Oncternal Therapeutics Inc (ONCT) 2008 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2008 GTx Incorporated Earnings Call. My name is [Nikita] and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

(OPERATOR INSTRUCTIONS)

I would like to now turn the presentation over to your host for today's call, McDavid Stilwell, Director of Corporate Communications. Please proceed, sir.

Thank you and good morning. On behalf of GTx, I would like to welcome you to our first quarter 2008 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 website at www.gtxinc.com. We will have a replay of this call available on our website until May 26, 2008.

With me today are Dr. Mitchell Steiner, Vice Chairman and Chief Executive Officer; Mark Hanover, President and Chief Operating Officer; and Mark Mosteller, Chief Financial Officer. Following this introduction, Dr. Steiner will highlight first quarter 2008 clinical and corporate development. Next, Mr. Hanover will briefly detail our financial performance. Dr. Steiner will then make closing remarks and 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 risk and uncertainties we have discussed in detail in our reports filed with the Securities & Exchange Commission, including in our Annual Report on Form 10-K filed March 11, 2008. We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call. Now, I'll turn the call over to Dr. Steiner.

Thank you, McDavid. Good morning and thank you for joining us on our first quarter 2008 earnings call.

This is an exciting time for our Company. In February we announced the positive results of the Phase III ADT clinical trial evaluating toremifene 80 milligrams for the treatment of the multiple side effects of androgen deprivation therapy.

The results demonstrated that a daily oral dose of toremifene 80 milligrams compared to placebo met the primary endpoint of the trial, with a 54% reduction in the incidence of new morphometric vertebral fractures. Toremifene 80 milligrams also increased bone mineral density, improved lipid profiles, ameliorated gynecomastia, and reduced hot flashes. We are planning to file the NDA with the FDA by the end of the summer and we are preparing for a 2009 product launch, if FDA marketing approval is obtained.

We believe that toremifene 80 milligrams, by preventing fractures and managing the other serious side effects of ADT, will fill a significant unmet clinical need. More than 700,000 prostate cancer patients in the United States are on ADT, and 100,000 new men initiate ADT each year. About 77% men on ADT have osteoporosis or osteopenia, placing them at high risk for fractures. ADT patients have a 20 fold increase in the risk of fractures compared to men not on ADT, and they were three time more likely to experience a fracture than post-menopausal women.

Fractures are life-threatening as immediate survival of men on ADT who develop a skeletal fracture is about three years less on average than men on ADT who do not have a fracture. Adverse lipid profiles occur in over 54% of men on ADT. And men on ADT have higher rates of cardiovascular events than men not on ADT.

Symptomatic side affects of ADT are hot flashes and gynecomastia. Hot flashes which occurred in 89% of ADT patients are a serious and frequent complaint. Gynecomastia, which is abnormal breast enlargement, pain or tenderness occurs at some point in 66% of men on ADT.

Our appreciation in understanding of the seriousness of multiple side effects of ADT has greatly increased over the past decade. 20 years ago, before routine PSA testing, men typically presented with more advanced prostate cancer and those who had metastatic prostate cancer died within three years of diagnosis.

Now, with zero PSA, patients are being diagnosed earlier, usually before the disease has become symptomatic and men with advanced prostate cancer and ADT are living for 10, 15 and even 20 years. The multiple side effects of ADT are contributing to the morbidity and mortality in patients with advanced prostate cancer. In the last five years, the number of articles focused on the clinical impact of side effects of ADT has greatly increased.

Further in March, the National Osteoporosis Foundation announced treatment guidelines that now recommend that men on ADT should be evaluated for bone loss. Similarly, last week, the American College of Physicians released guidelines with a treatment of male osteoporosis, which states that men on ADT are at high risk for fractures and should be followed for bone loss with routine DEXA screening.

Our market research shows that urologists want to provide total care for their patients on ADT to treat the patient and the disease. But urologists are equally concerned about the lack of FDA-approved treatment options for the serious side effects of ADT. Some urologists are prescribing drugs off-label to individual side effects, but end up treating multiple side effects with a polypharmacy drug regimen, a bone agent for bone loss, statins for cholesterol management, Megace or Effexor for hot flashes, and radiation or antiestrogens for gynecomastia, which collectively is expensive, inconvenient, has its own potential for side effects.

Patient research also confirms this unmet need. More than one-third of men on ADT have specifically asked their physicians for medications to control the side effects of ADT and almost two-thirds of patients said, they would ask their doctor to prescribe a medication with a target product profile similar to toremifene 80 milligrams. The opportunity for toremifene 80 milligrams as a treatment for side effects of ADT is attractive.

The symptomatic side effects of ADT are what drives patients to see their physicians and physicians as well as patients are concerned about the greater risk of fracture and cardiovascular disease. Both patients and physicians recognize that ADT is the only effective way to manage advanced prostate cancer and that it cannot be stopped and therefore managing the side effects of ADT is critical.

GTx plans to market toremifene 80 milligrams in the United States. About 6,000 urologists account for 90% of total urology ADT prescriptions and more than 1,000 of these physicians already know GTx and toremifene through past or ongoing involvement in our clinical trials. There are an additional 1,000 medical oncologists who are frequent ADT prescribers, a sales force of 60 to 80 representatives with effectively market toremifene 80 mg.

In preparation for the commercial launch of toremifene, we have continued to strengthen our senior management team. We've hired Michael Brown as Vice President, Marketing and Managed Care. Mike joins GTx from GlaxoSmithKline, where he was most recently Regional Vice President, Managed Care.

Prior to that, he was Senior Product Manager in charge of Strategy and DTC Marketing for Boniva, a bone agent. He was also Senior Product Manager for the launch of Avodart, a BPH drug. Michael worked closely with Greg Deener, our Vice President of Marketing and Sales, and Chris West, our Vice President of Sales, to plan and execute the successful launch of toremifene.

We've also hired Paul Hadeen as Director of Managed Care. Paul has 27 years of experience in Managed Care, Marketing and Sales at Organon. Jim Banaghan has joined GTx as Director of Government Accounts. Jim most recently held a similar position at Schering-Plough.

[Shontelle Docton] has joined GTx as Vice President of Medical Affairs. Shontelle worked for 11 years in medical affairs at Pfizer, most recently as a Senior Director and Group Leader, overseeing the field-based medical organizations supporting Viagra and Revatio. She has experience building and leading medical affairs teams and fostering relationships with opinion leaders and advocacy groups. The Senior Commercial Team to lead to toremifene pre-launch and launch activities is now in place.

As for toremifene 20 mg's Phase III high grade PIN clinical trial, we have obtained our pre-specified number of cancer events and have initiated the process for conducting the interim efficacy analysis. We are eagerly awaiting the results from an independent data management group. We will announce the results in a press release. If the data are positive at the pre-specified level of statistical significance, we will report that toremifene 20 milligrams, compared to placebo, reduced prostate cancer incidents. With positive news the clinical trial will continue for safety and GTx will meet with the FDA to discuss next steps as outlined in the SPA.

On the other hand, if the results do not meet the pre-specified statistical level required for interim efficacy analysis, GTx will be informed by the independent data management group to continue the trial as planned. I want to make it clear that the interim efficacy analysis does not include stopping rules for futility, nor is the interim efficacy analysis a binary event.

The clinical trial continues as this is a chemoprevention trial where time of treatment may be important, and many of these patients would not have had their three-year biopsy, prostate biopsy, at the time of the interim efficacy analysis. Moreover, the level of statistical significance required at the final efficacy analysis is more lenient than that specified for the interim efficacy analysis.

In December 2007, GTx and Merck & Company entered into a collaboration to discover and develop selective androgen receptor modulators, SARMs, a new class of drugs with the potential to treat sarcopenia, which is age-related muscle loss that results in reduced physical strength and the ability to perform activities of daily living as well as other musculoskeletal-wasting diseases.

Today, I am able to give you more clarity on the joint Merck and GTx SARM collaboration. Merck and GTx are evaluating multiple SARM candidates, both GTx and Merck SARMs, in Phase I and Phase II clinical trials. There are two Phase II clinical programs ongoing: one for sarcopenia, and one for cancer cachexia. We are also evaluating the potential of SARMs to treat other musculoskeletal-wasting conditions. As you are aware, Merck and GTx are conducting a Phase IIb clinical trial evaluating Ostarine, which by the way Merck has now named MK-2866, for the cancer cachexia indication.

About 160 subjects with non-small cell lung cancer, colorectal cancer, non-Hodgkin's lymphoma or breast cancer have been randomized to placebo Ostarine 1 mg or Ostarine 3 mg for 16 weeks. The primary end point is change in lean body mass and the secondary end points include physical performance. We anticipate announcing results in the third quarter of this year.

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

Good morning. The details of our financial results for the first quarter 2008 are included in this morning's press release and are available on our website. I will focus on the highlights.

The net loss for the quarter was $12.7 million, compared with a net loss of $8.1 million in the quarter a year ago. Revenue for the first quarter of 2008 was $4.5 million, compared to $1.7 million for the same period last year. Revenues for 2008 included $257,000 of net sales of Fareston and $4.2 million of collaboration income from Ipsen and Merck.

Research and Development expenses were $14 million, and General and Administrative expenses were $4.3 million for the three months ended March 31, 2008, compared with $8 million and $3.1 million for the first quarter of 2007.

At March 31, GTx had $134.7 million in cash, cash equivalents and short-term investment. GTx has no debt and no warrants. We anticipate a full year 2008 net loss in the range of $52 million to $62 million. This projection includes pre-launch activities for toremifene 80 milligram, as well as the cost of the ongoing Phase III high grade PIN clinical trials. Following the high grade PIN interim efficacy analysis, we will update you further on the incremental pre-launch spending we anticipate in 2008 for that program.

Our 2008 guidance does not reflect potential milestone payments from our partners Ipsen and Merck; nor does it include potential income from our licensing toremifene for Asia and other territories outside of the U.S. and Europe.

I will now turn the call back over to Mitch.

Thank you, Marc. This is a busy time for GTx with positive Phase III ADT results. We're diligently working to file the new drug application for toremifene 80 milligrams. As the interim efficacy analysis is now being conducted, we expect the results soon. If successful, we'll have a second near-term NDA filing. The GTx and Merck SARM collaboration is moving forward with multiple SARMs in Phase I and Phase II clinical trials in sarcopenia and cancer cachexia, with the next important SARM milestone being the completion of the Phase IIb Ostarine cancer cachexia clinical trial anticipated in the third quarter.

Finally, we are also excited about GTx's preclinical pipeline. Our scientific team continues to develop our newest product candidate, GTx-758, an oral LH inhibitor for advanced prostate cancer and GTx-878, an ER beta agonist for BHP, to both enter clinical development over the next year.

Operator, we are now ready to take questions.

(OPERATOR INSTRUCTIONS). Your first question comes from the line of Joel Sendek of Lazard Capital Markets. Please proceed.

Thanks. I wanted to further define the couple of potential snares for the PIN trial. So, first of all, I want to understand what the worst case is. Would the worst case in your view be a continuation of the trial?

Okay, yes. So let me just rephrase it. The question, Joel, is looking into the PIN trial, what would be the worst case scenario, the implication there is that there have been some rumors floating around that the worst case scenario is that it's a futility analysis. And that for some reason, we are going to get a message back that says, guess what, not only did you not hit your pre-specified statistical significance, but the futility analysis says you have to close down the trial.

Another worst case scenario that is sort of floating out there is the concept that, oh, there is a safety issue that that would be brought into question. Well, let me remind the group that the Data Safety Monitoring Board has reviewed the safety every six months and we've continued to get continuous plan. And we've already seen the safety data for the 80 mg in the sicker patient population.

So safety, we've done, that should not be an issue from the standpoint of news during the interim. And then, so the worst case scenario, which is the only case that would happen if we don't hit a positive result, is that they tell us to continue the plan as trial. If we continue the trial as planned, excuse me, I superimposed that, if we continue the trial as planned, remember now the statistical significance or the statistical hurdle that we need to hit is much, much more lenient in the final look than in the interim.

And how about if there is a negative trend. Will you know that, or will you relate that to investors if that happens?

The only information we will get from the independent group is, did you hit or did you not hit? If we did not hit, all they're going to tell us is continued as plan. The reason for that is that if you can imagine yourself being a patient, and then we told you that we are off by a small fraction, so it looks like for all practical purpose the trend is that we're going to hit in the final analysis, it's going to be very hard to keep the trial blinded. So for the Company or for the patients and so, the way we've specified it is that the independent group will tell us continue the trial as planned, if we don't hit at the pre-specified statistical significance level.

Okay. And then on the positive side, you said if you hit there, you will continue for the three years for safety. Will there be another efficacy [level] or will it be done at the interim?

Yes. So if we do hit, we're done for efficacy. So at that point, that will be the interim efficacy analysis will be what will be the efficacy on record. We would continue the trial for safety. But by the time we file the NDA, the trial would be for all practical purposes, the safety component of the trial will be completed. And even after you file your NDA, there is a subset that's still lingering. You can always file 120 days after you submit to NDA.

So based on our timelines, the safety analysis should not slow down our time to file the NDA and to have the priority review time that we are anticipating.

Okay. Thank you.

Your next question comes from the line of Craig Gordon of Cowen and Company. Please proceed.

Hi, good morning. Just a couple of questions. One was, you guys were planning on doing additional Phase III trials looking at ACAPODENE for the treatments specifically of gynecomastia and hot flashes. Have these trials begun, or are those still anticipated in starting in the first half of this year?

First half of this year? So to make sure I understand, the question is, does GTx anticipate doing additional Phase III trial or some of the other side effects of ADT, gynecomastia, hot flashes, and potentially prevention of bone loss? All three that can help clarify and create primary indications under the Phase III trial that we just successfully completed.

Well, as you know, there's a lot of regulatory stuff that has to go on before you start the trial. So at this point now, we have not given any guidance out in terms of when these three trials would start, but we do feel that since we do have a unique advantage that no other drug out there being developed or any drug that has been out there in the market that could be used off label has the ability to treat all of these different side effects, our feeling is that we'd love to have a primary indication to each of these things that toremifene can uniquely do. So hot flashes, gynecomastia, and prevention of bone loss are three areas that we would focus on.

So I think, right now, the best guess is wait. I think, hopefully, we'll have more clarity in our next call in terms of when we believe those Phase III would start. But I will tell you that behind the scenes here, we are working very diligently to get regulatory clarity trial size and site selection and that kind of stuff.

Okay. And with multiple candidates in Phase I, Phase II and Ostarine reporting Phase 2IIb results, when are you guys and Merck going to make a decision as to the development program for each of these compounds moving forward?

It's a good question. So right now, what is happening is, as you would imagine with any collaboration, the first thing that's going to happen is they have their compounds, we have our compounds and the first thing we need to understand for those that are early on is which one is better for the indications -- has a better profile for the indications that we are going into. And so that's going to be going on I would imagine over the next year or so.

In the meantime, we do have Phase II candidates that have already been selected for those indications that we also need to look at the outcomes for those as well. As you know, GTx, because of the relationship that we struck with Merck, will only be interested in that that we pick the right SARM product for the right indication.

And as you recall, our milestone package, our royalty, basically the economics is not different for GTx, whether a Merck compound is selected or a GTx compound is selected. So, but what I hope will happen is that within the year's time that we will get more clarity from a standpoint of where we are going in sarcopenia and potentially hear about other indications that we are going into together.

But more importantly, we do know that -- more concretely and more importantly we do know that the Phase IIb cancer wasting trial will be completed in late summer and hopefully be able to report those results. So that's pretty much what I can say at this point.

Okay, great. Thank you.

Your next question comes from the line of [Krishna] Gorti of Rodman & Renshaw. Please proceed.

Hi, thanks for taking my question. I was just trying to understand, what's the cancer prevention risk at the end of two years following diagnosis of high grade PIN, is there any data out there? And the related question is how reflective is the efficacy, say for example, had you been trialed as positive, how reflective is it of cancer prevention?

Let me just answer --. Your first question again is what?

The first question is like, do you have any data out there which shows two-year cancer occurrence following high (inaudible) PIN diagnosis, because most of the data out there is a three-year and a six-year data showing the risk of cancer.

Are you telling about from high grade PIN?

Yes.

Okay, all right. So the answer is, there is a plethora of data out there with one-year, two-year and three-year. Most of it actually is going to be one to two years. There is just a rarity to find good controlled data for three years. I can only think of two trials right off the top of my head.

So most of it's going to be out there for two years, and the problem though is that we've watched the evolution of the management of high grade PIN over the last, I guess, the last 10 years that we've been working on this. What people are saying now is clearly patients at high risk for prostate cancer, they have high grade PIN. But the risk for coexisting cancer if we do a good biopsy prior to-- just do a good biopsy, then you can follow patients with high grade PIN. Instead of having to go back and biopsy them every six months, you can probably get away with waiting beyond one year, maybe two, maybe year three. There is still an increased risk, high grade PIN is still a premalignant lesion.

So the good news is we are watching this field mature right about the time that we are going to see our data. And so a lot of the controversy of whether this is a premalignant lesion has passed and we are going to be smack in the middle of the controversy of how do you manage these patients now, if there is a potential therapeutic drug available.

In terms of efficacy, now that we have pulled the interim analysis, we'll get the data back soon. All of these patients--.

Let me back up. This is the placebo group in this trial and actually our clinical trial represents the, it is really a landmark trial. It is the most well controlled trial ever conducted in this patient population.

And so we'll learn a lot about the risk profile in the placebo group and we'll be able to get a better understanding of what the risk profile is for this patient population. Again, that will help cement what would be a potential treatment option for these patients. Now remember, this is a handle to the bucket and so we pick patients with high grade PIN because they represent the highest risk patient population. We will stratify it for patients with a family history, African-American descent, PSA, other things that have been correlated with increased risk of prostate cancer in the future.

So a very well controlled trial, its data will be the benchmark that people will use going forward for patient management; and really this is a patient population that you can easily get your arms around because it's a histologic diagnosis.

Okay. So more patients in this trial, almost all of them are two-year rebiopsied, right? Most of the patients have a --.

That's right. So everybody's got a year, almost of them got two-year, some patients have three-year. And when the trial is done, when we submit the safety data, we're going to have a three-year data in almost all of the patients as well. So when we go out there to market, it will be based on three-year data.

So at the time of interim analysis, what percentage would have a three-year biopsy data, if you can tell us?

What percent of patient will have two-year data?

Three-year biopsy data?

I don't know that number. It's small. I don't know the number though. It's small.

Thank you

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

Yes, thank you. Two questions if I may. First, Marc, can you give us a little bit more guidance in terms of the financials for this year in terms of expected collaborative revenues and/or expenses? And then the second is, on Ostarine, do you have a sense of when we might see that top line data? Thanks very much.

While Marc is getting the numbers, I'll give you the Ostarine. We expect the last patient out to be in late summer, so basically late August and giving everybody a chance to clean up the database and report back to GTx. So we're looking for early third quarter to get the results on the cancer wasting, is that right?

Late third quarter.

Sorry, late third quarter, to get the results.

Thanks.

Meg, let me make sure I understood the question. So the guidance was 52 to 62, our revenue 4.2 of it is Merck and Ipsen, and the rest of it is Fareston sales. What was the rest of that question? I'm sorry.

The revenue guidance for the year is what?

I don't understand.

What is your revenue guidance for the rest of the year?

I'm sorry.

For the full year.

I'm sorry. For the full year, it's around $14 million.

Okay. That's fine. That's all I need. Thank you.

And Meg, do you want me to give R&D, you want me to give it out there?

Can you break it out that way?

Yes, the amount charged to R&D is 345, the amount charged to G&A is around 436, so a total of 781.

Are you giving-- ?

No, I said do you want me to give you the -- .

Options?

Yes.

No. I was looking more generally, sorry, for the general revenue guidance and the general expense guidance for the year that would get you to that $52 million to $62 million loss?

Right, sorry. Okay. Yes, so again the $14 million is the revenue.

Okay. And do you have a general breakout on R&D and SG&A?

I do, but I would really prefer to wait till I get our PIN efficacy to give you more specifics, if you don't mind.

That's fine. Okay, thanks a lot.

Okay.

Your next question comes from the line of Lucy Lu of Citi. Please proceed.

Hi, thank you. The question is for Mitch, basically, couple of questions from the PIN data. I know you have not disclosed a pre-specified number of events of interim analysis, but could you please just review the powering assumptions at this interim analysis for us? That's the first one.

Lucy, it's a little hard to hear you, could you speak up again?

Okay. I am just wondering if you could review for us the powering assumptions at the interim analysis, given that you now conduct interim analysis at a higher number of events.

Right, so the question is what is -- basically the question is, what does the SAP call for? That is the final statistical analysis plan and how the statistics changed. Now that we now know the -- now we have kind of pulled the interim and we know it's going to be different than the 281 because the 281 was based on 1260. Is that the question?

Yes. Just wondering whether it's updated powering assumptions for this interim analysis? Thank you.

Yes, sure. Great, perfect. All right. So here is the answer. The number of events that we made the decision to hit, and we have obtained, was 350 events. The SAP, the final statistical analysis plan, still calls for an alpha spending of 0.001 for the interim look. If we are looking for anywhere between a 28% to 30% reduction at the interim, and if we do that, we are going to hit our pre-specified alpha and p-value.

Because of the trial and the way that is set up now that we picked 350, 350 means that we have more cancers represented in the interim than we would have at 281, so therefore the p-value, and this is an important point and I'm glad you asked this question, the p-value that we have to hit based on Kaplan-Meier and log-rank analysis is now a p-value of 0.003, okay. And that has to do with the fact that 350 is more of the trial than 281 was.

Okay. So as long as you reduce the relative's occurrence of cancer by 28% to 30%, you should have a p-value of 0.003 and that should be sufficient.

That's right. Then the other thing to let you know is -- that's right. So you need to have a p-value of 0.003 and that will be sufficient. And I was going to make another point along those lines. The power -- the probability right now is approaching, because of the way that we did the SAP, the probability is approaching greater than 90%.

Okay, great. Thank you. And then, just wondering how does the overall event rate in this Phase III compared to Phase II?

The event rate, it's a good question. Make sure I understand the question. The question is, how does the overall event rate, or another way to say it, the aggregate event rate look in our Phase III when compared to the Phase IIb?

Yes.

Right. And so the answer is that we're actually tracking less.

Okay. And then the last question, I guess, I have is, are you going to tell us the Gleason score of the cancers found in both the treated and placebo group?

I'm sorry.

Are you going to tell the Gleason score [relative] between the ARM?

In the interim look?

Yes.

My understanding, don't hold me to this, but my understanding is that we will get that information, and if we get the information and we have a positive interim analysis and we have that information, I will share that.

Great, thank you.

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

Good morning. This is actually John in for Howard. I had a couple of questions about, kind of follow-on about the number of events. Could you explain how that 350 was chosen, and if it has any affect on the SPA, and if it does, how would affect the SPA?

What was the second part of the question?

With the changing of a number of events, does this affect in any way the SPA for the PIN trial? And if it does, how would affect the SPA?

Got you. Remember, we said in the final statistical analysis plan and that was part of what we had to do before we conducted the interim analysis. So all that is in place as an amendment to the SPA. The 350 was selected because when we went from 1260 patients to basically 1590 patients, that method denominator got bigger. With a bigger denominator it meant the power or probability went down. So in order to account for that and get us in to about a not greater than 90% probability or power, it meant that we need to be at 350, so that's how we came up with the 350.

Okay. So it's easiest just kind of adjusting for the size of the trial?

That's right because the trial was originally supposed to be 1260 and because of the SPA and the way that we had to discuss them, the safety subsets, it just ballooned up by 330 patients.

And again that was adjusting the SPA?

Okay. Everything, all this is in the SPA. Right. And the SPA, it was discussed with reproductive urology initially and then with oncology, is where it sits right now.

Okay, great. And just another question on the trial. If I'm not mistaken, last time you said it would be about approximately two weeks when you pulled the trigger until we saw data. Does that time line still fit?

Yes. And just to remind everybody that this is very unlike shutting down a trial, waiting for that last patient out and cleaning up the base and all that stuff. Typically, when that happens, when you close out the trial, it's about a three-month turnaround. In this setting, it's probably in the time frame that you just mentioned.

Okay, great. So no longer than two weeks from today, at least, unless you can tell us when you pull the trigger?

Right.

Okay. And then, real quick, the R&D increased pretty considerably over the quarter. Is that a reasonable ramp that we should assume for the rest of the year?

Marc, R&D increased?

Yes.

Is that ramp up going to be consistent?

Yes, it is consistent.

Are you expecting that for the rest of the year?

Yes, I am.

Okay, great. Thank you very much.

Your next question comes from the line of Patrick Walker of Walker Smith Capital. Please proceed.

Hi guys. Thanks for taking my question. Congratulations again on that successful ADT trial. I guess a lot of it-- I wanted to follow up I guess on John's previous question. So I am interpreting this press release, right, that the analysis is beginning on the HG-PIN, so we are within weeks then of finding out if we are continuing or if we've got a positive trial, correct?

That is correct. The trial, as we speak now, the interim analysis is being conducted.

Okay. And by the DSMB and they will inform you when they have their information ready?

As soon as we know and we will turn around and issue a press release and the press release will let you know either way. If you don't hear anything, it's not because we heard from them that we are going to continue as planned. If continue as planned is one of the decisions, it will be in a press release and obviously if we hit, it will be in a press release as well.

Got it. One point of clarification, I was surprised to hear some speculation, I guess, because that's [all called] ACAPODENE and somehow these two trials were related that there were two trials for ACAPODENE. But just to clarify, you all are moving ahead with the NDA on the 80 milligram ADT trial and that is completely separate from anything going on with HG-PIN, correct?

Right. Absolutely, that's separate. And also the additional Phase III that we are considering to expand, now you have a positive ADT trial and the fun part is that we can use that data to continue to build our safety database and to build our brand and, more importantly, to increase the indications and so we wanted that to come out with three primary indications. Because the questions that have come up is one is, when do we start the treatment with somebody on ADT And our trial was only for patients greater than six months, and so if we can do patients less than six months and give clarity, you would imagine that the greatest bone loss is going to happen within the first six months to one year anyway. Since we already have hit a fracture study, all we need is BMD.

For gynecomastia, it's not just gynecomastia related to ADT, but it's hormone-induced gynecomastia, you can increase your market that way. Then finally hot flashes is a big issue with ADT and it's not just ADT patients on Lupron and Zoladex but it can also be patients that potentially can be on bisphosphonate. Therefore we don't end up becoming a ACAPODENE or toremifene that 80 milligrams doesn't become a drug only for patients on Lupron and Zoladex, but if a physician chooses to put the patient on IV Zometa because of metastatic disease, IV Zometa is not going to treat hot flashes. IV Zometa is not going to treat the gynecomastia and they may be given simultaneously.

We want to treat -- we want to test this in three separate Phase IIIs. Small studies, 200 to 250 patients, but it will expand our primary indications and we already have the data for the most part sitting in our Phase III that we've already done.

So you'll know how large to make them and how long they should last?

Correct.

And I guess finally, how does this --? If you could talk more on a strategic level, how does this, how does the positive ADT trial affect the way you all are looking at business development, corporate development, fund raising? You have got a lot of cash and (inaudible) cash but, can you just give a little elaboration on how your view is changed, now that you have got something that [may be] towards NDA?

Yes. So make sure I understand the question. So the question is from a business development standpoint, what is GTx thinking strategically now with the positive trial in hand, from a standpoint of where we want to go?

And so for the U.S., we would like to, I think that's the question. So for the U.S. we would like to move forward and build our commercialization team. As you know, we built the senior member component of it. And we are going to obviously wait a little bit before we build the rest of it until we move closer to filing the NDA and getting -- making sure it's been accepted and all that stuff and obviously approved.

The other things that have happened interestingly now with a positive ADT trial is we've gotten a lot of interest in the rest of the world. As you know, Ipsen currently has Europe and Ipsen has publicly stated they are filing their NDA equivalent to the EMEA in fourth quarter of this year. We have worked very closely with Ipsen and essentially side-by-side in developing the NDA and their written components with their NDA equivalent. So we're working very, very closely with Ipsen and we do value their input, and we do appreciate having a company that's done it before, work with us side-by-side to help us as we move forward with filing our own NDA.

As for other business development activity, I will tell you we've gotten a tremendous number of interests and have moved in a direction with data in hand for the rest of the world. It has been a mix of large pharmaceutical companies that have stepped to the plate and recognizing that the rest of the world has a value, including Japan, and it's open.

So we are in discussions and have been for Japan. But what's interesting is, we are also dealing with some global pharmaceutical companies that have an interest in Japan and other territories which will make it-- we'd rather have a deal where we just sign one deal and have the rest of the world covered, Ipsen in Europe and GTx in U.S. and in Canada and Mexico and like I said the rest of the world with the global pharmaceutical.

That will be the easiest thing for us to do in our preference. And so we've been working along those lines. So hopefully we will be able to certainly put that to bed before the NDA is decided upon. And hopefully, it will be during the NDA process that we will get word in how we are planning to license toremifene outside the United States.

And then, Patrick, to Mitch's point, I think that's going to add a tremendous amount of, or let me say it differently-- add an additional cushion, I should say, to our current cash position if we were able to secure one of those. And of course that's why I specifically mentioned in my comments earlier that, aside from that opportunity, we had the chance to also pick up additional milestone payments from our partnership with Ipsen and Merck.

So right now, we feel like we're in a really good position from that perspective.

All right. Let me maybe ask you a related question a slightly different way which is, do you think that Merck's view of ACAPODENE has changed with this data?

I can't speak for Merck, but I will tell you that Merck is very interested in GTx as a company. As you know, they formed a strategic collaboration on the SARMs. The collaboration is not just on the SARM compounds, but also on GTx's core competency in the space of SARMs' concerns and other areas. And so we have been very happy with our Merck relationship and hope that -- I'm certain that will continue under any scenario, but it does make sense that Merck is a close partner and that certainly will weigh in as we think about what we want to do going forward.

All right. Thank you very much. Best of luck with this new data.

Thank you.

Thank you.

(OPERATOR INSTRUCTIONS). Your next question comes from the line of Eric Schmidt of Cowen & Company. Please proceed.

Good morning. I apologize that I joined the call late here, so forgive me if you've covered this, Mitch. But could you just kind of frame, in your own words, why the decision was made on the PIN trial to prolong the analysis to 350 versus 281 events? Obviously, you had increased the power, but this is interim analysis and we could have had the 281 look, I guess, six months ago, so there is a trade-off here. I'm just trying to understand your logic.

Yes. So first of all, the Company's position is -- first let me lay out the facts. The facts are that we had an SPA and the SPA had 281 events to hit about a 28% to 30% reduction. We hit a p-value of 0.001 with a power of 89%.

During the discussions with the SPA, with the FDA, it became clear that we had to add two additional subsets, the part of the efficacy analysis, but there would be subsets for safety. One is for bone mineral density and the other one is for a cataract study.

When we agreed with the FDA, these sub studies had not been filled. After we agreed on the SPA with the FDA, the sub studies got filled. We ended up at 1590 instead of 1260. The Company's position was, let's see how it plays out. If it looks like it's going to take us --. We were telling everybody fourth quarter of 2007. If we were going to go way, way, way beyond that, we would stick with the original plan, recognizing it's just an interim look and recognizing that the 89% power is probably not going to be accurate. In fact, the power will be more like a 50% power if you're dealing with 1590 patients.

So the Company made the decision that boy, wouldn't it be nice if we hit on the interim analysis? And since we hit on ADT, we are moving ahead to file the NDA. Let's put ourselves in the best position humanly possible to optimize the outcome of this interim analysis. And in order to do that, then we decided that you have to file a statistical analysis plan, no matter what before you do an interim. So while we were doing these statistics to file the statistical analysis plan, it became clear that in order to hit a power of about 90%, we're going to have to wait for a few more events.

So the decision was okay, what would be that magic number? Because at the end of the day we wanted to be able to hit on the interim or at least give ourselves the best chance to hit on the interim. That's where the number 350 came in.

Interestingly, and I think you were off the call when I made this comment, when you get to 350, 350 is a larger proportion of cancers of the total expected for the trial. Consequently, the interim, even though you are spending an alpha of 0.001, the p-value that we would have to hit in the interim is now 0.003.

So by doing this move and by accruing more cancers, we in fact have increased the leniency of what we need to do to hit in the interim analysis, not just the power, but also the leniency. Again, from management's point of view, having run many trials under our watch and being successful to date with literally all the trials that we have conducted, we've got to give it our best chance here to hit in the interim.

Even though it's just an interim look, I'd rather turn the cards over when we've done everything we can to optimize rather than just turn the cards over because we hit 281. So what I've discussed with you today is all under the final statistical analysis plan that's been filed with the FDA; and I don't know what part of the phone call you came in on, but, as we speak right now, the interim efficacy analysis is being conducted.

And then it sounds like the real driver of your decision was the 1590 versus 1260 in terms of new patients. That's not something that happened more recently than that?

I don't understand.

It sounds like the real driver of the [cachexia] decision is just the decision to preserve the power of the study and that the power of the study changed when you expanded the trial from 1260 to 1590?

Right. So, we hit 281 in November, so we made the decision to revisit the statistics probably in January, and around February is when we created the statistical analysis plan, filed it in March, and this is where we are today.

Okay. I got it. Thanks.

Thank you.

Next we have a follow-up question from the line of Meg Malloy of Goldman Sachs. Please proceed.

Thanks. Mitch, to complete that a little bit, once you file the SAP, does the FDA sign off on it or they just kind of buy it? And then, secondly, what then -- given the increased size of the study, could you walk through the power and expect a difference if the trial were to proceed as originally planned? That is if you don't hit at the interim analysis and we wait out the end of the trial, could you talk about the expected difference and powering?

So the answer is, is that the FDA after you file the final statistical analysis plan, typically you don't hear anything from the FDA. It's like an amendment. You file it, if there are objections, you'll hear from them, and so that's how that was done.

So it was filed in a timely manner, the statistics that are in the spirit of the SPA. So in other words, what we did is we basically restated the statistics that we stated in the SPA, but with a denominator that's 1590 instead of 1260, okay. So it's not much different in that regard. So it's not like, we introduced a new statistical concept. It's the exact statistics that the FDA required in the SPA. All we did is tailor it to the new denominator, right?

Second question is how does that change the second look? Interestingly, the p-value that we need to hit in the interim is 0.003 or less. The alpha spend is still only 0.001. Do you hear that, Meg?

Yes.

So at the end, we still for all practical purposes conserved the leniency to hit again. And so it's going to be, certainly it's more lenient than 0.001 and even more lenient than 0.003. So it's not additive, you just can't say, does that leave you with a 0.03 minus-- excuse me, 0.01. We're able to preserve the final look as well, with an alpha spend of only 0.001.

So when we saw that we said, this is pretty cool, given that the statistics work out that way, so that we end up getting a little bit more leniency in the interim look, but remembering at the final look, we get even more leniency to hit. And again, you can probably get as low as 22%. All that stays the same, 22% at the end of the study and still hit.

The 22% giving you to less than p 0.05 if you assume a leniency-- an alpha spend of 0.001?

No, you said 0.05?

Less than 0.05

It's going to be --, remember the total alpha of the trial is 0.01, so it's going to be less than --, your alpha spend is 0.001. So that tells you what's left at the end.

All right. Because it's a single study. I guess what I'm trying to -- are you saying then that if you have a 22% difference -- ?

Then you will be fine under a single study of being less than 0.01, yes. It doesn't change the 0.01.

Meg Malloy; And where does the 22% come from?

The 22% reduction in cancers.

Right. But what's behind that assumption?

That assumption is just based on running a sensitivity. So, you ask what power, so if you get to 80% power, you'll be at a 22% reduction.

Okay. Thank you.

Thank you.

This concludes our Q&A session. I will now 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 updating you soon on our interim efficacy analysis. Thank you again for joining us on today's call.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.