Onconova Therapeutics, Inc.
Q1 2019 Earnings Call Transcript

Published: 14 May 2019

[Operator:]

Good morning, and welcome to the Onconova Therapeutics Corporate Update and First Quarter 2019 Financial Results Conference Call. [Operator Instructions] As a reminder, this call maybe recorded. At this time, I’d like to turn the call over to Avi Oler, Vice President of Corporate Development and General Counsel at Onconova.

[Avi Oler:]

Thank you, Operator. Good morning and welcome to Onconova's corporate update and first quarter 2019 corporate update and first quarter financial results conference call. Earlier this morning, we issued a press release with first quarter 2019 financial results and business updates. If you have not seen this morning's earnings release, you can find it on our Investor Relations page of our website at www.onconova.com. On today’s call, Dr. Steve Fruchtman, President and Chief Executive Officer will review the company’s recent business and clinical highlights and milestones and discuss anticipated progress over the remainder of 2019. After that, Mark Guerin, our Chief Financial Officer will review first quarter 2019 financial results. Steve will then make some final remarks before we host the Q&A portion of the call. For the Q&A portion of the call, we will be joined by Dr. Ric Woodman, our Chief Medical Officer who is in meetings in Turkey today. Before we begin, I remind everyone that statements made during this conference call will include forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Forward-looking statements speak only as of the date they are made as the underlying facts and circumstances may change. Except as required by law, Onconova disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances. Please see the forward-looking statements disclaimer in the press release issued this morning and the risk factors in the company's current and future filings with the SEC. With that, it is my pleasure to turn the call over to Steve.

[Steve Fruchtman:]

Thank you so much, Avi, and good morning everyone. And thank you again for joining today's call. Last year demonstrate important progress and achievements for the company. 2019 has the potential to be even more significant. First quarter and recent highlights include the following; as I hope you are aware we are pleased to announce yesterday that we have entered into a license agreement with HanX Biopharmaceutical also known as HanX to develop and commercialize rigosertib in Greater China. We see the second license agreement refinance as important to the advancement of the study of rigosertib and high risk myelodysplastic syndrome and in the future with solid tumor indications such as non-squamous cell lung cancer. Under terms of this agreement, we have granted HanX an exclusive license to develop and commercialize Rigosertib in Greater China. In exchange for these rights, HanX will make a 2 million upfront payment and will make an additional 2 million equity investment in Onconova common stock at a premium to the market. HanX will also dedicate 2 million of Chinese currency in escrow to fund legal sort of development over the next two years. HanX will make additional regulatory developmental and sales-based milestone payments to Onconova out of 45.5 million of net sales in China. Onconova will initially supply the finished product while HanX will support our clinical trial initiatives in China. HanX and Onconova will collaborate to advance drug in China and together with our other corporate partners globally pursuant to a joint developmental plan we will all participate in. In addition to the financials, this collaboration offers great strategic value to Onconova. We look forward to our pivotal INSPIRE Trial opening in China. Based on their large population we anticipate robust accrual from this new geographical area. In addition, we will be participating in the Acute Leukemia Forum in Shanghai at the end of May. This will be a meeting attended by MDS and Leukemia Experts from the U.S. and China and will give us an opportunity to present the INSPIRE Trial and Rigosertib at this meeting, as well as to meet with potential principal investigators who conduct the INSPIRE Trial in China. HanX has been an outstanding partner and we are appreciative of their commitment to this important program for patients with high-risk MDS. I would like to commend the business development teams from both HanX and Onconova for successfully completing this latest transaction which has the potential to be transformative for both of our companies. Business development efforts are continuing and we look forward to additional collaborations for the development of this innovative chemical entity Rigosertib. As a reminder, in December of 2017 Onconova and HanX entered into a collaborative development agreement for ON 123300, our unique dual inhibitor of CDK4/6 and ARK5 for the treatment of a variety of cancers. This program is currently in preclinical development and following our IND submission to the U.S. FDA we anticipate opening a Phase 1 trial in the second half of 2019. While we have obviously been very active in business development, our clinical focus remains on our late stage clinical programs which have continued to progress. This includes our pivotal INSPIRE Trial which as you know is a randomized controlled Phase 3 clinical program and a population of patients with higher-risk MDS after they have failed a hypomethylating agent. The primary endpoint of the INSPIRE Trial is overall survival. As mentioned on our recent call, during the first quarter we passed 75% enrolment mark of the anticipated requirement on the INSPIRE Trial for 360 randomized patient. Currently, more than 140 trial sites in 323 countries across all continents are active and enrollment is continuing worldwide. We have recently opened 19 additional clinical sites and eight already participating countries and approximately 25 new sites are being adding, including sites in Brazil, where we have recently obtained orphan drug designation. We now expect to have sites inside China as well based on our collaboration with HanX. Our goal continues to be to complete enrollment on the INSPIRE trial in the second half of 2019.We believe that these new regions with large populations in addition to the regions and new sites in the U.S. will help us reach this goal. As you can see, we remained laser focused on the INSPIRE Trial and its timely completion. I will mention our other programs which are progressive. With respect to our Phase II study of oral rigosertib in combination with full dose azacitidine in patients with high-risk MDS, we previously reported promising efficacy and a manageable safety profile. We will be presenting the data at the 24thEuropean Hematology Association Annual Congress in June in Amsterdam. The results from the Phase II trial of this combination are expected to form the basis of a new pivotal trial which is currently under review with the U.S. Food and Drug Administration. Regarding our special political assessment request or SPA to the U.S. FDA for a Phase III trial of oral rigosertib and azacitidine combination therapy for the treatment of adult patients with first-line higher-risk MDS, we are determined that the primary endpoint will be an overall response endpoint which will be a composite of complete remission and partial remission based on the IWG response criteria. Both of these endpoints imply a normal complete blood count and thus normal numbers of circulating blood elements. We have completed the end of Phase II meeting and our discussions with the FDA are ongoing. Following finalization of the SPA submission, we anticipate opening the Phase III trial of oral rigosertib in combination with azacitidine as early as the second half of 2019 following additional partnerships and funding. We look forward to filing an IND for ON 123300, which as I mentioned is a first-in-class dual inhibitor CDK4/6 and ARK5. In preclinical studies ON 123300 has been shown to be very effective against tumors and over expressed CDK4/6with activity in breast cancer cell lines resistance to commercially available CDK4/6 inhibitors, which are used in the clinic for women with hormone receptor-positive metastatic breast cancer typically in combination within [indiscernible] inhibitor. As noted, ON 123300 is already pounded with HanX. Together with our lung cancer experts and our corporate partners, we remain confident that we will initiate a new Phase I trial of rigosertib in combination within immuno-oncology agent and RAS-mutated non-small cell lung cancer in 2019. Concurrent with this Phase I trial in the U.S. SymBio Pharmaceuticals, our partner for the commercialization of rigosertib in Japan and Korea is also working with us to conduct a KRAS mutated non-small cell lung cancer trial in Japan. Based on the RAS target proteins that rigosertib effects, we believe that in addition to MDS rigosertib has many potential indications as RAS is mutated in many solid tumors. We continue to actively participate and present at major MDS hematology and oncology conferences worldwide. We recently presented information pertaining to rigosertib clinical trials at the American Association for Cancer Research Annual Meeting. The MDS symposium recently completed in Copenhagen and the Acute Leukemia Forum in Newport, California. Upcoming presentations, which I hope you will follow will be made at the 2019 Acute Leukemia Forum in China and the European Hematology Association Congress in Amsterdam. We will also be attending the 2019 American Society of Clinical Oncology Annual Meeting in this upcoming June in Jakarta. With respect to the RASopathies and other pediatric development programs, the National Cancer Institute is conducting pharmacokinetic pharmacodynamic and dose escalation studies in preclinical models for possible dosing of pediatric cancer patients with germ line last mutations with single agent rigosertib therapy for the first time. In addition, preclinical studies of rigosertib in Juvenile Myelomonocytic Leukemia or JMML, again a last driven leukemia continue at the University of California at San Francisco, a recognized center of excellence for studies in JMML. This preclinical study is being funded by the Leukemia & Lymphoma Society. We also have numerous investigator initiated studies ongoing including a study for patients with myeloproliferative neoplasms, in which the bone marrow produces too many circulating blood cells. Other investigator initiated studies include a study on RAS driven rare Squamous Cell Carcinoma of the skin which will be conducted at Centers of Excellence in the U.S. and Europe that have expertise in this rare disease. As you can see, our focus on advancing earlier stage programs while also looking to enhance the potential of rigosertib through existing and new collaborations and partnerships has resulted in a robust pipeline. Rigosertib, we believe has the potential for multiple franchises within a single new chemical entity. With that, I would like to turn the call over to my colleague Mr. Mark Guerin, our Chief Financial Officer for a discussion of our financial results for the first quarter 2019. Mark?

[Mark Guerin:]

Thanks Steve and good morning, everyone. Cash and cash equivalents as of March 31, 2019 totaled $10.4 million compared with $17 million as of March 31, 2018.Based on our current projections with the receipt of upfront funds from the HanX transaction, we expect that our cash will be sufficient to fund ongoing trials and operations into early 2020. Net loss was $7.8 million for the first quarter ended March 31, 2019 compared to $5.1 million for the comparable 2018 quarter. Research and development expenses were $4.1 million for the first quarter ended March 31, 2019 and $4.6 million for the comparable period in 2018. General and administrative expenses were $3.2 million for the first quarter ended March 31, 2019 and $1.9 million for the comparable period in 2018. We continue to look at ways to reduce our cash grants to focus our resources on the INSPIRE study. Also as noted in our year-end 2018 call, during the first quarter of 2019 we executed a reduction in our workforce which represents a savings of approximately $500,000 net of severance costs in 2019 and an ongoing annual savings of approximately $1.5 million. This completes my financial review. I'll now turn the call back to Steve. Steve?

[Steve Fruchtman:]

Thank you, Mark. We are very excited about the progress we're making both in pipeline and business development and the momentum continues to build. Our team is operating on all cylinders to complete the INSPIRE Trial and to build value for our shareholders by presenting our data to the FDA via the NDA process. If we are successful in these trials, we expect to commercialize the first new therapy for high-risk MDS since [indiscernible] was approved in 2004. Thank you all for your attention. Operator, please open the call for any questions which we’ll be happy to entertain.

[Operator:]

[Operator Instructions] And our first question comes from Dr. Joseph Pantginis with H.C. Wainwright. Your line is now open.

[Joseph Pantginis:]

Guys I think my questions are mostly logistical so the first one is, can you provide a little more color as to what the outstanding questions or discussion points are regarding the SPA. And can you remind us that the government shutdown impacted at all?

[Steve Fruchtman:]

Yes, I’ll ask Dr. Woodman to respond to that question. Ric?

[Ric Woodman:]

Thank you, Steve. I think the most outstanding question is related to starting dose and dose adjustment that we have to finalize with the FDA. Our statistical assumptions, our patient population both things were generally very much in agreement with the FDA. I think that the strength did impact us in one way in terms of the SPA review and that is typically you would get a rolling feedback from the FDA, ex number of questions that you would have an opportunity to answer, with the particular government shutdown what happens as we get all the questions all at once. And so obviously we're dealing with all in that same time and we continue to finalize our responses to the FDA.

[Joseph Pantginis:]

And then just curious with regard to the oral Phase II with regard to the upcoming EHA update. I guess can you manage some expectations about what we might see, is it just going to be longer-term follow-up of these patients and how responses might have evolved over time?

[Steve Fruchtman:]

The Phase II 09-08 study with rigosertib in combination with azacitidine will primarily be an update of the few remaining patients we're continuing to follow on study. As well as additional analysis that we haven't previously looked at such as response across the various IPSS-R subsets, but generally speaking the efficacy will be very similar to what we shared at ASH.

[Joseph Pantginis:]

And then my last question I think maybe from Mark, first can you just discuss the accounting for the upfront payment from HanX the 2 million. And then secondly, I know you had some one-times in the first quarter regarding G&A and the restructuring so just maybe trying to get a sense of maybe a little more color with regard to the new baseline or the run-rate going forward for G&A?

[Mark Guerin:]

So for the first question, the HanX deal the upfront 2 million we are not yet fully through our analysis for the revenue recognition of that, but if it is similar in some way to transaction some of the past, there will be the premium that they paid for the stock would likely be recognized as revenue. And then the 2 million milestone depending on a number of factors we have yet to go through some of that could be revenue immediately and then probably a larger chunk of it would be recognized over the term of the agreement. So hopefully that answers your question for now. Then your second question, you're right we did have some one-time expenses in the first quarter specifically the reduction enforcement I mentioned. And I would expect that our ongoing burn rate will continue to be what it has been previously which is in the 5.5 million cash per quarter or so.

[Operator:]

And our next question comes from Dr. Jason McCarthy with Maxim. Your line is now open.

[Naureen Quibria:]

This is Naureen on for Jason. I apologize if there is some background noise. So my first question is with regards to your CDK inhibitor program. Now that you’re moving closer to an IND can you talk a little bit about the trial design and particular patient selection that you might have in the trial will it be focused just in breast cancer or other solid tumors?

[Steve Fruchtman:]

So I’ll take that one and thank you very much Naureen. Our plan when we submit the IND to the FDA the Phase I will be all common trial because we’re eager when I say all common, a solid tumor trial we’re eager to establish the appropriate dose in man. Clearly, we understand where this unique CDK4/6 and ARK5 inhibitor will ultimately play a clinical role. And that is in metastatic the hormone receptor-positive metastatic breast cancer. So we would like in addition to having more commerce but to be at a site where many of these patients are seen because clearly women who fail let's say Palbociclib, if we in the Phase I trials saw a response with ON 123 for one of these unfortunate women who already failed a commercially approved CDK4/6 inhibitor that will be a big deal because ultimately you can understand that that is the indication we'd like to study . But in addition diseases like multiple myeloma, planocellular carcinoma which are driven by mutations in ARK5 would also be of interest to us in the Phase I study.

[Naureen Quibria:]

And I was just wondering pivoting a little bit to one of the data that you presented at ASH regarding your CXC012 as a potential biomarker for patient response to rigosertib. I was just curious are you continuing to follow that in any of the trials and is this something or is the biomarker strategy something that you included as part of your SPA package for review?

[Steve Fruchtman:]

So we continue to study a broad number of genomics and other abnormalities in all of our studies. So right now it’s a broad MDS population believe we’ll be doing a deep genomic sequencing on all of the patients for instance on the INSPIRE Trial and based on that much larger trial than the one you're referring to we will make decisions going forward and how best to identify these biomarkers. So all the patients on the INSPIRE Trial will be having deep genomic sequencing. They've already been run at randomization but we’re waiting to batch them post randomization to repeat those specimens and ultimately call the survival on the INSPIRE Trial.

[Naureen Quibria:]

And one last question from me, recently we had the Acute Leukemia Forum in California under the small Phase II study of oral rigo with Azacitidine AML patient and the responses were pretty impressive 50% response though the patient number was just 17 patients. Are there any plans to initiate a study in that indication?

[Steve Fruchtman:]

So I’ll let Dr. Woodman who attended that conference to take that question. Ric?

[Ric Woodman:]

Thank you, Steve. Yes the AML patients that we presented at the Acute Leukemia Forum in Newport were from 09-08. They represented a small subset of patients who were part of that Phase I/II study in addition to MDS patients. We plan to explore further the data we have in other studies with patients who have that elevated blast counts. Clearly, we saw responses in a population that's heavily pretreated and has a very poor prognostic outcome. So clearly having an oral agent in patients with elevated blast counts is potentially worthwhile pursuing. Part of the initial interest we have is related to the fluctuations in how the world is learning to define acute myeloid leukemia based on blast counts. It varies around the world 20% and above is how they generally define it in Europe. Above 30% is how it's defined in some other parts of the world including the United States. We do have responses in patients who have elevated blast counts. We're going to go back and the hope is that over the summer we’ll do retrospective analysis because we have a much larger subset of patients in our other studies who have blast counts that would define them as AML. And so understanding clearly the response both IV and oral rigosertib in these patients will be our first step. And based on that information we’ll then make a decision about how we can proceed with further development of rigosertib in AML setting as defined by either 20% or 30% blast. Thank you.

[Naureen Quibria:]

Actually I do have one last final question. This regards to KRAS positive, non-small cell lung cancer study that you plan to pursue. Could you clarify with regards to the IST are they going to be working in coordination with your partner in Japan or are they two separate studies I guess a little clarification on that would be little helpful? Thank you.

[Steve Fruchtman:]

So we plan to initiate the study at a major medical center in the U.S. and as you pointed out that study will be for patients with KRAS mutated lung cancer who is already progressed on an immuno-oncology drug. Tentatively the study would be a combination of alternative immuno-oncology. We have a negotiation we see the ability to get a commercially approved IO for free to combine with rigosertib that will be the major focus of the trial in the U.S. In collaboration with SymBio we're actually working on how best to combine those trials and we have not finalized the program with SymBio yet there is also interest in other sites in the U.S. but it could be a variety of approaches to attempt to optimize the rigosertib research that we plan to do with KRAS mutated non-small cell lung cancer. And again a lot of this how many studies we can do, I want to remind everybody even though we’re very excited about this program KRAS mutated lung cancer our focus will continue to be to complete the INSPIRE Trial.

[Operator:]

Our next question comes from Dr. Ahu Demir with Noble Capital Markets. Your line is now open.

[Ahu Demir:]

Congratulations on the partnership and the progression that you made. My first question will be on the data for the Phase III rigosertib clinical study. I know you will present at EHA, ASCO when do we expect more patient like larger patient population or do we expect perhaps potential of using PTP and 11 mutation as a biomarker. Can you give a little bit color on what do we expect from the data or do we just wait for ASH for larger patient population?

[Steve Fruchtman:]

Ric?

[Ric Woodman:]

Well, it will probably be two areas of focus one will be continuing to look at the 09-08, I mentioned a moment ago the use of oral and IV rigosertib in AML and then finally looking at genomic profiling and we will look at studies other than the INSPIRE study in terms of what information is available in terms of genomic profiling in biomarkers. Establishing some of these biomarkers is going to take some validation studies and so that's something that we probably would wait and see the initial preliminary data and then move into 2020 with that type of program.

[Ahu Demir:]

My following question will be on the CDK4 program also follow up on the Naureen question. Could IND permission will be filling the first half of 2019 and it will be first breast cancer and later on you can explain on the other indications, is that correct? I think that’s what you mentioned.

[Steve Fruchtman:]

It’s the opposite. I am sorry if I confused you. Yes, to your first part of your question we plan to submit the IND by hopefully end of June, but this is going to be our first in-person trial, so will be oral combo of trial for patients where no other alternative therapies available to them, so we will – in oral combo trial to establish the dose but we would clearly like to be at a site which we’ve already identified, we have a large number of patients with hormone receptor positive metastatic breast cancer who fails a commercially available CDK4/6 inhibitor. So it’s going to be in oral combo trial to get optimal dose but we would also like already in a Phase I to identify certain groups of patients, where ultimately we know these are the areas of diseases that we also want to study. So it will be a combination of both oral combos with a bias towards certain indications like the current refractory metastatic breast cancer for patients who failed to commercially available CDK4/6 inhibitor.

[Operator:]

[Operator Instructions] And our next question comes from Dr. Yale Jen with Laidlaw & Company. Your line is now open.

[Yale Jen:]

In terms the HanX deals for the rigosertib, is that only include IV version or would that potentially also added the [ORO1] as well?

[Avi Oler:]

This is Avi speaking. Nice to hear from you Yale. Yes, it includes both formulations. It includes rigosertib as a whole.

[Yale Jen:]

Okay. And in the prepared remarks suggesting that if you have the SPA definition turned and depending on the partnership or resources you could start the first-line combination therapies, would that be suggesting maybe HanX will be the one of the major sources for moving this floor forward?

[Steve Fruchtman:]

So thank you, Yale for that important question. The reality is, there is tremendous global interest in the first-line high-risk combination trial that we would like to open and clearly HanX is also very interested in participating in that trial as is SymBio in Japan. So our goal based on funding will be to start with a number of sites in the U.S. and also to include next value of this new partnership with HanX to include a site in China and in addition to include a site in Japan, so that is our plan.

[Yale Jen:]

So let me be clear, so that means that both those companies would not be mainly supporting the U.S. study - only there is the study in the U.S. but with support study in their respective countries for large patient population so to coverage?

[Steve Fruchtman:]

That is correct, Yale. So they will be responsible under our auspices we will be participating in the same trial but we will be funding the trial in their respective countries.

[Yale Jen:]

And just one more question that irregular surface starting the KRAS pathway and there’s another KRAS focus that you have called AMG-5, 10 for Amgen. We understood that there are some sort of data readout come probably at ASCO. You guys have any comments about that particular program and what do you think that stay above RAS as a target partly?

[Steve Fruchtman:]

The comment Yale is we look forward to seeing the data at ASCO.

[Operator:]

And at this time I am showing no further questions. I would like to turn the call back over to Steve for any closing remarks.

[Steve Fruchtman:]

Thank you. So 2019 continues to advance well and we look forward to achieving value enhancing milestones this year, including completion of enrollment in our Phase 3 INSPIRE trial of intravenous rigosertib. Our Phase II program with all rigosertib in combination with azacitidine is advancing towards a pivotal Phase III trial in first-line high-risk MDS patients as well and we're also continuing to execute our partnering strategy, including the additional geographical licensing agreements for our pipeline. We also look forward to continuing with our scientific rigor by publishing and presenting data in high-quality scientific journals and continuing to present at the key medical and scientific conferences that we outlined to you today. With our strengthened cash position and multiple late-stage clinical programs, we remain optimistic that we will achieve our clinical milestones and advanced business development opportunities for our pipeline. As always, we tremendously appreciate your continued support. We look forward to bringing rigosertib to the help of patients with high-risk MDS. Thank you for your participation on today's call and for your excellent questions. Please feel free to contact us with any additional questions you may have and thank you again. Operator?

[Operator:]

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