Onconova Therapeutics, Inc.
Q2 2018 Earnings Call Transcript

Published: 14 Aug 2018

[Operator:]

Good morning and welcome to Onconova's Second Quarter 2018 Earnings Conference Call and Webcast. At this time, all participants have been placed on listen-only mode. At the end of the prepared remarks, participants will have the opportunity to ask questions. [Operator Instructions] Please note that today’s remarks will include forward-looking statements and that actual results could differ materially from those projected or implied in our forward-looking statements. For a description of important factors that could cause actual results to differ, we refer you to the forward-looking statements in today's press release and the note on forward-looking statements in the Company's SEC filings. It is now my pleasure to turn the call over to Onconova's CEO Dr. Ramesh Kumar. Please proceed.

[Ramesh Kumar:]

Thank you, Nonie. Good morning everyone and welcome to our second quarter 2018 results call. Joining me from Onconova's management team are, Dr. Steven Fruchtman. President and Chief Medical Officer and Mark Guerin, Chief Financial Officer. The second quarter was marked by strong financial and clinical progress. In May, we completed a $28.75 million upsize underwritten public offering bringing our total cash on hand to $29.5 million at the end of June. We were pleased that among our new investors were fundamental institutional biotech investors. The proceeds from this offering, combined with the funds raised in February and the Pint license agreement strengthened our balance sheet and provided us with the resources needed to advance our lead programs. Our Phase 3 INSPIRE intravenous Rigosertib clinical trial for second-line higher-risk MDS patients is expected to be completed in the second half of 2019. We are also expecting to advance our Phase 2 Oral Rigosertib trial in combination with Azacitidine in patients with either first-line MDS or with Azacitidine-resistant disease to a pivotal trial protocol under a special protocol with Special Protocol Assessment or SPA. The combination trial in first-line, high-risk MDS patients will advance to a pivotal Phase 3 trial in 2019 pending additional resources from business development activities. As we make progress with our key Rigosertib trials in MDS to be detailed by Dr. Fruchtman, we are positioning the company to reach key milestones. We recently announced the promotion of Dr. Steve Fruchtman to President. Steve joined Onconova in January 15 as our Chief Medical Officer. In his new role, Steve is providing leadership across our entire product portfolio. We are also looking forward to seeing the results from our funded collaboration with the National Cancer Institute or NCI in pediatric cancer associated RASopathies, as well as the progress of ON 123300 CDK program partnered in China with HanX Pharmaceuticals where the ongoing IND studies are funded by our partner. Now I’d like to turn the call over to Steve for a more detailed discussion of our clinical programs and upcoming milestones. Steve?

[Steven Fruchtman:]

Thank you, Ramesh, and good morning, everyone. This is my first time addressing investors since becoming President of Onconova. And I would like to personally thank Ramesh for his continued support. This is a very exciting time at the company and I appreciate the opportunity to share our enthusiasm with you about our differentiated pipeline and the progress we are making in our clinical trial programs. As a reminder, we currently have four clinical trial programs that are ongoing. These include our lead program, the Phase 3 INSPIRE pivotal trial with intravenous Rigosertib for high-risk, second-line patients with Myelodysplastic Syndromes, commonly abbreviated as MDS, who fail to respond to or progress on hypomethylation therapy. As you may recall, MDS are a complex group of bone marrow diseases or related to the failure of production of circulating blood cells by the bone marrow with a significant incidence, unfortunately of transformation to acute leukemia. 30% of patients with high-risk MDS may transform to acute leukemia, which is the reason for their high-risk designation. High-risk MDS patients who fail Azacitidine or Decitabine, a class of drugs referred to as hypomethylating agents or abbreviated as HMAs have a dismal prognosis. And those transforming to acute leukemia are highly refractory and typically succumb to their underlying disease. Their prognosis at diagnosis is determined by a composites International Prognostic Scoring System or IPSS score, which is based on their bone marrow functions as determined by the level of the deficiency in their circulating blood cells, the percentage of leukemia cells in their bone marrow at diagnosis and cytogenetic abnormalities in their bone marrows if they are present. In January of 2018, we completed on the INSPIRE trial, a preplanned interim safety and efficacy analysis and expect to complete accrual through this trial and provide top-line data in the second half of 2019. I would like to note that there are no approved products for high-risk patients failing HMAs, the current standard of care for high-risk MDS. Furthermore, there have been no new approved treatments for MDS in over a decade. There are approximately 5000 patients in the U.S. alone who could potentially benefit from an improved therapy after failing a hypomethylating agent. And, the intense of MDS is actually increasing as the general population ages. I want to point out to you that MDS is most commonly a disease of the elderly. Based on this background, we have dedicated two Rigosertib programs, both intravenous and oral to the unmet medical needs of high-risk MDS patients based on the INSPIRE trial and the combination trial of oral Rigosertib with Azacitidine that I’ll describe to you. The combination trial is a Phase 2 trial with oral Rigosertib in combination with Azacitidine in high-risk front-line patients, as well as those who have already proved to be refractory to Azacitidine therapy. We have already prepared the synopsis for the proposed pivotal Phase 3 trial in front-line, high-risk patients with MDS and have reviewed this synopsis with the U.S. and ex U.S. health authorities. Thus, there is an agreement on the trial design and a composite response endpoint. We plan to conduct this pivotal new trial under a SPA and the SPA application is anticipated to be filed in fourth quarter 2018 following dose determination that is optimal based on safety and efficacy evaluation that is ongoing from this Phase 2 trial. Since the Phase 2 combination trial has completed accrual, we are continuing to monitor the safety, tolerability and the efficacy results and we plan to present these results at a future scientific conference which will form the basis for the design of the pivotal trial for front-line, high-risk patients with Myelodysplastic Syndromes. In addition, we have conducted a Phase 2 trial with oral Rigosertib in lower risk MDS patients and that data was most recently updated at the 2017 ASH or American Society of Hematology Meeting. This trial focused on patients who are red cell transfusion dependent with low-risk MDS. Lower risk MDS patients suffer from inadequate and bone marrow function and are typically unable to produce sufficient numbers of circulating blood cells, but they have a lower risk of transforming to acute leukemia than those with high-risk disease and thus the lower risk designation. There are more than 10,000 lower risk MDS patients in the U.S. and these patients also have an unmet medical need with a therapeutic goal of improving the amount of function and ideally making them red cell transfusion independent. Lastly, the National Cancer Institute will be conducting a Phase 1 trial with both intravenous and oral Rigosertib as part of a collaborative initiative with Onconova for the treatment of Juvenile myelomonocytic leukemia or JMML and other oncological RAS, genomic pathway diseases. We have a cooperative research and development agreement or CREDA with the NCI and a clinical protocol is under their review. We anticipate the start of a clinical trial in pediatric cancer associated with RASopathies later this year. We have of course, also been actively participating and presenting at major MDS conferences and presenting data from our ongoing trials. Following the interim analysis of the INSPIRE Phase 3 trial, we reported results across our MDS pipeline. We presented initial Phase 2 data from the expansion study of oral Rigosertib in combination with Azacitidine in patients with MDS at the recent Sixth International Bone Marrow Disease Failure Symposium in March of 2018. The data demonstrated an overall response rate of 76%, 62% in patients following HMA failure and 85% in HMA naïve patients. Based on the continued progress in our oral Rigosertib and Azacitidine combination Phase 2 program in front-line MDS, we are working towards additional regional collaborations and partnerships to help finance and advance to a pivotal Phase 3 trial for oral Rigosertib with Azacitidine in front-line, high-risk MDS patients. In summary, there are many important ongoing activities related to the advancement of both intravenous and oral Rigosertib programs, which are moving towards impactful milestones for Onconova. We will remain focused on these programs in MDS, while also looking to enhance the potential of Rigosertib in additional indications and additional combinations via creative collaborations and partnerships. Our pipeline product candidate, referred to as ON123300, which is a CDK inhibitor is advancing towards an IND filing in collaboration with our Greater China partner HanX Pharmaceuticals. CDK inhibitors have emerged as a modality that provides meaningful clinical benefit and target large market cancer indications. They are typically used in combination with other therapeutic modalities such as an aromatase inhibitor in metastatic breast cancer. ON 123300 has the potential to overcome many of the limitations of current generation and approved CDK4/6 inhibitors. We believe ON 123300 may have the potential to act as a single agent due to its unique targeting in addition to CDK4/6 of the ARK5, as well as CDK4/6 making it potentially suitable for indications that may not be responsive to the current generation of CDK4/6 inhibitors. With that, I will turn the call over to Mark Guerin, our Chief Financial Officer for a discussion of our financial results for the quarter. Mark?

[Mark Guerin:]

Thanks, Steve and good morning, everyone. Net loss was $4.3 million for the second quarter ended June 30, 2018, compared to a net loss of $2.6 million for the second quarter ended June 30, 2017, primarily due to a $3.5 million gain on the change in warrant liability in the 2017 period compared to $0.5 million gain in the 2018 period. Research and development expenses were $4.1 million for the second quarter of 2018, compared to $4.6 million for the 2017 period. General and administrative expenses were $2.1 million for the second quarter of 2018, compared to $1.8 million for the second quarter of 2017. At the end of the quarter, cash and cash equivalents totaled $29.5 million, compared to $4 million at December 31, 2017. As Ramesh mentioned, in May 2018, we closed on a $28.75 million upsized underwritten public offering in which we issued approximately 67.6 million shares of common stock or as common stock equivalents and warrants to purchase at an aggregate of 1.7 million shares of our Series B convertible preferred stock. The financing which we project will take us to the fourth quarter of 2019 based on our current plans and projections, broadened our shareholder base and included new biotech institutional investors. That completes my financial review. I will now hand the call back to Ramesh for his closing remarks.

[Ramesh Kumar:]

Thanks, Mark and Steve. We have many programs in motion with the expectation of both incremental and pivotal data in 2018 and 2019. Our near-term pipeline program objectives are, to advance INSPIRE to top-line data, finalize the Phase 3 protocol under an SPA for oral Rigosertib in combination with Azacitidine in first-line HR MDS, start the RASopathy clinical and advance of a novel CDK directed compound partnered with HanX to the clinic. We remain committed to entering into additional collaborations and geographic licensing agreements for our entire pipeline. We also anticipate multiple publications and scientific presentations to announce results of our ongoing and completed studies. With our balance sheet and multiple programs across our pipeline, we believe the next 12 to 18 months will permit key achievements in both business development and clinical trial for our Rigosertib and CDK programs. Steve, Mark and I are looking forward to our future interactions with you. Thank you. With that, I would like to open the call for question s. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Joe Pantginis with H.C. Wainwright. Your line is now open.

[Joseph Pantginis:]

Hey guys. Good morning. Thanks for taking the question. Three questions if you don’t mind. First, thank you for the very detailed update and I want to find out why did you changed the guidance for completing the INSPIRE study. I know we were talking about first half 2019 until today and that moved to second half now. So as a follow-up you did previously state that post the interim analysis, you did anticipate a greater interest and more robust accrual. So, I was just curious about what might be contributing to the pushing out of the timeline? Thanks.

[Ramesh Kumar:]

Thank you, Joe. Very insightful questions. As you know, we always try to be current in updating our forecast and also try to use an abundance of caution. But there is some more detail behind it and Steve will take you through our rationale and how we are doing in this very important trial.

[Steven Fruchtman:]

So, we continue to have, Joe, robust accrual, but we turn many patients down and the reason we turn them down is because they – based on the way the protocol is written and appropriate, they are not eligible for the trial. So, as you know, the main component of this trial is you have to have failed Azacitidine within nine cycles within a year. And many of the patients who are referred have received more than nine cycles we’ve learned that. And thus, we think it’s very important not to accept them for the trial because we understand based on the previous trial that Onconova conducted, who is most likely to benefit. So, remain strict to our principle that the patient has to – had progressed within nine cycles of Azacitidine. If they receive 10 cycles of Azacitidine or more, we make them not – they are not eligible for this trial and that has created some difficulties because of the number of patients we turn down and based on that and our belief that we want to have an optimal amount of homogenous patient population with high-risk MDS we’ve changed the guidance as you’ve noted.

[Joseph Pantginis:]

That’s actually very helpful. Thanks, Steve. And then, my next question, you – and I would call it, I guess, a little bit of a teaser in there with regard to your prepared comments. You referred to additional indications potentially for Rigosertib. I was just curious if you can add any more color about what you might be thinking about.

[Steven Fruchtman:]

Sure, Joe, thanks. So, as you know, the RAS gene is the most commonly mutated gene in cancer, mostly in solid tumors actually. So, I will just pick out one space, one cancer for instance. 40% of patients with lung cancer have – are mutated at the RAS gene. In the modern era, many of these patients are receiving immuno oncology approaches and this has actually revolutionized the therapeutic approach for these patients. Many of the patients do quite well on immuno oncology approaches, but the majority of patients will progress. So we believe and in interactions with key opinion leaders and for instance, lung cancer and other solid tumors, that the combination of agents such as Rigosertib with direct antagonism of the RAS pathway in combination with an immuno oncology drug is something of interest and deserves study and that’s one other thing that I was alluding to in my remarks, Joe.

[Ramesh Kumar:]

Joe, just want to emphasize that we remain focused on our core programs, but we are also looking for collaborations and these are coming mostly from outside through opinion leaders who see the value in combining modalities. They know the unique mechanism of action of Rigosertib provides these avenues. And Steve is pursuing many of these.

[Joseph Pantginis:]

Thank you. And then, just the last question and I know, you might not be able to answer this, just because these are ongoing, but you did provide some color during the call and – or the desired contribution for a potential funding of the oral program going forward. So I just wanted to get – see if you can provide anymore color as to the status of your ongoing business development discussions? Thanks.

[Ramesh Kumar:]

Joe, thank you. Another very, very important questions on the top of our minds. As you know, we said to our investors and we have been saying to the analysts that our focus is to complete INSPIRE deliver results. But we also recognize the immense value of the oral program and that actually is the magnet, which I think we are using to draw business development activity. So, our focus is to have in concert progress of oral Rigosertib to a pivotal program in concert with a business development activity that helps support, not only that program, but our entire pipeline to progress further. So, we remain very confident, very optimistic that these two things will be in sync and these things can be announced as we progress the oral pivotal trial protocol. Hope that was the answer – complete answer to your question.

[Joseph Pantginis:]

No, it certainly did, thank you and thanks guys.

[Operator:]

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

[Jason McCarthy:]

Hey guys. Thanks for taking the questions. With enrollment and the timing of enrollment push back, can you give us a little bit more color on the patients that you are enrolling? Are you still maintaining that 70% or so very high risk patients in the study? And could you also walk us through the significance of having a death event driven trial. So, even though it’s the enrollments might lag behind a little bit into mid-year, or whatever the timing is, it’s not an overall pivotal trial. So, could you still potentially reach those 288 events earlier in 2019?

[Ramesh Kumar:]

Steve?

[Steven Fruchtman:]

So, thank you, Jason. And let me answer your first question first, which I guess makes sense. So, yes, so, we continue as we learn from the previous trial, it appears that Rigosertib has a most profound effect on survival in the very high-risk category of the MDS patients we are studying. So the previous trial we are running 40%, very high-risk and by changing the eligibility that patients had to progress with nine cycles of Azacitidine, and that’s a very different patient – let’s say then the patient is benign at study, on Azacitidine for 24 months and then progress, so the nine month change in eligibility has given us a high - which makes perfect sense, a higher percentage of patients that are very high-risk and we continue to run at 70 or above of the patients randomized on the INSPIRE trial are very high-risk. Regarding your second question, when you do these trials, Jason, there are so many moving parts. So, you do your best judgment about when the moving parts are aligned. But you are right. We now need to have a goal of randomizing 360 patients. The time that the data can be looked at, however, because this is a survival trial it’s 288 deaths. Now we also know from previous studies that patients who fail Azacitidine, who have high-risk MDS and control arms of various studies have a life expectancy of four to five months. So, you could, based on that very short life expectancy, which is actually maybe shorter because of the 70% very high-risk patients randomized on this study, there is a very close link to the number of deaths and the number of randomized patients. So to summarize, we may have – and this is a guess, I don’t know, let’s say a 310 or 320 patients, we all may have already reached or soon to be reach 288 deaths and thus the trial could be evaluated at that time, which would of course show on the timeline. But I hope that answers your question.

[Ramesh Kumar:]

Thank you, Steve. Jason, I just want to emphasize that we will continue to provide you updated guidance. I think you asked two important metrics. One is this very important subset of very high-risk IPSS criteria, that’s crucial and the other one is closer we get to the death events, say we have 90% of the way, it would be a very good time for us to give a guidance to the people, because I think this, as everybody knows is a survival-based study. No other endpoint is important as much as the overall survival. So, Steve will continue to provide updates and we will continue to provide guidance as needed and as I mentioned in the very beginning, it is just the abundance of caution. Remember, we are surrounded by various people looking into the disclosures that we wanted to just alert you to where we are in keeping the quality of the trial intact and also completing a – hopefully, very successful trial. Jason, did that answer your question?

[Jason McCarthy:]

It did, thank you. It’s very helpful.

[Operator:]

Thank you. [Operator Instructions] And we do have a question from Jotin Marango with Roth Capital. Your line is now open.

[Jotin Marango:]

Good morning. Thank you for taking my question. I have a few about Rigosertib. First about INSPIRE following on the questions from Joe and Jason. Ramesh, with the change in guidance that – as I understand you do intend to continue fine tuning. Is this change from first to second half still covered within your cash runway for the year?

[Ramesh Kumar:]

Jotin, that’s a very good point. As Mark described, in his comments and it’s in our Q, we expect our cash to go into the fourth quarter based on what we are doing and not counting any business development revenues. So we feel confident that we have cash into the fourth quarter and we can take either affirmative actions, which is to say we manage the burn rate differently or that we do one or more deals that bring money, which allows us sufficient coverage and enough of a cushion. So we can deliver the results. Did that answer your question, Jotin?

[Jotin Marango:]

Yes. Thank you. And a couple more for Steve. With INSPIRE reading out next year, and you are – meanwhile you are trying to ramp up other directions within MDS which is a very hard indication right now, in high-risk and also in low-risk. Are there details or nuance on the disease on the interaction of this drug with the disease, which you would learn from INSPIRE that would then be useful for this other trial within MDS and then what would that be, sort of what would you learn from INSPIRE which you could then the flight of the protocols for this other indications? Thank you.

[Steven Fruchtman:]

That’s a great scientific question, Jotin. What we don’t talk much about, but in the reality is that every patient who’ve been randomized on the INSPIRE trial has deep genomous sequencing done at a central lab that functions as the lab for the entire trial. For anybody gets full genomous sequencing, same technology at the same lab and we anticipate actually quite soon that all those specimens pre-randomization from either bone marrow, blood or both to also interestingly see this concordance between the marrow and the peripheral blood regarding gene abnormalities that will be discovered. Those results – those specimens will be repeated every time a patient has a repeat bone marrow which is mandated by the trial of post-randomization. So I think it will be very interesting. We can identify one or two biomarkers, because MDS is so diverse regarding the number of genetic abnormalities they have in their bone marrow and their blood, and identify populations where Rigosertib is profoundly successful in both prolonging life and perhaps in addition improving marrow function and thus we can apply those learnings going forward in subsequent trials.

[Jotin Marango:]

Thank you.

[Steven Fruchtman:]

Does that answers?

[Jotin Marango:]

Yes, yes, thank you. A last one, Steve. During your discussion, you mentioned JMML and a plan to move towards that indication interest in pediatric and orphan. What is behind the choice of direction? The former data rational that that pushes in that direction. Thank you.

[Steven Fruchtman:]

So, that’s a great question. And as you may know, many companies when they do go for an approval, the FDA will most frequently actually the EMA demand a pediatric trial. Interestingly, when we met with the FDA, regarding the creation of the INSPIRE trial, we were clearly told that, because MDS is a disease of the elderly. There was no mandate. There is no requirement to do a pediatric trial. However, being MDS and RAS experts, we are aware of a very rare syndrome. So, we talk about abnormalities in MDS. All these abnormalities are acquired. They are only present in their bone marrow. So we have a RAS mutation or a RAS pathway mutation. That mutation is only present in your bone marrow. All the other cells of your body are normal genomically. There are these rare syndromes, one of which is JMML which tragically and unfortunately, these children are born with abnormalities or RAS, so the RAS gene abnormality is not limited to their bone marrow, it’s in every cell in their body. And because the most frequently replicating cell population is in the bone marrow, with this RAS abnormality, these children go on to develop leukemia, it’s usually called MDS of children. But the most recent terminology is Juvenile myelomonocytic leukemia. Typically, the drugs that are used for these children are similar to adult MDS. They use Azacitidine Interferon Hydroxyurea Clofarabine. So we believe, based on the signs that there is an abnormality or RAS and the mechanism of action of Rigosertib and the RAS mimetic that we would like to study these children and the NCI has agreed and in collaboration with the NCI, we hope to put our first patient - first pediatric patient on a clinical trial sometime in 2018.

[Jotin Marango:]

Thank you very much.

[Operator:]

Thank you. This concludes today’s Q&A session. I would now like to turn the call back over to Dr. Ramesh Kumar for closing remarks.

[Ramesh Kumar:]

Thank you, Monee. I want to thank all the analysts who asked questions and all the participants in this call. With the resources we have, and the multiple catalysts we have defined, we will remain focused, determined and positive, while delivering results for you. So I look forward to seeing you at other conferences or in our next earnings call. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.