ChemoCentryx, Inc.
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[Operator:]

Welcome to the ChemoCentryx Second Quarter 2015 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the call over to Susan Kanaya, Senior Vice President and Chief Financial Officer at ChemoCentryx. Ms. Kanaya, please go ahead.

[Susan Kanaya:]

Thank you. Good afternoon and welcome to the ChemoCentryx Second Quarter 2015 Financial Results Conference Call. This afternoon we issued a press release providing financial results and company highlights for the quarter ended June 30, 2015. This press release is available on our website at www.chemocentryx.com. Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide a corporate update and review our anticipated milestones for 2015. Following his comments, I will provide an overview of the financial highlights for the second quarter before turning the call back over to Tom for closing remarks. As a reminder, during today's call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in our annual filings made with the Securities and Exchange Commission, including our annual report on Form 10-K filed on March 13, 2015. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements. In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 6, 2015. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. I will now turn the call over to Tom.

[Thomas Schall:]

Thank you, Susan. And thank you to everyone for joining us on our second quarter financial results conference call. Today I will discuss how we have advanced our pipeline program since our Q1 conference call and then I will summarize the key milestones that we expect to achieve for the remainder of 2015 and into 2016. We continue to execute on all of our ongoing initiatives during the quarter and remain on track to deliver on several milestones this year. This is particularly true in the area of orphan and rare diseases with our complement C5a receptor inhibitor known as CCXX168. We also made progress in our chronic kidney disease program with our CCR2 inhibitor known as CCX140 and in the immune-oncology area with another CCR2 inhibitor CCX872. As you probably well know all of these novel compounds are orally administered therapeutic agents. During today's call, I will discuss the following three key areas. First, the continued clinical development progress in the area of orphan and rare diseases with CCX168, our C5a receptor inhibitor. We are presently evaluating CCX168 in three different disease settings; antineutrophil cytoplasmic autoantibody or ANCA-associated vasculitis, AAV, atypical Hemolytic Uremic Syndrome or aHUS, and immunoglobulin A mitigated or IGA kidney disease, IGA nephropathy. Second; in the area of chronic kidney disease, the presentation of Phase II clinical trial data of CCX140 in patients with diabetic nephropathy. And third; in the immune-oncology area and enrollment update from the ongoing clinical trial of patients with non-resectable pancreatic cancer being treated with CCX872, as well as our preclinical efforts where we combine chemokine receptor inhibitor with check point inhibitors. Let’s begin with our recent accomplishments in our orphan and rare diseases program. CCX168 is a lead program for Chemocentryx. CCX168 is as very potent orally administered highly specific small molecule inhibitor of the complement C5a receptor or C5aR. We are currently testing CCX168 in three different diseases and I will take each in turn. The first indication is an ANCA-associated vasculitis sometimes referred to ANCA disease and abbreviated here as AAV. We have two ongoing clinical trials in AAV; the first clinical trial is in Europe and it is a Phase II trial called CLEAR. CLEAR is designed to evaluate the safety and efficacy of CCX168 in AAV patients, while reducing or even eliminating steroids from the standard of care treatment in this disease. You may recall that CLEAR trial employs an innovative three step trial design and that the data from steps one and two, which we have previously discussed provided evidence that CCX168 treatment was associated with improvements in renal functions and most AAV patients have to be manifestations of these disease as well as in clinical improvements in a multiorgan disease involvement score known as the BVAS. In the large majority of measurements from steps one and two of CLEAR, CCX168 treated patients saw a more rapid and more pronounced clinical response in both the steroid minimized group in step one. And in the steroid free group in step two, then the contemporaneous control group who were getting the standard of care, which included full dose of steroids. Step three is the final step of the Phase II CLEAR trial, mainly aimed at expanding the numbers in both the steroid reduced and steroid free treatment arms in order to allow us to assess which treatment paradigm might constitute a potential Phase III trial plan. I'm pleased to report that we have completed enrollment of patients in the CLEAR trial and expect to report topline data from this trial by the end of the year. A second ongoing clinical trial in AAV is the North American Phase II trial known as CLASSIC, in which we are adding CCX168 to a full standard of care regimen. In the CLASSIC trial, we are examining the safety and efficacy of two different doses of CCX168, added to standard of care over 12 weeks of treatment. Importantly and as was true in the CLEAR trial as well, there is a contemporaneous control arm where patients get standard of care alone plus a placebo to CCX168 over the same 12 week treatment period. Therefore in CLASSIC, the potential benefit of CCX168 the patients above and beyond the current full standard of care will be measured. We continue to enroll patients in CLASSIC and I'm pleased to report that we have reached the halfway mark of our enrollment target for our plan. Beyond AAV, we've made further progress in our efforts to broaden the therapeutic reach of CCX168 through the initiation of as Phase II, proof-of-concept clinical trial in aHUS patients with end stage renal disease. We anticipate reporting early results from the study by the end of year. In June at the 15th European Meeting on Complement in Human Disease held in Uppsala, Sweden, our collaborators presented data to support the biological mechanism of C5a receptor inhibition as an antithrombotic approach in aHUS. That presentation detailed data that CCX168 blocks the up-regulation of the coagulation promoting protein known as Von Willebrand factor or VWF on human microvascular endothelial cells, which have been exposed to aHUS patient. This is important because VWF plays a central role in the clotting cascade and thrombosis or blood clotting with a blood vessel is a central part of the pathology of aHUS. Furthermore, VWF gene defects have been identified in patients with aHUS and are thoughts to be an underlying cause of the disease. Therefore this work by our collaborator supports the integration of C5a and its receptor in the activation of the coagulation system in promoting thrombosis in aHUS. Accordingly, the work provides a mechanistic validation for inhibiting C5aR by our drug CCX168 in the treatment of aHUS. Further to this point, we presented additional science on this topic during the quarter at the European Renal Association, ERA/European Dialysis and Transplant Association, EDTA meeting in London. There we outlined proof-of-concept data showing direct anti-thrombogenic potential of CCX168 in serum from patients with aHUS. Both of these recent scientific presentation demonstrate that CCX168 could potentially play a key antithrombotic role in the treatment of aHUS. And finally in the area of treating rare and orphan diseases with CCX168, let's look at IGA nephropathy where we have an ongoing Phase II pilot study. As a reminder, the trial protocol includes up to 12 weeks of dosing IGA nephropathy patients with inhibitors of the renin-angiotensin-aldosterone system, a so-called RAS therapy running period prior to receiving CCX168, in order to stabilize patients on the RAS inhibitor therapy. A few patients have indeed this running period and we have commenced dosing of CCX168 and will continue per protocol with up to 12 weeks of treatment. We anticipate continuing enrollment into 2016 and since this is an open label study, we anticipate having some initial results towards the end of 2015, and during 2016. Now let me turn to our chronic kidney disease program. We and other experts believe that the chemokine receptor known as CCR2, plays a central role in the progression of diabetic chronic kidney disease or diabetic nephropathy. At the aforementioned ERA-EDTA meeting during the quarter, the Phase II results from CCX140 in diabetic nephropathy were well received by the medical community. Especially the fact, that the improvements in the primary and secondary endpoints were achieved by adding CCX140 to patients also receiving best standard therapy. That is the clinical improvements achieved by inhibiting CCR2 with CCX140 were of a significant additive benefit to patients over and above those improvements from the standard of care treatment alone could confer. This was presented at the meeting by Professor de Zeeuw of the Netherlands, who focused on the study design, subject disposition and overview of the drug safety profile, as well as primary endpoint data from the trial. He reported the fact that the trial achieved its primary endpoint and that the data suggest that CCX140 has renoprotective effects on top of standard of care in patients with type II diabetes and nephropathy. We look forward to additional presentations and discussion on the results from this trial at other major medical meetings this year, and upcoming peer-reviewed medical journal publications in the near future. Now turning to our efforts in the immune-oncology area; we have an ongoing multicenter clinical trial in patients with non-resectable pancreatic cancer with our second CCR2 inhibitor CCX872. The enrollment in the trial occurs in two stages; Part A and Part B. In Part A, which is now complete eligible patients receive a single dose of CCX872. In Part B, which has already commenced approximately 50 patients are scheduled to receive FOLFIRINOX, one of the current standards of care in the treatment of cancer of the pancreas and twice daily doses of CCX872 for 12 weeks. Patients who achieved at least stable disease at the end of the 12 week period are eligible to continue treatment with CCX872. The trial will evaluate if the combination of CCX872 and FOLFIRINOX can promote a more effective antitumor response in these patients than the standard of care alone. The primary efficacy measurement will be a progression free survival when patients have completed at least 24 weeks of treatment. Now, what makes this approach so interesting? In oncologic disease, tumors can profoundly subvert inflammatory and effector immune in this case effector meeting anti-tumor responses. In the tumor cellular microenvironment, CCR2 bearing cells are thought to be largely of an immune suppressive behavior. These are the so-called myeloid-derived suppressor cells or MSDCs. These cells effectively help the tumor hide from the body’s cytotoxic immune response to tumor cells. Inhibiting CCR2 and thus the myeloid-derived suppressor cells controlled by CCR2 could therefore lead to the liberation of a cytotoxic immune response against the tumor cells and improve patient survival. By the end of 2015, we plan to report initial data from this trial. This will be our first and in early into whether CCX872 may play a role in reducing the myeloid-derived suppressor cell content and activity of those sells in the cellular microenvironment and pancreatic cancer, thus potentially enabling a more effective tumor cytotoxic immune response. Beyond CCX872, but still in the immune-oncology area, we are conducting preclinical work with various chemokine receptor inhibitors in combination with check point inhibitors such as those inhibiting the PD-L1 pathway. We believe that this combinatorial approach may result in even a greater anti-tumor effect. We plan to present preclinical data to support the hypothesis in the fourth quarter of this year. With I'd like to turn the call back over to Susan.

[Susan Kanaya:]

Thank you, Tom. As I mentioned earlier, our 2015 second quarter financial results were included in our press release provided earlier this afternoon. Research and development expenses were $8.6 million for the three months ended June 30, 2015 and were below the $9 million reported in the same period in 2014. The decrease in research and development expenses was primarily attributable to lower expenses associated with CCX140 or CCR2 inhibitor, due to the completion of the Phase II clinical trial in patients with diabetic nephropathy in the fourth quarter of 2014. And CCX507, our second generation CCR9 inhibitor, due to the completion of Phase I clinical development in the third quarter of 2014. These decreases were partially offset by higher expenses associated with CCX168, our C5aR inhibitor, due to continuing patient enrollment in the CLEAR Phase II clinical trial in Europe and in the CLASSIC Phase II clinical trial in North America for the treatment of AAV. Further, the commencement of enrollment in Phase II proof of concept clinical trials in patients with IgAN nephropathy and aHUS and costs associated with initiating the pancreatic cancer trial for their second generation CCR2 inhibitor CCX872 contributed to the increase in 2015. General and administrative expenses were $3.6 million for the three months ended June 30, 2015 compared to $3.4 million for the comparable period in 2014. This increase in 2014 to 2015 was primarily due to increases in stock based compensation expense for stock option grants and restricted stock unit awards and professional service expenses. Total shares outstanding at June 30, 2015 were approximately 44.1 million shares. Cash, cash equivalents and investments totaled $94.2 million at June 30, 2015. With that, I will now turn the call back over to you Tom.

[Thomas Schall:]

Thank you, Susan. Across our key therapeutic areas including rare and orphan diseases, chronic kidney disease and immune-oncology, we have five ongoing clinical trials. We anticipate several milestones across these areas in 2015 and into 2016 as follows. Starting with orphan and rare diseases, we look forward to announcing top line results by the end of this year from the vasculitis Phase II CLEAR trial with our C5a receptor inhibitor CCX168, which is being conducted now in Europe. And we’ll continue enrollment in the vasculitis North American Phase II CLASSIC trial with CCX168 and report topline data in the first half of 2016. We plan for an end of Phase II meeting in 2016 with positive CLEAR and CLASSIC Phase II results and initiating a Phase III trial in patients with ANCA-associated vasculitis by the end of 2016. And also we’ll report early results from the CCX168 Phase II proof of concept study in patients with AHUS by the end of 2015. Next, in the area of chronic kidney disease, we look forward to additional presentations at major medical meetings and the peer-reviewed publication of data from the CCX140 Phase II trial in patients with diabetic nephropathy. As we continue the design of Phase III trials and preparation for Phase III development and continue to prepare for CCX140 at the Phase II meeting with the FDA. Finally in the area of immune-oncology, we look forward to advancing the pancreatic cancer clinical trial of CCX872 in combination with FOLFIRINOX and plan to report initial results by the end of 2015. And in the fourth quarter, we anticipate presenting preclinical results from the combination therapy of chemokine receptor inhibitors in combination with check point inhibitors. In closing, I am very pleased with the second quarter's continued progress and I very much look forward to sharing some more news with you in the coming months. We will now take some questions, operator?

[Operator:]

[Operator Instructions]. Our first question comes from the line of Anupam Rama from JPMorgan. Your line is now open.

[Anupam Rama:]

Hey guys, thanks so much for taking the question. Just a quick one on CCX168. Just wondering if you could set the expectations for what you are expecting on BVAS later this year, based on kind of what you’ve already seen in the data?

[Thomas Schall:]

Thank you for the question Anupam. I also have the great pleasure being joined by Dr. Pirow Bekker, our Chief Medical Officer. And since Pirow has been most closely associated with the data recently, I think I’ll let him take that question.

[Pirow Bekker:]

So Anupam, just to remind you in the steps one and two, we’ve actually seen a significantly higher BVAS response rate in the patients receiving CCX168. The response was almost double the response seen in the compo group, so the compo group had a BVAS response rate of about 44% compared to 86% and 88% in the two CCX168 groups. So this will be our primary endpoints for this study as we complete, the step three of the study towards the end of the year. And so our hope is that we would be seeing a continued benefit in the step three of the study as well.

[Anupam Rama:]

Great. Thanks so much for taking our questions.

[Thomas Schall:]

Thank you.

[Operator:]

Dr. Tom Schall, I'm showing no further questions at this time. I would like to turn the call back over to you for any closing remarks.

[Thomas Schall:]

Thank you very much. I’m very pleased to have hosted this conference call today. I thank everyone for their time and participation. And I wish everyone a very good afternoon. Thanks again.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today’s program. You may all disconnect. Everyone have a great day.