Turning Point Therapeutics, Inc.
Q3 2019 Earnings Call Transcript

Published: 4 Nov 2019

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the Turning Point Therapeutics' Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jim Mazzola, Senior Vice President. Please go ahead.

[Jim Mazzola:]

[Athena Countouriotis:]

Thanks, Jim, and good afternoon to everyone joining us today. I am happy to be joined by our Chief Financial Officer, Yi Larson on today's call. I am very proud of the progress our team has made over the past quarter and year-to-date. This year, we outlined multiple important milestones for 2019; and as of today, I am very pleased with the progress towards accomplishing them. During today's call, I will give you an update on each milestone. Before I get into the details, I want to start by highlighting reasons why we believe Turning Point is a differentiated precision medicine company. At Turning Point, we have internally discovered and developed our wholly owned pipeline of next-generation tyrosine kinase inhibitors or TKIs that target numerous genetic drivers of cancer, namely ROS1, TRK, ALK, MET, and RET for use in both TKI-naive and TKI-pretreated patients. Our macrocyclic platform has enabled us to design multiple, small and compact kinase inhibitors with the potential to overcome the limitations of conventional TKIs. One of the limitations of conventional TKIs is the pervasive challenge of intrinsic and acquired resistance that often limits the response rate and durability of response with existing therapies. One challenge is the emergence of mutations in an area of the kinase called the solvent-front, which is a common cause of acquired resistance to currently approved therapies for ROS1, TRK, and ALK. In addition, we believe solvent-front mutations will arise from current approved and investigational RET inhibitor and that our macrocyclic platform has generated TKIs that are potentially best-in-class, based on their rational design, their potency, and their ability to bind to their targets with greater precision and affinity than other kinase inhibitors.

[Yi Larson:]

Thank you, Athena, and good afternoon, everyone. I am very happy to be on my first quarterly call since joining Turning Point Therapeutics in August. As you may know, my history with the company dates back to my role as the lead banker from Goldman Sachs on the Turning Point IPO. I decided to join the team, given the company leadership, the encouraging data with repotrectinib and the pipeline of additional TKIs that have rapidly progressed into the clinic. In addition to my role as Chief Financial Officer, I am excited to work with the team on our corporate strategy and to further scale the company and continue to strengthen our discovery and development engine. I have already met many of you and look forward to seeing more of you at upcoming conferences. Turning to the financial results of the third quarter. Operating expenses totaled $22.1 million, an increase of $3.6 million sequentially from the second quarter and compared to $6.1 million in the third quarter of 2018. Similar to last quarter, expenses are ramping as we initiate our clinical trials and build out our teams. Primary drivers of the year-over-year increase were investments made to develop repotrectinib and the rest of our pipeline, including the headcount we have added. Operating expenses in the third quarter also include $3.5 million in non-cash stock-based compensation expenses. For the nine months ending September 30, operating expenses were $54.7 million compared to $16.2 million during the prior year period. The increase was also driven by development expenses for our three clinical stage assets, as well as personnel expenses. Included in the year-to-date increase is $8.5 million in non-cash stock-based compensation. Moving to cash flow and the balance sheet. Net cash used in operating activities during the quarter was $16.5 million, bringing our year-to-date net cash used in operating activities to $43.7 million. Our cash, cash equivalents and marketable securities at September 30 were $423.6 million compared to $250.2 million as of June 30. The increase was driven by net proceeds from our follow-on offering in September of $189.5 million. We now project our cash position will fund current operations beyond 2021. Looking ahead to the fourth quarter, we expect expenses will increase from the third quarter, as we continue to invest in the execution of clinical trials for our three clinical stage assets and launch a fourth study in pediatric patients. And with that, let me turn the call back to Athena, who will provide closing comments.

[Athena Countouriotis:]

Thank you, Yi. I am very pleased with the progress we have made to date against our plan for the year. We have achieved nearly every milestone we outlined earlier this year often ahead of schedule and took action to complete our follow-on offering in September to ensure the company is well funded through key data readouts in 2020. As I look ahead to the last two months of the year, we will continue to focus on delivering against our milestones. Our goals remain to, advance enrollment in each of our clinical trials, initiate our Phase I/II clinical study of TPX-0046, initiate our Phase I/II study of repotrectinib in pediatric patients, nominate a development candidate in our ALK inhibitor program, and continue to focus on our ongoing preclinical work to support our combination strategy for repotrectinib. We look forward to sharing progress against each of these goals in 2020. I want to close by thanking our great Turning Point team for all they accomplished during the quarter and year-to-date. Looking back at the past four quarters, we have grown the company from less than 20 employees to now approximately 90 employees and I am incredibly humbled by the talent we continue to attract and what we have as a team accomplished. We set big goals for ourselves in 2019, and I am so proud of how this team continues to deliver. Operator, you may now open the line for questions.

[Operator:]

Our first question comes from the line of Michael Schmidt from Guggenheim. Your line is open.

[Michael Schmidt:]

Hi, guys. Congrats on all the progress and thanks for taking my questions. I had one on your two more recent pipeline or Phase I study entries, 0046 and 0022. Just generally speaking, could you remind us how the SRC inhibition aspect of those molecules could be a potential differentiating factor for these two agents, the RET and the MET inhibitor respectively, and to what degree might this potentially add to potential toxicities as well?

[Athena Countouriotis:]

Yes, sure. Thanks, Michael for the question. One of the things in regards to SRC is, I have quite a bit of experience here. I've worked on two prior SRC inhibitors from both dasatinib and bosutinib or Bosulif. I think what has been clearly shown in the past is maybe different than what we're doing here, and SRC is also a part of repotrectinib just so you know, and I think that's one of the beauties of repotrectinib is in the way that it was designed was not to be exclusively specific for ROS1 and TRK, but to be highly selective. And part of that selectivity included SRC and the SRC family kinases, which we believe adds to some of the benefit of repotrectinib and its ability to tackle bypass mechanisms of resistance through what's called the STK3 bypass pathway. That is where SRC has activity. That is what could potentially also translate into both 022 and 046 and one of the ways that we believe our MET inhibitor and our RET inhibitor differentiate versus those that are ahead of us.

[Michael Schmidt:]

Very good, thank you, and I guess that brings me to my next question. So, it sounds like the 0022 study is a little bit further along in the RET inhibitor, and you outlined the design on the call earlier. Can you just help us understand how you think about potential positioning of 0022 relative to capmatinib longer term? I know it's still early, but how do you think about the Novartis compound here?

[Athena Countouriotis:]

Yes. When I look at 022, and it's interesting that these are the first questions coming. I would say that, I think most of the focus has been on repotrectinib and 046. I'm very happy to hear your enthusiasm, because we have just as much. Jean has been working in the MET space for over 20 years, and this is the molecule that she is the most proud of, which is 022. And again to that same theme I said earlier, capmatinib being more specific. I think for where we are hoping to focus 022 is really, again in an area beyond exon 14 skipping mutations. So, I think that's the relevance in terms of the comparison to the compound you're mentioning. I really do believe there are two things we have to prove here. I think one is that there still is an unmet medical need for another MET inhibitor in the clinic, and two, the benefit as you've been outlining for CSF1R also with SRC for our MET inhibitor. I'm very pleased with enrollment here as I am with the Phase II study. I've definitely been seeing a diversity of the patients that have been enrolled. So I do believe we're starting to show that there is still an unmet medical need for a MET inhibitor. I think the second component in regards to the benefit of CSF1R and SRC will come through the data; and as we've said, we're guiding toward an update from the Phase I in the second half of next year.

[Michael Schmidt:]

Great, thanks. Then one more, maybe on repotrectinib, and I know you mentioned the interim analysis of the initial data from the Phase II portion of the TRIDENT study in the second half of next year. But how should we think about additional follow-up data or updates from the ongoing Phase I study, especially when we think about durability of the frontline patient population? Thank you.

[Athena Countouriotis:]

Yes, sure. So, as you know, and as I said in the prepared remarks, the Phase II is by far our top priority for the team. I'm pleased with the progress they're making not only with patient enrollment, but also investigator engagement as well as site activations. In regards to the Phase II just so you know, in all of our trials, we will not give quarterly updates. That's not going to be our standard practice in terms of enrollment numbers, but rather try to guide you toward meaningful data time points. And so what we've been saying for not only the Phase II, but 022 as I just mentioned is an update in the second half of next year. In relation to the Phase I, as you know, we've updated that twice since the IPO. And from April to ASCO, the data improved. From ASCO to ESMO, the data further improved and my level of confidence in the Phase II now is incredibly high based on the data again that we've continued to show, not just within this year, but also the data cut that we showed last year from the Phase I. I am putting the team now a 100% focused on trial execution. We are about to have our third and fourth trials in the clinic very soon and the two data timepoints that we're reading out to next year in the second half of the year. So at this point, obviously the team is continuing to follow the patients in the Phase I, but it's not our intention to do another update from that dataset because, again the encouraging information we've already shared is that with a median amount of follow-up of over 20 months, the median duration of response was not yet mature and I think that's incredibly encouraging, again knowing the number for crizotinib at 18 months.

[Michael Schmidt:]

Helpful. Thank you so much and congrats on the progress.

[Athena Countouriotis:]

Thank you, Michael.

[Jim Mazzola:]

Thanks, Michael.

[Operator:]

Our next question comes from the line of Paul Choi from Goldman Sachs. Your line is open.

[Paul Choi:]

Hi, good afternoon, everyone, and thanks for taking our questions. Athena, maybe staying on repotrectinib, for the planned combination study with Tagrisso, can you maybe articulate to us what you think is the lowest hanging fruit in the EGFR patient population that could potentially help you leapfrog some of the other combination studies that are being pursued by competitors? And then what would you look for as sort of the go or no-go decision for a potential pivotal trial here?

[Athena Countouriotis:]

Yes. Thank you for the questions, Paul. First of all, we're looking at quite a few combinations. We've obviously discussed previously, as I said before, the benefit of having SRC and potential activation within the STK3 bypass pathway is one of the ways that we think we could utilize repotrectinib in combination with the EGFR inhibitor. We're still evaluating that as we are evaluating other novel combinations. So at this point, it's a little too early to talk about go, no-go decisions in regards to that trial design. Again it's something we're still looking at. But we're also looking at quite a few additional combos, and I think we made the conscious effort on the last call to highlight that we've really been strengthening our internal translational research, biology, building our chemistry group, to be able to further develop not only the combination strategy with repotrectinib, but also future discovery efforts. So it's a little early to give go, no-go, because we're still looking at multiple options in terms of combo designs and we said that we would give some data in regards to that work early next year.

[Paul Choi:]

Okay, great. Thank you for that. Then turning maybe back to 022 for a moment and the RET, can you give us maybe as your thoughts on trial design and prioritization of either the treatment-naive population or the treatment experience population or is the plan to go at them simultaneously given that you could potentially have launches of two drugs in the category over the near-term?

[Athena Countouriotis:]

Yes. Again, I would say that there is a lot of similarities in regards to what we're doing for both of the Phase I programs. Obviously, 022 is further ahead than 046. 022 essentially is a standard dose escalation with the Phase I components of escalation and then expansion, where we would be looking at multiple different disease types, whether it's long or GI-oriented diseases such as gastric or hepatocellular. There will be optionality there, based on prior TKI used, yes or no. That is a standard Phase I. The RET is definitely different and as we said in the prepared remarks, we've now updated our investigator presentation to show the design. The RET design, which is a much bigger Phase I/II mirrors what we did with repotrectinib, and again allows quite a bit of optionality. There is a Phase I dose escalation component, but as we proceed toward Phase II, there are multiple cohorts just like TRIDENT-1 that would again be disease-driven, so lung, thyroid versus others and options in regards to prior TKI used, prior platinum used, yes or no. I think we've tried to take some of the lessons learned there from the other investigational agents that are ahead of us and potentially look at ways we could maximize our timeline for the RET inhibitor.

[Paul Choi:]

Got it. Thank you for that. I'll jump back into queue.

[Operator:]

Our next question comes from the line of Andrew Berens from SVB Leerink. Your line is open.

[Andrew Berens:]

Thanks. Congrats guys on the progress. There are a couple of questions on repo. I guess in TRIDENT, what percentage of patients do you think will have brain mets and what's the typical course of a patient with brain mets?

[Athena Countouriotis:]

Yes. So, one of the things we've been monitoring, obviously is the activity in the frontline, second line as well as intracranial and extracranial. And as you know, Andy, we have very strong data both in the frontline setting with all three patients having responses. You had intracranial measurable disease as well as 75% in the pretreated setting. Our estimates are somewhere and it depends on the literature, but it does mirror what we saw in our trial and the trial itself for us is somewhere around – it really depends on the patient population, but around half of the patients, most of the literature supports a higher incidence for patients potentially in the upfront setting versus pretreated setting, but that's kind of the numbers that we've seen in terms of the incidents.

[Andrew Berens:]

So you're saying in the frontline setting, it's 50%, which is higher than in the second and third-line?

[Athena Countouriotis:]

It really depends on the dataset that you're looking at. In our hands, again our data was pretty consistent with what you've seen in the literature, which is about half of the patients.

[Andrew Berens:]

Okay. And how long do those patients typically survive without progression and once they progress, any idea how long they usually will?

[Athena Countouriotis:]

I don't have the OS data in front of me to be able to answer that, Andy. I think what you could say from the literature is that you see relatively similar rates depending on whether you're looking at the historical entrectinib data, when they showed response rates. What you don't see is similarities between the duration and or the PFS and so I don't have the OS numbers, I know the recent crizotinib paper that was presented probably about six months ago. Now in the literature may have that, but I don't have that on top of my head.

[Andrew Berens:]

Okay. And then I guess any idea of how the entrectinib launch is going?

[Athena Countouriotis:]

We've clearly been watching it. I think its early days still, clearly. It got approved, obviously in the beginning of August. I think again, nothing has changed in regards to the way that we believe repotrectinib will eventually be utilized post obviously a registration path and approval. We still believe based on the fact that it is the most potent agent, that it will be best-in-class for frontline. As you know entrectinib is not approved and does not have activity in patients who have resistance. So that's clearly an area we will differentiate as well.

[Andrew Berens:]

Okay. And then, I guess on the RET program, just how difficult will it be to enroll patients that have failed 292 or 667, identify them and then enroll them or the LOXO also aggressively trying to enroll those patients in the trial?

[Athena Countouriotis:]

The one thing I would say is this is the one where I would give the team incredible amounts of credit that they've completely knocked it out of the park. We came out of ESMO incredibly motivated. The IND cleared and basically what we saw at ESMO was investigator enthusiasm, not only for our data, which was for the first time head-to-head versus both of the molecules you're referring to in terms of proxy compounds. But also we clearly heard from multiple investigators that treatment resistance is occurring and a molecule that can overcome some of these resistant mutations is potentially coming to the clinic at the right time. I'm not going to predict too much in terms of future enrollment, except to say that obviously, we're initiating the trial very soon, and has a tremendous amount of enthusiasm from the investigators to get the trial going because we know patients are waiting.

[Andrew Berens:]

Okay. Thanks a lot. Appreciate it, guys. Congrats again.

[Athena Countouriotis:]

Thank you. Thanks a lot, Andy.

[Andrew Berens:]

Sure.

[Operator:]

Our next question comes from the line of Arlinda Lee from Canaccord. Your line is open.

[Arlinda Lee:]

Hi, guys. Congratulations on the progress. I'd like to maybe follow-up on one of Andy's questions. You talked about some of the ESMO investigators shared with you about the need for active agents – agents active against resistance. Curious given that a lot of the lung docs talk about using the most potent drug upfront. How that might fit into what they've been talking to you about? And then as well, can you talk a little bit about the ALK inhibitor that you're planning to decide on a go forward molecule with what kinds of characteristics are you looking for in that molecule versus what you have in the clinic already? Thank you.

[Athena Countouriotis:]

Yes. Sure, Arlinda. Thanks. The one thing I would say is I think it was fair, and I've said this before. Establishing efficacy in a pretreated setting may not be uncommon for us to do here with 046. Our RET inhibitor is exactly what we did with repotrectinib. But from a potency perspective as we showed at ESMO, we believe we are very comparable in the wild type setting. The Phase I design allows all kinds of flexibility in terms of patients can be enrolled with and without prior RET/TKI use. So I think it really will be determined based on the investigator. At this point, the conversations we've been having clearly is about an unmet medical need for another RET to move into the clinic, and that's probably where I'll leave it. I want all of that information to be captured within our database and then clearly, we'll start talking more about what types of resistance are occurring from those other agents and/or if we are enrolling patients who are TKI-naive. From the ALK inhibitor characteristic, as you know repotrectinib does hit out, but does not hit ALK as potently as it does ROS1 and TRK. Clearly, one of the areas that Jean and the team have been focused on is our series of candidates for an ALK inhibitor that can address not only the most common G1202R solvent-front mutation, but also a compound mutation where there really is no current available therapy. I think equally, there are very big differences between our safety profile for repotrectinib and for lorlatinib. And so again, if we can translate some of that safety difference into a new ALK inhibitor, I think that would be incredibly encouraging as well, but we're just a candidate nomination. So I think ideally what we're looking for is something that can address still an unmet medical need that is not addressed by lorlatinib and especially if that agent moves up to the frontline, clearly, there will continue to be a need in the second-line setting.

[Arlinda Lee:]

Thank you.

[Jim Mazzola:]

Thanks, Arlinda. Next question?

[Operator:]

Our next question comes from the line of Jim Birchenough from Wells Fargo Securities. Your line is open.

[Yanan Zhu:]

Hi. Thanks for taking the question. This is Yanan on for Jim. So just first question is on potential resistant mutations to repotrectinib, so do you have some sense from the clinical trial data? In particular, I'm interested in whether patients who progress repotrectinib, maybe resistant to other ROS mutations. Since repotrectinib has a very compact 3D structure, is it possible that resistant mutations that preclude repotrectinib may also automatically preclude other inhibitors with larger footprint? And whether that will impact – whether doctors want to use it in first-line or not? Thanks.

[Athena Countouriotis:]

Yes. I think it's a very good question. From the resistance perspective of repotrectinib, that data was not captured within the Phase I study. It will be captured within the Phase II. So just to level set, within the Phase II study, patients who have, obviously, tumor biopsies evaluated for the presence of their fusions prior to enrollment. In addition, prior to enrollment, they will have a baseline liquid tumor biopsy to evaluate presence of resistant mutations prior to coming on to repotrectinib. They will also have another liquid tumor biopsy, approximately two to three cycles into treatment and then at the end of treatment or the time of progression. So we'll have potentially two opportunities to capture the answer to the question of what resistant mutations are occurring with repotrectinib. I do not have that today. I think the point that you made there about utilizing repotrectinib in frontline. I do not know that that's going to be dictated by resistant mutation for repotrectinib. I think that story has already been shown in regards to its potency and the fact that obviously our response rate is over 90%. And so to me, I think the – what I just came back from Asia at a very large team meeting and there is a tremendous amount of enthusiasm for the Phase II study and specifically using repotrectinib in frontline, obviously crizotinib is now approved there and reimbursed, but given the fact that it is so much more potent, that is the key driving factor for investigators to utilize it upfront.

[Yanan Zhu:]

Got it. That's very helpful. Maybe two more quick ones, could you talk about the distribution of ROS1 patients and how concentrated that is? And if your pivotal study – you're targeting centers that have a strong concentration of patients. And also a question on whether you have a better sense of the percentage for ROS1 patients that have solvent-front mutations? Thank you.

[Athena Countouriotis:]

Yes, thanks. So the historical information that's in their literature that mirrors pretty much what we've shown as well for solvent-front mutation, specifically, the most common G2032R mutation is about 40%. And so that's – our dataset is a little bit lower than that, but again our dataset is 40 patients. Not all of them have had prior crizotinib. But that's the data that's in the literature to support prevalence of solvent-front mutations. In regards to ROS1 distribution, maybe just let me step back and say, we have approximately 100 sites that will participate within this trial, but those sites were methodically chosen based on not only the incidence of the diseases, but also the physicians' experience in the space and their experience with other TKIs that are obviously ahead in terms of their development. And so, again, I think the incident what we've seen is anywhere between 2% to 3%. I've seen numbers up to 2.6% presented in the literature for ROS1, but we were very mindful in our site selection for Phase II.

[Yanan Zhu:]

Got it. Very helpful. Thank you, Athena.

[Athena Countouriotis:]

Thanks very much for all the questions.

[Operator:]

I'm showing no further questions at this time. I would now like to turn the conference back to Jim Mazzola for his closing remarks.

[Athena Countouriotis:]

I'm happy to step in for Jim. It's Athena. All right, well thank you everybody, obviously for participating in the call. I really want to say thank you to the team. You have done a tremendous job this year. And for all of you that have dialed in, I look forward to seeing many of you at upcoming banking conferences throughout November and December. Operator, you can now close the call.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for participating and have a wonderful day. You may all disconnect.