Teva Pharmaceutical Industries Ltd (TEVA) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ignyta, Inc. Company Update and Financial Results Conference Call.

(Operator Instructions)

As a reminder, today's conference is being recorded.

I would now like to turn the conference over to Mr. Jacob Chacko, CFO of Ignyta. Sir, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining us today to discuss Ignyta's asset purchase transaction with Teva Pharmaceuticals and concurrent registered direct equity offering, as well as 2014 company highlights and financial results. On the call today are Jonathan Lim, Ignyta's President and Chief Executive Officer; Pratik Multani, our Chief Medical Officer; Robert Wild, our Chief Scientific Officer; Zach Hornby, our Chief Operating Officer; and me, Jacob Chacko, the company's Chief Financial Officer.

First, some housekeeping issues before we start. If you would like to be added to Ignyta's e-mail list to receive company information or if you would like to change your contact information, please visit the Investor Relations page of our website. In addition, be advised that this conference call is being broadcast live on the Investor Relations page of Ignyta's website at investor.ignyta.com. The slides that will be referenced on this call are also available on that site. The playback of this call will be available for 1 year and may be accessed on the Internet at that site.

Please note that all the information discussed on the call today, including the related slides that the company made available in connection with this call, is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during this call, management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Ignyta's SEC filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q.

The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 17, 2015. Ignyta undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

With that said, let me turn the call over to Jonathan Lim. Jonathan?

Thank you, Jacob. Good afternoon, everyone, and happy St. Patrick's Day. Today is one of our more exciting quarterly update calls as we will be discussing our acquisition of the worldwide rights and assets relating to four oncology development programs from Teva Pharmaceuticals, as well as our concurrent registered direct common stock offering, which upon closing, will result in gross aggregate proceeds to Ignyta of approximately $42 million. We'll discuss these transactions in detail, which were completed just in time for our regularly scheduled company highlights conference call, where we will discuss our financial results for the full year ended December 31, 2014.

Ignyta's vision is to become the world's leading precision medicine company with an integrated approach to therapeutics and diagnostics, or RXDX in oncology. From our inception in 2011 to today, we have been steadfastly laying the foundation for realizing this ambitious vision with the building of our proprietary multiplex diagnostic assays and our CLIA-certified, QSR-compliant diagnostic laboratory on the DX side, and the in-licensing of entrectinib and RXDX-103 on the RX side, all the while integrating activities between our diagnostic and therapeutic teams to drive potential benefit for cancer patients.

With the announcement we made today, acquiring these four development stage oncology programs for Teva, now significantly accelerates our trajectory by adding critical mass to our therapeutics pipeline and further enabling us to leverage our precision oncology platform. These new assets complement our entrectinib development program and extend our ability to target the majority of known oncogenic drivers across multiple solid tumor indications.

This deal is truly transformational for Ignyta and well aligned with our strategic focus on developing first-in-class and best-in-class precision medicines to help cancer patients with unmet needs. We're also grateful that Teva and the financial investors who share Ignyta's precision oncology vision and invested in our concurrent financing. We intend to use the funds to further advance our precision oncology vision by developing targeted therapies that provide meaningful benefit to specific populations of cancer patients.

Turning to the slide deck. Slide 3 is a short agenda of the presentation. We'll provide a brief overview of Ignyta and our capabilities and strategy followed by an overview of the Teva transaction, including the assets we acquired, the financial terms, and the strategic fit with our current business. We'll then cover the lead program we acquired from Teva in some detail, provide an overview of the other assets we acquired, discuss our planned use of proceeds from the financing, and our plans going forward. And we'll be happy to answer your questions afterwards.

With that, let me turn it over to Jacob. Jacob?

Thank you, Jonathan. For those who are not yet familiar with the Ignyta story, I'll provide brief overview of the company and our lead program, entrectinib, beginning with Slide 4. We have established a precision medicine company with an integrated approach to oncology therapeutics and companion diagnostics.

Beginning with the in-licensing of entrectinib in October 2013, we have established a pipeline of targeted products, as well as a CLIA-registered, QSR-compliant diagnostic lab with multi-modality assay capabilities and significant financial resources to pursue our vision of catalyzing precision medicine for the benefit of cancer patients.

Turning to Slide 5. A critical source of competitive advantage for Ignyta has been the stellar group that we have been fortunate to recruit to our senior management team and the teams driving both our therapeutic and diagnostic efforts. As Jonathan will discuss in the context of our vision for these newly acquired assets, it was the full set of capabilities represented by this team that enabled us to effectively diligent these assets and will allow us to efficiently execute upon our vision going forward.

Slide 6 provides a snapshot of the expertise represented by our senior management team, many of whom you will hear from on today's call. With this team and our highly capable and dedicated employees, we can effectively and efficiently drive the development of our targeted therapeutics and our companion diagnostics.

Slide 7 shows our pipeline prior to today's transaction with Teva, and Jonathan will later walk through how the newly acquired assets transform this pipeline. Our programs before today's transaction include our lead program, entrectinib, and our RXDX-103 program, each of which we in-license from Nerviano Medical Sciences, as well as our Spark discovery programs.

Entrectinib, formerly called RXDX-101, is a targeted therapy for patients with cancers that harbor oncogenic driver alteration to the Trk family of tyrosine kinase receptors, including TrkA, TrkB, and TrkC, as well as ROS1 and ALK proteins. Using non-small cell lung cancer as an example, entrectinib allows us to target oncogenic drivers representing approximately 10% of the incident population.

As Jonathan will describe later, the newly acquired Teva assets will build nicely upon entrectinib and provide us with access to much larger pieces of the oncogenic driver pie. RXDX-103 is a preclinical stage program targeting the Cdc7 cell protein kinase with broad therapeutic potential across multiple tumor types, potentially including those that we are targeting with entrectinib.

Turning briefly to entrectinib, Slide 8 provides an overview of the profile of this product. Entrectinib, as mentioned, is a potent inhibitor of TrkA, TrkB and TrkC, as well as ROS1 and ALK that is currently in two Phase I/IIa clinical studies and has composition of matter patent protection until at least until 2029.

Slide 9 provides an overview of the two entrectinib dose escalation studies that are ongoing. Ignyta assumed responsibility for the ALKA-001 study that Nerviano had previously initiated at two different sites in Italy. This dose escalation study was designed to determine the maximum tolerated dose and recommended Phase II dose, or RP2D, as well as preliminary anticancer activity of single agent entrectinib in patients with solid tumors selected for molecular alterations in the TrkA, ROS1, or ALK tyrosine kinase receptors.

In Q3 last year, we initiated a new multi-center mobile Phase I/IIa trial of RXDX-101 called STARTRK-1, the first of the study, the acronym of which stands for Studies Targeting Alterations Responsive to Targeted Receptor Kinase Inhibition. This study is in a Phase I/IIa multi-center single-arm open label study of oral entrectinib in adult patients with locally advanced or metastatic cancer confirmed to be positive for relevant molecular alterations. STARTRK-1 will involve clinical sites in the United States, Europe, and Asia. We anticipate identifying the recommended Phase II dose and schedule for entrectinib by the middle of this year and in Q3 initiating Phase II of the STARTRK-1 study using a basket design with expansion cohorts based on the relevant molecular alteration.

Slide 10 shows the clinical dosing schedules we have been testing for entrectinib, which included both intermittent and continuous daily dosing. Our last clinical update for entrectinib was provided at ESMO in October of last year, during which we discussed 25 patients that had been dosed in the ALKA study, 19 under schedule A and three patients each under schedules B and C.

The STARTRK-1 study uses schedule B, daily dosing in the fed state, and is continuing with dose escalation. If accepted to ASCO this year, we anticipate providing an update on an additional approximately 25 patients across both the ALKA and STARTRK-1 studies. This update will include patients with molecular alterations to each of our target genes: NTRK, ROS1, and ALK.

On Slide 11, we have a brief reminder of the entrectinib clinical results we reported at ESMO. At that time, we reported that entrectinib was well tolerated with a good safety profile and was also showing nice signs of efficacy with one complete response, five partial responses, and two prolonged stabilized disease across all three alterations of interest and across a variety of tumor types, including non-small cell lung cancer, colorectal cancer, and neuroblastoma. Over the past few months, we were pleased to receive orphan drug designation across these three tumor types as well.

Slide 12 highlights our GXP-compliant, CLIA-registered laboratory that can test samples using various cutting-edge technologies for multiple oncogenic molecular alterations. We intend to use this lab for enrollment in our clinical trials, and to develop and validate 1 or more companion diagnostics for use with our targeted therapies. As Jonathan will detail, this in-house diagnostic capability is a key aspect of our vision for executing upon our newly enhanced pipeline.

Slide 13 is a reminder of our two-pronged approach to deriving value from targeted assets using our RXDX platform. In the first case, we use our Oncolome database to identify molecular alterations of interest. When there's already a company developing a drug candidate that targets that specific molecular alteration, we seek to in-license or acquire what we believe to be the most promising or most advanced drug candidate, as in the case of our in-license of entrectinib and RXDX-103 from Nerviano. If we identify an alteration of interest and there's no known company developing a drug candidate that targets that specific molecular alteration, we can use our internal Spark programs to independently initiate target validation and drug discovery activities for these first-in-class opportunities.

In the second case, we may become aware of clinical or preclinical oncology assets that are available for licensing or acquisition that, as in the case of the Teva transaction, the seller had deprioritized the assets for strategic reasons but that we believe can be optimized, particularly through our patient selection-driven approach to oncology development.

With that, let me turn it over to Jonathan to discuss the details of this very exciting transaction. Jonathan?

Thank you, Jacob. On Slide 15, we begin to get into the Teva transaction. As many of you know, Teva announced last October their decision to focus their R&D efforts on core therapeutic areas that did not include oncology. In late 2014, they undertook a process to divest their oncology R&D assets. Through our participation in this process, Ignyta emerged as Teva's preferred option due to our team's ability to leverage our RXDX platform and capabilities in developing these assets for the benefit of cancer patients.

Slide 16 illustrates the rationale for the Teva transaction at a high level. We already had a compelling long-term vision, a capable team and therapeutics R&D and diagnostics lab resources in place, together with our entrectinib and RXDX-103 programs. With the addition of the four Teva assets, we now have a critical mass of targeted drug development programs that we feel can take our precision oncology offering to the next level and enable us to be even more effective and efficient in our clinical development of all of our programs for the benefit of cancer patients.

Slide 17 provides an overview of the four assets we acquired from Teva. CEP-32496, which we have renamed RXDX-105, is a potent small molecule inhibitor of BRAF, EGFR, and RET. This compound is currently in a Phase I dose escalation clinical trial and, along with entrectinib, could potentially be in Phase II by the second half of this year. We believe this program enables us to target multiple first-in-class and best-in-class opportunities in indications like non-small cell lung cancer, metastatic colorectal cancer, and other solid tumors. And we will look at this program in greater detail later in this call.

CEP-40783, which we have renamed RXDX-106, is a potent, highly selective, pseudo-irreversible inhibitor of Axl and cMET. This compound is in late-stage preclinical development. We believe this program represents first-in-class and best-in-class opportunities in non-small cell lung cancer patients who have failed previous therapy with EGFR inhibitors.

Of the patients who develop resistance to first-line EGFR therapy in non-small cell lung cancer, for example, the three most common drivers of resistance are T790M mutations, which occur in about half of the patients; Axl activation, which occurs in 22% of patients as a resistance mechanism; and MET amplification, which occurs in 11% of patients. In other words, about 1/3 of patients who develop resistance to first-line EGFR therapy in non-small cell lung cancer have Axl or MET alterations that can be targeted by RXDX-106. The pseudo-irreversibility provides differentiation of this compound due to its enablement of prolonged target inhibition without having to compete with the ligand Gas6, which may eliminate the need for continuous dosing.

CEP-40125, which we have renamed RXDX-107, is a nanoformulation of a modified bendamustine. This compound is in late-stage preclinical development and has potential activity in solid tumors, unlike bendamustine, which is approved for liquid tumors.

And finally, TEV-44229, which we have renamed RXDX-108, is a potent selective inhibitor of the atypical kinase PKCiota, which is an oncogenic driver in a number of different tumor types. This compound is in preclinical studies, and we believe this compound could potentially target PKCiota amplified squamous lung cancer, K-RAS mutant non-small cell lung cancer, colorectal cancer, and even pancreatic cancer.

Slides 18 and 19 provide an overview of the Teva transaction. We acquired these products in an asset purchase transaction. Teva has also made an equity investment in Ignyta to align the incentives of our two organizations. Ignyta will solely fund development and commercialization of all of these assets with no additional milestone or royalty consideration being due Teva.

Turning to Slide 19. Under the terms of the asset purchase agreement, we acquired all of Teva's assets and worldwide rights relating to the four oncology development programs in exchange for 1.5 million shares of our common stock. Teva has agreed not to sell or otherwise transfer any of these shares for one year, and we are required to register the resale of these shares with the SEC within that year.

We also assumed all of Teva's ongoing obligations under certain contracts relating to the purchased programs, including the agreements under which Teva in-licensed rights to the assets, and we purchased Teva's inventory of the product candidates for about $850,000. Teva also purchased 1.5 million shares of our common stock for a purchase price of $10 per share, resulting in gross proceeds to Ignyta from Teva of $15 million.

Concurrently, we have also entered into stock purchase agreements with several additional institutional healthcare investors that have purchased an aggregate of about 2.7 million additional shares of our common stock. The offering resulted in aggregate gross proceeds to Ignyta of approximately $41.6 million. We did not use a placement agent in connection with this transaction.

On Slide 20, you can see the impact that the acquisition of these programs has on our development pipeline. The graphic on this slide, in fact, illustrates the critical mass I mentioned earlier where we're essentially tripling our pipeline from two to six early clinical and preclinical stage programs, resulting in one of the more robust pipelines amongst oncology-focused biotech companies. But more importantly provides us with multiple opportunities to develop targeted oncology therapies for patients.

Louis Pasteur once said that chance favors the prepared mind. From our earliest days as a company, Ignyta has had a compelling long-term vision for how precision oncology could best be delivered through the integration of RX and DX, and we have been actively seeking the right therapeutic assets to pursue with our DX platform.

Slide 21 shows how this transaction with Teva delivers on this vision with therapeutic assets that are almost tailor-made for the oncogenic drivers that we're going after. The unifying linchpin of this precision oncology approach is our proprietary companion diagnostic platform called Trailblaze. We are already planning to use our in-house diagnostic capabilities, including Trailblaze, to select patients and drive clinical enrollments for entrectinib, for NTRK1, 2, and 3, ROS1 and ALK. We will build upon Trailblaze to detect the molecular alterations of interest for all of our other programs.

In its ultimate embodiment, Trailblaze is a proprietary, multiplex companion diagnostic platform that identifies actionable oncogenes in various solid tumors that we can then address with our own pipeline of first-in-class and best-in-class drug candidates, or so-called companion therapeutics.

This integrated approach, where we use our in-house DX capabilities and can now offer a pipeline of in-house RX candidates to patients with various actionable oncogenes, is fairly unique in the industry and is one of the reasons why acquiring four additional development stage oncology programs is transformative for Ignyta. This centralized screening for a larger number of molecular alterations should result in enhanced efficiency of the screening process for entry into our clinical trials with a higher rate of patients being eligible for our clinical studies and lower overall screening costs. In addition, we believe that clinical sites will be more willing to participate in our clinical trials because we will have multiple treatment options for patients based on the results of their diagnostic screening.

Slide 22 exemplifies this last point by looking at the oncogenic drivers of non-small cell lung cancer as an example. As you can see by the blue bars, entrectinib covers NTRK, ROS1 and ALK, representing approximately 10% of non-small cell lung cancer patients.

The green bars show that RXDX-105 covers BRAF, EGFR and RET, representing another 17% to 24% of patients. RXDX-106 also has the potential to address patients who develop resistance to EGFR inhibitors via Axl activation or MET amplification, as shown by the orange bar. 106 also covers MET amplifications as shown by the orange bar, which represents another 1% of patients. The maroon bar shows that RXDX-108 covers mutant K-RAS non-small cell lung cancer, an area of significant unmet need that represents about 25% to 30% of patients with non-small cell lung cancer.

Adding all of that up and backing out the 30% of the oncogenic drivers that are unknown, we believe that our product candidates have the potential to address more than 80% of the known oncogenic drivers in this disease, and we plan to explore some of these opportunities through innovative clinical trial designs, such as master protocols.

Slide 23 shows the 2014 NCCN Guidelines that list seven genetic alterations that drive non-small cell lung cancer, and our pipeline has potential activity against all of these targets except for HER2.

I'm now going to walk you through the potential market opportunities for our lead product candidates that are in the clinic, entrectinib and RXDX-105. Slide 24 shows that, on a conservative basis, focusing on just two solid tumor indications, namely non-small cell lung cancer and colorectal cancer in the rows on the left, and focusing in the columns up top on known actionable oncogenic drivers, namely fusion kinases or activating mutations, so we're not including overexpression snips or other variants of unknown significance that are not well validated as oncogenic drivers, this yields about 30,000 newly diagnosed patients in the U.S. each year with non-small cell lung cancer or colorectal cancer harboring molecular alterations that could be addressed by entrectinib or RXDX-105.

On Slide 25, if you want to be even more conservative and focus solely on areas of unmet need that exclude indications such as mutant BRAF melanoma and ALK+ non-small cell lung cancer, this results in 11 golden grids, which highlight the cohorts of those patient populations that provide us with opportunities to be first-in-class. Over 11,000 patients can be addressed by entrectinib and RXDX-105 in these 11 golden grids.

Slide 26 shows that if we add in BRAF mutated colorectal cancer, which represents a potential best-in-class opportunity and an upside opportunity for RXDX-105, the number of addressable patients doubles to more than 22,000 patients, representing a substantial market opportunity for the lead programs in just two solid tumor types with validated oncogenic drivers. While the strategic vision and opportunity are compelling, even more importantly, Ignyta is focused on strong execution to translate this exciting vision into reality.

Turning to Slide 27. We have developed a clinical development plan designed to most effectively leverage our RXDX platform and provide us with multiple shots on goal across a variety of actionable oncogenes. This clinical development plan will employ the master protocol concept, an efficient and scalable way to simultaneously develop multiple product candidates for the treatment of a single cancer histology. This approach takes advantage of Ignyta's diagnostic expertise and infrastructure with our ultimate goal to develop a multiplex assay or platform that supports the breadth of the therapeutic options in our expanded pipeline.

The graphic representation of the master protocol design is shown on Slide 28. The golden grids in the graphic indicate first-in-class opportunities and the orange grids represent best-in-class opportunities. We plan to open up over 100 sites worldwide, which will send us tissue samples to then process in our own CLIA-certified, QSR-compliant diagnostic lab. Our companion diagnostic capability then unifies the master protocol by identifying patients with tumors that harbor the actionable oncogenic drivers that are targeted by our development pipeline.

These pipeline products are represented within the master protocol by multiple individual cohorts. These cohorts are independent from each other, which means they may represent molecules at different stages of development, but they all take advantage of our existing clinical operations and clinical site infrastructure. Some cohorts may be registrational in intent, while others are more exploratory. And importantly, they may open and close at different times, again, independent of one another.

The workflow consists of screening patients with our diagnostic for presence of one of many of a range of oncogenic drivers of interest. Then, based upon the specific driver identified in a patient's tumor, that patient is enrolled in the appropriate cohort and provided with the appropriate drug candidate from Ignyta's pipeline. The elegance of this approach is that the more potential solutions you have for a given patient, the more inhibitors of oncogenic driver alterations you have represented under your master protocol and the greater operational efficiency and potential benefit to the patient you can realize.

Therefore, instead of screening 100 patients for every one patient with an NTRK fusion, for instance, and having to turn the other 99 patients away, you could instead, with the same tissue sample, and this is key because tissue, especially for lung cancer, is a rare commodity, you could screen the same patient for Trk fusions, ROS fusions, as well as alterations in BRAF, RET, cMET, Axl, the list goes on, and then enroll them into one of our cohorts. And by the way, if the analysis shows that the patient is pan-wild type and doesn't have any of the molecular alterations tested for, well, then that patient would be eligible to be enrolled in the RXDX-107 or nanobendamustine cohort.

This approach satisfies a significant challenge in precision medicine around studying targeted therapies in rare or ultra-rare patient populations because patients want to be on a study and their physicians want to get them on a study. The master protocol concept maximizes this potential. And Ignyta will be one of the few companies in the industry with a built-in master protocol that includes our own companion diagnostic and pipeline of proprietary drug candidates.

We plan to initiate STARTRK-2 in non-small cell lung cancer by as early as third quarter of 2015, beginning with entrectinib. This study will provide us with multiple first-in-class or best-in-class shots on goal in parallel. We expect to expand this master protocol to include RXDX-105 and then to broaden it further over time with multiple additional cohorts for 106, 108, et cetera, as our other product candidates enter the clinic.

Shifting gears, our team will now provide some more detailed information relating to RXDX-105 and the other assets we acquired today. Slide 30 gives a high-level overview of the RXDX-105 program. This product candidate has demonstrated profound unique efficacy in preclinical xenograft models of colorectal cancer, including primary patient derived xenograft or PDX models, which tend to be more predictive of potential clinical activity. RXDX-105 is similar to entrectinib in its stage of development. There is a Phase I clinical trial ongoing with a Phase II expansion in colorectal cancer patients planned in the second half of this year, once the recommended Phase II dose is identified. The target product profile, or TPP, of this candidate is exciting. We believe 105 could address unmet medical needs in BRAF+, locally advanced or metastatic non-small cell lung cancer.

An upside driver, as I mentioned earlier, would be BRAF+ metastatic colorectal cancer with EGFR feedback activation. We believe this product candidate could also address unmet needs in RET+ non-small cell lung cancer, metastatic colorectal cancer and/or other solid tumors based on its high potency against the RET proto-oncogene.

We believe that the combined activity against BRAF and EGFR in a single agent could result in RXDX-105 having advantages over the combinations of single agent therapies currently being deployed to inhibit these kinases, including improvements in safety profile due to a lack of overlapping toxicities and drug-drug interactions that could be seen in combination regimens and the pharmacoeconomic advantages of having dual inhibition all in a single oral pill versus the alternative of having to take combinations of multiple expensive oral and intravenously administered drugs.

Slide 31 shows the oncogenic signaling pathway targeted by RXDX-105. The figure on the left depicts the well-known EGFR MAP kinase cell signaling pathway. This pathway helps to control fundamental cellular processes such as growth, proliferation, differentiation, migration and apoptosis. And abnormalities in this pathway, including EGFR and BRAF, can play a critical role in the development and progression of cancer.

The figure on the right shows that the RET proto-oncogene is a typical receptor tyrosine kinase that sits at the cell's surface. When activated, it initiates well-known downstream cellular proliferation and survival pathways such as MAP kinase, PI3 kinase and PLC-gamma.

Slide 32 depicts the biological mechanism of action rationale for dual BRAF-EGFR inhibition in colorectal cancer and non-small cell lung cancer. In colorectal cancer, it is well known that blocking only one of BRAF or EGFR is suboptimal due to negative feedback and compensatory pathway activation. For instance, although vemurafenib is an effective single agent in mutant BRAF melanoma, the objective response rate observed as a single agent in mutant BRAF metastatic colorectal cancer was only 5%. Part of this lack of efficacy is presumed to be due to feedback activation of EGFR.

As a consequence, several combination approaches targeting these nodes are being studied in the clinic. RXDX-105 allows us to explore this combination strategy of inhibiting BRAF and EGFR in a single-agent product candidate. The figure on the right shows that EGFR overexpression and mutations and BRAF mutations appear to be oncogenic drivers in non-small cell lung cancer patients. Although the evidence is less well developed in this indication, we believe that dual blockade of EGFR and BRAF could also potentially translate into improved treatment outcomes in patients with non-small cell lung cancer.

Slide 33 shows the cellular potency and selectivity of RXDX-105 for BRAF, EGFR and RET. The compound shows equipotent activity against these targets in human cell lines in the 60 to 85 nanomolar IC50 range. Importantly, there's no VEGFR2 activity, which has been known to result in dose-limiting toxicities, such as hypertension, for other kinase inhibitor programs. Teva did some extensive benchmarking of RXDX-105 in PDX models, where the patient-derived tumors had intact stroma to preserve the tumor microenvironment.

Slide 34 provides some antitumor data from various mutant and wild-type BRAF PDX models of human melanoma and colorectal cancer comparing RXDX-105 against vemurafenib. The bars in the red square show the data from vemurafenib treatment and the bars in the green squares show the data from RXDX-105 treatment. 105 showed significant efficacy against a broad range of melanoma and colorectal cancer models with varying BRAF mutations, including superior efficacy versus vemurafenib in nine out of 15 chemo-resistant melanoma models and an impressive seven out of seven colorectal cancer models.

Slide 35 shows comparative PDX data against vemurafenib and also against dabrafenib in BRAF-driven models of colorectal cancer. As you can see, in each case RXDX-105 showed superior performance in tumor inhibition versus the currently approved mutant BRAF inhibitors. Based upon these findings, the program was advanced into a first in human clinical trial which Pratik Multani, our Chief Medical Officer, will now describe. Pratik?

Thank you, Jonathan. Slide 36 provides an overview of the ongoing clinical trial of RXDX-105 that was initiated by Teva. The Phase I portion of this trial is being conducted at 5 clinical sites around the United States, and the Phase I trial itself has a standard three-plus-three dose-escalation design with the objective of defining the recommended Phase II dose, or RP2D.

The study is currently enrolling patients with a broad range of eligible tumor histologies without any selection based upon mutational status. While the RP2D has not yet been determined, dosing has achieved exposures at or near the exposures that were associated with tumor response in preclinical models. We expect to be able to identify RP2D in the third quarter of this year.

After completion of Phase I, the protocol incorporates a Phase II expansion into 33 patients with relapsed or refractory metastatic colorectal cancer with tumors that harbor a BRAF V600 mutation. The primary objective here is to determine single-agent antitumor activity based upon objective response rate. We expect to initiate this portion of study 1105 in the second half of this year.

Stepping back, we feel that RXDX-105 carries multiple points of differentiation versus other molecules that overlap into this space. As we've depicted on Slide 37, in terms of efficacy, RXDX-105's potential for dual BRAF and EGFR inhibitory activity in a single molecule with a single PK profile holds the potential for higher efficacy across multiple tumor types than can be achieved with BRAF inhibition alone. In addition, RXDX-105 as a single molecule avoids the risk of stacking toxicities, seen when combining a BRAF inhibitor with a separate EGFR inhibitor, leading to a potentially better safety profile and, therefore, greater patient compliance. Also, the lack of VEGF receptor activity avoids hypertension and other associated toxicity, something that distinguishes RXDX-105 from other RET inhibitors in development.

And finally, the pharmacoeconomics of having multiple mutually supported mechanisms of action in one molecule carries advantages in terms of cost of goods, pricing, and reimbursement. Examples of how these potential advantages of RXDX-105 compare against ongoing development of other BRAF and RET inhibitors in non-small cell lung cancer and colorectal carcinoma are detailed on the next slide, Slide 38.

In non-small cell lung cancer, where BRAF inhibitors as single agents and in combination with MET inhibitors are being studied, we believe RXDX-105 with its EGFR inhibition activity carries best-in-class potential as a single agent as well as first-in-class potential in patients with tumors that harbor non-V600 BRAF alterations.

In colorectal cancer, single agent BRAF inhibitors have shown unimpressive activity, leading to the exploration of double and triple combinations. Here RXDX-105 could, again, through its dual BRAF-EGFR mechanism, demonstrate meaningful single agent activity or provide a backbone for simpler combination approaches.

In the RET arena, multiple agents are being studied in non-small cell lung cancer, but they carry the liability of VEGFR inhibition and its attendant toxicity. RXDX-105 has the potential for first-in-class or best-in-class in this setting, as it does in colorectal cancer where RET inhibitors have not yet, to our knowledge, entered the clinic. We are very excited about the potential of RXDX-105 across multiple tumor types in oncogenic driver alteration with the potential for first-in-class or best-in-class in multiple indications within this space.

I'll now turn the call over to Robert to provide an overview of our RXDX-106 program.

Thank you, Pratik. As you can see on Slide 39, RXDX-106, previously known as CEP-40783, is a highly potent selective pseudo-irreversible inhibitor of the Axl and cMET receptor tyrosine kinases. Both Axl and cMET have been identified as key mechanisms of resistance to EGFR-targeted therapy in non-small cell lung cancer, particularly Axl cMET amplification or overexpression, as well as overexpression of its ligands Gas6 and HGF, have been linked to resistance to EGF receptor tyrosine kinase inhibitor therapy in EGFR mutated lung cancers. This accounts for potentially up to one third of all non-small cell lung cancer patients relapsing on EGFR TKI therapy, as Jonathan mentioned earlier.

Moreover, Axl and cMET overexpression have also been linked to resistance to EGFR antibody-based therapy, such as cetuximab, in colorectal cancer and head and neck squamous cell carcinoma settings. It is widely believed that crosstalk between EGFR, Axl and cMET receptors may mediate uncoupling of EGFR activity and may switch tumor cells towards EGFR independence. As such, we believe that dual inhibition of Axl and cMET in the context of EGFR pathway inhibition, or EGFR-targeted therapy acquired resistance, may be advantageous.

In addition to its role in EGF receptor biology, Axl and cMET have been identified as key targets in epithelial mesenchymal transition, EMT; cancer stem cell expansion; and invasive metastatic behavior of tumor cells in multiple cancer histologies. All of these are hallmarks of drug resistance, disease progression and severity.

RXDX-106 is a potent oral pseudo-irreversible Axl and cMET inhibitor with potential to be best-in-class based on high potency, dual activity against both Axl and cMET targets, long duration of response, as well as lack of unwanted off-target activity against targets such as VEGF receptor 2. The pseudo-irreversibility, which means it has a slow off-rate without being covalently bound to the target, is also a potential advantage because it allows for more prolonged target engagement and inhibition and potentially less frequent dosing.

Primary potential tumor indications for RXDX-106 include non-small cell lung cancer, relapsed or refractory to EGF receptor inhibitors with Axl and cMET involvement, and non-small cell lung cancer patients with MET exon 14 partial deletions.

In addition, secondary indications of interest may include metastatic colorectal cancer, melanoma, breast cancer, pancreatic cancer, gastric cancer, esophageal cancer, ovarian cancer and AML. RSDX-106 is currently in late preclinical development, and we plan to file an IND within the second half of this year.

Pratik will now give a brief overview of the RXDX-107 program. Pratik?

Thanks, Robert. Turning to Slide 40. RXDX-107 represents the one non-targeted asset in the acquired portfolio, but it builds upon bendamustine, a highly active chemotherapeutic with the potential to expand its spectrum of efficacy. This is a compound I also happened to develop during my time at Salmedix, which was subsequently acquired by Cephalon. I was excited about the compound back then and I'm pleased to be able to work on RXDX-107, which is a nanoformulation of a modified bendamustine that has been designed to enhance its permeability into and increase its retention by tumors.

The core bendamustine component retains its unique antitumor properties, including non-cross resistance to other alkylators. The modified formulation seeks to expand this activity into solid tumors, therefore offering us the potential to develop this agent in patients across a range of solid tumors that test pan-wild type positive in our diagnostic panel.

RXDX-107 adds tremendous breadth to our master protocol since all patients, even those with tumors that lack an actionable oncogenic driver will have the potential to be enrolled on an Ignyta study. We expect to file the IND for RXDX-107 in the first half of 2016.

I'll hand the call back over to Robert to talk about the file program.

Thanks, Pratik. As Slide 41 states, RXDX-108 is a program targeting the atypical PKCiota serine/threonine kinase. Atypical PKCiota is a novel and emerging oncogenic target essential for mutant K-RAS signaling, as well as RAS/RAF/RAC mediated signaling downstream of oncogenic receptor tyrosine kinases such as cMET, EGFR and HER2.

A significant association between PKCiota activation and tumor stage, grade and prognostic outcomes have been demonstrated in several cancers. Amplification of the PRKCi gene, which is the gene that encodes PKCiota, and constituent activation of PKCiota are hallmarks of several distinct cancer subtypes, including approximately 36% of non-small cell lung cancer patients and 70% of squamous cell lung carcinomas, but 44% of serious high-grade ovarian cancers, 50% of esophageal squamous cell carcinomas and the majority of the K-RAS mutant colorectal and pancreatic ductal carcinomas, which are all a clinical subgroup nonresponsive to EGFR inhibitor therapies.

Like Axl and cMET, PKCiota has also been implicated as an important mediator of EMT and cancer stem cell expansion and self-renewal signals, such as Notch, Wnt and Hedgehog signaling, driving drug resistance and tumor progression. As such, targeted PKCiota therapy has a potential to function as a broad, tractable precision medicine approach for patients with high unmet medical needs across multiple tumor types and histologies, including RAS mutant cancers.

The RXDX-108 program includes a lead molecule formerly known as TEV 44229, as well as several other first-in-class oral PKCiota inhibitors. The goal of the RXDX-108 program will be to select the best candidate molecule and initiate IND-enabling activities by the first half of 2016.

And now, let me turn the call over to Jacob for a review of the use of proceeds from our financing and an overview of our near-term company milestones, as well as our financials for the 2014 fiscal year. Jacob?

Thanks, Robert. As you can see on Slide 43, our 2014 year-end cash balance was $76.6 million. This includes the impact of the $10 million milestone that we paid to Nerviano in December 2014. The cash burn of the core business for the fourth quarter of 2014, not including that milestone, was $8.1 million compared to $6.9 million of cash burn for the third quarter of 2014.

We expected our cash on hand as of the end of 2014 would be sufficient to fund all of our key clinical and development milestones for entrectinib, RXDX-103 and our Spark development programs throughout 2015 and into the first half of 2016. That expectation is before considering the potential benefit of the additional $10 million that we can draw down from our Silicon Valley Bank term loan facility at our discretion after the initiation of a Phase IIa portion of the STARTRK-1 trial, which we expect to occur in Q3 of this year.

The gross proceeds from today's equity financing were approximately $42 million and brings our balance sheet to its highest level to date. Because of the structure of today's transaction, all of this new funding provides us with additional resources for clinical and development activities related to our new asset from dollar one. We believe that we are well capitalized to execute our precision medicine strategic plan with ample cash run rate to seek to achieve anticipated potential key value inflection points.

Slide 44 shows our key 2015 and 2016 corporate milestones. We have already achieved the first milestone, with entrectinib having received orphan drug designation for the treatment of neuroblastoma and for the treatment of TrkA+, TrkB+, TrkC+, ROS1+ or ALK+ non-small cell lung cancer and colorectal cancer, as well as rare pediatric disease designation for entrectinib for the treatment of neuroblastoma.

As you can see on the slide, there are significant potential drivers of value from the clinical programs for both entrectinib and RXDX-105, and we intend to provide clinical data updates at major conferences this year and next. The most important of these is preliminary Phase II proof-of-concept data from the Phase IIa portion of our STARTRK-1 study; Phase II proof of concept data from our 1105 study of RXDX-105 in BRAF mutant metastatic colorectal cancer; and STARTRK-2 Phase II non-small cell lung cancer data from multiple different cohorts, such as NTRK, ROS, RET and BRAF.

We intend to announce one or more of these data sets at the major 2016 oncology conferences. We also have other key milestones relating to our CLIA-registered diagnostic lab and the development of our companion diagnostic to support our clinical trial of all our product candidates and the continued development of our preclinical product candidates.

The final slide provides an overview of our company highlights after today's transactions. We believe we are now well positioned to become a leading precision oncology company through our integrated approach to RXDX development with a critical mass of targeted potential first-in-class and best-in-class product candidates in clinical development.

Turning next to our financial results from 2014, which are not on the slides. For the year ended December 31, 2014, we posted a net loss of $40 million or $2.18 per share, which compares with a net loss of $14.2 million or $3.83 per share for the year ended December 31, 2013. We did not record any material revenue in 2014 or '13.

Research and development expenses were $30.5 million for 2014 compared with $10.2 million for 2013. The increase was primarily due to a $10 million milestone payment we made to Nerviano relating to the entrectinib program and the payment of an upfront license fee of $3.5 million to Nerviano for rights to the RXDX-103 program, as well as an increase in activities relating to development of entrectinib. The increase between periods was also due to personnel expenses related to hiring and engaging additional employees and consultants to help us advance our product candidates and facilities-related expenses as a result of the expansion of our leased facility space.

General and administrative expenses were $9.5 million for 2014 compared with $3.7 million for 2013. The increase was primarily caused by increases in personnel, audit, legal and intellectual property costs, some of which resulted from activities relating to operating as a public company and facilities-related expenses as a result of the expansion of our leased facility space.

With regard to our cash position, at December 31, 2014, as I mentioned, we had cash, cash equivalents and available-for-sale securities totaling $76.6 million and current and long-term debt of $21 million. At September 30, 2014, we had cash, cash equivalents and available-for-sale securities totaling $94.7 million and current and long-term debt of $21 million.

At December 31, 2013, we had cash and cash equivalents totaling $51.8 million and current and long-term debt of $10 million. As of December 31, 2014, we had 19.6 million shares outstanding and 22.7 million fully diluted shares, which includes our outstanding options and warrants as of that date.

With that, and for the time available, Jonathan, Zach, Pratik, Robert and I would be happy to address any questions you may have. Operator?

(Operator Instructions) And our first question comes from the line of Gena Wang of Leerink Partners.

And first, let me start with my congratulation. This is a great transaction for the company. So maybe I will start with the question on the transaction. Just wondering, did Teva approach you or did you approach Teva? Was it very competitive bidding?

Yes, it was a competitive process and we do active outreach to various large companies and small companies on a regular basis. And so we initiated dialogue with Teva earlier this year. And I think we were mutually impressed with the -- they were impressed with our team as well as our capabilities and just the breadth and depth of precision oncology expertise that we could bring to bear to their assets, and they were very eager to work with us on that front.

Okay. So for the RXDX-105, I wonder, have you seen any clinical data from the ongoing Phase I/II dose escalation study?

Sure. This is Pratik. So as I stated earlier, the study was initiated by Teva to determine the recommended Phase II dose, and it enrolls patients with a range of advanced solid tumors and without any selection based upon mutational status. And so given that, there may not be a significant opportunity to gain insight into the activity of RXDX-105 in the Phase I portion of the study.

That said, though, the study does incorporate this Phase II expansion into patients with colorectal cancer that have a BRAF V600 mutation. And we expect to determine the RP2D in third quarter this year and enter into this expansion by as early as the third quarter this year, and we would then update at an appropriate scientific conference the results of the study.

Okay. So maybe I'll continue with the data. So like when you -- I think you will initiate STARTRK-2 non-small cell lung cancer master protocol for entrectinib 105 and potentially 106 in second half this year, so wonder if the data from entrectinib, from ASCO presentation, if there's indication or activity in other tumor types, how would you plan to moving forward with other tumor types for entrectinib? And also how will this whole thing affect potential? I think the last time when you presented at our conference, you mentioned potential pivotal program for entrectinib. How would this now the changing will affect the potential pivotal program for entrectinib?

Good question, Gena. This actually accelerates it. So the STARTRK program, both STARTRK-1 and STARTRK-2, are very complementary. So STARTRK-1, as you recall, the Phase IIa is a Basket protocol design where we'll accept different patients with different histologies in each of the six baskets for Trk, ROS and then ALK-treated and ALK-naive.

In addition to that, what we're doing with STARTRK-2 is putting a stake in the ground that we're interested in non-small cell lung cancer. So we're picking a single histology and then going after multiple oncogenic drivers. So it's sort of the reverse of the basket. Some people call it the bucket design. But it basically is where you take one histology and then move in parallel on multiple oncogenic drivers. And so it's within STARTRK-2 that we're actually accelerating our plans to generate potential registration enabling data.

Okay, great. And maybe one question for upcoming ASCO data. So you mentioned that you would have 25 more patients. How many of the 25 patients are from STARTRK-1?

Yes, it's a mix of patients from STARTRK-1 as well as ALKA. So as we've stated before, we're running both ALKA and STARTRK-1 in parallel, and so the 25 new patients will be from both studies.

Okay. Thank you. I will jump back to the queue.

Okay. Thanks, Gena.

(Operator Instructions) And our next question comes from the line of Kevin DeGeeter of Ladenburg.

Yes. Thanks for taking my question. A couple of things here. On 105, can you help me perhaps better understand the -- seems to me we've got two pathways here that we're really kind of going after; EGFR, BRAF and then RET. I'm just trying to appreciate the decision to move forward in colorectal as opposed to lung. Lung, we know more about RET activity. It's a little less clear in colorectal. I'm just trying to understand the relevance of kind of and strength of RET small molecule relative to the EGFR-BRAF mechanism?

Yes. So, Kevin, we're actually covering multiple different hypotheses in parallel. And so with 105, 105 will be part of STARTRK-2 non-small cell lung cancer. So we'll have cohorts that are geared towards BRAF as well as RET within lung. And then Teva actually started study 1105, which Pratik mentioned is a Phase I/II design. We believe that we're on track for Phase I dose escalation to be able to pick a recommended Phase II dose that then seamlessly moves into a prespecified Phase II expansion cohort of 33 patients with mutant BRAF colorectal cancer.

So we'll be exploring the BRAF-EGFR colorectal cancer hypothesis within the existing protocol that we're taking over from Teva, which is study 1105. And then the lung cancer hypotheses for RET and BRAF will be explored within the STARTRK-2 master protocol along with entrectinib. Does that make sense?

It does. And you mentioned the transaction, that there's no milestones or royalty payments, but I believe some of these assets under the existing relationships do have sublicenses. Can you just kind of help us walk through how to think about any potential milestones and royalties that may have been due to third parties through prior arrangements?

Sure. Yes, just to clarify, the milestones and royalties statement was no additional royalties and milestones to Teva beyond what is owed to existing third parties. And so with 105 and 106, both of these are originally [Ambit]-discovered programs that were then exclusively licensed by Cephalon. And so those are -- the royalties for those are mid-single digits to low-double digits on a tiered basis based on sales thresholds and then a mix of development milestones, around $22 million of development milestones, and then some sales milestones as well.

Yes, Kevin, this is Jacob. As you think about the third-party obligations, the way to think of them is that it really consists of a mix, as Jonathan mentioned, of milestones and royalties, but they're all very reasonable in nature and really consistent in magnitude with the milestones and royalties that we owed to Nerviano for entrectinib and RXDX-103. So if you look back and see some of that -- the way the Nerviano milestones and royalty payments were structured, what we said about them is very consistent with these as well.

Sure. And then just one or two more quick questions for me. One of the exciting things to me in this transaction is the ability to really kind of wholeheartedly move into these master protocol designs. Any thoughts as to working with additional companies or on additional programs, perhaps co-development arrangements, other flexibility to even further leverage those protocols, particularly non-small cell lung? And just kind of how do we think about the optionality going forward with those study designs?

Yes, it's a good question. I mean, strategically you can see that this leapfrogs us or accelerates our development plans, because we do have more of a critical mass of multiple programs that could target different oncogene drivers. Now we continuously field inbound requests from other companies regarding other potential assets. And so we're really going to be focused on executing this range of assets that we have today. And then in the future, we'll keep our eyes open to do things that make sense for our shareholders. So we'll be open to that, but you can imagine that with the tripling of our pipeline in the near term, we're going to be very focused on execution and doing well for our shareholders and for patients.

Okay. Then one last one for me, then I'll get back in the queue. Is it reasonable to assume that Teva and perhaps other parties had an opportunity to see the current status for STARTRK-1 and the European data sets as well before making their commitment to take equity as part of this transaction?

I mean, I'll just say that people -- both the people who invested as well as Teva, I think they were impressed by what Ignyta is bringing to the table, and we were impressed by the work that Teva has done to date on these programs. And we're grateful to be working with them on these programs and we want to do right by them.

Fair enough. Thanks so much.

Thank you.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Jonathan Lim for any further remarks.

Well, thank you all for joining us this afternoon. And as always, we appreciate your continued support and interest in our company. If anyone has any further questions, please don't hesitate to contact the corporate or Investor Relations team here at Ignyta.

That concludes our call today, and we thank you for your attention. Take care, everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Have a great day, everyone.