Achieve Life Sciences, Inc.
Q2 2013 Earnings Call Transcript

Published: 8 Aug 2013

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to OncoGenex update on clinical development programs and discussion of second quarter 2013 financial results conference call. My name is Mercy. [Operator Instructions] At this time, I would like to turn the call over to Susan Specht, Senior Director, Investor Relations with OncoGenex Pharmaceuticals. You may go ahead.

[Susan W. Specht:]

Thank you, and thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, Chief Executive Officer; Susan Wyrick, Principal Accounting Officer; and Jaime Welch, VP of Marketing and Corporate Communication. Cindy Jacobs, our Chief Medical Officer, normally participates on this call, but she's unavailable today due to business travel. Before we begin, I'd like to remind everyone that today's call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to OncoGenex's documents filed with the SEC concerning factors that could affect the company, copies of which are available on the website. I'll now turn the call over to Scott who will provide an update on our 2 clinical-stage product candidates, custirsen and apatorsen, previously referred to as OGX-427.

[Scott Daniel Cormack:]

Thanks, Susan. Good afternoon and thank you for joining us. I'd like to begin today's call by providing a brief update on our custirsen development program. In the fourth quarter of 2012, we announced the completion of patient enrollment in SYNERGY, our Phase III primary registration trial for custirsen. As a reminder, SYNERGY is designed to evaluate a survival benefit for custirsen when added to the first-line chemotherapy docetaxel in men with metastatic castrate resistant prostate cancer or CRPC. Custirsen has received Fast Track designation and the SYNERGY trial is under an FDA [ph] agreement with the FDA. As previously announced in May, the SYNERGY trial is continuing as planned per the recommendation of an independent data-monitoring committee, who completed the second futility analysis per protocol. The expected timing of survival results for SYNERGY is based on a prespecified number of death events. Based on current projections, we now expect the required number of events to occur late in the first quarter or early second quarter of 2014. The timing has been shifted due to death events occurring slower than expected. While some may view this as a positive signal, we caution that no conclusion regarding the possible outcome of the trial can or should be drawn from the fact that death events have occurred more slowly than we expected. The timelines we originally estimated, we did so by modeling the occurrence of death events based on the results from the randomized Phase II medium survival duration for each treatment group, and then added an additional 4 months to account for the introduction of new treatments. According to our current estimates, we believe the survival results will be announced in mid-2014. But we are tracking cumulative death events in the SYNERGY trial, both OncoGenex and Teva remain blinded to all analyses and data. Patient enrollment continues in the 2 additional Phase III trials of custirsen, AFFINITY and ENSPIRIT. AFFINITY will evaluate the potential survival benefit of custirsen in combination with Jevtana as second-line chemotherapy in approximately 630 men with CRPC and is currently enrolling patients throughout North America, Europe, Russia and Australia. Patient accrual continues to progress at a rate consistent with our expectations. And we currently estimate that accrual will be completed in the second half of 2014. Meanwhile, ENSPIRIT will evaluate the potential survival benefit of combining custirsen with docetaxel as second-line chemotherapy in approximately 1,100 patients with advanced or metastatic non-small cell lung cancer, who have progressed after first-line chemotherapy has failed. Custirsen has also received Fast Track designation from the FDA for the ENSPIRIT trial. I'd now like to turn the focus to our [indiscernible] partner product candidate. OGX-427 was recently granted its generic name, apatorsen, by the United States Adopted Names Council. During the balance of this call and in our future communications, we will be referring to OGX-427 as apatorsen. We continue to make great progress on the ORCA development program for apatorsen. ORCA, which stands for Ongoing studies evaluating treatment Resistance in Cancer, now includes 6 randomized Phase II trials of apatorsen in 4 tumor types. Last month, we announced that patient enrollment was completed in Borealis-1, our company-sponsored, randomized, placebo-controlled Phase II trial of apatorsen in combination with first-line gemcitabine and cisplatin in patients with metastatic bladder cancer. 183 patients have been randomized into Borealis-1 at 55 clinical sites throughout North America and Europe. We're very pleased that this trial completed accrual ahead of our guidance, which we believe is a testament to the new -- to a need of new therapies for this difficult-to-treat cancer. The primary endpoint of the trial is overall survival and data are expected in the second half of 2014. Also in bladder cancer, patient enrollment is ongoing in Borealis-2, as announced in April. Borealis-2 is an investigator-sponsored, randomized Phase II trial evaluating apatorsen in combination with docetaxel, in approximately 200 patients with metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy. This trial is being sponsored by the Hoosier Oncology Group and is being conducted at approximately 30 sites in the United States. We eagerly anticipate the results of these trials in order to initiate discussions with the FDA on the potential of apatorsen for patients suffering with bladder cancer. Moving on to lung cancer. We also announced last week that patient enrollment has been initiated in the Spruce clinical trial. Spruce is an investigator-sponsored, randomized, double-blind, placebo-controlled Phase II trial evaluating apatorsen in approximately 155 patients in the previously untreated advanced non-squamous, non-small cell lung cancer. This trial is being conducted in partnership with the Sarah Cannon Research Institute, or SCRI, at approximately 20 cancer centers in the United States. Additionally, in lung cancer, in May, we announced plans to initiate a second randomized Phase II trial of apatorsen. The Cedar Trial will evaluate the potential benefit of adding apatorsen to gemcitabine and carboplatin in patients with advanced squamous cell lung cancer. This trial is being conducted by the U.K. National Cancer Research Network and the U.K. Experimental Cancer Medicine Network. Cedar will enroll approximately 140 patients at 35 centers in the U.K. Also in May, we announced plans to initiate the Rainier trial, an investigator-sponsored, randomized, placebo-controlled Phase II trial evaluating apatorsen in combination with ABRAXANE and gemcitabine in approximately 130 patients with previously untreated metastatic pancreatic cancer. This trial is also being sponsored by SCRI, and is expected to begin patient enrollment in the coming weeks. As for prostate cancer, patients continue to be enrolled in the Pacific trial and investigator-sponsored, randomized, open-label Phase II trial evaluating apatorsen in approximately 80 men with CRPC who are experiencing rising PSA while receiving Zytiga. This concludes the clinical development program update. I'll now turn the call over to Susan Wyrick who will provide an overview of the second quarter financial results. Susan?

[Susan Wyrick:]

Thanks, Scott. The end of the second quarter of 2013 was approximately $57 million in cash, cash equivalents and short-term investments. We continue to expect that these funds, combined with reimbursement due from Teva under our Collaboration Agreement, to be sufficient to fund our operations into 2015. Revenue for the second quarter of 2013 increased to $6.3 million compared with $2.4 million for the prior year quarter. Revenue for the 6 months ended June 30, 2013 increased to $11.4 million, compared with $3.7 million for the same period in 2012. The increase in both periods was due to higher revenue earned through our collaboration with Teva, largely resulting from clinical development activities associated with the AFFINITY trial. Total operating expenses for the second quarter of 2013 increased to $15.7 million compared with $8.4 million for the same period in 2012. Total operating expenses for the 6 months ended June 30, 2013 increased to $29.1 million, compared with $15.2 million in the same period of 2012. The increase in both periods was primarily due to higher clinical trial expenses associated with patient enrollment in the AFFINITY and Borealis-1 trials, increased costs directly associated with efforts to increase patient enrollments, increased headcount to support our clinical development activities and toxicology and preclinical expenses related to apatorsen. These increases were partially offset by lower apatorsen manufacturing costs due to the timing of manufacturing activities. Net loss for the second quarter of 2013 was $8.4 million, or $0.57 per diluted common share, compared with $4.2 million, or $0.29 per diluted common share for the prior year quarter. Net loss for the 6 months ended June 30, 2013 was $15.1 million, or $1.03 per diluted common share, compared with $11.1 million, or $0.89 per diluted common share for the same period in 2012. The net loss in the 6 months ended June 30, 2013 included a noncash gain on revaluation of our warrant liability of $2.3 million. Before completing our financial review, I'd like to reiterate guidance for 2013. Net cash requirements for 2013 are expected to be in the range of $40 million to $50 million, reflecting AFFINITY costs, which are reimbursed by Teva quarterly in arrears, as well as the majority of the cost for Borealis-1. Year-end cash, cash equivalents and investments are expected to be in the range of $25 million to $35 million. We continue to expect that this estimated year-end cash balance and the fourth quarter receivable from Teva will be sufficient to operate the company into 2015. Keep in mind the majority of our Phase II apatorsen trials are investigator-sponsored and substantially less capital-intensive than company-sponsored trials. This concludes the prepared financial results discussion. I will now turn the call back over to Scott for closing remarks. Scott?

[Scott Daniel Cormack:]

Thanks, Susan. In conclusion, we are pleased with the progress we have made in the first half of the year for both custirsen and apatorsen. In partnership with multidisciplinary cancer experts who share in our enthusiasm for the potential of apatorsen, we now have a robust development program that will enroll nearly 1,000 patients in randomized Phase II trials. With custirsen, we eagerly await SYNERGY results while continuing our efforts to enroll the 2 additional Phase III trials, AFFINITY and ENSPIRIT. We remain committed to executing against our goals while demonstrating capital efficiency and retaining cash into 2015. Thank you, again, for joining us. And we'll now turn the call back over to Mercy to open the line for questions. Thank you very much.

[Operator:]

[Operator Instructions] Our first question is from Stephen Willey from Stifel, Nicolaus. [Technical Difficulty]

[Susan Wyrick:]

It looks like the connection was broken. Perhaps we should take the second question.

[Operator:]

Our next question is from Katherine Xu from William Blair.

[Unknown Analyst:]

Actually, this is John [ph] in for Katherine. I had a quick question about if there any plans on doing possibly a combo study with XTANDI?

[Scott Daniel Cormack:]

Would that be in regards to the custirsen program or apatorsen?

[Unknown Analyst:]

Apatorsen.

[Scott Daniel Cormack:]

Yes. At this point, we are going to pursue the investigation in combination with Zytiga. No immediate plans to do something with XTANDI. Obviously, a lot of interest in that program -- a very effective drug, in our view. But I think it will be prudent for us to see what we see with combination with Zytiga first. And then we could explore for subsequent development activities -- a subsequent combination with XTANDI.

[Unknown Analyst:]

And also, just a quick follow-up to that. Just curious how that trial's going with Zytiga? Maybe you could talk about -- maybe provide some color about the recruitment and maybe some potential impact on time lines?

[Scott Daniel Cormack:]

Yes. We generally don't give updates on accrual until, obviously, when we initiate or when we complete the accruals, so I can't give you too much guidance on that one. What I can get into is, obviously, our enthusiasm on the concept of what we're doing with Zytiga. I think in this particular trial, it's one that we're really testing the theory and hypothesis of apatorsen affecting treatment resistance. As you can appreciate with Zytiga and in fact, all agents, I think what we're seeing is continuing resistance occurring with patients as you see breakthrough in these patients going forward. And in this particular trial design, what we're doing is we're taking patients that are on Zytiga who have rising PSA, so detect [ph] early sign of resistance coming through. And having -- adding apatorsen on top of that with a view to see if we can change basically the development and continued development of resistance, so it's one of the bigger tests, I think, we have for this theory of breaking treatment resistance in cancer patients. It's a pretty exciting trial. Hopefully that goes through your questions, John [ph]?

[Operator:]

Our next question is from Philippa Flint from Bloom Burton.

[Philippa Flint:]

Just a quick question. From the clinical development side, your costs aren't from clinical trials, if I understand it, they are really just related to the Borealis-1 and 2, right? Because the others are either investigator-sponsored for apatorsen or Teva funded from custirsen? So can you give any guidance to what the total cost of those 2 trials over the length of the trials might be?

[Susan Wyrick:]

I don't -- this is Susan. We don't really give specific guidance related to the cost of an individual trial. But I can tell you that as you mentioned, the AFFINITY trial is reimbursed 100% from Teva. And except for Borealis-1, the other trials are investigator-sponsored and so the majority of our costs related to clinical trials are related to Borealis-1.

[Operator:]

[Operator Instructions] Our next question is from Stephen Willey from Stifel, Nicolaus.

[Stephen D. Willey:]

So with respect to the powering assumptions in SYNERGY. If I remember correctly, and I think you said in your opening remarks, you've added 4 months to what you anticipated to be the median OS times in each arm, correct?

[Scott Daniel Cormack:]

Right, right.

[Stephen D. Willey:]

So you added 25 and 21 months then?

[Scott Daniel Cormack:]

Yes. So if you go back to the -- what we did is we basically took the randomized Phase II trial, which was giving us controlled patients of around 16.9 and the combination with custirsen that are about 23.8. Added 4 months to each one of those and then, obviously, superimpose that over the accrual curve to give us an estimated timing on the events. So yes, you're estimations are pretty much bang on. I think it works out to be about 20 months or thereabouts for control and about 27, 28 for the treatment group.

[Stephen D. Willey:]

Okay. And then I guess as you look at some of the other failed Phase IIIs that we've seen in the tax-naive space that is spread out over the last year or 2, I think, a lot of the studies kind of were enrolled or enrolled the majority of those patients. I think, when these newly available therapies maybe not have been as widespread in terms of availability as they are now? So I guess, when you just look at some of the numbers that have come out of those other competitive studies, do you feel like the 4 is adequate at this point?

[Scott Daniel Cormack:]

Yes, that's one of the tough parts of doing the estimation, I think, in this particular trial. And the initial concept of adding the 4 months, that was something that we did fairly early on. And that was based on most of the new agents are providing sort of somewhere in that range. And there's just, basically, a lack of studies that have been reported in the literature that are looking at sort of the series of all these different agents now, and giving us a good handle on how long patients live in that first-line chemotherapy setting. As you very much know, a lot of the newer agents, particularly Zytiga and I think we're seeing the same thing with Enzalutamide starting to shift into that pre-chemo space. So how much impact that really has on a survival duration once you start with chemotherapy, obviously, isn't all that well known. So I think our 4 months is probably -- no, not a bad number. But there's not a lot of new information to be able to peg it with a recent published study that says if you are to take docetaxel frontline, followed with, say, cabazitaxel and if you got one of these new antigen-directed compounds somewhere in that sequence after doce, how long those patients would live? But I think it's probably not a bad proxy. But obviously, we will have to unwind the results and see what that is looking like. That's part of the rationale for, I think, what we've described before to these events are accruing more slowly than we expected. Obviously, we can't say what that is from, because we are blinded on the data set. But that is the present reality. It is coming in 1 or 2 quarters beyond what we had originally projected, which is quite a delay.

[Stephen D. Willey:]

And then what kind of insight do you have and just in terms of the geographical distribution of patients? I know that this study, I think, incorporated a lot of Teva x U.S. sites, which may be within some geographies whereby these drugs aren't readily available. Do you have any kind of insight with respect to the percentage of patients that might be in some of these, say, countries within like Eastern Europe whereby Zytiga and 3100 may not be readily available?

[Scott Daniel Cormack:]

Yes, it's a good point. The -- we haven't given the specifics on number of patients by sort of geographic range. But we have talked in the past about the site distributions, and that site distribution was kind of 2/3 x U.S. And as we know, the approvals by the FDA from the U.S. of these new agents was quite a bit faster than it was in the other areas. So I think in that particular case, we probably had longer exposure of these agents not being used in these patients because of the geography that we had x U.S. Obviously, again, when we get into the results and taking a look at the specifics, we'll see how that might have influenced or continues to influence, but we don't have any specifics on that at this point.

[Stephen D. Willey:]

And then just one, I guess, a big picture on apatorsen. You're, obviously, going to be getting quite a bit of data, I think, probably throughout 2015 with respect to these ORCA programs. And I guess, how do you kind of balance the individual trial signals that you get on a one-off basis? There's obviously going to be incentives to move forward in the event of positive data. But you're running this drug across essentially 4 or 5 different tumor types. And so do you want to essentially sit back and try to gauge what the data looks like in each of those tumor types before you make a go-forward decision within a couple of different tumor types? Or are you kind of committed to a couple of these indications that if positive, you're going forward regardless?

[Scott Daniel Cormack:]

Right. That's a -- it's a great strategic question. So I think it varies a little bit by tumor. So I think we have to break out bladder cancer first because obviously, we've completed accrual of Borealis-1. That is a study that has 180 patients and it has a primary endpoint of overall survival. That one, obviously, and I think we've talked to this in the past. We've always sort of said that we expect survival somewhere about 12-plus months after we complete accruals. So that puts us into the second half of '14 as far as the survival results expectation for that particular trial. That would lead the other survival numbers from the other trials by quite a margin actually. And if Borealis-1 is positive, in particular, is highly positive, we'd want to initiate discussions with FDA much sooner. And certainly, get into planning for a Phase III if that is warranted in that trial sooner. With respect to the other trials, because they're all initiating roughly at the same time and, similar size and contacts and trial design, it's likely they start to mature, I would say in closer proximity to each other. And in that way, you have, I think, a different opportunity to say, let's take a look at the totality of the remaining trials and kind of pick winners and prioritize our efforts with regards to those trials both with respect to the overall outcome as well as the relative outcome. The landscape, as you well know, we have Jaime online here. We have a very competent marketing staff, and it's part of the analysis that we do, is looking at landscape and the opportunity for these drugs. But I think for the other trials outside of bladder, we'll probably be looking at a very robust analysis of not only the data, the landscape, the opportunity, availability of patients, the overall need kind of a broader strategic perspective on where to pursue apatorsen with regards to its prioritization of capital and investment.

[Operator:]

[Operator Instructions] I'm showing no questions at this time. I'll turn the call over to Scott Cormack, CEO, for closing remarks.

[Scott Daniel Cormack:]

Thank you, Mercy. Thanks, again everybody for joining us. We very much have enjoyed the call and the Q&A and we look forward to providing future updates in the not-too-distant future. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today's conference. You may now disconnect. Everyone, have a great day.