Clovis Oncology, Inc.
Q2 2015 Earnings Call Transcript

Published: 7 Aug 2015

[Operator:]

Good day, ladies and gentlemen. And welcome to the Clovis Oncology Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to hand the conference over to Anna Sussman, Senior Director, Investor Relations. Please go ahead.

[Anna Sussman:]

Thank you, Karen. Good afternoon, everyone. Welcome to the Clovis Oncology’s second quarter 2015 conference call. You should have received the news release announcing our second quarter financial results. If not, it is available on our website. As a reminder, this conference call is being recorded and webcast. Remarks maybe accessed live on our website during the call and will be available on our archives for the next several weeks. The agenda for today's call is as follows; Patrick Mahaffy, Clovis' President and CEO will discuss the highlights of the second quarter and provide an update on our clinical development program. Then Erle Mast, Clovis' Chief Financial Officer, will cover the financial results for the quarter in more detail. Patrick will make a few closing remarks and then we will open the call for Q&A for which Dr. Lindsey Rolfe, our Chief Medical Officer; Gillian Ivers-Read, Chief Regulatory Officer; and Steven Hoerter, our Chief Commercial Officer will also be available. Before we begin, please note that during today's conference call we may make forward-looking statements within the meaning of the Federal Securities Laws, including statements concerning our financial outlook and expected business plans. All of these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the date on which they are made and Clovis undertakes no obligation to update or revise any forward-looking statements. Now I’ll turn the call over to Patrick Mahaffy.

[Patrick Mahaffy:]

All right. Thanks, Anna. Welcome everybody. Thanks for joining us this afternoon. Certainly an exciting time here. We have completed regulatory submissions on schedule for rociletinib in U.S. and Europe and we are preparing for the potential U.S. commercial launch for rociletinib before year end. We also established a five-year Cooperative Research and Development Agreement known as CRADA with the NCI to explore rociletinib anticancer combination therapy which will complement our own combination study plan. We are also making great progress with rucaparib. In April we received breakthrough therapy designation for rucaparib for advanced mutant BRCA ovarian cancer and at ASCO this year we have provide an updated data in both mutant BRCA, as well as BRCA-like patients, which I will describe shortly. Importantly, with the $298 million equity offering we completed in July, we are well-capitalized to pursue our development and clinical objectives. The breakthrough therapy designation in place for two of the three products in our pipeline and the potential U.S approval for rociletinib by year end 2015 and rucaparib in 2016, clearly accelerating for becoming a commercial biopharmaceutical company. Before I start, I want to just say, how happy I am to welcome Dr. Lindsey Rolfe as our new Chief Medical Officer, responsible for preclinical and clinical development and pharmacovigilance at Clovis. Lindsey had the slow motion six-year quo has finally succeeded. So I think its awesome that you’ve joined us in this role, actually you’ve been with us six years, almost from the beginning. I will also note that with NDA filing is plan, Andrew has moved down to new endeavor. We are really excited for Andrew. We have loved working with him here and I have a feeling he has spoken to many of you about his new endeavor as well. It is exciting for him and we wish him absolutely all the best. Let me start with rociletinib, as mentioned our regulatory filings took place in U.S. and Europe before the end of July. There is a validation period before both applications are firmly accepted for review and we anticipate receiving the validation for these filings during the third quarter. We are also pleased that in July, the EMA granted rociletinib accelerated assessment which can reduce the EMA review time by approximately three months. QIAGEN supplemental PMA filing for companion diagnostic for T790M positive mutant EGFR non-small cell lung cancer is expected to be submitted in the next few days and we expect that it will be reviewed in parallel with our NDA submission. I’d like to take a moment to recognize the team that work so tirelessly to submit these simultaneous filings. It was a huge effort by our pretty small organization and our clinical collaborators, and I am proud and impressed that we able to go from IND to NDA in just over three years, ahead of our most optimistic expectations from the start of this program. Our submissions include data from two single-arm studies, TIGER-X and TIGER-2. These data sets have continued to demonstrate compelling and consistent activity, and tolerability in patient of T790M-positive mutant EGFR non-small cell lung cancer. I would like to take a moment to review some of the specific characteristics of our data set. Our data are derived primarily from Western patients who are heavily pretreated and have very advanced diseases. As reported at ASCO, patients at the 500 milligram BID dose enrolled in our studies had received a median of three prior therapies, 74% had progressed on an immediate prior EGFR TKI and 40% had a history of brain metastases, 84% of these patients were treated at U.S. institutions, primarily academic institutions. These patients we believe are representative of the heavily pretreated patients typically seen at U.S. academic cancer centers and given their advanced disease represented real test for a novel therapeutic. Our data also show that rociletinib treatment is not associated with the cutaneous toxicity, which are the hallmark of wild-type EGFR inhibition, such as acting from rash, stomatitis and paronychia. All of these can significantly impact patients quality of life, result in treatment discontinuation and cause patient distress, which maybe especially and if you, for patients transitioning to a subsequent treatment following frontline therapy where these side effects occur frequently. Overall rociletinib is well-tolerated. The most frequent adverse reaction or lab abnormalities reported were diarrhea, nausea, fatigue, QTC prolongation and hyperglycemia. Importantly, the only Grade 3 adverse reaction or lab abnormality reported in greater than 5% of patients was hyperglycemia. As a result, we believe our data demonstrate the safety and activity of rociletinib in a uniquely relevant patient population. Interestingly, as we have discussed previously, we have shown encouraging response rates in the centrally confirmed T790M negative patient population as well. This activity maybe related to the anti-IGF1R activity from the human metabolite rociletinib, which of course, is also the cause of the hyperglycemia we sometime see. Multiple studies in recent years, most recently by Crystal et al. in science have been published demonstrating that the IGF1R pathway plays a role in the development of resistant to EGFR inhibitors and two other targeted therapies. This unexpected but potentially very meaningful finding is now being explored in our TIGER-2 and TIGER-3 studies where we are actively enrolling both T790M negative and T790M positive patients. This brings me briefly to our ongoing development program for rociletinib. We have three global registration studies enrolling in the TIGER program in EGFR mutant non-small cell lung cancer patient. TIGER-1, a randomized Phase 2/3 global registration study versus erlotinib in newly diagnosed patients., TIGER-2 single arm study in second line patients directly after progression on their first only TKI therapy. Importantly, TIGER-2 includes both T790M positive and T790M negative patient cohorts and includes sites in the U.S., Europe and Asia. TIGER-3, a randomized comparative study versus chemotherapy in both T790M positive and T790M negative patients which requires TKI therapy. Phase 1 study of rociletinib in Japan has completed enrollment in [TIGER-J] [ph] the phase 2 study in Japanese patients has agreed upon with the Japanese regulatory authority who will initiate in the fourth quarter and will examine activity in both T790M negative and T790M positive patients. Finally, as we have discussed, having demonstrated the monotherapy activity of rociletinib, we are now moving forward with the series of combination studies to see if these results can be approved upon. We expect that three of these combinations with inhibitors of PDL1, PD1 and MEK will initiate in the third or fourth quarter of 2015. We also anticipate additional combination studies beginning in 2016 and will provide details on additional combination studies as we've agreements and protocols in place. To facilitate and potentially accelerate this exploration, we signed a cooperative research and development agreement or CRADA during the second quarter with NCI to evaluate rociletinib in combination with other anticancer therapies over the next five years. This research will be conducted through the Cancer Therapy Evaluation Program or CTEP of the NCI. We were honored that rociletinib was chosen to participate in this program. Importantly, we expect our next updated clinical data to take place at the World Lung Meeting in Denver in September. Planned presentations include updated data in T790M negative patient and patients with CNS involvement and many preclinical combinations. As you know and probably have seen, we just presented a full update of our data set at ASCO. We do not plan to provide full clinical data update from T790M positive patients in TIGER-X or TIGER-2 trial during the rociletinib regulatory review process. And thus they will not be there at the World Lung Meeting. Moving to our commercial plans for rociletinib, we continue to prepare for potential U.S. launch by year-end. Our marketing -- market access, sales leadership and U.S. MSL teams are in place. Recruiting the leadership of our field sales organization has also completed with that team in place and we've been extremely pleased with the quality of candidates who have joined us to build a world-class oncology commercial organization here at Clovis. We are now finalizing the recruitment of our sales force and expect to have the full U.S. commercial team including that sales force in place next month. Turning now to our PARP inhibitor, rucaparib. It has also been a great time for rucaparib. We have shown very encouraging activity in the substantial number of ovarian cancer patients including both germline and somatic mutant BRCA patients and also in patients with tumors of other DNA repair deficiencies that cause them to behave similarly to tumors with BRCA mutation. I refer to these patients as BRCA-like all those with the BRCA-like signature. In recognition of rucaparib’s activity, in April, we received breakthrough therapy designation from the FDA for rucaparib’s monotherapy treatment of advanced ovarian cancer in patients with BRCA mutated tumors, inclusive of both germline and somatic BRCA mutations. Rucaparib is the only PARP inhibitor on the market or in development to have received breakthrough therapy designation. Back to our knowledge, it is the only drug under development for ovarian cancer that has received breakthrough therapy designation. As I noted earlier, we presented updated rucaparib data from two phase 2 studies in ovarian cancer, ARIEL2, Study 10 at ASCO month or so ago. Highlights from these presentations include data from ARIEL2 in platinum sensitive BRCA mutant patient demonstrated an overall RECIST response rate of 69%, the disease control rate of 94% and the median progression free survival of 9.4 months. Complete responses were observed in 10% of these patients. Data from ARIEL2 in patients with the BRCA-like signature demonstrated a RECIST ORR of 30%, disease control rate of 73% and the median progression free survival of 7.1 months. Further demonstrating the ability of our BRCA-like assay to predict outcomes of rucaparib, only 13% of biomarker negative patients responded direct to rucaparib therapy. Overall approximately 60% of the 204 patients in ARIEL2 had either -- were either BRCA mutant or had BRCA-like tumors. The response rate for rucaparib is surprisingly consistent in mutant BRCA patients, even for patients who have received multiple prior lines of therapy. Importantly, in 23 BRCA-mutant patients, treated with at least three prior lines of chemotherapy, a 61% RECIST response rate, with the median duration of response greater than 11 months was observed. What is particularly encouraging in this very advanced population? Complete responses were observed in 13% of these patients. These data are especially relevant, as it is the population we are pursuing for our initial indication for rucaparib. These are the highest response rates ever seen in a meaningfully sized, mutant BRCA ovarian cancer patient population and the only evidence of activity in a prospectively defined BRCA like population for any PARP inhibitor. Rucaparib is also well tolerated with a manageable safety profile. The grade 3/4 treatment-related adverse events observed in greater than 15% of patients treated with the recommended 600 mg BID dose were anemia/decreased hemoglobin and fatigue/asthenia and anemia. Rucaparib is clearly emerging as a differentiated drug that is the subject of a very differentiated development strategy. We are encouraged by our results, which demonstrate the identification of the tumor BRCA-like signature, may identify a broader but still selective population of ovarian cancer patients likely to benefit from rucaparib therapy. No targeted therapies exist today for these patients with a BRCA-like signature and we're enthusiastic about rucaparib’s observed activity in the selected patient population. Let me briefly now review the rucaparib development program. As we announced last quarter, we expanded ARIEL2, what is now a registration study for the treatment of ovarian cancer patients who failed at least three prior therapies. We are adding approximately 300 patients into the ARIEL2 extension and data from this study are expected to service the basis of an NDA submission into 2016. Our commissions are very enthusiastic about the data we reported at ASCO. And that is probably influencing the very encouraging enrollment we are seeing in the study. As an important reminder, the ARIEL2 study prospectively assesses and correlates rucaparib activity -- efficacy with the molecular characteristics of each patient's tumor, resulting in three pre-specified subgroups of ovarian cancer patients

[Erle Mast:]

Thanks, Pat. Good afternoon, everyone. Our second quarter 2015 financial results are included in this afternoon’s press release and I will review just some of the highlights of these results. Our net loss attributable to common shareholders was $71.5 million, or $2.10 per share for the second quarter of 2015 and $134.7 million, or $3.96 per share for the first half of 2015, compared to a net loss of $34.8 million, or a $1.03 per share, and $65.5 million or a $1.93 per share for the comparable periods of 2014. The increase in our net loss was primarily due to increased investments in research and development activities in 2015, as well as the lack of milestone revenue in 2015 as compared to 2014. Research and development expenses totaled $60.3 million for the second quarter of 2015 and $117.1 million for the first half of the year, compared to $28.4 million and $52.6 million for the comparable periods of 2014. And these increases are due to expanded enrollments in the TIGER-X and the TIGER-2 studies for Rociletinib and the ARIEL2 and ARIEL3 studies for rucaparib, as well as the initiation of the TIGER-1 and TIGER-3 studies, launch preparation activities for rociletinib and higher personnel cost to support each of these activities. General and administrative expenses totaled $7.2 million for the second quarter of 2015 and $14 million for the first half of the year and that compared to $5.3 million and $10.6 million for the comparable periods of 2014. The year-over-year increase is primarily due to higher share-based compensation expense, increased personnel expenses and facility costs, and higher professional service fees. Our net cash burn from operations for the second quarter of 2015 was $57.2 million and it was $106.5 million for the first half of 2015. As we discussed on previous calls, we do expect that the quarterly cash burn will continue to increase throughout this year, as enrollment in our clinical studies continues to grow and our launch preparation activities for rociletinib expanded. We ended the second quarter with $377.6 million in cash and short-term investments but does not include the $298 million that we raised in July through an offering of 4.1 million shares of our common stock. With that, I'll turn the call back over to Pat for some closing remarks. And then, we'll open it up for Q&A.

[Patrick Mahaffy:]

Okay. Thanks, Erle. A quick summary of some milestones. For rociletinib, we intend to continue enrollment in the TIGER studies underway and will commence TIGER-J and the combination studies discussed. Most importantly, we are finalizing recruitment of our sales force and preparing for potential US product launch for rociletinib by the end of this year. For rucaparib, we will continue to enroll ARIEL2 and ARIEL3. We are excited about presenting the final ARIEL2 data in an overall presentation at ESMO in September. And importantly, we continue to plan for a mid-2016 or 2016 to the FDA for rucaparib treatment in ovarian cancer patients, who failed three prior lines of therapy. Finally for rociletinib, continuing enrollment and we anticipate the first update from the breast cancer study by the end of this year. With that, thanks for joining us. We look forward to seeing many of you here in Colorado at the World Lung and at ESMO in Vienna in September. And I think we'll now open up the call for Q&A.

[Operator:]

[Operator Instructions] Our first question comes from the line of Terence Flynn from Goldman Sachs.

[Terence Flynn:]

Hi. Thanks for taking the question. Just wondering now that you submitted TIGER-2, can you give us any perspective just on the data relative to what we've seen with TIGER-X? I know you don't want to get into too many of the details, but can maybe just give us a high-level summary in terms of whether patient mix, efficacy, tolerability, and any comparison across the two studies? Thank you.

[Patrick Mahaffy:]

Yes. We see relatively consistent data from all of our studies. I will remind you that some of the TIGER-2 data that was submitted is primarily sort of supplemental data, 625 and higher doses are the primary dose. We are seeking approval for 500 mg comes from TIGER-X and the data you saw at ESCO.

[Terence Flynn:]

Okay. Thank you.

[Patrick Mahaffy:]

You bet.

[Operator:]

Thank you. And our next question comes from the line of Charles Duncan from Piper Jaffray. Hey, guys. It’s William for Charles. Thank you for taking the question. The quick question on TIGER-J, do you expect that to be registrational?

[Patrick Mahaffy:]

It is a component of a registrational study. It will also include data from the same dataset that effectively is in our NDA and MAA. We are required as all are to run a specific study in Japanese-only patients, but we were really pleased that the NDA was encouraging of us to enroll both T790M-positive and T790M-negative patients in that Japanese-only study. Let me say that you don’t expect to need additional studies after that. And when do you think that could be out?

[Patrick Mahaffy:]

A lot of it depends on when we start and how fast enrollment goes. I would expect that we'll use that data to submit for approval if not at the end of '16, more likely early '17 as the timing of a Japanese submission. Okay. And then, do you guys have any target timelines for development in the rest of Asia?

[Patrick Mahaffy:]

We will use the data from the NDA and MAA as the basis of submission in several other territories, including South Korea, Taiwan, I won’t name them all, but those are the two largest as the basis of our submissions. And so those submissions will likely go in prior to any Japanese submission. Okay. Great. Thank you.

[Patrick Mahaffy:]

Yes. I think, Gillian, just said to me, you could say too, but it will likely be they will go in after the US approval. Okay. Great. Thanks.

[Operator:]

Thank you. And our next question comes from the line of Eric Criscuolo from Mizuho.

[Eric Criscuolo:]

Good afternoon. Thank you for taking my questions. Just going on for Peter tonight. I guess just on the CRADA that you have. Can you maybe provide a little more detail as to what type of trials, what type of combos they might be looking at? And are the PDL-1 and the PD-1 combos trials that you had discussed previously, are those part of the CRADA?

[Patrick Mahaffy:]

They are not. So the PDL-1, PD-1, and the MEK inhibitors, it doesn’t mean they couldn’t become so over time. But the studies we’ve referenced in the past that will start in the third and fourth quarters with the PDL-1 and PD-1 and the MEK inhibitors all studies that were underway and precede the establishment of that CRADA. The CRADA will initiate studies as early as the end of this year, possibly next year. We will announced what those combos are, hopefully either at one of the fall meetings or at our next quarterly update. We have agreed with them. We actually have to agree before we say anything that we say something in a format that they agree, we just haven’t done that yet. So more to come but they’re exciting and not surprising combinations.

[Eric Criscuolo:]

All right. Great. Thank you. And then just on the PD1 and the PDL1 combo trials, do you have any insight into maybe differences that you might see between the PD1 versus the PDL1 mechanism of action with your drug and maybe why one might work better versus the other?

[Patrick Mahaffy:]

Lindsey.

[Dr. Lindsey Rolfe:]

And that’s a good question. I think the simple answer is no, there is not enough information out there with other molecules to lead us to believe that there will be a significant difference between one or the other. We’re in exploratory mode here.

[Eric Criscuolo:]

Okay. Great. Thank you.

[Patrick Mahaffy:]

You bet.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from line of Cory Kasimov from JPMorgan.

[Cory Kasimov:]

Hey, good afternoon, guys. Thanks for taking the question. A couple for you on roci and one on lucitanib. So for the update on the negative patients at World Lung, how many more incremental patients should we expect to see there? And then also from a data standpoint, what's the latest thinking on when you might provide an initial update from the TIGER-1 frontline study?

[Patrick Mahaffy:]

So as to the negative, it will be -- I don’t know the number. I think we presented on about 37 patients at ASCO. I would imagine in this update in addition to our data set that include those that might have anywhere between 6 and 10 more patients, something along those line. So it’s going to get into the 40s and the number that starts being I think not a small number but something that starts looking consistent and clear. As to TIGER-1, we may try to find a way to provide something on response rate in the fall but it is sort of hard in the context of the presentations we have for TIGER-1, the only one we’re really presenting is trial in progress posters and you're not allowed in trial in progress posters to provide data. And so, I think it’s more likely than any meaningful data, it would be available at ASCO. In particular, Cory, there's no way we would have what everybody would like to see and which is actually most relevant here which is PFS data, it’s just not mature enough. And so, I wouldn't have high expectations too much on TIGER-1 in the fall but I would look to ASCO in a more realistic way.

[Cory Kasimov:]

Okay. And then another on Roci, as it relates to potential pricing of the drug, how flexible do you think you need to be considering there is a chance that AZ could theoretically beat you to the market by a month or two?

[Patrick Mahaffy:]

I was thought at CEO school, a thousand years ago and I’m not supposed to talk about price prior to an approval. And so, I’m probably not going to say that much. Obviously, prices are concerned that it’s ever discussed in our industry. I think with targeted therapies that deliver these types of disease control rate and this type of response rate, it’s a little bit different than a drug that might work in the FAB store or less of the patients who are treated. I do not regard it to be likely that either we or AZ are going to use price as a basis of differentiation. There's plenty to differentiate our drug that does not include price.

[Cory Kasimov:]

Okay. And the lastly on lucitanib, I realize this isn’t talked about nearly as much as rociletinib or rucaparib. But with data coming up later this year, I assume at San Antonio Breast, can you just set the stage a little bit for what we might expect? I mean what's the trial design to show and maybe what's the best comparator that's in the market today for that drug?

[Dr. Lindsey Rolfe:]

So, it’s a randomize Phase 2 study where patients were randomized between two doses of lucitanib that varied from breast cancer patients, including how mono-therapies have stopped working. So this is a latest stage population. And importantly, patients have to have optimizers of the FGF access, that’s just what you’d expect based on what the drug does. The program point is progression free survival and the study is still enrolling, so this certainly won’t be a final day to set. It will be a preliminary day to set. But we hope to be able to show preliminary data on PFS and in the initial cohorts of patients.

[Cory Kasimov:]

Okay. That’s helpful. Thank you very much for taking the questions.

[Patrick Mahaffy:]

You bet.

[Operator:]

Thank you. And our next question is a follow-up from the line of Charles Duncan from Piper Jaffray.

[Charles Duncan:]

Hey, guys. Just a follow-up on Japan. Do you expect to announce the Phase 1 data and when might we see that?

[Patrick Mahaffy:]

There is not much to say about our Phase 1 data. Just to remind you, our data remarkably consistent, so we don’t -- it was a Phase 1 study. It was a dose escalation study. I mean it isn’t…

[Dr. Lindsey Rolfe:]

It’s a tiny Phase 1 study that went very much to plan.

[Patrick Mahaffy:]

We’ve never even considered. We’ve shared with the investigators in the PMDA and everyone encourage us to move forward. There was nothing there and dose is the same.

[Charles Duncan:]

All right. Very good. Thanks.

[Anna Sussman:]

Okay. With that, I think we’ll wrap up the call for today. So, we like to thank everyone for their interest in Clovis Oncology. If you have any follow-up questions, you can reach me at 303-625-5022. This call can be accessed via replay over webcast at www.clovisoncology.com, beginning in about an hour and will be available for 30 days. Appreciate your interest and time. Thank you and have a good evening.

[Operator:]

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.