Oncternal Therapeutics Inc (ONCT) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the first quarter 2010 GTx, Incorporated earnings conference call. My name is Ann and I'm the operator for today. As a reminder, this conference is being recorded for replay purposes. (Operator Instructions) 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'd like to welcome you to our first quarter 2010 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'll find it on our website at GTxInc.com. We'll have a replay of this call available on our website until May 18th, 2010.

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'll remind you that information discussed on this call may include forward-looking statements and such statements are subject to the risks and uncertainties we discuss in detail in our reports filed with the Securities and Exchange Commission, including in our quarterly report on Form 10-K filed March 15, 2010. We expressly disclaim any obligation to release publicly any update to forward-looking statements made during this call. Now I'll turn the call over to Dr. Steiner.

Thanks, McDavid and thank you all for joining us today. This morning I will provide a progress report on our clinical development programs.

Toremifene 80 mg for the reduction of the risk of fractures and the treatment of other estrogen deficiency side effects in men with prostate cancer on ADT is a large commercial opportunity for GTx. During our end-of-review meeting December, FDA confirmed that this indication is an unmet medical need and there are no drugs approved for the treatment of bone fractures in men with prostate cancer and ADT.

We are designing the second Phase III clinical fracture study to also support the other benefits of toremifene 80 mg to treat estrogen deficiency-related side effects such as hot flashes and gynecomastia, which we'd like to see included in the label. Having a second trial with confirmatory clinical data for fractures and hot flashes could substantially increase the U.S. market opportunity for toremifene 80 mg to approximately $750 to $800 million.

We have scheduled a follow-up meeting with FDA this summer to finalize the design of the clinical trials. We do expect to initiate TREAT 2, which is the name we have given to the second pivotal Phase III toremifene 80 mg clinical study, in the second half of 2010. Moreover, with the expansion of our Ipsen relationship, which we announced in March, the funding of this new study has been secured.

As for toremifene 20 mg clinical program to prevent prostate cancer in men with high grade PIN who are at high risk for prostate cancer, the last patient completed the trial in late February. We're conducting the necessary operational steps to close the study and we expect to receive data from the study and announce the results this summer. If the trial is successful we will then file the toremifene 20 mg New Drug Application by year-end.

In first quarter, we reacquired full rights to our SARMs from Merck. SARMs are a class of anabolic non-steroidal drugs that GTx has pioneered. Ostarine, our lead SARM, has performed well to date in seven clinical studies conducted in over 560 subjects and has the potential to be a first in class drug to treat muscle wasting in cancer patients, also known as cancer cachexia.

This past weekend we conducted a key opinion leader meeting with medical oncologists and other muscle-wasting medical experts to share the data from our Ostarine clinical trials, including the completed Phase IIb cancer cachexia study. We also shared with them our current thinking regarding the design of the cancer cachexia clinical program. There was great support among these medical experts for the development of Ostarine for this important unmet cancer care indication.

We will submit a request for a meeting with FDA this month to discuss our plans for initiating a registration clinical study of Ostarine for cancer cachexia to better understand FDA's clinical development requirement for filing an NDA for marketing approval for this drug candidate.

Ostarine Phase IIb cancer cachexia clinical trial results for performance and quality of life will be presented at ASCO in June. In addition, the efficacy and safety results of the head-to-head clinical study in postmenopausal women where Ostarine compared more favorably to Merck's SARM will be presented by Merck at ENDO this June.

The clinical development of GTx 758 is also making good progress. GTx 758 is an oral LH Inhibitor discovered at GTx. GTx 758 has potential to reduce serum total testosterone to castrate levels and serum-free testosterone to sub castrate levels without causing hot flashes or bone loss, two serious side effects of current line Androgen Deprivation Therapy for prostate cancer.

With three decades of FDA experience, the regulatory pathway for ADT is well established, with serum total testosterone concentration accepted as a surrogate endpoint. Currently available Androgen Deprivation Therapies are all LHRH analogs - either agonists or antagonists - and while these eight agents achieve medical castration, there are non-oral formulations with similar efficacy and side effects. GTx 758, if successful, will be the first truly differentiated approach to Androgen Deprivation Therapy in many years and the commercial market is also well defined, with current worldwide sales of ADT drugs exceeding $3.0 billion annually.

Because GTx 758's mechanism of castration is not dependent on whether or not the patient has prostate cancer, we initiated a Phase II clinical trial in 60 healthy male patients in February of this year. This is a very expeditious way to assess clinically the proof of concept that GTx has the ability to reduce total testosterone to castrate levels, and unlike LHRH analogs, to even further reduce serum-free testosterone to sub castrate levels. This is important, because serum-free testosterone is the form of testosterone that prostate cancer cells actually utilize to proliferate or grow.

We believe that GTx 758 has a potential target product profile for three different indications. The first indication is first line Androgen Deprivation Therapy for men with prostate cancer. ADT, by GTx 758, has the potential to results in medical castration without the hot flashes or bone loss seen with LHRH analogs of bilateral orchiectomy.

The second indication is second line ADT in men with castrate-resistant prostate cancer and because of the potential ability of GTx 758 to further reduce free testosterone to sub castrate levels, GTx 758 would target patients who develop castrate-resistant prostate cancer while they're on LHRH analogs of post bilateral orchiectomy.

The third indication, treatment of hot flashes in men on LHRH analogs of post orchiectomy and based on the results of the preclinical models, GTx 758 has the potential to reduce hot flashes in men with prostate cancer and ADT.

An oral agent is unique. More importantly, to be able to reduce total testosterone to castrate levels and to cause free testosterone to go to sub castrate levels, will truly differentiate GTx 758 from all current ADT therapies and allow us to be able to potentially move not only into first line but also second line hormonal therapy for prostate cancer. I will now turn -- let me also say that we expect to receive results from our ongoing Phase II clinical trial in summer of 2010.

I will the call over to Marc Hanover for a brief review of the financial results.

Thanks, Mitch.

Following the termination of the Merck relationship, we recognized $54.9 million in collaboration revenue, which would otherwise have flowed through our income statement over the expected remaining life of the collaboration.

As a result of this onetime increase in collaboration revenue, we reported net income of $44.3 million for the first quarter of 2010. Without the recognition of this nonrecurring revenue, we would have reported a net loss of approximately $9.0 million for the quarter, as compared to a net loss of $11.3 million in the first quarter of 2009.

Total revenue for the first quarter of 2010 was $56.6 million, compared to $3.6 million for the same period in 2009. The $56.6 million was comprised of the following -- $49.9 million of non-cash collaboration income from Merck; $5.0 million in cash collaboration income to be paid by Merck in the fourth quarter of this year; $922,000 of collaboration revenue from Ipsen; and Fareston net sales of $799,000.

For the three months ended March 31, 2010 and 2009, research and development expenses decreased to $7.7 million from $8.3 million, respectively. General and administrative expenses were reduced during the three months ended March 31, 2010 to $4.5 million from $6.5 million for the three months ended March 31, 2009.

At March 31, 2010 GTx had cash, cash equivalents and short-term investments of $38.7 million. This does not include the $5.0 million reimbursement for SARM research and development expenses, which we will receive from Merck in the fourth quarter of this year in accordance with our contractual agreement.

Also, we expect to receive milestone payments from Ipsen for the initiation of the TREAT 2 clinical trial and we may receive additional milestone payments for the toremifene 20mg high grade PIN clinical program, assuming the Phase III clinical trial is successful.

Now I will turn the call back to Mitch.

Thank you, Marc. Operator, we're ready for questions.

(Operator Instructions) And our first question comes from the line of Eric Schmidt with Cowen & Company. Please proceed.

Good morning, thanks for taking my questions. Mitch, is there any clarity on whether Ipsen might be able to file for EMEA approval based on the existing data on toremifene in ADT?

Yes, so existing data as it relates to the 80 mg ADT. So where we stand right now is we're trying to make sure we got full regulatory clarity with the FDA and the other thing that's very interesting in Europe is, as you know, toremifene, even though we have patents, what's more important in patents is regulatory exclusivity. And I don't know if you remember, but we have said in the past that the EMEA has stated that toremifene does qualify for innovative therapy, which means you get eight years of data protection of ten years of market exclusivity for the compound.

And so we all are kind of waiting on the PIN data and if the PIN data comes in positive, then it would make sense to try to move on both front since that will start the clock and you want to get full advantage of your ten years. With that said, we still want to get more clarity from the FDA and then and move forward and see what we have, but the data is there. It's a question of what is the right strategic move to make sure that we win.

Okay and then in terms of your discussions with Ostarine and the FDA later this month, what kind of end point are you going to propose for the primary evaluation?

Okay. I don't know if you recall, Eric, but we had actually met with the FDA in a pre-IND meeting when we filed our IND for the Phase IIb, which was based on the data that we received in the elderly men and postmenopausal women? That was a Phase II of the MAD, the SAD.

And at that point, we actually met with about four or five different divisions of the FDA and the one that -- several of them were very encouraging, but the one that clearly there appears to be equal urgency in terms of the unmet medical need was in oncology. And the two end points that they asked us to include in our Phase IIb, which are going to be the same end points, are going to be required in the registration phases later on.

Whether it's a Phase IIb, whether it's a Phase IIb/III, whether it's a Phase III is semantics -- it basically is the next well controlled, adequately controlled trial for a registration trial -- is going to be total lean body mass and a performance measure. Weight is not acceptable for a primary end point and the reason this is important is because we hit on total lean body mass. We also hit on performance, which will be the same end points that we required in the next study.

And do you know which performance measure that might be? Will that be stair-climb tests would you say?

Right. So what we've done in several of our trials, two in particular, we used stair-climb and we explored other performance measures. If you look at the NCCN guidelines, the two performance measures that they list, when you look at frailty, is stair -- not stair-climb but gait speed and grip strength and we looked at both of those in our Phase IIb and we were able to show that more patients move not frail -- excuse me, from frail to not frail in both those accounts.

The stair-climb, however, appears to be a much more relevant end point from a standpoint that patients -- the whole reason you're doing performance is to show that they have a better quality of life and that they have a clinical benefit. And it's hard to show clinical benefit if you just kind of walk; it's much more to show that you can get up some stairs and you can also show, going up stair-climb, how fast they go up the steps and how much power they go up the steps and since its 12 steps, you also get endurance. So it's a really nice way and the other thing that's even more important in that is that in two of those other studies we hit on stair-climb, both in the healthy population and a cancer population.

All the FDA told us was this would be acceptable for the Phase IIb. We have to discussion with them what they want going forward, but now, with two trials of data and a performance measure that is, recognized in the literature as well as being able to show an increase in activity. That would be considered a clinical benefit. Then this would be what we would propose to the FDA, recognizing that gait speed and grip tests are things that we had shown in other studies.

But I do think a more robust measure in these patients that you can translate to clinical benefit and to quality of life is going to be stair-climb.

Okay and then one last question. Would you start a next trial for Ostarine, a pivotal study without a partner or is that all pending financing?

Right. So our thinking is that for ADT, the 80 mg, which is our second Phase III, that is one trial away from approval if that proves to be successful and so we're fortunate enough to get funding from our partner Ipsen.

Ostarine, I think the next best step for GTx is to get regulatory clarity, because the regulatory clarity will also help assess the value of the asset and certainly, if the FDA has a registration path that they agree to, that will increase the value of the asset with our potential partnership discussions that are going on as we speak. And the thought would be that we would have FDA clarity and resources in place through a partnership before we move forward in starting that Phase IIb/III, or Phase IIb or Phase III depending on how we make out with the FDA.

Great. Thanks, Mitch.

Thank you, Eric.

Brian Klein, Lazard

Hi Mitch, thanks for taking the questions. I was just wondering regarding the TREAT 2 study. How many patients were you planning to enroll and how ling do you think that might take?

Yes. These are good questions and so what we've done is we purposely haven't said much, because we want to meet with the agency first and get their buy-in on the statistics. And so after we meet with them and we know exactly what we need to do, then we'll lay out what we -- what the numbers are, how long the study is, how long we think the recruitment would be and additional timelines, so right now it'd be kind of a premature.

I can at least tell you it will be at least the size as the trial that we performed and we're now dubbing as TREAT 1. But the real question is what do we need to do to make sure that without question we hit the end points so that we can move forward with a product, an important product?

Right and then on last question. Do you think you might have to go up against a competitor like denosumab?

No, not at all, for a couple of reasons. One is denosumab is not approved to ADT and again, I'm not going to comment for Amgen, but they're moving into postmenopausal osteoporosis and at this point now and to our entire discussions with the FDA, they made it very clear two things. One, there's nothing available for these patients now for bone fractures.

Number two, drugs like Fosamax and all these other "male osteoporosis" drugs are not indicated for this indication. What does that mean? Somebody who uses Fosamax, it's considered off-label for this patient population. So cancer treatment-induced bone loss is an indication of its own and even more importantly, if we're successful, it's not going to be "treating osteoporosis". It's going to be treating -- it's going to be to prevent fractures in these patients. And so that is clearly a different indication.

So we do not believe we're going to require -- it's going to be require a comparator and there's never been any discussion to that affect. So we do believe that the comparator arm will be a placebo arm.

Great. Thanks so much.

Okay. If there are no further questions, we would like to thank you all for your interest in GTx. We look forward to providing you with updates on our future progress and thank you again for joining us on today's call.

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