Daré Bioscience, Inc.
Q1 2015 Earnings Call Transcript

Published: 7 May 2015

[Operator:]

Good afternoon and welcome to the Cerulean First Quarter 2015 Conference Call. This call is being recorded. My name is Nicole and I will be your operator today. With us from the company are Paul Friedman, Executive Chairman; Chris Guiffre, President and Chief Operating Officer; and Alejandra Carvajal, Vice President and General Counsel. Now, I’d like to turn the call over to the Cerulean team, Dr. Friedman. Please proceed.

[Paul Friedman:]

Okay, thank you Nicole for the Cerulean team. Good afternoon, everybody and thank you for joining Alejandra, Chris and me for this call. As you know on March 20 after a thorough search conducted by leading executive search firm, which helped us evaluate external candidates as well as an internal candidate, the Cerulean Board of Directors unanimously elected Chris Guiffre as Cerulean’s new CEO. He is familiar to all of you from his contributions as Chief Business Officer and Chief Operating Officer. So, I am glad to have the opportunity to introduce him to you as CEO, Chief Executive Officer, and to turn this call over to him. Chris?

[Chris Guiffre:]

Thank you, Paul. As you know, our team is passionate about helping people living with cancer. And I am honored to have the opportunity to lead that team in the pursuit of its important goals. I also want to thank you Paul for your leadership and mentorship and for agreeing to remain in the capacity of Executive Chairman until the 2016 Annual Meeting. It’s really exciting to conduct my first quarterly call as CEO. So, let’s dive in. Today, I will update everyone participating on the call regarding key activities in the first quarter and provide a brief financial update. Then Paul and I will take your questions. Before we begin, I will ask Alejandra to comment on forward-looking statements that maybe made during this call. Alejandra?

[Alejandra Carvajal:]

Thanks, Chris. 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, May 6, 2015. Back to you, Chris.

[Chris Guiffre:]

Thank you, Alejandra. We had a great first quarter and these are exciting times at Cerulean. On March 19, we announced that a Phase 1b/2 trial of CRLX101 plus Avastin in patients with metastatic renal cell carcinoma, or RCC met its primary endpoint. This is one of the most important and validating events thus far in the history of Cerulean. These clinical data demonstrate the power of our nanoparticle-drug conjugates, or NDCs, which are designed to one, selectively target tumor cells; two, reduce toxicity by sparing the body’s normal cells; and three, enable therapeutic combinations. Also very importantly, these single-arm data bode well for the randomized trial that we are currently enrolling in third and fourth line RCC. The top line data we reported on March 19 included the following highlights. First, the trial achieved its primary endpoint with more than half of the patients enrolled achieving at least 4 months of progression-free survival, or PFS. Second, the median PFS for this trial was 9.9 months. That’s more than twice as long as the roughly 3.5 months we would expect to see for standard-of-care in this setting. Third, the RECIST response rate was 23%. That’s far more than the 2% to 4% response rate we would expect to see with standard of care in the third and fourth line RCC setting. Finally, consistent with the broader CRLX101 experience in more than 250 patients at this point, CRLX101 given in combination with Avastin was found to be safe and well tolerated in this important Phase 1b/2 study. The full dataset underlying the top line data we announced on March 19 will be presented by Principal Investigator, Dr. Steve Keefe. Keep in mind that patients are still being treated and these data will continue to mature beyond ASCO until there are no patients still on treatment. For those of you will be at ASCO, Dr. Keefe, the PI of a single arm study and Dr. Martin Voss, the PI on the randomized study will be joining us at a reception we are hosting on June 1. If you are there, we look forward to seeing you. We ask Doctors Keefe and Voss to share the stage of this reception because we think the data from the single arm RCC study should de-risk our ongoing randomized RCC study. The 9.9 months PFS observed so far is obviously greater than the 5.8 months of PFS we proposed to demonstrate in the randomized study. Sometimes you see a reduction in PFS from single arm data to randomized data. Here if that happened, even if you assumed let’s say a 25% reduction for example, we still would be looking at 7.4 months which comfortably exceeds the 5.8 months on which the statistical plan for the randomized trial is predicated. It’s important not to forget combinability. In addition to showing provocative signals of efficacy, the single arm study showed that the CRLX101-Avastin combination was well tolerated. CRLX101 has been used to treat more than 250 patients as monotherapy and in combinations. And so far it appears that it is well-tolerated even in combination with other treatments. This finding is important because like many others in the oncology space, we believe that combination treatment regimens are the future of cancer treatment. It also is important because combinations are not possible with so many poorly tolerated drugs. CRLX101 is special due to its apparent combine ability. These most recent data add to the growing body of evidence that CRLX101 is a great drug to use in combinations. And again the combination with Avastin was well tolerated in the single arm trial. So we expect that it will continue to be well tolerated in the randomized RCC study. At this point, I would like to talk a little bit about the treatment paradigm for people living with RCC. In the first line RCC patients are often treated with a TKI, in most cases Sutent [ph] often with some success. In second line RCC patients are often treated with a second TKI or an mTOR inhibitor, often with less success than what was seen in first line. In the third and fourth line RCC patients have to turn to another TKI or another mTOR inhibitor. Usually it’s a TKI called sorafenib. Treating a patient with a TKI after he or she has previously failed a different TKI is not an optimal treatment option, that’s probably why a third and fourth line study published in the Lancet last year showed that even a good drug like sorafenib was only able to deliver 3.6 months of PFS and a 4% response rate in this space. The other options in the space look no better. Avastin for example, when used without CRLX101 provides 3.7 months of PFS and a 4% response rate. RCC patients being treated in the third and fourth line need much better treatment options and that’s why the third and fourth line RCC space has been referred to as an unclaimed space. While Cerulean intends to claim that space, we see third and fourth line RCC as a meaningful market opportunity and one where high penetration rates are possible because of an almost complete lack of competition. In the U.S. alone, about 60,000 people per year are diagnosed with RCC. We estimate that about 10,000 patients per year in the U.S. will progress to third and fourth line. Almost regardless of what penetration rates, uptake curves and pricing assumptions you may make, you can see an attractive market opportunity for our first indication. Given the extreme unmet need in the third and fourth line setting, we see no reason why the penetration rates would not be high, the uptake curve would not be steep, and the price would not be attractive. The third and fourth line space is very different than the first and second line RCC space. There are four TKIs and two mTOR inhibitors already used in first and second line. In addition, there are combos with TKIs being studied in second line and beyond and a multi-kinase inhibitor being studied in second line and beyond. For example, Exelixis soon will be reporting cabozantinib data, which could provide an interesting new option for some patients in second line. And let’s not forget the immunooncology products being explored in the frontline setting. It’s a crowded market in first and second line and it’s becoming even more crowded. And that crowded space could serve to increase the size of our potential market in third and fourth line. If the treatment options in first and second line RCC improves, then more patients should get to third and fourth line and we would expect these patients would be fitter and healthier that would allow CRLX101 plus Avastin to be used to treat more patients in third and fourth line and for longer periods of time. Therefore, all of the advancements in the RCC treatment – in the treatment of RCC are not only good for patients, but they are also good for Cerulean. If we can contribute a significant advancement in the third and fourth line setting, then we will be fulfilling our mission to help people living with cancer. So, we are eager to see the results of the randomized study about a year from now. We continue to expect the primary endpoint readout for our randomized RCC study in the second quarter of 2016. We decided not to take an early look at response rate data, but the primary endpoint readout, which is PFS in the clear cell population has not changed since we launched the study. In fact, we continue to enroll to plan and we expect to enroll the last patient in the study this fall. When we report data on this trial, we will report primary PFS endpoint data and we will report ORR secondary endpoint data. Let’s hope these data look a lot like the 9.9 months of PFS and the 23% response rate we reported in the single-arm study in March. Finally, before I conclude our discussion of our RCC program, I will touch on the announcement we made last week. The FDA granted fast-track designation for the CRLX101 Avastin combo in metastatic RCC following progression through two or three prior lines of therapy. The FDA’s fast-track program is designed to facilitate the development and expedite the review of drugs that are intended to one, treat serious conditions and two, fulfill an unmet medical need. A fast-track drug must show some advantage over available therapy, such as one showing superior effectiveness, two, avoiding serious side effects of an available therapy, or three, decreasing a clinically significant toxicity of an available therapy that is common and causes discontinuation of treatment. Receiving fast-track designation is important to Cerulean, because it allows for more frequent interactions with the FDA review team and could lead to the agency considering a rolling review. It could also make CRLX101 eligible for a priority review. Also of note, because Cerulean is a small business, another advantage of fast-track designation is the agency would waive the application fee for our first NDA, which would save us approximately $2.3 million. With that thorough conversation about our RCC program, I would like to now transition to CRLX301. Let’s begin by underscoring that CRLX301 is the second clinical candidate from our dynamic tumor targeting platform. We are proud of what our platform has done to-date and excited about what it will continue to do as a product engine in the future. The data from the preclinical studies for CRLX301 appeared just as promising as the preclinical studies for CRLX101, because we are now seeing the translation of the CRLX101 preclinical data into clinical results. We are eager to see whether the CRLX301 preclinical data will do the same or after the start in the clinic with CRLX301, having completed the first three dosing cohorts with no DLTs. We continue to enroll patients in Australia in the Phase 1 portion of this trial. In addition, we filed an IND in the U.S. in the first quarter and received the Safe-to-Proceed letter from the FDA. So we will begin enrolling patients in the U.S. before we advance from Phase 1 into the Phase 2a portion of this trial. We continue to expect to announce Phase 1 data as well as our plans for a lead indication by the end of this year. Now, let me briefly highlight our financial results for the first quarter of 2015, which are included in the Form 10-Q that was filed earlier today. Then Paul and I will be happy to take your questions. For the first quarter we had a net loss of $8.4 million compared to a net loss of $2.9 million for the first quarter of 2014. The increase in net loss for the 2015 period was principally due to expenses associated with our clinical development programs and a near doubling in employees year-over-year. In the first quarter, we entered into a loan and security agreement with Hercules for a term loan of up to $26 million and concurrently sold $1 million of Cerulean common stock to Hercules in a private placement. We ended the first quarter with cash and cash equivalents that totaled $56.3 million. Then in April, we completed an underwritten public offering of common stock of approximately $40.3 million in gross proceeds including full exercise of the underwriters’ over-allotment option. This financing, significantly strengthens our balance sheet and we believe we will have the cash necessary to fund operations into 2017, a period of time in which we expect to achieve several significant clinical milestones. In summary, the first quarter of 2015 was highlighted by both the debt financing and promising clinical data. The second quarter is off to a great start with an important fundraising and an important fast-track designation. As we continue to announce clinical data from CRLX101 and CRLX301, I believe that we will continue that strong momentum. With that, we will open up the call for your questions, Nicole please prepare the queue.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of John Newman of Canaccord Genuity. Your line is now open.

[Kevin Dai:]

Hi, guys. This is Kevin in for John. Thanks for taking my question. I think that you guys have a pretty good cushion for your RCC data, so congratulations, I am going to ask one on Phase 2, I was wondering if I could talk a little bit about the ovarian and rectal cancer programs you have going on, specifically the enrollments, just want to see how the status is for that because I do know that in rectal cancers it does take longer because patients maybe treated and [indiscernible]. So, just wondering if you have update on the enrollments, how many patients that you guys would think that you guys be presenting and when the data will actually be coming in this year?

[Chris Guiffre:]

Sure. So, first of all, thank you for the compliment we are pleased with the 9.9 months and I agree I think you used word cushion, I do think that we have some cushion there. We will see whether it’s enough of course. You won’t know until the readout of the randomized data about a year from now. But we certainly like the data we are seeing in the Phase 1b/2 study and we are glad that Dr. Keefe is going to present it at ASCO. In terms of your questions about both the ovarian programs and the rectal programs, I didn’t even mention them in my comments today because we had no new clinical data to report. I believe in our last call we guided people to the expectation that by the end of the year we will provide additional interim data. So you may recall Kevin that on the call in March, we provided for the first time clinical data in both of those settings. We had 9 patients worth of ovarian clinical data to report and 8 patients worth of rectal clinical data report. That’s obviously too small a sample size to draw significant conclusions. So, we told people we will continue to enroll those studies and we continue to expect to provide data by the end of the year on those studies, which could help facilitate go, no-go decisions. With that said, you made a comment about the pace of enrollment and I am glad you highlighted that. There are many, many benefits associated with working with leading academic institutions on ISTs, not the least of which is their expertise. The fact that they are paying using their money to study our drug is also quite helpful when you are a small company like ours, but one of the prices you have to pay when you do that is that you are not able to control the pace of enrollment quite as much as you would like. And I think I have said publicly before that I would have preferred to have more data than 8 and 9 patients respectively on each of those trials to report. We continue to enroll those trials. They never enroll fast enough for me, but we do think we will have a meaningful body of data by the end of the year. I just think it’s not wise for me to speculate on what the exact number is in either program, but you have seen that we have 8 and 9 patients after almost a year of enrollment for each study. We are hoping we can pick up the pace on that, but you should not be expecting 25 or 30 patients at the end of the year that would be a mistake.

[Kevin Dai:]

Okay, great. Thank you so much.

[Chris Guiffre:]

Okay, thank you.

[Operator:]

Thank you. And our next question comes from the line of Mike King of JMP Securities. Your line is now open.

[Mike King:]

Good afternoon, guys. Thanks for taking the question.

[Chris Guiffre:]

Hi Mike.

[Mike King:]

Actually a couple that I wanted to follow-up on the previous. On renal, Chris, I wonder – couple of questions I had one is on the randomized trial I think the key focus should be on the hazard ratio more so than absolute level of PFS, correct? So, maybe you can talk a little bit about the hazard ratio you are looking for in case there is a play of chance, where control – we saw this with the Inlyta study, where the control arm did a lot better. So, I am just wondering if you can talk a bit about that kind of hazard ratio you are looking for in the randomized?

[Chris Guiffre:]

Yes. So, there is a limit to how much depth I can go into with you, Mike, but what I can tell you is the obvious answer to your question on the hazard ratio, it’s 0.6. And I agree with you that hazard ratio is important and it’s 0.6 in this study.

[Mike King:]

Okay, thanks for the clarity on that. Also on just can you remind us what the criteria are for measuring progression, because this is another area where trials can get, can sometimes lose their or reduce their benefit in terms of the drug over control just as far as how the clinicians read progression versus a central lab. And is that different between the open label and the randomized?

[Chris Guiffre:]

Yes, so excellent question. And I think I am going to invite Paul to join me in answering it, but let me start off with a couple of points in response to your question. So, first of all, the measurement criteria, the RECIST criteria which you are familiar with, 20% increase or the 30% decrease and so those are the criteria that are used in both the single-arm study and the randomized study. In terms of the randomized study however, there is independent review of the scans and that is a difference than what you would see in a single-arm study in an IST. So, the University of Pennsylvania is reviewing – is doing its own scans for the IST, but in the multi-center company-sponsored randomized trial, which will have more than 35 U.S. centers and 5 South Korean centers that is all being harmonized through independent review of the scans. And that’s a decision we actually made recently. That’s an additional expense for the trial, but we decided based on the advice from some of our clinical and regulatory advisors that, that was an expense well worth incurring in order to make sure that this trial was well-suited for registration purposes whether it be as one of two well-controlled trials or is the basis for an accelerated approval.

[Paul Friedman:]

So, I can’t add a whole lot to that, Chris, except to say that I think that, that is an important distinguishing aspect, the fact that we proactively decided to go ahead and spend that money with the idea of having a more blinded, a more certain objective and blinded review of the data. And I think that’s a best practice. I think that was a – it’s money well spent.

[Chris Guiffre:]

Did that help Mike?

[Mike King:]

It should. And then on ovarian, maybe you can help us put that study result – future study result into context for us, again because I guess Avastin has shown an ability to extend PFS, it’s often difficult to measure in ovarian with just because of the nature of the disease, so what kind of result would be sufficient enough I guess is the question to move forward with 101 in that setting? Thank you.

[Chris Guiffre:]

Yes. Okay, sure. Thanks. So first of all, I will say that when we started the program we used to answer that question by saying we would like to see something north of a 20% response rate, because that is what we viewed as a meaningful improvement over standard of care at the time. But we would also point to people that the AURELIA data where Genentech combined Avastin with three different chemos were worth keeping an eye on, because one of the three of those combinations actually produced some impressive results and that’s Avastin in combination with weekly paclitaxel. To the surprise of some of the thought leaders in the space those data were accepted and reviewed and approved by the agency. I think the approval is right around Thanksgiving. So really what’s going on, we are in the first few months of a potential shift in the standard of care in second and third line ovarian cancer. I think we while we enroll our various trials in ovarian cancer and we have two, we want to see whether or not the market is going to move in the direction of Avastin plus weekly paclitaxel. If you have seen those data and I know you have Mike, you can tell that that significantly moves the needle and we won’t be talking about a 20% response rate as being satisfactory to move forward. So the way I would like to answer your question is to say over the course of this year, while we are enrolling patients in a combo of 101 and Avastin and in a combo of 101 and weekly paclitaxel, we will be evaluating what the bar is that we would want to clear before we would decide whether to invest in an expensive randomized trial. So by the end of the year I might be able to answer your question with a little more specificity, but for now that’s really about all I can say without speculating.

[Mike King:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Katherine Genis of Edison. Your line is now open.

[Katherine Genis:]

Hi everybody. First, Chris congratulations.

[Chris Guiffre:]

Hi, Katherine.

[Katherine Genis:]

How are you?

[Chris Guiffre:]

Doing well.

[Katherine Genis:]

Good. Just wanted to congratulate Chris on your new assignment first and wish you with the best and good luck in your new role.

[Chris Guiffre:]

Thank you very much.

[Katherine Genis:]

You’re welcome. I just had a couple of questions. The first one was in reference to the Phase 1b/2 study and the randomized, could you just talk a little bit about representative patient populations. Are you looking at a very similar patient population in the randomized versus the single arm maybe you could speak to that. And then second, could you just refresh my memory as to any dose limiting impact of the combination of CRLX101 and Avastin?

[Chris Guiffre:]

Sure. So you know what I would like to – I will definitely jump in and just tell you that yes at a high level they are the same patient population. But I will actually turn to my colleague Dr. Friedman and let him and his MD try and answer the rest of the question for you.

[Paul Friedman:]

If I am correct here, we are only taking third – people who have seen two or three previous regimens where as there were a couple of patients in the 22 who read or layer or earlier. And we are also taking non-clear cell, but we have made the primary analysis of 90 patients who are going to be clear cell. And then there are another 20 who are non-clear that don’t – are not part of the primary analysis, but we were intrigued in the IST study by some interesting responses we got in the non-clear cell patients and that’s an even harder patient population to treat. The second part of the question – the second question had to do with limitations with the dosing combination. I think the combination has been very well tolerated. I mean, if you go above the MTB, you do see bone marrow issues, but if you stay at the 15 mg/m2 in combination with Avastin in the 250 patients that we treated to-date combination has been very well tolerated.

[Chris Guiffre:]

Exactly. Yes, I mean, I don’t know how much more we can awake and answer that question other than to say there have been no discontinuations, no dosing down, tolerability is qualitatively as best as they are well-tolerated. And maybe the best thing we could do is point you to the presentation at ASCO and hope that Dr. Keefe speaks to that in more detail when he gives his presentation or obviously if you are at ASCO, we would love you to come to the reception and hear what Dr. Keefe and Dr. Voss have to say to the group at our reception.

[Katherine Genis:]

Absolutely. We are looking forward to that. Thank you.

[Chris Guiffre:]

Thanks.

[Operator:]

Thank you. That concludes the question-and-answer session. I will now turn the call over to Mr. Guiffre for any closing remarks.

[Chris Guiffre:]

Excellent. Well, thanks to all of you for joining us today and we are looking [Technical Difficulty] next quarter. Have a good night.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect.