Oncternal Therapeutics Inc (ONCT) 2009 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the first quarter 2009 GTx Inc. earnings conference call. My name is Jackie and I will be your operator for today's call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's conference. (Operator Instructions).

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

Thank you and good morning. On behalf of GTx I would like to welcome you to our first quarter 2009 corporate results conference call. We released our financial results earlier this morning through the news wires. If you do not have a copy of the release you will find it on our website at GTxInc.com. We will have a replay of this call available on our website until May 25, 2009.

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.

Before we begin, I will remind you that information discussed on this call may include forward-looking statements and such statements are subject to the risks and uncertainties we discussed in detail on our reports filed with the Securities and Exchange Commission including in our annual report on Form 10-K filed March 3, 2009. We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call. And now I will turn the call over to Dr. Steiner.

Thank you McDavid. Our clinical programs in commercial plants are progressing nicely. As for toremifene 80 mg for the prevention of bone fractures in men with prostate cancer on ADT, our NDA was accepted for filing and reviewed by the FDA in the first quarter and the FDA has provided a PDUFA date of October 30, 2009. We are very proud to be among a select number of biotech companies with an NDA under review by the FDA.

In the United States there were over 700,000 men with prostate cancer on ADT. More than 95% of these men have hormone sensitive prostate cancer and are treated almost exclusively by urologists. Toremifene 80 mg was developed for men with hormone sensitive prostate cancer on ADT. Consequently, GTx will focus our commercial efforts on urologists where we have long history and deep relationships. We are very much -- and we very much regard urology as our core competency.

We have spent the last 12 years working with physicians who treat prostate cancer patients and learning about their needs. In the last year we have surveyed more than 2000 urologists, medical oncologists and general practitioners, a far larger number than the survey we recently read about with 11 physicians who were primarily medical oncologists to assess the current state of medical knowledge about estrogen related side effects associated with ADT.

Moreover, we're gathering key information about the potential competitive challenges and advantages of our product candidate. Now armed with this knowledge, we're even more confident with the current efficacy and safety profile once approved, toremifene 80 mg will be the dominant product for the prevention of bone fractures in men with prostate cancer on ADT.

A key strength of toremifene 80 mg is the strong scientific rationale for the use of a selective estrogen receptor modulator to treat the estrogen deficiency side effects of ADT. Urologists understand the hormonal milieu induced by ADT in their prostate cancer patients. Androgen deprivation works by reducing testosterone to castrate levels, thereby depriving prostate cancer of its primary growth factor.

One unintended consequence is that estrogen levels are depleted because in men estrogen is aromatized from testosterone. Therefore, androgen deprivation therapy is estrogen deprivation therapy, too. Estrogen is the primary hormone responsible for maintaining bone quality and strength, and depletion of estrogen induced by ADT results in weak bones and an increased risk of fractures.

If a patient with prostate cancer and ADT develops a fracture, his life expectancy is shortened by three years. Loss of estrogen in men on ADT also causes a variety of other side effects, including adverse lipid changes, cardiovascular disease, bothersome hot flashes and painful gynecomastia.

Estrogen deficiency in ADT patients is a compelling and simple scientific story. We were at the annual meeting of the American Urologic Association in Chicago two weeks ago where the topic of our scientific presentations was estrogen deficiency in men with prostate cancer on ADT. We had extensive conversations about this condition with urologists at the AUA. And it is clear that they get it, are excited about the science and approach. They also recognize the need.

By converting prostate cancer from an acute deadly disease into a chronic one, patients are now living long enough to suffer from the consequences of low estrogen. Urologists want to take responsibility for the cancer treatment induced side effects that threaten the lives of their patients by bone loss and fractures as well as lipid changes and cardiovascular disease. They are also concerned about bothersome estrogen related side effects like hot flashes and gynecomastia.

Fracture data from the toremifene 80 mg Phase III clinical trial were presented at the AUA and provided important information from the first prospective fracture study in men on ADT. The fracture risk is high. During the course of the two-year study, 9.9% of placebo patients experienced a nontraumatic fracture and nearly one in four, that is 23.9% experienced either a nontraumatic fracture or greater than 7% bone loss, the amount of bone loss the FDA considers so significant that patients were required to be removed from the trial.

An additional key point made in that presentation was that while toremifene 80 mg reduced new morphometric vertebral fractures by 54%, among all patients treated compared to placebo. In compliant patients who took at least 80% of the drug, the risk reduction improved to approximately 60%.

Our commercial plans are on track. Following FDA approval, we plan to hire approximately 65 sales consultants to detail our product candidate primarily to urologists. We're looking forward to launching toremifene 80 mg once approved and to fulfill our commitment to partner with urologists who want to take responsibility for the fractures and bone loss as unintended side effects of estrogen deficiency induced by ADT in their advanced prostate cancer patients, a truly unmet medical need.

As for toremifene 20 mg for the prevention of prostate cancer in men with high-grade PIN, the Phase III clinical trial is ongoing. In the first quarter an independent Data Safety Monitoring Board conducted a preplanned semiannual review of unblinded safety data and recommended that GTx continue the clinical trial as planned. The DSMB has now evaluated unblinded safety data of nearly 3000 patients from the two toremifene Phase III clinical trials, some of whom have been on drug for as long as three years.

Though the last patient will complete the Phase III high-grade PIN clinical trial in the first quarter of 2010, the timing of the efficacy analysis is determined by the number of prostate cancer events that occur in the clinical trial. GTx anticipates conducting the efficacy analysis of the toremifene 20 mg Phase III high-grade PIN clinical trial in late summer.

The GTx Merck SARM partnership is moving forward with multiple clinical development programs an ongoing Phase II clinical trial evaluating MK0773 for sarcopenia will be completed in the second half of this year. We look forward to updating all of you more completely later this year with information about the indications we are pursuing and the anticipated timing of the new clinical trial initiations. Also we will be presenting a detailed data set from the Ostarine Phase II cancer cachexia trial in a podium presentation at the upcoming Endocrine Society annual meeting being held in June in Washington, DC.

Our newest clinical development program is GTx-758. This is an oral LH inhibitor for first-line treatment of advanced prostate cancer. This is a product which GTx believes has the potential to be best in class primary androgen deprivation therapy. In preclinical in vitro and in vivo models, GTx-758 demonstrated the potential to reduce testosterone to castrate levels without a flare, build bone and prevent hot flashes.

GTx-758 builds on GTx's core strengths in the discovery and development of drugs that mimic hormones by maximizing the clinical benefits of the natural hormones, while minimizing the unwanted clinical side effects. And if it is successful in clinical development, it will strengthen our franchise in urology.

GTx-758 represents an exciting commercial opportunity. The market for ADT drugs such as Lupron and Zoladex in the United States approaches $2 billion with approximately 700,000 patients being treated.

GTx-758 is currently in a Phase I clinical trial and by year end we anticipate establishing proof of concept of reduction of testosterone in a second Phase I clinical trial. I will now turn the call over to Mark for a review of the financial results of the quarter.

Good morning. The details of our financial results for the first quarter 2009 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 ended March 31, 2009 was $11.3 million compared with a net loss of $12.7 million for the same period in 2008. Revenue for the first quarter of 2009 was $3.6 million compared to $4.5 million for the same period in 2008.

Net sales of Fareston were $759,000 and $257,000 for the three months ended March 31, 2009 and 2008 respectively.

Collaboration revenue for the first quarter of 2009 consisted of approximately $1.5 million and $1.4 million from the amortization of deferred revenue from our partners Ipsen and Merck respectively.

For the three months ended March 31, 2009 and 2008, research and development expenses were $8.3 million and $14 million respectively. The decrease in research and development expenses resulted from the completion of the toremifene 80 mg Phase III ADT clinical trial in the first quarter of 2008 and the completion of our Ostarine Phase II cancer cachexia trial in the third quarter of 2008.

For the three months ended March 31, 2009, general and administrative expenses were $6.5 million compared to $4.3 million for the same period in 2008. The increase in general and administrative expenses was primarily the result of increased personnel, medical education and marketing expenses related to the planned commercialization of our toremifene product candidate.

At March 31, 2009, GTx had cash, cash equivalents and short-term investments of $81.7 million. Potential milestone payments from Ipsen or Merck could further enhance our balance sheet. GTx has no debt and no warrants.

I will now turn the call back to Mitch.

Thanks Mark. Operator, we are now ready to take questions.

(Operator Instructions) Joel Sendek, Lazard Capital.

Thanks. A couple of small questions here. For the PIN data, could you define summer for us? Does that mean September?

I think the best I can say, because remember it is event driven, and event driven basically means you have to wait for the events to come in. So I wish I could say it is going to be on X date at such and such time. So all I can say right now is late summer.

Okay, and the way I'm going to interpret that is the way the calendar reads summer, not the school year.

I will tell you, May is not a summer month.

Okay. The next is on 758, I'm just confused about what you said. Did you say the second Phase I will have data by year-end or you will start the second Phase I?

We will have data by year end.

For the second Phase I?

Correct.

Okay. And then on the salespeople, it seems to me, if I am interpreting it correctly you will wait for the PDUFA date and then do the hiring. Is that generally correct?

Yes, I think what is generally correct is that GTx is exploring multiple options here. One is if we do it alone then I think it is important for us to spend as much money as possible not at risk.

So another way of saying it is that the most risky part of building a team is the actual salespeople on the pavement. We are building the infrastructure, both the medical affairs and also the sales infrastructure. So the brains behind the operation, the generals and the strategic lieutenants will all have been hired by GTx and have been working diligently to roll this out.

So whether we roll it out in a GTx sales force or we really it out in a co-promote or something like that, we are wasting no time to make sure that the messaging, the materials, the surveys and all of the things that need to be done are done in such a way that we can seamlessly move forward with a sales launch after we hear approval.

Okay. My final question is any significant data at ASCO?

We're not present today that at ASCO. We presented the bone data, as you know, at the AUA. And we felt that the data for cancer cachexia would be more appropriate in an Endocrine Society meeting because it has such implications across all muscle wasting diseases, and it would be lost in a cancer only trial form. So the thought was go ahead and present it at Endo and it got accepted into Endo and so we are looking forward to showing again.

Now our second Phase II study which represents roughly 300 patients that have been on trials with Ostarine and the second Phase II trial in cancer wasting patients looks very much like the Phase II trial that we did in the elderly men and postmenopausal women. So that kind of makes more sense as you rollout a more comprehensive program to do it at an endocrine meeting.

Thanks.

Aaron Reames, Wachovia.

Thanks for taking my questions. First on the Fareston sales, it is a substantial jump since prior quarter. I was wondering if that is a run rate that we should expect going forward. Or was there an anomaly in that number and it should go back down to the roughly $300,000 range?

It's Mark. Just to answer that, it is not an anomaly. We increased the price of Fareston late last year and as a result that should be the run rate for the year.

Okay, thank you. Just on the cancer cachexia program, since there is a possibility to run it by comparison to a sarcopenia program, a shorter duration pivotal program, when could we expect to get a little bit more information about what the plans are for cachexia and when we could see either additional studies being conducted or registrational studies being started?

It's a great question. The behind the curtain stuff that is going on right now between GTx and Merck is that this is not an example of a single product that is going out to a single indication. So consequently -- and it is not because GTx had a SARM program that Merck licensed in.

It turns out that Merck had its own SARM program. We had our own SARM program and we had to let all of these trials that we had started independently, that we both get credit for, to complete. At the same time there was so much thought work going into how to rollout comprehensive program that goes after such an indication as sarcopenia which is huge. But more importantly, how do you get to market expeditiously with other indications?

And so we're working very closely with Merck and our position is once we have more clarity on exactly how we will be moving forward from a regulatory and clinical standpoint, and which trials and which are registration trials and all of that nice stuff. The best bet is just to make sure that we have all of that completed.

So the goal would be by the end of the year we have more clarity. And when I say by the end of the year it doesn't mean we're not going to start trials potentially. It just means that in order to explain outside of the company what we are doing, I'd rather be able to explain it in a more comprehensive manner.

I will tell you that the program is extremely active. We received data in the first half of the year and we will continue to receive data in the second with trials that are ongoing. Some you may be able to see on clinicaltrials.gov. So, very active. It is a priority. It is just an issue of how do we get our arms around the comprehensive program so that we can lay out a timetable that we can commit to.

Okay, great. And just the last question that I had it seems to be somewhat of a change in stance around the co-promote opportunity in the United States. I know there was broad global interest in the [capodene] when you were going through the process of out licensing ex US rights. Some of those potential interested parties that did not get access to the ex US rights proposed some different solutions for GTx in terms of addressing the commercialization aspects in the US. Is that something we could possibly see evolve in the near future?

It's a great question. Basically you are saying that GTx is saying all along we want to launch this ourselves in the US and ex US we license to our partner Ipsen on European rights. And then Asia and Japan we're in discussions.

And now we're beginning to go through the motions of selecting distributors in rest of the world to help us with other regions, because now with a fully filed NDA, usually once you have an approved NDA that is usually good enough for most of these regulatory agencies around the world. We want to be ready to start rolling this out and have distributors identified.

In the US our thought is you don't have to think of this as an extreme. What do I mean by that? Either GTx does it or they don't. The truth of the matter is there are deal structures that allows GTx to gradually move into a sales position if that makes the most sense, as opposed to doing a completely at risk on the front end.

On the other hand, with a sales force of only 65 we are not talking about a massive primary care physician sales force. So it is very, very doable. So I'm not at all walking away from the responsibility.

The real question is can we go out there with 120 reps initially and get out there, right there in November 1 when we hear from the FDA October 30. And then allow us to ramp up what we think are very attractive numbers quickly and surprise everybody in terms of what the expectation could be for a product like this and why we feel we're going to be a dominant player in this space.

So what I would like to leave everybody which is the concept that there is some in betweens that can be done that will get us ultimately to our final goal.

Last question that I had, from the marketing survey that you did across 2000 practitioners, can you remind us what percentage of patients in the urology segment suffer from hot flashes?

It's actually high number. If you read the PDR, so that means the actual trials that were done, it approaches about 60 to 70%. But if you ask patients and physicians to treat these patients it is probably closer to 80%. It is the number one bothersome side effect. And there are patients that have pretty substantial hot flashes, probably more in the order of 10 to 15% of those patients that -- almost thinking about stopping the drug because they just can't tolerate the hot flashes.

Okay, great. Thank you for taking my questions.

(Operator Instructions) Eric Schmidt, Cowen and Company.

Thanks and good morning. Thanks for taking my question. Mark, I was a little intrigued by your answer to and question about pricing. Did you tick up the price on a 60 mg Fareston formulation to ready for the 80 mg? And should we assume that the 80 mg will be priced at roughly one-third higher than the current 60 mg price?

Thanks for the question and for being on the call. We increased our price on 60 margins obviously to the $15 range. We don't know what that price will be for the toremifene 80 mg right now. It is too early to confirm that. But at this point we believe the pricing for Fareston 60 mg is in an appropriate spot for the drug. And so we're going to wait for pricing on the toremifene 80 after we get approval.

Okay. A question for maybe Mitch on the PIN trial, Mitch if my memory serves, you completed enrollment about three years ago on the majority of patients, the 1260 in that trial. So I assume those patients now off study. I know you included another about 300 in various ancillary trials.

I guess my question is, with the majority of the patients off study is there any risk that the number of events don't happen in this trial? And what would happen to the study if that is the case?

That's a great question. Thank you. Your math is absolutely right. From our standpoint, we added -- exactly you're right -- 300 patients or so for some sub studies the FDA asked us for. Those 300 patients do count towards the number of events. And so they are part of the efficacy analysis as well as the safety analysis.

One thing you have to remember is that patients do drop off over the last three years for all kinds of reasons. Either they develop cancer or they are one of the folks that drop out. So even though you have 300 patients that last patient getting into the study may not be the last patient ending the study because either they dropped out or they got their biopsy or who knows. But the point is you're absolutely right.

I am confident based on what I know of the numbers that we will hit the number of events that we need. I'm not worried about that at all. These patients do develop cancer at a higher rate, at least it appears that way in the aggregate and it is matching our Phase II-B. And so I am confident we will hit that number.

More importantly though, is as you know at the recent AUA meeting that was a lot of talk about Avodart hitting their endpoint and how would that affect GTx in terms of our being a competitor for GTx.

I must say that I was excited when the PCPT trial hit. That was a 24% reduction in prostate cancer at seven years in a low risk patient population. But the absolute reduction was about six percentage points. So that is basically about -- something in the order of less than 1% per year if you do a straight seven years.

The Avodart study was very, very, very similar to the PCPT study. What they showed was about a 5.2% absolute reduction in four years and actually their two-year point was about a 3.8 percentage point difference. That translated to about a 23% reduction overall.

The reason I'm telling you these numbers is I was excited as hell to see that the world is viewing a clinically meaningful reduction in prostate cancer in low risk and moderate risk patients in the order of five to six percentage points over the life of that trial. And of course they give you a relative reduction.

But the part that really opened my eyes for the Avodart study, because I was actually at the meeting, was the fact that they showed a reduction primarily in the low-grade tumors -- tumors that are Gleason 6 or less. Neither the PCPT trial or the Avodart trial had any affect on the Gleason 7 to 10. So the 7 to 10 are like the really aggressive types. If you will recall from our Phase II study, we chose high-grade patients, i.e. patients with high grade PIN, and they did have in both the six and 12 month biopsies and the 12 month biopsies a reduction and high-grade disease in the Phase II-B.

So, for us to win -- and let me also make the point that the Avodart study did not report on reducing prostate cancer in PIN patients. So we believe picking PIN patients which are more relevant now than ever before that the PCPT trial and the reduced trial excluded PIN patients. So this is ours to have. And to win we need to have the same relative reduction, absolute reduction in cancer but have it, if we can, in the 7 to 10 Gleasons, which means the high risk cancers, and we win.

The reason that is important is that low risk cancers, i.e. Gleason 6 or less, are the kinds of cancers you would treat with radiation over surgery. The Gleason 7s and 10s are the ones that actually threaten the life of the patient. So we have real opportunity to win here.

The other thing that really was interesting was the side effect profile, where in the reduced trial they had more erectile dysfunction, almost double. Libido was much less and also gynecomastia was doubled. If you remember from our Phase II-B in any of the doses we did not see sexual side effects.

So I think we have a very real opportunity to win on this one and that is why want to make sure we do the PIN trial just right. But I'm confident we're going to hit the number of events that are required to come up with an answer.

Thank you for that answer. In terms of your confidence, could you share with us where you are in number of events and what the acquired endpoint is?

I wish I could because every time we do that, we get a cluster or we don't get a cluster. So think the best thing to say is we are shooting for seeing that number of events by late summer.

Thanks a lot.

Lucy Lu, Citi.

Great, thank you. Quick question (inaudible) about -- the study is positive, are you going to (inaudible) or are they going to be longer? And I have a follow-up. Thank you.

It's a great question. The answer is we only have three year data. But what makes this different is you will see, if the data is positive, we're also going to be able to tell the world what the actual cancer risk is in this patient population. I can tell you it is much higher than an elevated PSA or an otherwise low risk patient population. What that means -- and by several fold.

So the way I'd like people to think about this is don't think of this as sort of an oh my gosh, GTx is going to go out there and try to prevent prostate cancer in low risk and moderate risk disease. I think the way we need to think of this is almost like GTx has developed a therapy to treat patients that have a high-grade lesion, a pre-malignant lesion. And we're suggesting you going to treat this premalignant lesion to prevent progression to prostate cancer or small tumors from becoming bigger tumors.

So I would argue that if we show a positive trial then the medical education and our understanding of how to use the drug was just begin. It will be just the beginning. You can see how we can do multiple trials as well as follow-up studies to ask the question, when is the next time you need to do a biopsy? Can you delay the biopsy? Is the effect greater than just three years? Can you see the affect at six years?

To remind you of an example of that is tamoxifen. When tamoxifen was first approved for breast cancer it was actually with one year data. Then they showed three year data. Then they showed five-year data and that was [adjutant] data. And even today we're still having discussions about when to use tamoxifen in tamoxifen resistant patients and do you switch them around. So I think when you deal with cancer care products, the way to use them only becomes better understood in clinical practice.

That's great. Mitch do you have an update on the (inaudible) label change (inaudible) in the US (inaudible)?

That's a great question. The current the question as we got a label change in Europe for to toremifene 60 mg, which is Fareston 60 mg. And in that study -- excuse me, in that label change they reacted exactly as GTx expected. That is they said that the clinical risk -- clinical benefit outweighs risk and that patients with a history of QT prolongation or have QT issues should not be on the drug.

That's fully what we expected. We were happy with that, because our feeling is that is exactly what we should be getting in the US. And so, we submitted our data to the agency for Fareston 60 mg in June of last year and we are hoping that literally soon we will hear from them and this way we can then see what kind of label changes that Fareston 60 mg will have and have more clarity in that regard. But we have not heard from the agency at this point.

Great, thank you.

Thank you gentlemen. At this time, you have no further questions. So I would like to turn the call over to Mitch for closing remarks.

Thank you Jackie. We would like to thank all of you for your interest in GTx and we look forward to updating you in the future. Back to you, operator.

Thank you. Thank you ladies and gentlemen for dialing in to our conference call today. You may now disconnect and have a wonderful day.