Achieve Life Sciences, Inc. (ACHV) Q4 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the OncoGenex Pharmaceuticals’ Fourth Quarter 2014 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. [Operator Instructions] As a reminder, today’s call is being recorded. I would now like to introduce your host for today’s conference Jim DeNike, Senior Director of Corporate Communications. Sir you may begin.

Thanks Amanda and thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer; John Bencich, Chief Financial Officer; and Cindy Jacobs, our Chief Medical Officer. Before we begin, I'd like to remind everybody that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to OncoGenex documents filed with the SEC concerning factors that could affect the Company, copies of which are available on our Web site. I'll now turn the call over to Scott.

Thanks, Jim. Good afternoon and thank you for joining us. Today I will provide an in depth update on our key programs, including results to-date and anticipated events. We have two clinical stage assets, Custirsen and Apatorsen being evaluated in two Phase 3 studies and five Phase 2 studies across a variety of cancers and we have strong financial resources to fund our ongoing operations. Over the next 12 months, we expect a number of significant clinical events for these product candidates, including survival results for our Phase 3 prostate cancer trial, a second interim futility analysis for our Phase 3 lung cancer trial, subject to completion of the Teva termination agreement and a modified statistical analysis plan, enrollment completion in our Phase 2 metastatic bladder cancer trial and survival results for our Phase 2 pancreatic cancer trial. We have developed a pipeline of late stage product candidates that target mechanisms of treatment resistance in cancer. These treatments are designed to block the production of specific proteins that we believe promote treatment resistance and survival tumor cells and are overproduced in response to a variety of cancer therapies. Our aim in targeting these particular proteins is to disable the tumor cells’ adaptive defenses, thereby rendering the tumor cells more susceptible to attack. We believe this approach will increase survival time and improve the quality of life for cancer patients. Let me start with an update on our lead product candidate Custirsen. In December 2014, OncoGenex and Teva agreed to negotiate the termination of our collaboration and return Custirsen rights to OncoGenex. Negotiations of the final termination agreement and mechanics for the transition of the program are still ongoing. While this process has taken longer than originally anticipated, we and Teva are continuing to work diligently to complete the transaction. Custirsen is currently being evaluated in two Phase 3 trials, one in patients with prostate cancer and one in patients with non-small cell lung cancer. We and collaborating investigators have conducted one Phase 3 clinical trial and five Phase 2 clinical trials to evaluate the ability of Custirsen to enhance the effects of therapy in prostate, non-small cell lung and breast cancers. Data from these trials demonstrate the potential benefit of adding Custirsen to existing cancer therapies. I’d like to take a moment to highlight important results from subsequent analysis conducted following the completion of the Phase 3 SYNERGY trial and provide an update on the two ongoing Phase 3 studies, AFFINITY and ENSPIRIT. Although the primary endpoint of overall survival for the SYNERGY trial was not met, we are enthusiastic about the results from an independent retrospective analysis that showed a meaningful survival benefit in them who received Custirsen and who were defined as having poor prognosis based on well established prostate cancer risk factors. Preliminary results showed the unadjusted hazard ratio for these patients and measuring used to compare the death rates between groups was 0.67 for the four prognostic subgroups, representing a 33% lower rate of death for patients who have the worst prognostic scores and received Custirsen. We are continuing to evaluate these findings and have submitted data to ASCO for presentation at its upcoming annual meeting. We will provide additional information regarding these data if and when they are accepted. We believe the hazard ratio and P-value for the overall SYNERGY trial would have been significant if this trial hadn’t rolled the higher number of patients with poor prognostic features. This analysis is important in consideration of the ongoing Phase 3 trials, AFFINITY and ENSPIRIT. In both of these trials patients enrolled must have experienced disease progression following initial treatments prior to receiving Custirsen. As clusterin is more heavily expressed in more aggressive tumors or is a reaction to treatment, Custirsen may provide a survival benefit for these patients given the SYNERGY clinical results. For AFFINITY as specifically this Phase 3 trial is evaluating a survival benefit for Custirsen in combination with the second-line chemotherapy cabazitaxel in patients with metastatic CRPC. We completed enrollment of approximately 630 patients in September 2014 and the trial is designed to show a survival benefit with 85% power based on a hazard ratio of 0.75. A single interim futility analysis was completed in January 2015 and the trial is continuing based on the recommendation of the independent data monitoring committee. Survival results in this trial are expected in late 2015 or early 2016. The Phase 3 ENSPIRIT trial is evaluating a survival benefit for Custirsen in combination with docetaxel treatment as second-line chemotherapy in patients with non-small cell lung cancer. Treatments that improve overall survival in advanced non-small cell lung cancer are urgently needed. The current design is to enroll 1,100 patients in order to show a survival benefit with 90% power based on a hazard ratio of 0.80. Two interim analyses exist for stopping the trial based on inadequate evidence of clinical benefit or futility. The first futility analysis was completed in August 2014. Upon completion of the Teva termination agreement we may modify the study design and statistical analysis plan for the ENSPIRIT in order to allow for a smaller trial size and to include an earlier, more rigorous second interim futility analyses. The goal of this amendment would be to provide a better assessment of more clinically relevant survival benefit when adding Custirsen to second-line docetaxel or to terminate the trial early for survival futility. We would aim to complete the more rigorous second interim futility analyses by mid-2015, subject to completion of these modifications. Based on the improved survival benefit observed in poor prognostic patients treated with Custirsen in the completed Phase 3 SYNERGY trial, we’re optimistic about the ongoing AFFINITY and ENSPIRIT trials because the greater proportion of patients with poor prognostic features are being enrolled in these second-line Phase 3 trials. In light of the encouraging SYNERGY results in this patient population, we may also prospectively evaluate those patients with poor prognostic factors within the ongoing Phase 3 AFFINITY and ENSPIRIT trials. I’d now like to provide an update on our proprietary candidate apatorsen and the ORCA program. Apatorsen is our product candidate designed to inhibit production of Heat shock protein 27, a cell survival protein expressed in many types of cancers including bladder, non-small cell lung, pancreatic, prostate and breast cancers. Hsp27 expression is stress-induced by many anti-cancer therapies. Over expression of Hsp27 is thought to be an important factor leading to the development of treatment resistance and tumor immune escape mechanisms, both of which are associated with metastasis and negative clinical outcomes in patients with various tumor types. Hsp27 can also function as an immunomodulatory protein by a number of mechanisms that include altering important membrane expressed proteins on monocytes and immature dendritic cells. This alteration results in tumor-associated immune cells that are not functional in identifying and killing cancer cells. The induction of anti-inflammatory cytokines by Hsp27 may also play a role in down-regulating lymphocyte activation leading to additional unresponsive immune cells. Given its role we believe this is a unique mechanism that could be synergistic with other therapies and as a result is generating considerable interest. We and collaborating investigators are currently conducting five randomized Phase 2 clinical trials that are being designed to evaluate the ability of apatorsen to enhance various treatments in patients with bladder, lung, pancreatic and prostate cancers. The primary endpoints of these Phase 2 trials are survival or progression free survival outcomes in order to identify patient populations and indications for future company sponsored trials. It’s worth noting that statistically significant differences in these trials are unlikely due to small sample sizes. However the trials are designed to potentially support registration if the primary endpoints reach statistical significance. Let me start with the study of apatorsen and its potential role across the continuum of bladder cancer treatment, including both superficial and metastatic bladder cancer. Bladder cancer is a disease where limited treatment advances have been made over the last two decades. This represents a high unmet need for new treatments that extend survival given the overwhelming number of patients who are diagnosed each year and progressed on current treatment. In December 2014, we announced results for our Phase 2 Borealis-1 trial of apatorsen in the treatment of metastatic bladder cancer. Subsequent analysis showed that the addition of 600 milligrams of apatorsen to standard of care chemotherapy resulted in a 50% reduction in the risk of death in patients with lower performance status. As I mentioned earlier, a similar result in patients with poor prognostic factors was observed in the Custirsen SYNERGY trial. These two trial’s results confirm our belief that these product candidates, both of which targets stress-induced proteins, maybe most effective in patients with poor prognostic features. Turning to superficial disease, we completed a Phase 1 trial of apatorsen in patients with superficial disease or muscle invasive bladder cancer who had not yet undergone vasectomy or transurethral resection. Results of this trial demonstrated that of the patients treated with apatorsen 38% had complete responses with no pathologic evidence of disease observed in polysurgical tissue following only four doses of apatorsen administered intravascularly over an eight day period. The Borealis-2 trial is currently evaluating apatorsen in combination with docetaxel treatment in patients with advanced or metastatic bladder cancer who have disease progression following first-line chemotherapy. We expect enrollment in this trial to complete in late 2015. Based on clinical results to-date, we are currently evaluating parallel development strategies for continued evaluation of apatorsen in both superficial and metastatic bladder cancer. Moving to pancreatic cancer, in December of last year, we announced completion of patient enrollment in the Phase 2 Rainier clinical trial evaluating apatorsen in combination with ABRAXANE and gemcitabine in patients with previously untreated metastatic pancreatic cancer. We expect to report survival results for this trial in late 2013 or early 2016. Turning to our evaluation of apatorsen in lung cancer, apatorsen is currently the subject of two ongoing Phase 2 trials, Spruce and Cedar. We’ve recently announced completion of patient enrollment in the Spruce clinical trial evaluating apatorsen in patients with previously untreated advanced non-small cell lung cancer. The trial will allow us to better understand the role of apatorsen’s potential to delay or prevent treatment resistance and improve survival outcomes. We expect to report primary results of the Phase 2 Spruce trial in the first half of 2015. In addition, the Cedar clinical trial is currently enrolling patients. Cedar is an investigator sponsored, randomized, open-labeled Phase 2 trial evaluating apatorsen in patients with previously untreated advanced schema cell lung cancer. That completes the development program update. At this time, I’ll turn the call over to John who will review our fourth quarter and year-end 2014 financial results. John?

Thanks Scott. We ended 2014 with approximately 47.1 million in cash, cash equivalents and short-term investments. Based on our current expectations, we believe our capital resources as of December 31, 2014, will be sufficient to fund our currently planned operations into the third quarter of 2016 and through the following milestones. Results from the Phase 3 AFFINITY trial expected in late 2015, early 2016, completion of patient enrollment in the Borealis-2 trial expected in late 2015, results from Rainier trial expected in late 2015 or early 2016 and results from the Spruce trial expected in the first half of 2016. Upon completion of the agreement with Teva to terminate our collaboration and based on the terms previously disclosed, we expect that we will receive a payment of approximately 27 million subject to certain adjustments. We believe that that payment from Teva together with our current cash and cash equivalents would be sufficient to complete the milestones just mentioned, as well as a modified second futility analysis on the ENSPIRIT trial. Additional capital will be required to fund completion of ENSPIRIT beyond the second futility analyses. Revenue for the fourth quarter and year ended December 31, 2014 was 5.7 million and 27.1 million respectively. This compares with 8.6 million and 29.9 million respectively in the same period in 2013. Revenue earned in 2014 consists of reimbursable clinical trial, manufacturing and preclinical costs incurred by OncoGenex under the collaboration agreement with Teva. Total operating expenses for the fourth quarter and year ended December 31, 2014, were 12.3 million and 56.6 million respectively. Net loss for the fourth quarter and year ended December 31, 2014 was 5.7 million and 26.2 million respectively. In February of this year, we announced the execution of a new lease agreement enabling the relocation of our Bothell, Washington headquarters, yielding significant savings through 2017. That concludes the prepared financial results discussion. I will now turn the call back over to Scott for closing remarks. Scott?

Thanks John. In conclusion with numerous trials across multiple tumor types, stages of disease and in combination with various therapies, we are in the midst of an exciting time as we are nearing key enrollment and data milestones. We believe we have sufficient financial resources to fund our operations into the third quarter of 2016 and an experienced and dedicated team that will enable us to achieve our goals. Thank you again for joining us today. And at this time, I’d like to invite the operator to open the line for questions, Amanda?

Thank you. [Operator Instructions] Our first question comes from Katherine Xu with William Blair. Your line is open.

Hi, this is Joe and I am sitting in for Katherine. I have a question about the Borealis-1 data. So based on the Borealis-1 data, do you have any idea when you would seek to initiate a Phase 3 trial on metastatic bladder cancer, and how do you plan on funding it? Would you seek to partner apatorsen before initiating a Phase 3 trial or would you -- is there some other idea in mind?

Hi, Joe thanks for the question. So the plans right now we have a fairly diverse development strategy for apatorsen with respect to the continuum of bladder cancer as we discussed in the prepared statements now having results for superficial disease, as well as the frontline metastatic setting. We’re looking at the development of a fairly broad development program that would cover both of those areas and then potentially the second-line setting dependent upon the results of Borealis-2 clinical trial. At this point it’s probably a little bit early to say exactly where that direction is, as we typically do in contracts at partnering, we do shared results with potential partners with the view of sharing what we’re doing and hopefully securing partnerships for the future. But at this point I don’t think we've got a direct path on how that would be. We still have some activities that we want to take specific protocols to regulatory authorities including of course the FDA and that would drive that strategy. So it’s kind of in those early stages of that part of the development program.

[Operator Instructions] Our next question comes from Stephen Willey with Stifel. Your line is now open.

Hi, this is Prakhar Verma for Steve today. Thank you for taking the question. So, you talked about that you may prospectively define and evaluate patient population in both AFFINITY and ENSPIRIT trials. So can you comment on the criteria that you will be using for defining this population or how does that would affect power for the overall population? Kind of go through the steps required for that, and also would it require regulatory approval for prospectively analyzing that population?

Yes so I’ll give you the first part and then I’ll turn on the back part for Cindy Jacobs our CMO to respond in a little bit more specifics for you. So, remember that there is probably already an enrichment in that or for that population in respect to both the AFFINITY trial and ENSPIRIT trial, just by the nature of the fact that these are second-line patients versus SYNERGY which was the frontline, so the fact that the target increases with exposure to treatment at the stage of disease. We should see a natural enrichment that comes from the population just because they are second-line that would have had progressed and failed off the frontline study. So with respect to the specifics and amendments that we’re looking at doing, I’ll pass that over to Cindy who can give you a little bit more background.

Sure, based on the SYNERGY data, that data showed seven prognostic features that defined a poor prognostic patient population within that trial. We’re looking at what those prognostic features might help define in the AFFINITY trial for prostate cancer. And looking at -- obviously there is precedence for doing perspective defining of poor prognostic population say maybe having three or four out of the seven prognostic factors. If we did do this as far as the survival analysis that was a co-primary or in addition we would definitely be seeking regulatory consent and approval of how we were doing the analyses both in Europe and at FDA. The ENSPIRIT is a little different because the patient’s population that is being accrued and that is an ongoing accrual right now, we’re watching it. The patients are already have very many poor prognostic factors. So we may or may not be doing that. We really need to see a little bit more in the enrollment pattern of this patient population which is already poor prognostic.

And second question, can you provide an update on the Pacific trial? You have indicated that you may submit data at a medical meeting in this year. Can you provide an update on that? Thank you.

Yes, actually that’s the investigator-sponsored trial with the Hoosier Oncology Group, and we did look at that. And although the patient enrollment is doing well it’s not quite complete, should be completed by the end of this year. And so as the investigators we looked at assessing the data at the end of the year and hopefully presenting at a GU ASCO 2016. So wasn’t quite ready for preliminary results at ASCO or later on this year.

Thank you. I am showing no further questions at this. I would like to turn the call back to Scott Cormack for closing remarks.

All right, thank you very much. So we just want to close off by thanking you for joining and participating in our call this afternoon. As indicated in the prepared statements and throughout there is an awful lot of activity going on over the next 12 months or so with the results from a number of trails starting to mature forward in both the Custirsen program and the apatorsen program it’s a very exciting time for us and we look forward to providing you updates as we go through the balance of the year with additional clinical results. Thank you very much for your time and attention.