Kura Oncology, Inc.
Q3 2018 Earnings Call Transcript

Published: 6 Nov 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Q3 2018 Kura Oncology Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct question-and-answer session, and instructions will follow that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Pete De Spain, Vice President of Investor Relations. You may begin.

[Pete De Spain:]

Thank you, Operator. Good afternoon and welcome to Kura Oncology's third quarter conference call. Joining me on the call from Kura are Dr. Troy Wilson, our President and Chief Executive Officer; and Dr. Marc Grasso, our Chief Financial Officer and Chief Business Officer. Dr. Antonio Gualberto, our Chief Medical Officer and Head of Development is also with us and available to answer questions during the Q&A session. Before I turn the call over to Dr. Wilson, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Kura's filings with the SEC, which are available from the SEC or on the Kura Oncology Web site for information concerning risk factors that could affect the company. With that, I will now turn the call over to Dr. Troy Wilson, President and CEO of Kura Oncology.

[Troy Wilson:]

Thank you, Pete, and thank you all for joining us this afternoon. Earlier today we were very pleased to announce our registration directed study of tipifarnib in recurrent or metastatic patients with HRAS mutant head and neck cancer has been initiated, and is now open for enrollment. As a reminder, the trial has two cohorts

[Marc Grasso:]

Thank you, Troy, and good afternoon everyone. I'll provide a brief overview of our financial results here on the call and invite you to review our 10-Q filed today for a more detailed discussion. Research and development expenses for the third quarter of 2018 were $11.7 million compared to $7.1 million for the third quarter of 2017. The increase in R&D expenses for the quarter was primarily due to an increase in clinical development activities related to our registration directed study initiation, ongoing Phase 2 studies and companion diagnostic activities for tipifarnib. General and administrative expenses for the third quarter of 2018 were $4.3 million compared to $2.4 million for the third quarter of 2017. The increase in G&A expenses was primarily due to increases in non-cash share based compensation, professional fees and personnel costs. Net loss for the third quarter of 2018 was $15 million or $0.40 per share compared to $9.3 million or $0.38 per share for the third quarter 2017. As of September 30, 2018 we had cash, cash equivalents and short-term investments of $187.4 million compared with $125.9 million as of June 30, 2018. The increase in cash resulted primarily from the net proceeds of $74.5 million from our public offering of common stock. It was completed on July 2, 2018, partially offset by cash used in operations. While we continue to believe our current cash puts us in a strong position to fund the registration directed study for tipifarnib in HNSCC, we view the potential opportunity for tipifarnib as much broader in both HRAS and non-HRAS driven tumor types, and we are looking to invest accordingly. We anticipate providing an update on expected cash burn on our year-end call in early 2019. With that, I will now turn the call back over to Troy.

[Troy Wilson:]

Thank you, Marc. That concludes our prepared remarks. However, before we jump into Q&A, let me quickly lay out our anticipated near-term milestones. Preliminary data from the AITL and CXCL12 positive cohorts and our ongoing Phase 2 trial of tipifarnib in PTCL and ASH, in December, additional biomarker enriched data from other hematologic indications in 2019, additional data from our Phase 2 trial of tipifarnib in HRAS mutant SCCs in 2019, data from our Phase 1 dose escalation trail of KO-947 in 2019, and submission of an IND application for KO-539 in the first quarter of 2019. With that, operator, we're now ready for questions.

[Operator:]

[Operator Instructions] And our first question is from Jonathan Chang from Leerink Partners. Your line is now open.

[Jonathan Chang:]

Hi, guys. Thanks for taking my questions. First question, can you help set investor expectations with regard to the upcoming tipifarnib data and PTCL at ASH. What would you view as a win there?

[Troy Wilson:]

Sure, Jonathan. Let me ask Antonio if he can comment on that.

[Antonio Gualberto:]

Yes, hi, Jonathan. So as you know, the patient population that we are currently treating in this study is a study upon population. They have picked up some data on the second-line, for example, [indiscernible] study for like with 20 patients that is around 40% from 46%. So we put a threshold of around 30% response rates for the AITL, and then a 10% null hypothesis for the PTCL nodes. Nevertheless, you note our intent is to select for the patients that are most likely to response, they are mostly likely to receive clinical benefit. So personally, we will see a response rate; perhaps this is a stabilization of about 40%, close to half of the patients that for me will be a good indication of success.

[Jonathan Chang:]

Thanks. Second question, how are you thinking about potential next steps for tipi in PTCL and maybe heme malignancies more broadly?

[Troy Wilson:]

Yes, so Jonathan, as Antonio mentioned, our focus in the lead up to ASH is really to get that data out there, to be able to demonstrate that CXCL12 offers us a means of enriching for clinical activity. Once that data is presented and we have a chance to discuss it, next steps would obviously involve is there a path forward we need to get regulatory input. I think our focus is directing people, at the present time, toward that ASH data. With respect to the other hematologic malignancies, as we indicated in the prepared remarks, the PTCL trail is advanced in that it was the first trial to start. We'd be looking to providing updates on those trials some time in 2019 around the major medical conference.

[Jonathan Chang:]

Great, thanks. And just one last -- sorry, go ahead.

[Antonio Gualberto:]

So, let me just add at my end. And obviously, we don't want to get ahead of the presentation. But in addition to the data or the activity of tipifarnib in every single patient that we have enrolled up to the timeout of the presentation, we are also doing a number retrospective looks to the PTCL populations how they respond in the particular subset to the standard of care. So we will be able to compare the potential outcome of the standard of care in a particular subset versus the result that we see with tipifarnib. So that will provide you with the appropriate context to interpret the data.

[Jonathan Chang:]

Got it, thank you. Just last question for me, you've also guided to additional data from the Phase 2 tipi study in HRAS mutants SCC in 2019. Can you talk about how much more data investors can expect given the announcement today of initiation of the registration-directed study?

[Troy Wilson:]

Sure, Jonathan. So now that the pivotal study or the registration directed study has been initiated and is open for enrollment, our intent would be to try to enroll patients that qualify on that study. That being said, we will provide an update on the ongoing Phase 2 study in terms of the patients currently on study and any additional patients who are added. There's a bit of asynchrony between patients that are being identified in sites that are being opened in the pivotal. In addition, as we indicated, we were quite encouraged in connection with the ESMO presentation to see some early signs of clinical activity in other squamous cell carcinomas that are characterized by HRAS mutations. We're going to be implementing the same dose and allele frequency cutoff in that cohort, and we would, in the same context and at the same time, we'd look to provide an update on that cohort as well, and of course, in both instances in the context of a medical meeting or a conference.

[Jonathan Chang:]

Great, thank you very much.

[Troy Wilson:]

Thank you, Jonathan.

[Operator:]

Thank you. Our next question is from Konstantinos Aprilakis from JMP Securities. Your line is now open.

[Konstantinos Aprilakis:]

Hi, guys. Thanks very much for taking my question. So, assuming AIM-HN enrolls steadily over approximately two years, as you guided, when do you expect to report initial data from the study, and what sort of cadence do you have in mind for subsequent readouts? And then two quick follow-ups.

[Troy Wilson:]

Sure. So, Konstantin, this study is a little different than the ongoing Phase 2 study. The ongoing Phase 2 study is open-label; we've been able to provide regular updates. We, the company, will be blinded to the outcome of the registration-directed study until we're appropriately notified by the Data Safety Monitoring Board. That being said, we did emphasize in the prepared remarks our focus has not been as much on enrollment as it has been on how can we increase the rate of clinical benefit. And so in particular the trial can achieve its primary efficacy endpoint with as few as 15 responses that are confirmed by an independent radiological review. We're currently in just in the Phase 2, in about 25 sites, we continue to enroll about two patients per month. The pivotal trial is intended to open in as many as a hundred sites. We're able to give you kind of total overall guidance, but I think given that we're the pioneers in this space and there's no one else to our knowledge that's drugging HRAS, we don't really want to try to, at this point, guide to any sort of interim data update. We won't be in a position to provide an interim unless and until the study meets its primary efficacy endpoint.

[Konstantinos Aprilakis:]

Okay, that's actually a perfect segue sort of into my next question. So after the updated ESMO, you were kind of tossing around maybe a 20% cutoff for the HRAS mutant allele frequency and maybe going as high as 35%. But it seems like you've now decided on 20%. So I guess curious as to what the factors are that were considered and what gives you the high degree of confidence that you seem to have in that 20% cutoff.

[Troy Wilson:]

Yes, let me ask Antonio if he could answer that question for you, Konstantin.

[Antonio Gualberto:]

So, Konstantin, we are doing our best to improve the outcome of the patients so you can -- and also, I understand also the question about the enrollment, but we need to focus on the fact that the study will become positive once we see 15 confirmed responses. So what you may notice from the data that we presented from the Phase 2 is that why the rate of approval will be the one that is defined by they say. But we are reducing if the denominator. So the chances that by using the cutoff we are going to see patients that have more likelihood or response so that that will give us a higher possibility to see those 15 responses sooner than later. The cost also will be reduced because we don't have to extend the enrollment by focusing on the sensitive population.

[Konstantinos Aprilakis:]

Okay, that's helpful.

[Troy Wilson:]

And Konstantin, just to add to that, yes, there was when we presented the ESMO data; there was one responder who wasn't included. We've now gotten the data from that patient. And that responder has an allele frequency of 27.5%. So that's entirely consistent with the 20% allele cutoff that we're using in the pivotal, as well as that's being implemented in the ongoing Phase 2's.

[Konstantinos Aprilakis:]

Okay, perfect, thanks for that. And then just one last one, the enrollment goal for SEQ-HN, how many patients are you looking to enroll in that trial. And are patients enrolled in AIM-HN; do they also count toward to enrollment total for SEQ-HN? Just a little clarity there would be helpful.

[Antonio Gualberto:]

So, the intent to SEQ-HN is to characterize the natural history of the patient with their HRAS mutation. So you do have to do a match of patients with wild type HRAS versus the patient with a mutation. And normally to do a match, to do in a proper way, the statistician that is blinded to the data, they need to have something like a rate of maybe three of four kinds the number of patients with the HRAS mutation. So if you have 60 patients -- 59-60 patients enrolled in AIM-HN, you want to have maybe three-fold that amount. So the match could be done with sufficient number of background HRAS wild type patients. So that means that you need to enroll at least 200. You will screen maybe 1,500, but you need to enroll maybe 200-250 patients in order to do a proper match.

[Konstantinos Aprilakis:]

Okay.

[Antonio Gualberto:]

Okay, answer your question?

[Konstantinos Aprilakis:]

Yes, it does. All right, thanks guys.

[Troy Wilson:]

Sure. Thanks Konstantin.

[Operator:]

Thank you. Our next question is from Joe Pantginis from H.C. Wainwright. Your line is now open.

[Joe Pantginis:]

Hey guys, good afternoon. I'm wondering if you can provide a little more color on the logistics around AIM-HN, specifically number one, the geographical breakdown. And then further can you discuss any particular bounds that are on the study, are there restrictions as to the maximum patients a site or region can contribute to the study. And three, where do you expect most of the patients to come from geographically? Thank you.

[Antonio Gualberto:]

Yes, the study is planned as a global study, so it will be conducted in the U.S., Europe, and a number of Asian countries. It is intended to generate data that will allow global registrations. I mean, the standards will be the U.S., the European, the E.U., Japan, potentially other Asian countries. The study will have competitive enrollment. Obviously, you're not expecting that that will be a skew, so the thing is always to enroll a patient population that somehow represent the percentage of the characteristics of the U.S. population so that will be acceptable by the FDA. And with that I mean that you cannot put 50%, for example, of Asian patients. And otherwise, as I said, it will be done by competitive enrollment to allow our registration in all potential territories.

[Joe Pantginis:]

Got it. Thank you very much.

[Troy Wilson:]

Thank you, Joe.

[Operator:]

Thank you. Our next question is from Chris Shibutani from Cowen. Your line is now open.

[Pam Barendt:]

Hey, this is Pam Barendt on for Chris. I'm trying to understand the differences or the key differences in inclusion and exclusion criteria between the previously ongoing and still ongoing Phase 2 and the pivotal. So can you comment on how many of the responders and non-responders in RUN-HN would've qualified for AIM-HM?

[Troy Wilson:]

Sure, Pam. Let me ask Antonio if he can address your question.

[Antonio Gualberto:]

Yes, there's nothing really esoteric. This is fairly a standard inclusion/exclusion criteria for recurrent head and neck cancer population. Obviously, the main change relates to the definition of the cutoff what they say. This was treating as strong indicator because we have a very sensitive assay that candidate, you know, has a one person allele frequency. Obviously at some point you have to try to find the appropriate clinical cutoff. So we are quite fortunate to be able to do that into the Phase 2. Otherwise, I mean, that very quickly you will see the characteristics of the inclusion of criteria within clinical trials that go, you know.

[Troy Wilson:]

And Pam just to add to that, so as I indicated in the prepared remarks if you look at the data that was presented at ESMO, for the patients, the HNSCC and the SCC patients, in the 13 patients whose tumors were profiled, nine of them had meaningful clinical benefit in terms of either objective responses or disease -- prolong disease stabilization. There was no meaningful clinical benefit in the seven patients who fell below the 20% cutoff. And then as I just indicated, the last responder we got data and that patient as well had an allele cutoff, had an allele -- mutant allele frequency of 27.5%. So it says -- Antonio mentioned in his comments, the goal is enrichment of clinical benefit. Ideally we will shrink the denominator and be able to drive clinical benefit and objective responses. I hope that helps answer your question.

[Pam Barendt:]

That does. And for a follow-up, what portion of the patients for the pivotal do you think, or are you anticipating will have received one versus two prior lines of therapy?

[Antonio Gualberto:]

That actually is related to prior question that I did not answer completely, you know, where are the patients are coming from? So you will have an expectation that many of the patients come from -- and that's fairly -- any people tell a study that is conducted across all these regions, so that -- because of access to a number of agents, you will have the expectation that the permanently population could be a second-line population, but as you can imagine, there will be a mix, they are second, third-line, there could be even some patients that could be first-line patients. Remember that the inclusion criteria is post platinum with platinum having been received in any setting and they have been receiving in the primary of -- in the neoadjuvant setting. So permanently I will expect second-line setting, there will be some third-line patients, and maybe some to, you know, front-line patients.

[Pam Barendt:]

Thank you very much.

[Troy Wilson:]

Thank you, Pam.

[Operator:]

Thank you. Our next question is from Joe Batey from Citi. Your line is now open.

[Shawn Egan:]

Hi, guys. This is Shawn calling in for Joe. Thanks for taking my question. I have two on, some of your allelic frequency findings and then one on ASH. You talked about a little bit with John's answer, but could you expand a little bit on opportunities to incorporate these new findings and new indications, and also are you planning on changing the non-small cell study to incorporate your allelic frequency threshold?

[Troy Wilson:]

Sure, Shawn. So, first with respect to the first part of your question, we do see some encouraging preliminary clinical data in a HRAS mutant squamous cell carcinomas that are not head and neck. And that data was presented at ESMO and as we indicated we'll provide an update. Those are a variety of histology, you can see them on the slide in our corporate presentation or the presentation that Dr. Ho used, but it's penile, it's Volver. What they have in common is that they are they are consistently that squamous cell carcinoma histology -- different organs, I should have said, I'm sorry, I misspoke. I think it's too early for us to really be able to characterize. We need to gather additional data to really understand the level of activity, but we are incorporating the same changes in terms of a 600-milligram starting dose and a 20% allele cutoff in that study. To transition to the lung study that you asked about, as you know, that's not the study, that's being conducted by the Spanish lung cancer. As you know that's not a study that's being conducted by the Spanish Lung Cancer Group. We can recommend changes and we will, we are, but that's ultimately their study and they can choose whether or not to implement those changes, but we do see an encouraging opportunity. Antonio, if you want to add anything to Shawn's question?

[Antonio Gualberto:]

Yes, I will indicate that the ability for us to define the -- let me say, it's actually a great question, and the fact that we can more clearly define the patient population, the patients are most likely to see the responses. Now, offer the possibility of tipifarnib to be perfectly competitive with the standard of care. So it means that now opportunities hoping nothing of it, not only squamous setting or other potential patient population, so not all the potential indications, but also potential settings. So the obvious progression for us will be to go to lines of therapy, you know, why -- if we can see response rates in the order of 50% response rates, why wouldn't we be competitive for sampling in the given setting or at given setting -- so give us a major opportunity to use this in the continuum of treatment of head and neck patients, and potentially all the squamous patients.

[Shawn Egan:]

Great, thank you for that. And just a brief follow-up, how much variability is there in the allele frequency within the tumor, and what steps are you taking in the pivotal study to ensure that your allele frequency results are representative of the whole tumor?

[Antonio Gualberto:]

So we do have limited data at present. So, as you know, when the patients we are initially enrolling the study, they were enrolled based on the allele frequency data that came from this site, so some of these sited use their particular methods, for example, the Memorial Sloan Kettering use the impart maturation sequencing that is quite assisted and so on. All are very similar maturation sequencing panels that have been used by other sites. So, the data is limited, but at least we can say that when we independently on a blinded manner, the data was being sequenced at the central laboratory of OncoDNA. We saw good concordance with the data that was generated from this site. Certainly, we can concordance within over the cutoff and below the cutoff. That is what is really important. I know there have been a number of questions about the cutoff, but I believe that the cutoff is appropriate based on a Phase 2 data, so we understand it will be necessary to -- when we offer the appropriate allele frequency cutoff for commercialization that would require a larger number of tumors, you know, again assuming that we have approval. It probably would require data from samples from the current Phase 2 tumors in the pivotal study.

[Shawn Egan:]

Great, thank you for that color. And then just quick one on your ASH, the skin reactions mentioned on your ASH abstracts and AITC target population, can you just comment on whether you think that's an on target effect or more of a chance observation?

[Antonio Gualberto:]

I do believe that it is potentially related to the Disease Center study. So as you know, peripheral T-cell lymphomas, they are novel disease, but they are infiltrating, so they can infiltrate the bone marrow, they can infiltrate the skin and they are very similar to BTCL cutaneous T-cell lymphoma, but within BTCL, you have patients that they will also have cutaneous manifestations. So it could be a mix of whatever the effect of tipifarnib plus disease under a study while we have seen more rash [ph] in this particular indications versus in other studies.

[Shawn Egan:]

Great, I appreciate it, thank you.

[Operator:]

Thank you. [Operator Instructions] At this time, I'm showing no further questions. I would like to turn the call back over to Troy Wilson for closing remarks.

[Troy Wilson:]

Thank you, Operator, and thank you all once again for participating in our call today. We appreciate your attention this afternoon, and look forward to providing additional updates in the months ahead. We'll be at the Stifel Healthcare Conference in New York next week and the Evercore ISI Conference in Boston later in the month. We are also planning to host an event at ASH here in San Diego, and hope to see many of you there. In the meantime, if you have additional questions, please feel free to contact Pete, Marc, or myself. Have a good evening everyone.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.