to ask on the Phase IIs for ostarine in both cancer cachexia and CKD, what's the proposed clinical benefit that you guys want to convey, what you said in ostarine in those indications?

Yes, great question, Mike. The proposed benefits are actually the benefits that we were able to understand what the FDA wanted. It's one thing for -- I mean, there is a lot "proposed benefit" that would be clinical benefit to the patient that the FDA may not recognize as an endpoint. So, we have to make sure that the FDA agreed with the company there was a -- if we hit a certain endpoint, that would be a clinical benefit.

So, the clinical benefit is the following two items -- one is an increase in total lean body mass, not weight, because Megace, for example, patients will increase appetite and increase weight. There's also -- it's at the detriment of muscle and usually it's water and fat.

So, that what -- that's why the FDA is not crazy about weight as an endpoint. Total lean body weight or mass is muscle, and muscle is what is -- have clinical benefit in patients wasting from cancer or from end stage renal disease and chronic renal disease.

Was the [Cerastium] approved on that endpoint?

Cerastium was approved on that endpoint, but in end stage -- in aged patients.

Right.

At the time, it was weight and then later it was total lean body mass.

Right.

But, then the second important clinical benefit is what's called a performance measurement or a -- yes, it has to be a performance benefit. So, Cerastium for example was approved on a handgrip and I believe it did a bicycle or walking test of some sort.

So, what the FDA wants is to show that now you are increasing muscle but the muscle that you are increasing is quality and quality enough to make a difference in these patients' lives. So, for example, in our study, you pick the stair climb, and in the stair climb, we show that not only do you have -- with the drug an increase in total lean body mass in our Phase II proof of concept, but that translated to a performance function benefit that was a stair climb. So, patients climb the stairs faster and had more power when they went up the steps.

Okay and that is also an approvable endpoint?

These are endpoints that are approvable endpoints based on the discussions with two different divisions of the FDA.

Have other drugs been approved on this -- on this -- on the function on the stair climb or other such metrics in that indication?

Yes, not indication, because we are going to be the first, but in the aged patient population --

Right.

Growth hormone has been approved based on that.

On function?

On both. First, it was initially approved just on body weight and then they had to do a Phase IV commitment for function, which they achieved.

And that was a stair climb?

No, they didn't do stair climb, and none of these, they used a handgrip I believe.

Okay.

Which is another way -- the FDA, at least the two divisions that we are talking to, there are a myriad of performance studies that can be done.

Okay.

And there is not any specific one that they have said, this is the one that you have to hit. So, we have picked a very standard one that is well accepted as being very sensitive and specific.

Okay.

And we have had discussions with the FDA whether this would be qualifying as a performance measurement and the answer is yes.

Okay, great. And then, on CKD?

The same thing.

The same thing, okay. Thanks very much.

Thank you, Mike.

At this time, there are no further questions. I would now like to turn the call over to Dr. Steiner for closing remarks.

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. I look forward to seeing some of you during our Analyst Day next month.

Ladies and gentlemen, that concludes the presentation. You may now disconnect and have a great day.