Oncternal Therapeutics Inc (ONCT) 2009 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2009 GTx Inc. earnings conference call. My name is Anne and I will be your coordinator for today's call. (Operator Instructions)

As a reminder this conference is being recorded for replay purposes. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session following the presentation.

I would now like to turn the presentation over to Mr. 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 second-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 www.GTxInc.com. We will have a replay of this call available on our website until August 24, 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. Such statements are subject to the risks and uncertainties as we discussed in detail in our reports filed with the Securities and Exchange Commission including in our quarterly report on Form 10-Q filed May 11, 2009. We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call.

Now I will turn the call over to Dr. Steiner.

Thank you, McDavid, and thank you all for joining us today. This morning we will update you on our commercial activities preparing for the launch of toremifene 80 mg, our plans for completing the toremifene 20 mg Phase III high-grade PIN trial, new information regarding our SARM collaboration with Merck and the indications and clinical trials we will pursue, as well as the progress of our oral LH inhibitor, hormone inhibitor, GTx-758 clinical program.

We submitted the toremifene 80 mg NDA to the FDA on December 30, 2008. The Agency accepted the application for filing and has signed a target agency action date of October 30, 2009. A common question we have been asked is whether the FDA will convene an advisory panel for the toremifene 80 mg NDA. Typically, the Agency only notifies the sponsor when they have determined to bring an issue before an advisory committee and does not signal when they will not.

With that said at this time we have not been notified by the FDA regarding a need for an advisory panel. In general, advisory committees are convened to discuss new chemical entities or applications where the benefit/risk profile is not clear. Toremifene, as you know, is not a new chemical entity. It has been on the market for 21 years worldwide and since 1997 in the United States.

Moreover, the toremifene 80 mg Phase III ADT clinical trial used new morphometric vertebral fractures, which is the endpoint set forth in the FDA's 1994 guidance on osteoporosis clinical trials, and furthermore the clinical trial was conducted in accordance with an SPA.

We will be ready to commercialize toremifene 80 mg if our NDA is approved. We have recruited at GTx a first-class team of senior commercial and medical leaders with experience in launching and supporting urology products. Our commercial team will focus at launch on the 6,000 urologists and 2,000 medical oncologists in the United States who treat the 700,000 men with hormone-sensitive advanced prostate cancer on androgen deprivation therapy who may benefit from toremifene 80 mg.

We have determined that we will need 64 sales consultants. A salesforce of this size is similar to those employed for the promotion of other successful drugs in urology. Our sales effort will be supported by a group of experienced medical science liaisons who will be available to address disease or mechanistic-related issues to clinical practitioners. In short, we feel confident that GTx will be prepared to bring this drug to market shortly after we have attained marketing approval from the FDA and we look forward to the launch of toremifene 80 mg.

As for toremifene 20 mg Phase III high-grade PIN clinical trial, at the time we initiated this clinical trial there were several key questions which remain unanswered, such as what is the actual risk for developing prostate cancer in men with high-grade PIN ; would the five alpha reductase inhibitors, finasteride and dutasteride, which is Proscar and Avodart, offer a compelling safety and efficacy profile in the prevention of prostate cancer; and what level of risk reduction in the incidence of prostate cancer would clinicians view as a clinical success.

Today it is well-established that high grade PIN is the premalignant lesion of the prostate and there is more clinical clarity on how to manage these patients. The results of our landmark clinical trial on toremifene 20 mg should reveal the true incidence of clinical prostate cancer in men with high-grade PIN.

In the last five years the results of two other prostate cancer prevention studies have been reported -- the PCPT study of finasteride in low-risk patients with low to normal PSA and the REDUCE study of dutasteride in medium-risk patients with elevated PSA, although less than 10. The highest risk patients, men with high-grade PIN, were not allowed into either study. While both studies demonstrated a statistically significant reduction in prostate cancer incidence, it is unclear what their long-term impact will be on clinical practice.

First, because neither trial evaluated the highest risk patients, these studies leave unanswered questions regarding which patient population is the most appropriate for treatment. Second, in both trials the reduction of prostate cancer incidence was only seen in low-grade cancers defined as Gleason score of six and lower. In neither trial was there a reduction in the incidence of aggressive prostate cancers.

In fact, if you look at tumors with Gleason scores of eight or higher, in the PCPT trial finasteride treatment resulted in a significantly statistically significant increase in these aggressive tumors. And in the REDUCE trial aggressive tumors went 33% higher in the treatment arm compared to placebo, although it wasn't statistically significant with a P-value equal to 0.15. Finally, both finasteride- and dutasteride-treated patients compared to placebo had a higher incidence of sexual side effects such as loss of libido, erectile dysfunction, and gynecomastia.

With the results of these two clinical trials in hand we now believe the elements which will create a clear winner in the marketplace are as follows. First, confirming that high-grade PIN patients are at the highest risk for developing prostate cancer and are the appropriate target patients for treatment. Second, showing an overall absolute reduction in prostate cancer incidence, similar to that of the PCPT in REDUCE trials but in a shorter period of time and in a higher risk patient population.

Third, demonstrating a reduction compared to placebo in more aggressive prostate cancers defined as Gleason scores of seven and above. And fourth, demonstrating no difference in sexual side effects or gynecomastia compared to placebo.

In order to have the results that will directly address each of these elements we need to have the most complete set of safety and efficacy data, which can only be obtained at the conclusion of the clinical study. GTx has therefore decided not to conduct the event-based efficacy analysis, which has been anticipated for late summer of 2009 with the results being available in the fourth quarter, and will instead conclude the study in the first quarter of 2010 and conduct a final analysis of the clinical trial thereafter. GTx plans to announce the results of the study and the successful plan to submit a new drug application in 2010.

As for the collaboration with Merck, we are making strong progress in our development of selective androgen receptor modulator or SARMs, a new class of drugs to treat a broad range of musculoskeletal loss conditions. At the time we formed our collaboration Merck and GTx were each working on the clinical development of SARMs. Together we are now clearly the leaders in the development of this important new class of drugs.

Over the last 18 months, since the formation of our collaboration, we have successfully addressed several challenges. First, to ensure that science would dictate which SARM compounds progressed through clinical development, our collaboration was structured so that the economics realized by GTx would be the same whether a Merck or GTx compound is chosen for development. Next, we had to agree on which indications offered the best opportunities for our SARMs and which molecules we should progress to these indications.

Third, we had to allow the internal programs already in clinical development at the time of the formation of our collaboration to finish so that the clinical information could be used strategically in the selection of compounds and the design of the next studies. Fourth, we ran a head-to-head Phase Ib clinical trial comparing Merck and GTx lead compounds, including Ostarine, in order to select the optimal product candidates for further development. And fifth, we had to agree on a criteria to advance back up and additional preclinical compounds into clinical development depending on the indication.

The last 18 months have been very productive for this collaboration. While we are not able to share all of the activity which is currently ongoing with our collaboration with Merck, I am able to tell you this morning more information about some of the multiple indications Merck and GTx are pursuing together as well as several important timelines. The first is the development of Ostarine for the treatment of chronic sarcopenia, the progressive skeletal muscle loss that is accompanied by impaired mobility, false, disability, and loss of independence.

Chronic sarcopenia is a significant unmet medical need in a growing aged population. Up to 27% of the population over the age of 65 is affected by chronic sarcopenia and a higher percentage is at risk for developing chronic sarcopenia. Exercise and nutritional support have been shown to have some benefits, but of limited value in a clinical setting.

The financial impact of chronic sarcopenia is estimated to be in the range of $20 billion to $30 billion per year in the US alone. There are no effective proven treatments for chronic sarcopenia.

To date Ostarine has been evaluated in multiple clinical trials. GTx conducted Phase I studies as well as a Phase II proof-of-concept study in 120 elderly men and postmenopausal women. We have also conducted a Phase II clinical trial in 150 patients with cancer cachexia. Merck has conducted Phase I clinical trials with their lead SARM, MK-0773, and a Phase II chronic sarcopenia clinical trial evaluating MK-0773 in postmenopausal women is ongoing.

Ostarine is the lead candidate for chronic sarcopenia. We are finalizing plans for the development of Ostarine for chronic sarcopenia with the goal of initiating a Phase II clinical trial in 2010. Since some of the milestones are paid by Mark to GTx at the initiation of certain clinical trials, the initiation of chronic sarcopenia Phase IIb clinical trial in 2010 will trigger a substantial milestone payment to GTx.

Our second SARM indication is muscle wasting associated with chronic obstructive pulmonary disease, also known as the COPD. COPD muscle wasting represents an important unmet mental need. In the United States an estimated 14 million people have been diagnosed with COPD and have direct medical expenditures of $15 billion per year, and combined direct and indirect expenses of more than $32 billion.

Nearly all COPD patients experience muscle weakness and one in four has severe muscle loss. Thigh circumference is an independent predictor of mortality in patients with COPD. The American Thoracic Society and the European Respiratory Society guidelines published in 2004 recognize that 'much of the morbidity from COPD results from secondary conditions which are often treatable if recognized, such as peripheral muscle dysfunction and a reduction in total and lean body mass.'

Pulmonary rehabilitation represents a standard of care, but is used in only a minority of patients because of lack of effective pharmacologic intervention. A drug such as a SARM by maintaining and building muscle has the potential to enable COPD patients to continue to live independently, reduce falls and hospitalizations, and to pursue the pulmonary rehabilitation programs to restore their breathing function. We estimate an effective treatment SARM treatment for COPD patients would penetrate 5% to 15% of the US market or approximately 1.4 million patients.

GTx and Merck are currently finalizing the clinical development plans for Ostarine in muscle wasting associated with COPD with a goal of advancing into a Phase II clinical trial by the first quarter of 2010.

With respect to the development of Ostarine to treat cancer cachexia, given that Ostarine's efficacy and safety profile is attractive for large chronic indications, such as muscle wasting associated with COPD and chronic sarcopenia, GTx and Merck are evaluating whether it makes strategic sense to progress Ostarine or to develop another SARM for cancer cachexia. Those discussions are currently ongoing.

Finally, I am pleased to provide an update on our progress with our newest product candidate, GTx-758, an oral luteinizing hormone inhibitor for the first-line treatment of advanced prostate cancer. We believe that GTx-758 has the potential to be a preferred first-line androgen deprivation therapy. In preclinical in vitro and in vivo models GTx-758 demonstrated the potential to quickly reduce testosterone to castrate levels without an initial testosterone flair and to prevent bone loss and hot flashes.

In the second quarter of 2009 GTx completed a Phase I single ascending dose clinical trial evaluating GTx-758 in 96 healthy male volunteers. GTx-758 was well tolerated. In late June we initiated a Phase I multiple ascending dose clinical trial evaluating GTx-758 in 60 healthy male volunteers. We expect to establish proof of concept in this trial by showing the ability of GTx-758 to reduce testosterone blood concentrations to castrate levels in men. We plan to announce these results in the fourth quarter of 2009.

GTx-758 represents an exciting commercial opportunity with a clear regulatory pathway. The established and well-accepted clinical trial primary endpoint for androgen deprivation therapy drugs is the reduction of testosterone to castrate levels. The market for ADT drugs such as lupine and Zoladex exceeds $3 billion worldwide, and we are planning to initiate the GTx-758 Phase II clinical trial in early 2010 and to complete the study later that year.

Now I will turn the call over to Marc Hanover for a brief review of the financial results in the quarter. Marc?

Good morning. The details of our financial results for the second 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 June 30, 2009, was $11.3 million compared with a loss of $13.2 million for the same period in 2008. Revenue for the second quarter of 2009 was $3.8 million compared to $3 million for the same period in 2008. Net sales of Fareston were $949,000 and $274,000 for the three months ended June 30, 2009 and 2008, respectively. Revenue from our collaborations with Merck and Ipsen was $2.9 million and $2.7 million for the second quarter of 2009 and 2008, respectively.

Research and development expenses were $7.7 million and $10.4 million for the three months ended June 30, 2009 and 2008, respectively. General and administrative expenses increased during the three months ended June 30, 2009, to $6.9 million from $6.4 million for the three months ended June 30, 2008.

At June 30, 2009, GTx had cash, cash equivalents, and short-term investments of $68.9 million. Potential milestone payments from Ipsen or Merck could further enhance our balance sheet. GTx has no debt and no warrants.

Now I will turn the call back to Mitch.

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

(Operator Instructions) Joel Sendek, Lazard Capital Markets.

So first on ADT I guess, can you let us know whether you are in labeling discussions yet? Obviously you are indicating things are going well at the FDA, but what kind of, I guess, evidence you can give us that that is happening?

Okay. So the question is kind of what is going on with the FDA at this point and the answer is -- the best way to answer that is labeling discussions are not supposed to happen until September and that was outlined in our 74-day letter. But I will tell you that what I do know is that all the things that are supposed to happen at this point to be ready for a PDUFA date action -- to meet the PDUFA date action of October 30 appears to be happening.

We hear it from the FDA on a regular basis. We are interacting with them on a regular basis and at this point, as far as GTx can tell, there is nothing to suggest that we are not going to meet that date. And that is pretty much all I can say at this point.

But as I told you in my comments, one of the questions that keeps coming up is whether we are going to have an advisory panel. And I answered that saying basically that they usually tell you when you will have one. Reproductive Urology is the division that we are working with; that is the one that on August 13 we will be having a panel with a different company and we were not put on that panel. So that just tells us that not a new chemical entity and the endpoints that we selected were not controversial and the results were pretty straightforward and we hope that reflects on that.

Okay. Thank you, Mitch. And then on (inaudible), I am a little confused as to why you made this change. It seems to suggest you are looking at other people's studies and therefore changing the time you are going to analyze yours, which seems odd to me. Can you comment a little bit more on that, whether you changed the statistical -- what are the statistical parameters that you will be looking at on the final?

Yes. So let me to you what the original was and then let me tell you where we are heading. The original statistical plan has not been changed. The original statistical plan called for -- we did an interim look and in the interim look we had to hit a P-value of 0.003. We needed to have a reduction of about 28% to hit, which is pretty aggressive, at basically with only five to eight patients completing year-three biopsies.

Or to say it a different way, only five to eight cancers at that time contributing to the number at year three. Almost all of them were year one and very few were year two. So we expected at year one to hit 28% and that was aggressive; we didn't hit that.

So this [civil announced] plan us for a -- since it's cancer event-based, to create another look. Then you have to complete your study and when you complete your study you have got to do your statistics on the entire study. So really you lose -- you have to pay some alpha for looking again and then at the end of the study you have some alpha that is left. So the statistical analysis plan gave the Company the opportunity to save all the alpha for the end of the study.

And when we started finding out that we are heading into September and by the time we get our data back you are basically fourth quarter and the study ended completely first quarter, then our thinking is why not save all the alpha for the end of the study and gives ourselves the best chance to hit. So that is on the statistical side. So nothing has changed statistically except that we want to make sure -- we don't win just by pulling the data, we win by winning.

So then the next question comes up, well, what else would push you in that direction? We were very fortunate, because really if you read everybody's notes -- because the thought is that, here we go, we started out with nobody in the field and then all of the sudden Proscar comes in with the PCPT trial and GSK comes in with Avodart in the medium-risk patients. And all of sudden now everybody is trying to guess what their data is. But today we know what their data is and we know what the strengths are and we know what the weaknesses are.

Toremifene 20 mg is uniquely positioned to be a different drug in the marketplace. So that means that at the time that we announce the results we want to be in the position to address each of those. So I will give you an example.

If we do top-line data and it says that we had a reduction similar to the PCPT trial and the Avodart trial and the reduction -- let's say the reduction is similar; sure it happened at three years. And let's say we even tell the world that, by the way -- and I believe this to be true -- that high-grade PIN patients are indeed the highest risk patients. So we are going to learn that and that is going to underscore the target patient that we went after.

So let's say the reduction was similar, so on push back will be, okay, fine, Avodart is out there and the PCPT trial has out there. Well, no. I want to be able to come back and say, wait a second, did you know that the PCPT trial and the Avodart trial had no effect on high-grade tumor -- only had their effect, let's say it that way, on low-grade tumors.

To save it a different way is when there was a reduction, the reduction in cancer incidence occurred in the low-grade stuff. The stuff that probably won't kill the patient but leads them to surgery and radiation and to be overtreated. So I am not going to take away from that.

But the high-grade tumors, which the finasteride study statistically showed a higher number in patients that took the drugs -- so the good news is you had the reduction, but the bad news is if you develop cancer it's more likely to be aggressive. And Avodart in the eight to 10 was not statistically significant but went in that direction if they had some more patients.

The point is if we can show, like we did in our Phase IIb -- because if you go back to our Phase IIb for toremifene 20 mg we do have a reduction in high-grade disease. Wow, that would distinguish us from that group. Then furthermore if I am able to tell you that the safety side effects do not include sexual side effects and gynecomastia, then we would win. Could only have that dataset in a single press release when you conclude the study.

We want to make sure that we had all of that information, because remember your first impression is your last impression. And so if we are going to come out we want to be able to say solidly how this toremifene 20 mg -- now that our potential competitors have showed their cards, what are the cards that we need to win. So I look at this as a unique opportunity.

And what kind of P-value do you need to show or what was the alpha save?

Well, by saving the alpha we are now at -- basically is you round it it's 0.009. So remember we started out with an alpha of 0.01. We spent 0.003 and it leaves me -- to subtract it out to be exact -- exact 0.0087, which is 0.009 which is giving us all that alpha at the end and we want to take advantage of that.

As you know from our original statistics, we were about 90% powered to hit a reduction of about 22%. And if you go to 80% power then you were down at almost 19% reduction, so that is about the same kind of reduction that we saw in the PCPT and the Avodart studies that ran longer.

So all the stars are lining up in the right direction and GTx's position is, look, let's make sure that we give our self the best opportunity to have all the safety, have all the efficacy data so when we make our announcement the only thing that we have to do next is file versus do another interim look. At that point your alpha would be like 0.006 and then you still have to wait for the conclusion of the study before you file with the FDA. So you don't save any time.

Great. Thanks, Mitch.

Aaron Reames, Wells Fargo Securities.

Thanks for taking my question. The first one is I was wondering if you could give us an update of the discussions with the Agency around the Fareston label in the US?

Yes. So just to bring everybody up to speed, the Fareston label has been under discussion with the Agency since we filed our 15-day safety alert approximately 13 to 14 months ago. What we do know is that the Agency has been gathering information over the past year. What we do know is that the discussions are going forward. What we do know is that we have submitted labeling very similar to the labeling that is in Europe.

We would be ecstatic if the labeling comes back exactly like the label in Europe, because basically with a drug that affects QT you should have QT language in your label. The goal is to have patients who -- the goal is to have patients that should be on the drug on the drug and patients who shouldn't be on the drug shouldn't be on the drug.

So right now there is no action or say it this way, there is no hint that the Agency is going to behave any differently than what we already learned through EMEA. Hopefully, we will hear soon from the Agency. I know I told you last call three months ago that we expect to hear soon, but this is how it's going. But I wouldn't take -- I wouldn't read anything more into it than that the Agency is addressing the labeling language and we hope to share that labeling language with you as soon as we know.

Okay, thank you. And then can you just provide us an update of the status of the ADT filing by Ipsen in Europe?

Yes. As you know, Ipsen is in a little different situation. The situation with Ipsen is, unlike in the US where we were allowed to reference heavily the Fareston NDA because we owned it, in Europe they want to do a centralized filing with the EMEA. If they do a centralized filing with the EMEA then the EMEA has already told Ipsen if the drug is approved that will allow them eight years of data exclusivity and 10 years of market exclusivity.

To do that, though, it means that you have to file a standalone NDA equivalent and consequently that means all the things that we had to reference they have to recopy, re-duplicate, and put it to their filing. So a lot of that delay is around getting all that together for a stand-alone filing, but the payoff is good. You get eight years of data protection and 10 years of market exclusivity.

Okay, thanks. And then can you just remind us -- (multiple speakers)

Just to answer that question, our understanding is that it will be late 2009, early 2010 for that filing.

Okay, great. Then just going back to the high-grade PIN study, can you remind us when -- some of the other studies -- now granted I know it's a different cancer indication so there is little comparability that could be made, but with some of the other SERMs can you remind us of when they started to see negligible separation between the two arms of the study? Let's say it was raloxifene and the prevention of -- to cancer progression in DCIS patients. Can you just provide us a little bit of that background again?

Yes, actually I think what should probably be more appropriate is for us to comment on probably the most widely published prevention study and focus on prostate cancer, because that is probably more relevant. So if you look at the PCPT trial, which was a seven-year study and they publish in the New England Journal of Medicine, they actually showed their curves in the cancer rates at each year.

And very interestingly in that trial, which was a huge trial, and with a drug that ultimately at seven years showed a 24% reduction in prostate cancer in low-risk patients, year one the curves overlapped and year two they had started to separate. By year three you saw a separation that continued into year four, five, six, and seven. And if you remember from our Phase IIb study that we did, the six-month biopsies were on top of each other and it wasn't until your second biopsy that you saw the separation that we saw.

To remind everybody, in the Phase IIb study we showed if you put everybody into the blender, including the six months, because that is what we are doing here. You are not allowed to 'drop a group.' You got to put everybody into the blender and get a number. Our reduction was 22%, so if we can hit something like that at year three then that is one thing.

And then if we can have it in high-grade disease showing a reduction there then we are alone. And if we can show that these patients are at highest risk, we win. And then, of course, if the side effect profile is better we win. VTEs we are expecting much because these are younger patients with a lower dose and the QT numbers we know that; it's being right there at the same level as the alpha blockers and the overactive bladder drugs.

So I think we are in good shape, we just have to execute. Management's decision is to give ourselves -- look, we did well with ADT. It's sitting there in front of the FDA. We are going to be launching that drug, God willing, if it gets approved, and we just want to make sure that the next batter up hits a home run.

Okay. And then does everybody at the end of the three years get one final biopsy? So even if there isn't -- so I guess can you remind us when biopsies occur kind of in that year two to three, does everybody get a final biopsy then? So does that really increase your total event rate that you will have available for the final analysis?

Absolutely. So the way the trial design is and what makes it a very unique trial, for the PCPT trial everything was for cause biopsies to year seven and the year seven half the patients decided they didn't want the biopsy. The dutasteride study everybody got a biopsy year two and year four, so if you capture as much information -- and, interestingly, even when they did that it was very similar to the PCPT trial that took in a shorter period of time.

In our situation everybody gets a biopsy year one, year two, year three. And if a physician feels that the patient needs to get a biopsy in between then that is called a for-cause biopsies and those are included as well. Since this is a Kaplan-Meier, then the Kaplan-Meier curve is only interested in when it occurs. And so you can capture your for-cause biopsies statistically and it just means that they decided to do a for-cause biopsy at six months then it plugs in at six months.

Similarly, if somebody discontinues the trial for whatever reason, we try to get a biopsy at the end of that. So if they discontinue at 28 months, let's say, then we get a biopsy and that counts. So we are doing everything we can to capture that information.

What we do know is that our dropout rate turns out to be -- which means patients that just dropped out and lost information -- is lower than we had projected at this point. For the whole trial it appears to be less than 25% at this point.

Okay, great. Thank you so much.

Simos Simeonidis, Rodman and Renshaw.

Hello, Simos. Operator, the next one. If he calls back, please put him on.

Eric Schmidt, Cowen and Company.

Mitch, just continuing on that line of questioning on the PIN study, my understanding was the original SPA didn't have an statistical analysis, this event-driven endpoint. And just wondering how, if at all, the decision to take the trial out to its three-year conclusion effects was in the SPA?

It is very consistent with the SPA. If you remember, the REDUCE trial did the same thing, they were supposed to do an interim look at year two, and they made the decision to save it up for the end. So they kept everything right to the end. So the SPA does not allow at the sponsor's discretion to save all the out for the end, and that is exactly what we did.

And how much more data are you looking for here? The great majority of patients have already rolled off three years, so I guess I am wondering -- obviously, you're giving up some time here in terms of getting the answer and preparing for potential FDA filing and commercialization. You have to balance that against some of the additional information you will get. But with the great majority of patients having completed the three-year time point, I think back in May, so even more by today, what kind of information do you think you are going to get on high-grade cancers and side effects, some things like that?

Great questions. So I have several answers, okay. The first one is that it doesn't shorten our timeframe to the FDA because the FDA would have required all of these safety data and you would have to close the trial down, get the queries and provide all the safety data and the efficacy data. So even though you would have had your, quote, interim look or your cancer event look, you really couldn't have filed until you have all of that data. So really the filing of the NDA is going to be basically the same time whether we look now or we look in first quarter when the last patient rolls out.

The second question has to do with the contribution of the cancer. So, for example -- or the patient. So a patient that survives three years on the study contributes more to the curve than the patient at one year. So I kind of look at it like the zero to one year is sort of like your hinge, and the further you can pull the curves apart at year three, that is where you win.

So even though it sounds like you have got your patients -- only so many patients left at the end, every patient relatively contributes much more to the information because after all they survived for three years with or without cancer. And so that it does impact the statistics on the Kaplan-Meier curve and we wanted to take advantage of that.

With that said, we are really at the end of the study. And so when we are really at the end of the study you can argue, well, why not just call it quits and you still have the same time frame to file with the FDA. In other words, you didn't save any time there.

And if you take a look and you are successful, then they are going to the patients that are left on the study that may want to drop off because you have already gotten the answers so you may taint the end of your study and patients will drop off. So our feeling was just -- look, we are close enough, we want to win on this, we now know what it takes to win, and just a reduction in prostate cancer is part of it. The rest of the information will be useful. And so that, Eric, is some of the things that went into the decision.

Okay, thanks for that. Just switching over to the ADT indication, should I interpret your discussion to mean that you are really not expecting a panel at this point on toremifene?

Yes, we are reading the tea leaves too. So when I go back and look at the FDA schedule, advisory panel schedule, advisory committee schedule, you could -- up to the end of the year the show you clearly which division has which day. And so Reproductive Urology is on August 13 and that would have fit perfectly with having enough time to do the panel, because they are supposed to notify the sponsor in enough time for us to prepare for the final. And then they want to have it at a point where they can still meet their action date.

And so our regulatory people are telling us that if the Agency intended for us to have a panel they would have notified us by now. We do know that the other activities that are going on are consistent with the Agency trying to meet that action date. So our conclusion is that since it's a non-new chemical entity and all the things I said in my call that maybe we are not going to get a panel. And that should just in some ways allow us to view toremifene 80 maybe as a line extension as opposed to a stand-alone new chemical entity indication, kind of like you and I spoke about in the past.

Got it, got it, yes. And then in terms of the commercial plans, you talked a little bit about what you were going to do, what are you doing at this point in time? I know you are not hiring the salesforce until you get approval, but you must be doing some things behind the scenes.

We are doing so much behind the scenes. For example, we hired all the first lieutenants and we just, quite frankly, hired the district managers as well that break up the region. Our whole education program is up and running. We hired an individual that was from Merck who actually set it up and we have already had it reviewed so the education materials are ready to go to train the reps.

We also have our marketing materials, literally, almost ready to go. All our packaging is ready to go and we are at this point now we have more than enough sales reps that have met our strict criteria for the kind of sales reps that we want, have already -- on lists ready to go when we are ready to start moving in that direction. The Company is trying to make a decision on whether we do a soft launch versus a hard launch, and that doesn't take many resources. It just means how do you use the people that you have.

And then, finally, as you know, we hired an individual that was at Pfizer for 12 years working on Viagra medical affairs. She has set up her team and we have hired the medical affairs, medical science liaisons who have also begun to work around disease awareness and beginning to put that information together so that we are ready to go. So a lot has been done and, literally, the only piece that will be left is to train and basically deploy a salesforce but all the rest of the pieces are pretty much in place. The less expensive pieces are ready to put in place.

So have you made conditional offers to sales yet?

No. No, other than the district sales managers that have been hired, which is just seven or so, we have made no conditional offers. A lot of the reason for that is that we are living in a different environment right now.

In the old days, if you didn't have somebody under contract with a contingency if the FDA approves the drug or not, you were in bad shape by the time you had to launch. Right now there is a surplus of individuals and we are really having an opportunity to pick from the best of the best and not having to put into place conditional contracts.

Okay. Last question maybe for Marc, I don't know. What is the next financial milestone from Merck in the SARM deal? Would that be the initiation of the IIb study that you alluded to and can you give us any sense of what magnitude milestone that would be?

Eric, thanks for the question. The answer to the first part is, yes, the next milestone would be the Phase IIb for the sarcopenia initiation of that study. We are not really permitted to talk about the size or the specific -- or I should say the specific number, but it is significant and would make a big difference to further enhance our balance sheet.

Okay. Thanks a lot.

[Yatin Hinaja], Rodman and Renshaw.

Good morning, guys. This is Simos. I apologize for dropping the call earlier.

Not to belabor the point, but I am going to follow up on Eric's question on high-grade PIN. It seems like the approach you are taking, the change in your strategy for one to read the data seems to be a conservative one. When we see the data it could end up being a very smart decision to wait, however, could you give us an idea on what was the trigger for making that decision to wait because you knew -- you have known for a while that PCPT and (inaudible) are going to read when they read. So --

I will tell you the trigger. It's a great question. I will tell you the trigger. I was sitting at the AUA and I am listening to the results of the REDUCE trial and I had -- in my brain I have engrained exactly what the PCPT number showed and I know our data. One of the things that hit me right between the eyes was that none of them had an effect on high-grade disease. And I am going to take you through some math there so you can appreciate why we did what we did.

So then I said to myself, huh. So I went back and looked at our Phase IIb and asked the question, if we are going to win -- forget reduction of prostate cancer -- but if we could win on a statistical reduction in high-grade disease, then we are going to need to have more patients in the final analysis because -- I will give you an example. If high-grade disease is 20% of patients and we expect to have roughly 500 cancers at the end of the study, that is 100 patients.

So I would rather have that 100 patients at the end of the study and show a statistical difference in high-grade disease than to pull the trigger now, show we have the reduction and trends in high-grade disease. So that was the trigger. The trigger was if you take the conservative approach, then you were going to capture all the patients that potentially develop cancer in the study. And if you can win on that point, you are different. You are different than PCPT; you are different than Avodart.

And that was a gamble worth taking, especially knowing how well ADT was going. If we are going to hit a home run and have another product to follow that would be a great differentiation factor when we go out to the show why toremifene.

Do you have any thoughts on exactly to that point -- in the Gleason eight to 10 patients in PCPT there were more incidents in the finasteride arm. Do you have any idea mechanistically what could have happened or was this more a study artifact because of the small patient numbers?

No, no. I think it's real. And I will give you -- I am going to say the technical part, then I will back off. But the technical part is that it turns out when you block -- this is a very good point -- when you block testosterone with testosterone going to DHT with a five alpha reductase inhibitor, you make more testosterone. They actually have more free testosterone.

So if free testosterone gets converted to estrogen because it's sitting around and the aromatase picks it up. That is why men on have finasteride and dutasteride gynecomastia; it's from the estrogen. Remember, our whole life has been based on estrogen is bad for prostate cancer. One of the thoughts is that the local increase in estrogen may be fueling the more aggressive tumors. Just like obese patients have more aggressive tumors because of obese patients have more fat, more fat converts testosterone to estrogen. And in this estrogen milieu they tend to have higher, more aggressive tumors and that is one of the explanations.

So when you block five alpha reductase you are basically causing a higher estrogen environment. That is the mechanism. And that is why, if you go back to the literature, there have been some papers and some editorials by independent groups that have suggested that maybe the best chemo prevention strategy may be to use a five alpha reductase inhibitor with a SERM, so you cover both the estrogen problem and the testosterone problem.

So one of the push backs that we have gotten is, well, no, you raise testosterone a little bit too in your studies; that is what your Phase IIb showed. Okay, that is true but you are blocking the estrogen receptor right at the prostate level. The other ones testosterone does go up also, makes estrogen, but it's not being blocked at the prostate. And so that may be the mechanism.

All right. Thank you for that. And final question on ADT, it sounds like the fact that you are not on the August 13 panel it looks like good news potentially. Can you tell us anything about the partnership discussions or is there increased interest recently on the 80 mg?

We have gotten a tremendous amount of interest on the 80 mg. And, interestingly, it's a different kind of group because it's a group that now comes in and says, well, there appears to be a commercial opportunity now. It's amazing as the risk profile goes down. But the problem is the Company also has reassessed kind of where we want to go and have done our financial modeling.

We realize with a salesforce of 62 that we could pretty much detail the same degree as any large pharma could in this space. But we are still -- now with that said, the things that we are looking at is timing of launch, whether we want to go out there with double the sales people, which means it may make sense to do that. But we have offers -- let's say it differently. Yes, I can say that. We have offers on the table that we are evaluating.

But we have to evaluate that in the context of what does it mean to our company to get to profitability? Can we get there sooner? And if we do a partnership, does that mean we have to wait for the SARMs and 758 and for PIN to kick in before we do that or do we think that there is enough information out there to suggest that we are heading down the right path and that if we hold on to this we can do it?

It's not like it's a primary care physician play. I mean this is who we are. We are a urology company; we are staffed by people with urology expertise. We hired people in the commercial and medical affairs leadership that are urology networked and focused and have launched in urology. So there is nothing that we can do, this is what we can do best.

But having said that, in all fairness, we are analyzing all options in parallel.

All right. Thank you for taking the questions.

Lucy Lu, Citigroup.

Just wanted to clarify one point, Mitch. Your goal to show a reduction in high-grade prostate cancer to differentiate yourselves from your competition, does that change your primary endpoint? Just wanted to confirm, is your primary endpoint still incidence of prostate cancer?

Yes, so it's the same. Nothing changes in this fiscal plan except that this fiscal plan allows us to do a cancer event-driven analysis or look at the analysis at the end of the trial. The incidence is exactly the same. The statistical handling of it, i.e. Kaplan-Meier curves, are exactly the same with [long range].

And so none of the statistics changes except that we are saving the alpha and not spending it. It's basically the same analysis as the PCPT trial and the REDUCE trial used as their primary endpoint.

So this goal of showing reduction in high-grade prostate cancer (multiple speakers)

It's a sub-analysis that is pre-specified.

Okay. And it is a secondary endpoint?

Absolutely.

Okay. And then the other question, just one more to clarify. You have said all along that you had enough events for the high-risk PIN study. You have said this multiple times in the past. I am just wondering, was there anything in the post-blinded dataset that made you make this change? Do you have the information based on pulled analysis to look at high-grade versus low-grade prostate cancer?

That is a great question. Remember it's aggregate data, right? So aggregate data can always fool you, but we kind of know what the aggregate high-grade cancer rates are for PCPT and for Avodart to REDUCE study, and we are lower than that. And that suggests that there may be an effect on high-grade disease.

But remember I am going out on a limb, I am going to qualify as aggregate data, but it's a very good question. If that data didn't look much different than the PCPT or the Avodart study, we may have thought differently. But with that plus the Phase IIb data have an effect on high-grade disease, this is really a point, even if it's a secondary endpoint, that we could differentiate ourselves in the marketplace. I would hate to lose it because there were so few cancers at the end. By just saving it up so you have every possible patient counted can only help us in that regard.

Then just a last point, so for this reduction in high-grade cancer to really count, because it's a secondary endpoint, you still need to hit the primary analysis?

Absolutely, absolutely. Absolutely. Yes. Now if the primary endpoint is close and you hit in the secondary endpoint, I think that only adds information that the FDA will review. But you have to do your primary endpoint for it to be a slam dunk.

All right, thank you.

Howard Liang, Leerink Swann.

Thanks very much. Mitch, just a question, have you talked to the FDA about the change of analysis?

It's already in the SAP -- I mean the SAP, right? Statistical analysis plan. Yes, it's already in the SAP, so there is no reason to go back and tell them we are executing on the plan that we originally had with them.

Okay. So I understand more data are better, just a question on how many more events you are going to get. I guess my question is specifically how many patients are scheduled for a year-three biopsy from (multiple speakers)?

We have got about 150 patients left.

Okay. Do you know how many more events or can you estimate how many more events you are going to get?

We have an estimate -- the answer is we have, but let me just tell you that all of the -- the way to look at it, Howard, is all of these events are going to be year-three events and year-three events count more than year two and year one. And that is kind of how we are looking at it.

So it's like every one of them counts so much more than year one, year two, so even if there is 150 patients -- and I think you are going to be surprised when you see the final results. High-grade PIN patients are clearly the highest risk patients and that is going to be the other important thing in this study. If nothing else comes out of that placebo arm, we are going to be able to tell the world that somebody followed 800 patients -- in the placebo arm, I think there is about 1,600 patients in the whole study -- for three years with central read and know exactly what the cancer rates are.

So the trial is going to be not only instructive for the urologists, but it's also going to be more ammunition for GTx because as you know the PCPT trial and the Avodart studies eliminated the PIN patients from the onset. So in the PCPT trial there is not much more to say than ad hoc and for the REDUCE study they just didn't have enough PIN patients in year two going to year four to make a determination. And just because you affect PIN doesn't mean you affect cancer, so I don't know what that means.

All I can say is that we will be in a great position to have data in PIN patients prospectively and specifically. And I would suggest that these patients are the target patients that we should be going after for treatment versus the concept of treating in the chemoprevention.

I think I heard you say 500 events earlier. So is the number (multiple speakers)?

Yes, I rounded up. So it's roughly 500 at the end of the study.

Okay, but it was going to be 460 originally in the summer?

I don't know if I gave a number, but the answer is that it's about -- by the time all of this is done it will be approximately close to that.

Okay. Then regarding the final alpha, I think you mentioned that the interim analysis the P-value hurdle was 0.003, so why is the final not 0.007 but 0.009?

They do a Flemming something -- [Brian Flemming] analysis. And that takes into -- it's a moving thing, so it's not like it's -- we like to round up and say if you use 0.3 you only have -- if you use 0.003 you only have 0.007 left. That is not true. When you do the analysis for alpha spend for the FDA, what we have agreed to, the final alpha comes out 0.0087.

Okay. And just going back to ADT regarding the priority review or actually you did not get priority review. So your interactions with the Agency in the last several months did the FDA explain, did provide color why that wasn't appropriate for priority review?

They actually did and it's bizarre if you ask me. But if you go back and read the guidance on priority review, they do say that it's not only whether there is a drug already on the market but they also said if there is also somebody else being evaluated for the same indication. So basically Amgen and GTx by filing very close to each other put ourselves in a position where, especially in the case of our indication, that there are possibilities out there other than our drug.

And that was what we were told directly and indirectly. And so Amgen didn't get priority review and we didn't get priority review, but right now it is kind of a moot point because we are very close to the October date. I don't think I would put much weight into that except to say that one of the things I am happy about is that it's allowing us to spend the time getting all of the things that we need to in place so that the October date is more realistic in terms of moving forward.

Great. Thanks very much.

(Operator Instructions) Mike King, Merriman.

Good morning, guys. Thanks for taking my question. Mitch, you may have given it and perhaps I missed it, but did you say if there was a number or proportion of patients that at entry were considered to be high-grade?

No, because we wouldn't know that at entry. At entry all you would know -- you are talking about the PIN patient I imagine, the PIN study.

Yes, sorry.

In the PIN study, all you know is the patients are cancer free and they have high-grade PIN. It's felt that high-grade PIN patients -- and there is a whole set of data to suggest that high-grade PIN patients don't go to low-grade disease. That high-grade PIN patients in fact go to high-grade -- or say it a different way, significant disease. If they are multi-focal high-grade PIN, even more so.

In other words, if you do 12 biopsies in one session and more than one core is involved then that patient really is in trouble going forward. So with that said, there is really no way to predict on the front end which patients are going to have high-grade disease versus those that won't. And so really this becomes then an evaluation that you do with the patients that develop cancer while on the study and that is what I am referring you to.

Okay. So I guess my question is when you get to the end of the study then, what -- you said it was a pre-specified sub-group. I was wondering if you could share any of the assumptions, the statistical assumptions for that sub-group and whether you feel this would be a direct label claim or would this just be in the clinical data portion of the label?

Yes, so the answer is I don't know. I will say that. I think if it's a secondary endpoint and if we hit a P-value that is statistically significant then it becomes a discussion with the FDA how it will appear. If we hit -- that secondary endpoint is pre-specified and it makes a big difference in how people think about a drug for efficacy, then I would love to see it in the label. But that would have to be a discussion with the FDA. Certainly we would publish on that because that is important information.

Okay, thanks very much.

Lucy Lu, Citigroup.

Great, thank you. Thanks for the follow-up. Can you please talk about your cash position? And also in terms of commercial buildout for the Acapodene 80 mg launch wanted to see whether or not you need additional resources for that launch, and just some guidance for the cost part.

Sure, sure. And if you don't mind I am going to have Marc answer that question.

Hi, Lucy. So our cash position right now is $68.9 million. As you know, we have partnership relationships with Ipsen and Merck. Both of those relationships can generate effectively in the next several months, equal if not more than what we currently have in place in terms of our cash balance.

So, again, I cannot comment on what milestone payments could come from either Ipsen and/or Merck at this point because I am not allowed to do so, but clearly we are managing our expenses. We understand what we have in front of us.

If we have an ADT launch, we are clearly in position to be able to manage that launch and this is the reason that we did the partnerships and the timing with which we did them. So we are confident in our position right now and look forward to having the opportunity to launch ADT.

Thank you.

Aaron Reames, Wells Fargo Securities.

Thanks for taking my follow-on question. I just wanted to ask one question on the Ostarine chronic sarcopenia study. Is that Phase II study designed to be one of two registrational trials or would that be -- need to be followed by two Phase III studies that would be conducted simultaneously? Can you provide us any insight on the meaning of that particular trial and basically what is going to be different between that study and the first 120-patient trial?

Right. So the answer is that -- I guess when you think of biotech companies we tend to do things in onesies and twosies. Merck is looking at this from a programmatic standpoint. So it's not just a chronic sarcopenia trial, it's everything that Ostarine has been involved with to date is supportive.

So I would have viewed this as being a major trial that would contribute to the information that we are going to need to position ourselves. Whether it's a follow-up Phase III or not, we haven't gotten to that point yet. But the trial -- the anticipation of the trial is that it will be the kind of trial that will get the information we need and it will be supportive, if not, included as we go for registration.

Merck is very eager to win in this space. This is a game-changer if it becomes even close to osteoporosis and by all accounts now it appears to be bigger than osteoporosis. And so the approach is conservative, but quick.

We are excited about it, because it's a potential big deal -- forget Merck, it's a big deal for us. We want to do everything we can to make sure Ostarine stays pristine as the best SARM going forward, and we will just take cues from Merck as we go forward.

Okay. So just maybe -- my interpretation of that answer is that it will be larger in scale, duration maybe the same or slightly longer, but it will definitely be larger in scale that may or may be supportive of a filing?

Right. Think of it as all this information is used together. In the big pharma world, Phase IIbs are used very seriously. It's a big deal.

Okay, thank you.

This concludes today's question-and-answer session. 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. This is a very exciting time for GTx and we look forward to providing you with updates on our future progress. Thank you again for joining us on today's call.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a great day.