Calithera Biosciences, Inc.
Q4 2018 Earnings Call Transcript

Published: 8 Mar 2019

[Operator:]

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Calithera Biosciences, Inc. Fourth Quarter 2018 Earnings Conference. [Operator Instructions] And now, it’s my pleasure to turn the call to the Vice President of Investor Relations and Strategy, Ms. Jennifer McNealey.

[Jennifer McNealey:]

Thank you, Carmen. Good afternoon, everyone. Welcome to our fourth quarter and year end conference call. Joining me today are Susan Molineaux, our Founder, President and CEO; Stephanie Wong, Senior Vice President of Finance; and Keith Orford, Chief Medical Officer. We have issued our press release and it can be accessed through our website at calithera.com. Before we begin, I would like to remind you that today’s discussion will include statements about our future expectations, plans and prospects that constitute forward-looking statements for the purpose of the Safe Harbor provisions under the Private Securities Litigations Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those in the risk factors discussed in the Risk Factors section of our annual report on Form 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Please note this call is being recorded. And with that, I will turn the call over to Susan.

[Susan Molineaux:]

Thanks, Jennifer and good afternoon everyone. Thank you for joining us today on our fourth quarter and year end 2018 conference call. At Calithera, we are building an integrated biotechnology company that develops novel small molecule oncometabolism drug, drugs that are targeting tumor and immune cell metabolism pathways for the treatment of cancer and other diseases. By building a pipeline of novel therapeutic product candidates, we are creating multiple opportunities to positively impact clinical outcomes for patients and drive development programs towards commercialization. This is a time of significant progress for our clinical stage programs as we continue to advance our two novel oncometabolism clinical candidates

[Keith Orford:]

Thank you, Susan. Let’s begin with a more detailed update on telaglenastat, our glutaminase inhibitor and our most advanced product candidate. We are currently focused on forging a clinical commercial path for telaglenastat in renal cell carcinoma. The program includes two randomized clinical trials of telaglenastat for the treatment of RCC. The Phase 2 ENTRATA trial of telaglenastat in combination with everolimus in late-line patients recently completed enrollment. This randomized double-blind trial, which is designed to evaluate the efficacy and safety of telaglenastat in combination with everolimus enrolled 69 clear cell RCC patients, who had previously been treated with at least 2 prior lines of systemic therapy, including a VEGFR-targeted tyrosine kinase inhibitor. Patients are being randomized in a 2

[Stephanie Wong:]

Thank you, Keith and good afternoon everyone. Detailed financial results for the fourth quarter and year end 2018 were included in today’s press release. I will also briefly review our results on this call. Calithera ended the year well capitalized, which enables us to drive our clinical programs to meaningful value inflection point. Cash and investments were $136.2 million at December 31, 2018. Collaboration revenue for the year was $22.2 million compared with $26 million in the prior year. In June 2018, we completed the manufacturing services and technology transfer under our collaboration and license agreement with Incyte with satisfied performance obligation under ASC 606, and as a result, all remaining deferred revenue was recognized. Research and development expenses for the year were $66.2 million compared with $43.1 million in the prior year. The increase of $23.1 million was due to an increase in the telaglenastat program to support the company’s new and ongoing clinical trials, including our Phase 2 CANTATA trial, which opened in 2018, increases in 1158 and CB-280 programs as well as investment in early-stage research. Research and development expenses for the fourth quarter were $17 million. General and administrative expenses for the year were $13.3 million compared with $12.5 million in the prior year. The increase of $0.8 million was primarily due to higher personnel related costs to support our clinical trials offset partially by lower outside professional services. G&A expenses for the fourth quarter were $3.2 million. The net interest income for the year was $2.7 million compared with $1.9 million in the prior year and reflects higher returns on investment partially offset by lower investment balances. Net interest income for the fourth quarter was $0.7 million. Net loss from operations for 3 months and year ended 2018 was $19.5 million and $54.6 million respectively. And with that, I will now return the call back over to Susan.

[Susan Molineaux:]

Thank you, Stephanie. And with that, operator, we are happy to open the line for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question is from Matt Phipps with William Blair. Go ahead. Your line is open.

[Matt Phipps:]

Thanks for taking the question. Just a couple. First on cystic fibrosis, is there any kind of pharmacodynamic or pharmacokinetic level you are looking for in that healthy volunteer study to know what dose to move forward? And then secondly when you do move into cystic fibrosis patients, could you potentially try to enroll patients with either low baseline levels of exhaled nitric oxide or maybe high arginase levels in sputum? And then as far as RCC goes, the landscape is changing a little bit and I know the enrollment criteria for CANTATA includes 1 anti-angiogenic therapy or nivo-ipi, but I just want to make sure that does then of course include like a pembro-Inlyta patient?

[Keith Orford:]

Okay, great. Yes, hi Matt. This is Keith. So I will take those in order. So in terms of the first-in-human and the Phase 1 study and for CF in healthy volunteers, especially with experience from 1158, we do have a good sense as well as preclinical data, a good sense of the exposure levels that we need to achieve in order to inhibit the enzyme. So in addition to PK targets, we will also be able to, we expect with multiple dosing to be able to see elevations in plasma arginine. So, both of those will be useful in terms of selecting a dose to go into patients. So we think we will be able to pre-accurate with the dose selection coming out of the healthy volunteer study. The second question was around selecting patients in CF and based on the data we are aware of, it looks NO reduction and arginase in sputum, are fairly universal. So arginase is high in the large majority of patients and we don’t think we are going to need to do any sort of restrictive or that we would need to restrict enrollment to just patients that have particularly high arginase, that’s something we will explore during the Phase 1, Phase 2 development. So we will be able to look at that retrospectively, but our expectation is that there won’t be a need to restrict in that way. And then finally, in terms of the RCC landscape, yes, so we do allow – so basically, any current therapy or most of the experimental regimens that include a PD-1 plus a TKI would all be acceptable first line therapies prior to entering this study. So, you need to receive either TKI and so a TKI plus a PD-1 would count as a prior TKI regimen or the ipi-nivo regimen also counts. So it pretty much accepts any regimen that’s currently approved and those that are likely to come from the ongoing studies.

[Matt Phipps:]

Thanks, Keith.

[Operator:]

Thank you. And our next question is from Robyn Karnauskas with Citigroup. Your line is now open.

[Srikripa Devarakonda:]

Hey, guys. This is Kripa on for Robyn. Thank you so much for taking my questions. Regarding the 1158 data that we expect to see in second half of 2019, I was wondering if you can set some expectations as to what sort of data we will see and I know you are running multiple trials, so can we expect to see data from all the trials together at one conference or would you be splitting it between conferences? Any color would be really helpful.

[Keith Orford:]

Sure. Yes. So yes, as you know, we have 2 ongoing studies and a number of ongoing combinations. So, we have the monotherapy and the pembro combination in the 101 study. We have 3 chemo combinations in the 203 study across a number of tumor types. So, in the second half of the year, we’re planning to present monotherapy and combo data. And the in terms of exactly what data we’ll present and at which conferences is to be determined, but we will be presenting data for monotherapy and combinations.

[Srikripa Devarakonda:]

Okay. And a quick follow-up question. The monotherapy, is it in all the indications that you’re looking? Then you’re testing the combo in as well. Will it be able to compare monotherapy versus the pembro or the chemo combos?

[Keith Orford:]

Yes. So, we the monotherapy development was not as expansive. So, we don’t have all the same cohorts for the monotherapy that we do for the combination. We have 8 different combo PD-1 combo combinations 8 different cohorts for the PD-1 combination. So that includes four cohorts of patients that had seen a prior PD-1 and had failed that PD-1 and then four cohorts of patients that had not seen prior PD-1. And we can go through those. But that’s 8 different cohorts. For the monotherapy, we had a CRC cohort, we had a nonsmall cell lung cancer cohort and then we had a cohort that sort of it included a number of different tumor types that had historically through our own data and published literature are known to have elevated MDSCs. But they don’t there’s not a 1

[Operator:]

Thank you. Our next question is from Jonathan Chang with SVB Leerink. Your line is now open.

[Jonathan Chang:]

Hi, thanks for taking my questions. First question, maybe just to follow up on the previous question on the arginase data coming up. So, will we have data from all the different cohorts in the second half update or are we just going to get data from specific indications? And also, will we have enough follow-up at that point in time to be able to comment on durability of any responses seen?

[Keith Orford:]

Yes. So, the different cohorts, as you would expect, enroll at different rates. So, I think it’s unlikely that all of those cohorts will have sufficiently mature and robust data to present to be clear that those decisions will be made over time as the data mature and we have a better understanding of exactly what data are available for presentation. But so, there could be it may not be that every cohort is presented just but it will depend on the enrollment at that time. And I’m sorry, I forgot, I think there may have been another part to the question, Jonathan?

[Jonathan Chang:]

No. It was just a combination of whether we are going to see data from just a specific indication of cohort or are we going to see everything and that you have at that time and whether we’ll have enough follow-up at that point of time for durability of any responses?

[Keith Orford:]

Yes. Again, I think those cohorts that enrolled again, given the difference in rate of enrollment of different cohorts, some of them will be more mature and more fully enrolled. So there but some of those cohorts, I think, we are confident will have mature data that we will be able to interpret.

[Jonathan Chang:]

Got it. And second question, how should we be thinking about the implications of the ENTRATA data in the second half on the CANTATA study?

[Keith Orford:]

Yes. That’s an interesting question, and I think, obviously, there are similarities and differences between the ENTRATA and CANTATA studies. The similarities include a similar patient population and that it’s an RCC patient population, and it’s a randomized study. But I think it’s at the same time, it’s a one study significantly larger than the other. We have different combination partner in cabozantinib versus everolimus, although the preclinical data, there are similarities between the preclinical data. So, I think it’s hard to say this is a direct read-through, but they’re similar enough that there will be some.

[Jonathan Chang:]

Got it. Thanks for taking the questions.

[Operator:]

Thank you. And our next question is from Jim Birchenough with Wells Fargo Securities.

[Unidentified Analyst:]

Hi, thanks for taking the questions. The question – actually just one question, this is Yanan [indiscernible] for Jim. So just have this longer-term strategy question regarding telaglenastat. Given that the landscape in RCC is changing and PD-1 plus TKI kind of, I think, is gaining momentum and the cabozantinib and nivolumab is being developed and I think with the data in second half of ‘19. So how do you see the possibility that cabozantinib plus PD-1 becomes a first-line therapy? And what does that mean for telaglenastat in that situation? And are you considering having a trial evaluating PD-1 plus cabo plus telaglenastat? Thank you.

[Keith Orford:]

Yes. So that’s an excellent question. And as you mentioned, the frontline space for RCC is certainly evolving. And I think that evolution has been sort of visible over the last couple of years. So, the increase in IO combinations in the frontline is something that we were aware of and actually positioned this study to take advantage of. In that, we knew that the IO therapy would be pulled out of second line and would really be used upfront either in combination in an in a PD-1, CTLA-4 combination like the ipi-nivo combination or in a PD-1, TKI combination in frontline. And secondly, that there are a number of competing regimens that are being developed there and that the cabozantinib combination is going to be somewhat later to the game. So, you’ll have other regimens, ipi-invo is already approved and became fairly well [indiscernible], particularly in the intermediate and poor prognosis patients. We have seen the Merck, pembroaxitinib data looked very impressive at ASCO GU, and that’s likely to become a significant player in the frontline as well. So, assuming the cabo, PD-1 data are eventually positive, it will be one of several regimens, and I should mention there is there are other regimens also that are being nivolumab-axitinib also presented positive data, and others are being developed. So, it will be one of several frontline IO combinations. So, assuming it did take over a certain fraction of that market, we still believe there will be a substantial majority of that market that frontline-setting patients will not have seen cabo, which will leave it to become really the dominant player in the second-line space. Having said that, with an active a positive study in the second-line setting, one clear possibility for telaglenastat would be subsequent study that would move into the frontline and that could be any number of potential combinations where we could try to add telaglenastat. We’ll have some time to see the data that read out here over the next year or so before we have to make decisions about what that triple combination might be.

[Unidentified Analyst:]

Great. Thank you for the color.

[Operator:]

Thank you. And our next question is a follow-up from Matt Phipps with William Blair. Please go ahead.

[Matt Phipps:]

Hi guys. I am back. I wanted to ask about the CD73 compound. Just as far as what would be the development strategy as you think of it now? We’ve seen a variety of data with kind of adenosine targets. AstraZeneca just opened a pretty interesting expansion cohort in their NKG2A receptor inhibitor. It’s a little different, but still looking really hard at the prostate cancer indication, both in combination with some of those AR receptors inhibitors as well as they also have some new cohorts that are looking at patients with high expression of CD73. Do you think that could actually be a biomarker?

[Keith Orford:]

Yes. So, I mean so I think you’ve highlighted one key point, which is that there are other groups. This is the one case of our programs that we’re developing in the clinic where we’re not blazing the trial. So, there will be useful information to be learned by in terms of what’s happening in front of us and that we will certainly learn from the experience of others in terms of designing our own development plan, which will accelerate the development of CB-708. In terms of CD73 as a potential biomarker, our understanding is that, that could be and could be a reasonable biomarker to use, whether it’s actually tumor CD73 or even circulating CD73 are both potential biomarkers that could be used. So that’s something we are certainly open to. And as we go through our development plan, we’ll be incorporating biomarker strategy to investigate, whether it’s a preselection biomarker or also pharmacodynamic biomarkers to look for evidence of activity. But CD73 is certainly a possibility.

[Matt Phipps:]

That’s it.

[Keith Orford:]

Yes, thanks Matt.

[Operator:]

Thank you. And this concludes our Q&A session for today. I would like to turn the call back to Jennifer McNealey for final remarks.

[Jennifer McNealey:]

Thank you, Carmen and thanks all for joining us today. We welcome your follow-up calls with any additional questions you may have. Have a good afternoon.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program and you may all disconnect. Have a great day.