Achieve Life Sciences, Inc. (ACHV) Q1 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the OncoGenex First Quarter 2015 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 turn the call over to Jim DeNike, Senior Director of Corporate Communications. Please go ahead.

Thanks Nicholas, and thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer; and John Bencich, Chief Financial Officer. Cindy Jacobs, our Chief Medical Officer is currently traveling and will not be available on today's call. 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 the website. I'll now turn the call over to Scott.

Thanks, Jim. Good afternoon and thank you for joining us. Today I will provide an update on several - our key clinical programs, including a preview of data through presented later this month at the American Society of Clinical Oncology Annual Meeting in Chicago. John will then conclude with a review of our financial results for the first quarter and then we’ll open the call to questions. Our two clinical stage assets, Custirsen and Apatorsen are currently being evaluated in two Phase 3 studies and five Phase 2 studies respectively across a variety of cancer indications. Both of these programs have multiple clinical data readouts in the near term making the coming months very exciting. We now have substantial clinical evidence indicating that our products have the potential to improve survival in the most vulnerable patients, those who have an increased risk for poor outcomes. Recent data have shown that patients in the SYNERGY and Borealis-1 trials who had poor prognosis live longer when treated with Custirsen and Apatorsen. I'm pleased to announce the data for both of these trials will be presented at the ASCO Annual Meeting in a couple of weeks along with updates on the Borealis-2 and Cedar trials that will be highlighted as trials in progress. The abstracts are now available on ASCO's website. Let me start with the data to be presented on SYNERGY and how that reinforces our ongoing belief that Custirsen benefits patient's with the greatest therapeutic need. These findings are significant, as our ongoing AFFINITY and ENSPIRIT Phase 3 Custirsen trials include a higher percentage of patients who are at risk - increase risk for poor outcomes. Results from the Phase 3 SYNERGY trial and subsequent exploratory analysis to be presented at ASCO show Custirsen provided a meaningful benefit in men who had a poor prognosis. The new data presented at ASCO will provide a more in-depth analysis of survival in the subgroup. Let me take a few minutes to review while we think these findings have a significant impact on the future development of Custirsen. As expected we found in the SYNERGY trial the men with commonly risk factors were at the greatest risk for poor outcomes. These risk factors included poor performance status, elevated prostate specific antigen, or PSA, elevated lactate dehydrogenase, or LDH, decreased hemoglobin, or the presence of liver metastases. Nearly half of the patients in the SYNERGY trial had at least two of these five risk factors and results show these men had a 27% reduction in risk of death when treated with Custirsen. In fact, had these criteria been perceptively defined as a primary endpoint, the trial would have shown a statistically significant survival benefit. These data underscore the importance of assessing clinical benefit for specific patient sub populations that are most likely to benefit from Custirsen treatment. We're scheduled to meet with the FDA in June, to discuss our proposed amendment to the Phase 3 AFFINITY trial and statistical analysis plan to include a co-primary endpoint evaluating survival benefit in men who are at increased risk for poor outcomes. We are also seeking advice from other regulatory agencies regarding this amendment. We expect to report topline results from the AFFINITY Phase 3 trial later this year or in early 2016. Our Phase 3 Custirsen trial ENSPIRIT is evaluating non-small cell lung cancer patients who have progressed following initial treatments. While we are in the process of making other amendments to the ENSPIRIT study that I'll outline in a moment, we are not at this time amending the statistical analysis plan to include a co-primary endpoint evaluating survival benefit in patients who are at increased risk for poor outcomes. That is because at the time of the initial futility analysis, approximately 80% of the patients in this trial had at least one poor prognostic risk factor. Given the aggressiveness of non-small cell lung cancer and the high percentage of patients in this trial with at least one risk factor, we believe the ENSPIRIT trial may already be in reg for the desired patient population. Last month we announced that we've filed an amendment to the ENSPIRIT trial protocol to provide us with a more expedient path to assess Custirsen's potential survival benefit in the hope so we can bring much needed treatment options to patients suffering from non-small cell lung cancer. We follow the protocol amendment with the FDA and have initiated or will be initiating filings with regulatory agencies in other countries as we become the sponsor in those specific regions. Let me take a few minutes to review these important changes. First, we provided the hypothesized hazard ratio from 0.80 to 0.75, while maintaining 90% power. This also changes the critical hazard ratio from 0.87 to a more meaningful and clinically relevant hazard ratio of 0.84. Recent non-small cell lung cancer drug approvals have hazard ratios that were 0.86 and lower. We believe that our revised thresholds are more appropriately aligned to the interest of both treating clinicians and their patients. As a result, the required number of patients the trial decreases from 1,100 to 700 patients. Second, the final futility analysis is now designed to be more rigorous and will take place when 40% of the events occur instead of the original 50%. This analysis is expected to occur in the next few months. As a reminder, the trial results will remain blinded to all parties unless futility is observed. Third, an evaluation of overall survival by patient histology and custirsen's efficacy among patients with varying risk factors and disease parameters will now be conducted. Finally, based on current enrollment and the changes discussed, we believe final survival results could be available as soon as the second half of 2016. Let's now switch to our Apatorsen program which is currently the subject of five ongoing Phase 2 investigator sponsor studies in bladder, lung, prostrate, and pancreatic cancers. An update on the global Phase 2 Borealis-1 trial in metastatic bladder cancer will be provided in ASCO oral session. The fact that this is an oral presentation underscores the importance of these data. In December 2014, we announced the results from this trial indicated that patients with lower performing status, as defined as prognostic score of 80% or less derive the greatest benefit from 600 milligram apatorsen in combination with chemotherapy. The result was a 50% reduction in risk of death compared to chemotherapy alone. Data presented at ASCO will provide further analysis of the impact of apatorsen in patients with specific poor prognostic risk factors. These results along with our previous Phase 1 trial in superficial bladder cancer who received apatorsen intravesically demonstrate the potential of this compound across the paradigm of bladder cancer treatment. Given the urgent needs to new bladder cancer treatments and our results to-date, we are working closely with investigators and planning to engage regulatory agencies to determine next steps. Finally, we have two posters featured in trials and progress. The first is Borealis 2, and the investigators sponsored randomized Phase 2 trial, evaluating apatorsen in combination with docetaxel in patients with advanced or metastatic bladder cancer. And who have disease progression following first line platinum based chemotherapy. This trial is sponsored by the Hoosier Oncology Group, and is currently enrolling patients. The second poster is on Cedar, an investigator sponsored randomized open label Phase 2 study evaluating apatorsen in previously untreated patients with advanced squamous cell lung cancer. The primary objective of this trial is progression free survival with secondary objectives to evaluate tumor response rates, overall survival, safety, tolerability, and health related quality of life. Additional analysis will be conducted to determine the effect of therapy on Hsp27 levels and to explore potential biomarkers that may help predict response to treatment. Over the next 12 months, we expect a number of significant clinical events from several apatorsen clinical trials within the ORCA program that are currently evaluating patient survival in some of the most aggressive tumor types, and we look to providing you with additional updates as these events occur. That concludes my update on our recent development progress. I would now like to invite John, to provide an overview of our financial results for the first quarter of 2015. John?

Thanks Scott. We ended the first quarter with approximately $40.4 million in cash, cash equivalents and short-term investments. This cash amount does not include the $23.2 million received from Teva on April 27, 2015 in connection with the termination agreement. Based on our current expectations, we believe that our cash, cash equivalents, short term investments and amounts subsequently received from Teva in connection with the termination agreement will be sufficient to fund our currently planned operations into the third quarter of 2016, which includes announcement of Phase 3 AFFINITY trial results expected late 2015 or early 2016, continuation of the ENSPIRIT trial through late 2015 or early 2016, including the final interims utility analysis expected in the next few months, completion of enrollment in the Phase 2 Borealis 2-trial and second line bladder cancer, announcement of the Phase 2 Spruce trial results in non-small cell lung cancer, continued enrollment in the Phase II Cedar trial in squamous lung cancer, announcement of Phase 2 Rainier trial results in pancreatic cancer, and finally continued enrollment in the Phase II Pacific trial in prostrate cancer. Revenue for the first quarter of 2015 was $1.4 million compared with $11.7 million in the first quarter of 2014. Revenue earned in first quarter of 2015, consist of reimbursable clinical trial, manufacturing and preclinical costs incurred by us under our prior collaboration agreement with Teva. Total operating expenses for the first quarter were $6.4 million compared with $19.7 million for the first quarter of 2014. Net loss for the first quarter was $4.5 million or $0.20 per diluted common share compared with $8.6 million or $0.59 per diluted common share for the first quarter ended March 31, 2014. In February of this year, we announced the execution of new lease agreements enabling the relocation of our Bothell, Washington headquarters, yielding significant savings through 2017. That concludes our discussion of our financial results. I will now turn the call back over to Scott for closing remarks.

Thanks John. In conclusion we believe we have sufficient financial resources to fund our operations into the third quarter of 2016. 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. Thank you again for joining us today. And at this time, I'd like to invite the operator Nicholas to open the line for questions.

[Operator Instructions] And our first question will come from the line of Stephen Willey with Stifel. Your line is now open. Please proceed with your question.

Hi, this is Prakhar on for Steve today. Thank you for taking my questions. So first question on AFFINITY. So do you expect any delay in the readout given that you're going to be discussing a modification in the trial with the FDA or another authority next month?

No, we shouldn't actually. We are expecting that the primary analysis would still flow in the backend of this year or early part of 2016. And then as we look towards ITT analysis, that would obviously flow a little bit later for looking at that versus sort of the subgroup population that we've discussed.

But if you do modify, that will be a co-primary endpoint, right?

That's correct.

Okay. So do you know at this point what the population looks like right now in the AFFINITY trial, with respect to the poor prognostic factors that you talked about?

No, we don't as can probably be appreciated what we need to do is make sure we get before the FDA early enough in this process before we start doing any of the analytics on the study. So, that's why there is an urgency to move this as quickly as we possibly could to the FDA, which is also why the FDA granted a Type A meeting which put us into next month.

Okay. All right, thank you.

[Operator Instructions] Our next question comes from the line of Katherine Xu with William Blair. Your line is now open. Please proceed with your question.

Great, hi, good afternoon. A few questions here. So for ENSPIRIT, if you look at the data from - recently from the huge [check points] [ph], second-line versus docetaxel, at least in the PDL expressers, the HR could get as low as 0.5. So just in light of that data, what do you think - how ENSPIRIT would fit into that future treatment paradigm?

Yes, thanks Katharine. So as you know from the biology of Custirsen, we have a fair bit of data to substantiate an ability to combine with multitudes of therapies whether they’re chemotherapies, hormone radiation et cetera and we don't see anything within the context of the immune modulator platform that would be contraindicated in the context of this drug. So to the extent that there is a strategy that says chemotherapy plus, custirsen plus some of the immune modulators we think that's certainly feasible strategy to evaluate as we go forward. So yes, I think there is - as those programs start to move forward there's an opportunity to evaluate our potential combination.

Okay. And on Pacific, just curious, it looks like again, it's a smaller study, 80 patients, seems like it's going a little bit slow. You said the data is not going to come out in the first half of 2016, just curious how that is going?

So the Pacific trial as you may recall we're looking specifically looking for patients that were on Zytiga and we’re having rising PSAs but not yet having the another manifestation of progression. And as that trial was starting, we were having the introduction of Zytiga obviously in the post chemo market and then the pre-chemo market and then Xandi was introduced into the marketplace and so on. So, during that time period the accrual was sort of shifting around as new therapies were coming into the marketplace and we didn’t want to obviously modify the inclusion criteria given some of the shifts. So there was a bit of a slow during that period but the trial was continuing and hopefully inline to have that data set as indicated.

Okay. And then lastly on the CTZ analysis for ENSPIRIT, previously you said mid-2015 and then in the press release you also said mid-2015, but in the prepared remarks both you and John said in the next few months. I just wanted to make sure, is it next - mid-2015 is kind of in one month versus in the next few months. Just curious is there some longer delay?

No, I think the mid from our perspective and there is a mid plus or minus a month is still in the mid part of the year. So I think that's consistent with the next few months and we said - we're saying by the next few months.

Thank you. And at this time, there are no further questions. So I’d like to turn the call back over to Scott Cormack for closing remarks.

Great. Thank you, Nicholas. As we approach the ASCO timeline, we look forward to seeing those that will be participating at ASCO and certainly as the year goes forward and we have the various material events that we've talked about in respect of our two clinical programs we look forward to providing you with the updates at those times. Thank you again.