Daré Bioscience, Inc.
Q3 2016 Earnings Call Transcript

Published: 4 Nov 2016

[Operator:]

Welcome to Cerulean's third quarter 2016 conference call. This call is being recorded. My name is Brian and I will be your operator today. With us from the company are Chris Guiffre, CEO, Gregg Beloff, CFO, Scott Eliasof, CSO, Adrian Senderowicz, CMO and Alejandra Carvajal, GC. Mr. Guiffre, please proceed.

[Chris Guiffre:]

Good afternoon, everybody and thank you for joining us. Let's start with a comment from Alejandra on forward-looking statements that may be made during the call.

[Alejandra Carvajal:]

Certain remarks that we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation 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 discussed in the risk factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC and can be accessed on our website. 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. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today November 3, 2016.

[Chris Guiffre:]

Thanks, Alejandra. Cerulean experienced a setback in August when our randomized RCC trial failed to meet its endpoint. We ran the study to determine whether CRLX101’s activity against HIV could improve outcomes in that refractory setting. Unfortunately, the answer was no. And as a result, we discontinued clinical development focused on HIV inhibition and sharpened our focus on 101’s topoisomerase 1 inhibition. There is a significant need for an improved topo 1 inhibitor that enables combinations not possible with marketed products in this class. We have three topo focused combination trials ongoing and we look forward to reporting on their progress in the quarters ahead. Cerulean’s NDC technology has created two clinical candidates to date. Our belief in our technology is now shared with a new partner, Novartis. As we announced in October, we entered into a five target collaboration with the Novartis Institutes for biomedical research. Novartis is a world leader in the research and development of oncology therapies and we believe this collaboration validates the potential of our platform. In October, we also announced a $20 million at the market financing facility with Aspire. In connection with this agreement, Aspire made a $1 million initial investment. Today, Adrian will focus - excuse me - today, Adrian will explain our focus on topo 1 sensitive tumors. Then Scott will talk about the Novartis collaboration. Finally, Gregg will comment on the Aspire ATM during his financial update. Adrian, please take it away.

[Adrian Senderowicz:]

Thank you, Chris. 101 is an NDC with a Camptothecin payload. Camptothecin is the most potent topo 1 inhibitor, but it was discontinued in clinical development because of - it was too toxic. 101 concentrates Camptothecin inside tumor cells and spares healthy issue administered in the PNES paper published early this year. Therefore we believe 101 will be more active and better tolerated than the marketed topo 1 inhibitors, irinotecan and topotecan. As we showed at ESMO last month, in our Phase 1b dose intensive trial, we have seen monotherapy responses in multiple topo 1sensitive tumor types, including colorectal and pancreatic tumors that were refractory to oxaliplatin irinotecan. One example is a fourth line pancreatic patient who progressed through a gemcitabine, abraxane combination named FOLFOX and FOLFIRINOX. This patient was in opioids due to severe pain. The patient had a 29% tumor shrinkage and was able to discontinue opioids for six months. This is remarkable clinical benefits for a fourth line pancreatic cancer patient. Example like these ones illustrates why we have the opportunity to replace irinotecan and topotecan and to treat tumors where these drugs were never approved. With strong monotherapy activity and unprecedented tolerability, for a topo 1 inhibitor, we have the opportunity to create combinations that are difficult or impossible with irinotecan and topotecan. Let me give you three examples of 101 combinations that are difficult or impossible with other topo 1 inhibitors. First, we are starting 101 in combination with weekly paclitaxel in what we use in platinum-resistant ovarian cancer. The combination is active and well tolerated. Second, we are starting 101 in combination with LYNPARZA, the first and only approved PARP inhibitor. Dose escalation is ongoing and we have not seen any dose limit in toxicity yet. Third and finally, we're starting 101 in combination with FOLFOX, a drug combination that includes leucovorin, fluorouracil and oxaliplatin. FOLFOX is sometimes combined with irinotecan to create a combination called FOLFIRINOX, a very active combination for GI tumors that few patients can tolerate. We aim to create a version of FOLFIRINOX by replacing irinotecan with 101. Dose escalation is ongoing and we have not seen any dose limit toxicities yet. I want to wrap up my comments by sharing an interesting case that the NCA investigator reported last week. One ovarian cancer patient being treated with LYNPARZA and 101 was in hospice and now he's back to full time work in less than six weeks of therapy. The patient had previously failed a LYNPARZA PD-L1 combination and now is being treated at 150 milligram of LYNPARZA twice a day plus 101 at 12 milligram per meter square. She is having no problems tolerating the PARP topo 1 combination. I understand this is just one anecdote, but imagine what you could do with a tolerable PARP topo 1 combo for many, many patients. The PARP companies can move beyond [indiscernible] and HIV positive patients to match larger patient populations with topo 1 inhibitors inner damage, Camptothecin PARP inhibitor’s ability to prevent the inner damage and repair. People are starting to learn about the profound importance of PARP inhibitors based on strong clinical data from AstraZeneca, TESARO, Clovis, Medivation, and Pfizer. The more people learn about PARP inhibitors, the more they will recognize the potential of PARP topo combinations. The home run for PARP inhibitors is combining with a topo 1 inhibitor and we have the only topo 1 inhibitor that could be combined with PARP inhibitors. With that, I will turn the call over to Scott.

[Scott Eliasof:]

Thanks, Adrian. Our platform was designed to selectively attack tumor cells, reduce toxicity by sparing the body's normal cells and enable therapeutic combinations. Like many nanoparticle companies, we have preclinical data showing targeting, but unlike most nano medicines, we also have clinical data that clearly shows CRLX101 concentrated in the tumor cells and not in the adjacent healthy tissue. These data were published in PNAS in March of this year and that paper is a significant milestone for our technology. We believe it contributed to our ability to attract a world class partner like Novartis. NDCs are differentiated from most other nanoparticle approaches because we conjugate the payload to the nanoparticle backbone. That's very different than typical entrapment approaches involving liposomes. Therefore, NDCs are the next generation of nanoparticle technology. Importantly, they offer strong market exclusivity because when you conjugate, you can create new chemical entities that are eligible for data exclusivity in the US and EU and for composition of matter patents around the world. That is simply not possible with entrapment approaches. Our technology platform has delivered two NDCs into clinical development so far and now we are going to work with one of the world's leaders in oncology to create five more NDCs. Novartis and Cerulean have started working together on NDCs directed at five mutually agreed targets, proposed by Novartis. Novartis provides the payloads and we make the NDCs. If Novartis takes any of the NDCs into the clinic, then they will handle clinical development, regulatory activities and commercialization for these NDCs. Our collaboration with Novartis provides $5 million in upfront and $3.5 million worth of FTE funding. It allows us to earn up to 233 million per target and milestones for each of the five targets, including 1.5 million per target in preclinical milestones and $7 million per target in option exercise fees to take an NDC into the clinic. And as you'd expect, we are entitled to royalties on NDCs that make it to market. With five different targets to work on, this deal gives us a chance to prove how robust and versatile our technology is, while creating significant value for our shareholders. I can't disclose targets of course, but if there are any other questions about the collaboration, I'll be happy to answer them in the Q&A portion of the call. Now, I'll turn the call over to Gregg.

[Gregg Beloff:]

Thank you, Scott. I’ll highlight our financial results for the third quarter of 2016, which are included in the Form 10-Q that was filed after market closed today. For the third quarter, we had a net loss of 10 million compared to a net loss of 10.6 million for the third quarter of 2015. We ended the third quarter with cash and cash equivalents of approximately $38.1 million. We believe that our cash and cash equivalents together with the $1 million in proceeds from the initial sale of common stock to Aspire and the $5 million upfront payment from Novartis are sufficient to fund our planned operations for at least the next twelve months. The Aspire firm commitment ATM is important to us because it provided us $1 million in capital to strengthen our balance sheet and because it gives us access to up to $19 million of additional capital. That is if and when we decide to sell shares to Aspire. We have no obligation to sell shares to Aspire, but we have the right to sell shares to Aspire using one of two mechanisms based on prevailing market prices. I want to point out that Aspire is a long time shareholder and we are grateful for their continued support. Let's wrap up with guidance. In 2017, we expect to report the following milestones. First, report further results from the ongoing Phase 1b/2 clinical trial of 101 in combination with weekly paclitaxel in patients with platinum-resistant ovarian cancer. Second, report initial results from the ongoing Phase 1/2 clinical trial of 101 in combination with LYNPARZA in patients with advanced solid tumors. And finally, we will report initial results from the weekly dosing dose escalation for 301. With that, let's open up the call, so that Chris, Adrian, Scott and I can take your questions. Brian, please prepare the queue.

[Operator:]

[Operator Instructions] Our first question comes from the line of John Newman with Canaccord. Your questions please.

[John Newman:]

Hi, guys. Thanks for taking the question. Question for I guess Chris and Adrian, could you just review why the combination of CRLX101 with a PARP makes sense and just how it’s different from some of the other topo 1. And then I was just curious if you could talk a little bit more about the study in solid tumors, is it specific to anyone solid tumor type or is it just open to a number of solid tumor types? Thanks.

[Chris Guiffre:]

Okay. Let's take your questions in reverse order. The second question is easy to knock off. Currently, it’s in all solid tumors in the dose escalation phase. Once we have declared a recommended Phase 2 dose, there was a contemplated expansion into small cell lung cancer, which is an obvious choice for this combination. There's also been plenty of discussion about other expansion cohorts and one you might imagine that's also obvious is ovarian cancer. That's where you see a lot of the PARP companies focusing, but there are a variety of tumor types that you could take a PARP topo combo into overtime. Right now, what we are focused on is as quickly as possible demonstrating that our topo 1 inhibitor is combinable with a PARP inhibitor and that's very important, because no one else has really been able to do that. Other people have tried of course, because the logic is very clear and sound. Topo 1 inhibitors damage DNA. PARP inhibitors prevent DNA damage and repair. So it is obvious that you want to be able to combine the two if at all possible. The challenge to the people of experience is that any time those two drugs interact, you get synergistic cell killing. That synergistic cell killing in the tumor is something you very much want and it's why the combination is so active, synergistically active. But unfortunately you get that synergistic cell killing in the bone marrow as well and that creates unacceptable levels of bone marrow toxicity, which has plagued other attempts. I think what I'd like to do is maybe ask Scott to talk you through a little bit about what we and AstraZeneca learned about how our topo 1 inhibitor does not create the bone marrow toxicity problems with PARP inhibitors that have plagued other combinations. Scott, would you take that for me?

[Scott Eliasof:]

Yes, absolutely. So let me first start by pointing out that, at the maximum tolerated dose of CRLX101 monotherapy in patients, there's very, very little hematological toxicities and that's actually quite surprising because both topotecan and irinotecan have quite considerable hem talks. And so do PARP inhibitors and so when people try to combine those two, as Chris said, they had to lower the dose basically into sub therapeutic levels and we knew from, since our clinical data said that there was going to be low hem talks, that's why we approached AstraZeneca about this idea of combining with CRLX101 and they immediately jumped on the idea. And what we've shown in preclinical studies is that when you look in the tumor and actually we have both clinical and pre-clinical data showing when you look in a tumor, you see sustained DNA damage that lasts for many days. In ovarian cancer patients, we've seen DNA damage out as far as six days, which is as far as we've looked and that's quite remarkable. And it's a function of the type of nanoparticle that we create here which releases the Camptothecin slowly inside the tumor over a long period of time. In contrast in the preclinical studies we've looked at bone marrow to look at DNA damage in bone marrow what you see is a tiny little bit of DNA damage in the bone marrow from CRLX101 probably caused by the camp disease and that's released in the plasma getting into the bone marrow not the nano particles. And that's very small and very, very transient, so it's there and gone in about a day or two. And so what we reasoned is if we dose CRLX101 wait a couple of days for the bone marrow to clear and now dose elaborate continuously over the next week or two, then you can get the synergistic efficacy in the tumor because you have plenty of DNA damage from want CRLX101 and then you're inhibiting DNA repair as Chris mentioned in the tumor with elaborate. But in the bone marrow there is no DNA damage and so you don't get the synergistic toxicity in the bone marrow and so that is the concept. It is a very sound concept there's a lot of literature suggesting that topo inhibitors are the most synergistic drug combination for PARP inhibitors. So we're very, very excited to test this combination in the clinic.

[John Newman:]

Thank you Scott. And with that I'm going to ask Adrian maybe to talk to John just briefly about the clinical opportunity for our PARP topo combo.

[Adrian Senderowicz:]

Let me, John, let me give you the example of - when someone tried to - we cannot try to combine irinotecan and Olaparib, what happened with this combination. So basically the dose for Olaparib is 400 milligrams PO BID as monotherapy and dose for irinotecan is around 350 milligram per meter square every three weeks. That’s the doses that you expect to give to patients. The dose that was tolerated in patients when they combined was 50 milligrams BID for Olaparib and 125 milligrams per meter square for irinotecan. So basically is a six and third of the dose that you give to patients. Let’s put in contrast what we are doing right now in our patients, and again we are in cohort number two, we have seen no dosing toxicities, so we already giving patients 150 milligram PO BID. So three times more on the irinotecan combination was able to tolerate and 12 milligram per meter square of 101 that is 80% of maximum dose we can give. So already in cohort two, we are and this is dose that this patient that I mentioned that was in hospital within six months, within six weeks sorry, the patient is working full time. So already we are doing significantly higher doses and actually very close to what the doses you expect to have at tumor activity in the trial. So we are already very, very happy with the clinical results so far.

[Chris Guiffre:]

Does that help John?

[John Newman:]

Yeah that’s excellent, really interesting how this combination should be and will work out, so very good. And I just also wanted to ask, I know that the trial is just starting but I'm just wondering if you know if these data might surface in the first half next year, in the second half, in the middle or if at this it’s just a 2017 event?

[Chris Guiffre:]

I’d love to be more specific and when I have a better handle on it for you we'll try and tighten our guidance but for now we're being at this point in October of 2016 just a little bit cautious about exactly what we provide for specific guidance. So all I can say for you now is that we will provide that data to you in 2017.

[Operator:]

Thank you. Our next question comes the line of Michael Schmidt with Leerink Partners. Your questions please.

[Varun Kumar:]

Hi, this is Varun Kumar on behalf of Michael Schmidt. I'm just following up on the 101 combo within PARP. If you decide to move ahead let’s say in ovarian cancer, can you talk a little more on potential patient subgroup that you will initially target to enroll based on platinum sensitive status and BRCA status guide? Thank you.

[Chris Guiffre:]

Sure, I'm going to turn that one over to Adrian to let him talk a little bit about that.

[Adrian Senderowicz:]

There are multiple opportunities in ovarian cancer so I assume you heard we have anti-tumor activity as monotherapy in platinum-resistant patients, in platinum-sensitive in combination with avastin, in combination with paclitaxel and looks like with combination with Olaparib. We need to be very focused and we need to get into the market the sooner the better. So we're going to have focus in a particular tumor types that are highly a unmet medical need in order to go to the market sooner. So you can imagine that platinum resistant in ovarian cancer is a particular avastin is the most significant unmet medical and obviously patients who fail PARP inhibitors will be the quickest way to the market, but again this is going to be a beachhead and as soon as we have approvals in these indications we’re going to move up.

[Chris Guiffre:]

Varun, I think it's an excellent question. But I also want to point out that we - in the PARP topo combo we don't have complete control over where we go, right. This is a collaboration between us and our friends at Astra Zeneca. So to some extent it’s going to be dependent on where they see the best opportunity to continue to expand the label for LYNPARZA. Or whether we combine with other PARP inhibitors and help them to expand their label. And to just put that in context, I'm sure that you've become in the last year quite familiar with what we call the PARP wars and how there are six companies basically vying for one market opportunity right now. If you think about it, the market opportunity that they're all going for right now is not enormous, they're all basically focusing on platinum-sensitive ovarian cancer and then there's the BRCA-mutants which now has a further or as we've seen with, maybe the HRT positive folks but the fact of the matter is I think you should think about the current six leading contenders in the PARP wars are all going after a relatively small pie today but I think all of them understand that the money that they're investing in this space would not bring an adequate return if they didn't go after bigger pies and bigger share of the pie over time. So what I believe we can do is help expand that pie significantly and I think as Adrian mentioned in his prepared remarks the PARP companies don't just need to think about BRCA-mutant platinum sensitive ovarian cancer patients, you can start to think of a broad swath of unmet medical needs where you have that interesting combination of DNA damage repair from the topo 1 inhibitor, excuse me, DNA damage from the topo 1 inhibitor and prevention of DNA damage repair from the PARP inhibitor, it’s all about expanding the pie so that you don't have to say which small niche are you going after, which I think was more or less your question, it’s which broad patient populations do you want to go after.

[Operator:]

Thank you. Our next question comes line of Debjit Chattopadhyay with Janney. Your questions please.

[Debjit Chattopadhyay:]

The ongoing Olaparib combo study, in terms of the doses being used, how does that compare with the 800 milligram dose of the approved dose of Olaparib versus what’s being tested in the ongoing clinical program.

[Chris Guiffre:]

Good question. I'm going to need a little help from Adrian on that, can you walk him through that.

[Adrian Senderowicz:]

Debjit, how are you doing? An interesting thing that some people may not be aware, the drug - Olaparib approved at the FDA was capsules, 400 milligrams per BID capsules so that’s 800. They switched to tablets and equivalent tablet a month is 600, so 300 BID. So we in the trial that we're doing at the NCI where we're working with tablets. And we are already at 150 PO BID, so we’re half the NPV for tablets. And we're going to go as - we’re going to go as much as we can. And I can tell you again we have - we are in the second cohort, we had two patients, three - probably a third with no toxicity, that’s the major issue that these combinations have and as I mentioned to you before, for the irinotecan, they were able to give 50 PO BID capsules that's equivalent to maybe 30 milligrams PO tablets because it’s a higher So we are way ahead of irinotecan combination. I hope it helps.

[Debjit Chattopadhyay:]

And then one more follow up on that. So at what level does this become clinically really interesting if you can get to 200 milligram tablet BID or the 250 milligram or anything above the 150 BID would be especially in combo with CRLX101 would make it therapeutically really relevant.

[Adrian Senderowicz:]

So, I can answer it in two-fold, one is already clinical interest in this patient who failed Olaparib of PDL1 or had this within a few weeks from hospice to full time work and this is not happened by spontaneously. The second answer is also interesting if you go to [indiscernible] phase 1 trial, you can see responses in brachial efficient patients as low as less than a 100 milligrams PO BID capsules. So we are already at 150 PO BID tablet that's equivalent to 200 milligram capsules. So we are at doses that are active in the clinics, significantly active with partial responses. Moreover, from the 101 dose we had a 12 milligram per meter square, this is already a dose that we have seen significant activity in human tumor. So we could be expecting the right population relevant doses right now relevant therapeutic levels right now.

[Debjit Chattopadhyay:]

Great. If I may with one more question, this is still a dose escalation study which is not enriched for any BRCA-mutant ovarian cancer patients. So if it's an all-comer study, do you, even if you go to the 200 milligram BID or higher Olaparib dose would you then see consistent response rates or it doesn't matter because your primary focus really is to see if you could combine CRLX101 plus Olaparib or higher doses?

[Adrian Senderowicz:]

So let me address this, so this is indeed all-comer solid phase 1 dose escalation and we are treating, so basically the primary endpoint is to see safety. However because of these we're seeing and not toxicity, I'm discussing with some investigators at the NCI to try to start and reaching patients with BRCA deficient tumors in order to start seeing activity run now because we believe that that will be the best way forward. But again the primary endpoint is safety and we want to obviously do expansion and determine two more types of interest in the very near future.

[Debjit Chattopadhyay:]

So, it’s the last question I promise. Given where your stock is right now and this is a more philosophical question here, wouldn’t be more prudent to have patients in the dose escalation phase where a tumor response - where you could actually see a response as opposed to just looking at safety here. Clearly because if you just report out, hey, these two drugs when they combined, but we haven't really seen responses because maybe the right tumor types are not in the study, would the market have patients for that or it wouldn't be more sensible to have some of these patients who are likely to respond. And thank you so much.

[Chris Guiffre:]

Debjit, it’s a very fair question. And I guess I start off by saying I don't really fully understand what's going in the market or what's going on with our stock, it is what it is and we tend to focus on what we can control and not what we can't control. But if you say given where our stock price is wouldn't be great if we were doing something different on the protocol. That may or may not be true, I'm actually not sure but I can tell you when we wrote this protocol with the NCI and AstraZeneca, almost a year ago, we didn't design the protocol around what our stock price was doing, we designed it around the best way to develop this drug and I think we felt and our friends at Astra Zeneca felt and certainly our friends at NCI felt the right thing to do was to try and get to a recommended phase 2 dose as quickly as possible because if we did that we would have accomplished something that no other PARP topo combo had been able to do for all the reasons we've discussed earlier in the call. So we're - as curious as you are about the activity and we like it when we get these anecdotes of activity from NCI but I think our first priority and our main mission have to be to figure out what the right dose levels are for these two drugs and as Adrian mentioned, we're already excited that we're a therapeutic dose levels of both drugs and we're not seeing any signs of the toxicities that have plagued other PARP topo combos. But we still have dose levels to go, we're only treating a 12 with 101 and you know we can go up to 15. We're only treating at 150 with LYNPARZA and we're moving into that third dose level cohort, 200. I myself would be delighted if we were able to treat at 200 and if we get to 250 or 300 that almost be like I think be like icing of the cake that would be incredible. But I think the job of the NCI, AstraZeneca and Cerulean is to find that recommended phase 2 dose and then start expanding into the various tumor types that we've all discussed. I'm not sure if that addresses your question but I hope it helps at least at our thinking on the topic.

[Operator:]

[Operator Instructions] Our next question comes from the line of John Robins, private investor your questions please.

[Unidentified Analyst:]

Just a question given the current stock price, any possibility of a reverse split to stay above the dollar threshold to avoid a possible delisting.

[Chris Guiffre:]

John, thank you for the question and certainly in a stew question you're aware of the NASDAQ listing rules as are we. We understand that our stock is trading below $1, as said earlier we don't fully understand why but it is what it is and we are I guess the way I’d answer your question is we are fully prepared to take the measures necessary to maintain our listing as a public company and rather than walking through sort of the details on how that works. I think I just would like to affirm that I understand your question and we’re well aware of the situation and know how to deal with it.

[Operator:]

There are no further questions in the queue so at this time I would now like to hand the call back over to Mr. Chris Guiffre, Chief Executive Officer for closing comments or remarks. Sir?

[Chris Guiffre:]

Thank you Brian and thank you everyone for joining us today, we look forward to reporting on our continued progress in March, have a good night.

[Operator:]

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.