Crescent Biopharma, Inc. (CBIO) Q1 2018 Earnings Report, Transcript and Summary

Good morning, and thank you all for joining the GlycoMimetics' call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the call over to Shari Annes of the Investor Relations group at GlycoMimetics. Please, go ahead.

Good morning. Our goals for our first quarters earning call are twofold. We'll of course brief you on key financial results, but importantly we want to take this opportunity to remind you of the key achievements of the quarter. The press release we issued this morning is available in the news section of the company's website at www.GlycoMimetics.com. This call is also being recorded. A dial-in phone replay will be available for 24 hours after the close of the call. The webcast replay will also be available in the Investor Relations Section of the company's website for 30 days. Joining me on the call today from GlycoMimetics are Rachel King, Chief Executive Officer; Brian Hahn, Chief Financial Officer; and Dr. Helen Thackray, Senior VP of Development and Chief Medical Officer. We will start today's call with comments from Rachel, and after that Brian will provide an overview of the company's financial position. When we open the call for Q&A Helen will provide clinical perspective in response to your questions. I would like to remind you that today's call will include forward-looking statements based on current expectations. Forward-looking statements contained on this call include but are not limited to statements about the development plan for GMI-1271 and for rivipansel, GlycoMimetics' product candidate licensed to our collaborator Pfizer, and our other pipeline programs. Such statements represent management's judgment and intention as of today and involve assumptions, risks, and uncertainties. GlycoMimetics undertakes no obligation to update or revise any forward-looking statement. Please refer to GlycoMimetics' filings with the SEC, which are available from the SEC or on the GlycoMimetics' website for information concerning the risk factors that could affect the company. I'd now like to turn the call over to Rachel. Rachel?

Thank you, Shari, and thank you all for joining our call this morning. When we last spoke in March I began by pointing to the significant progress GlycoMimetics had made in 2017 across our clinical portfolio. This morning I'm reporting that during the first quarter this year we continued that progress and laid a strong foundation from which we believe we will drive significant value creation. This foundation was built on the achievement of several key milestones including progress in our clinical pipeline as well as the strengthening of our balance sheet through our recent financing. Of particular note, based on guidance from the FDA, we have confirmed our clinical and CMC plans to NDA for GMI-1271 and announced the study designed for a pivotal Phase III trial and relapse for refractory AML patients. This study forms the core of our comprehensive development strategy for 1271 and AML. Also this quarter, we announced that we signed a study start-up agreement with the prestigious HOVON Consortium in Europe, to conduct a randomized controlled clinical trial evaluating GMI-1271 in newly diagnosed elderly patients who are unfit for chemotherapy. I'm pleased to report that both of these trials are actively working towards initiation and patient enrollment. Lastly, at the end of March we successfully completed a follow on financing that netted GlycoMimetics over $128 million. Despite volatile market conditions at the time, our public offering was significantly over subscribed, which enabled us to upsize the offering by over 50% between filing and pricing the transaction. This was a very positive outcome for us that resulted in numerous long term blue chip investors increasing their position in GlycoMimetics while also providing the opportunity for new investors to become shareholders in our company. I'm very pleased to be here today not only with a robust pipeline of novel first-in-class therapeutics, but also with the cash balance in excess of $240 million as of March 31, 2018. This financing extends our cash runway through what we expect will be a series of significant clinical read outs including the read out of topline data from our own Phase III registration trial in AML. These financial resources allow us to efficiently work toward our objective of delivering ground breaking therapies to patients with orphan diseases and to create transformative value for our shareholders. I'd now like to walk you through a calendar of potentially value creating clinical events. The first of which is expected at the end of 2018 with the announcement of topline data from the ongoing Phase III Trial that Pfizer is conducting of rivipansel and sickle cell disease. As you know, this study is being conducted under a special protocol assessment with the FDA and topline results are expected to include data from over 350 patients. If this Phase III Trial is positive and if the drug is approved, rivipansel could be the only on demand therapy available to patients and physicians that selectively disrupts an ongoing vaso-occlusive crisis to decrease time in the hospital. In a presentation at the J. P. Morgan Conference in January, Pfizer for the first time described rivipansel as a potential block buster with possible peak sales of greater than $1 billion. Under our agreement with Pfizer GlycoMimetics is entitled to double digit royalties on rivipansel product sales. GlycoMimetics is also entitled to receive remaining milestones of up to $285 million. With the next milestone payment due to us on acceptance of the NDA. If the Phase III Trial is successful, we would anticipate receiving this significant milestone payment during 2019. After that, we're entitled to a further milestone payment to recognize the first commercial sale in the United States. While we're not able to disclose details, these are meaningful financial milestone payments which together with potential royalties would add substantially to our already strong cash balance and further extend our cash runway. In the first half of 2019, we'll be focused on GMI-1271 our wholly owned clinical product candidate. While the AML clinical programs continue to recruit patients, we anticipate interim data from our ongoing trial of GMI-1271 in multiple myeloma. Specifically in that study we will be evaluating effects on M protein levels seen with the addition of GMI-1271 to the standard of care as an initial look at the possibility of using GMI-1271 in treatment of myeloma. Recall that our own preclinical data in animal models with multiple myeloma showed that the sensitivity of proteasome inhibitors could be enhanced with the addition of GMI-1271. Resulting in statistically significant improvements in survival. As proteasome inhibition with either Velcade or Kyprolis remains the cornerstone of treatment in multiple myeloma. We believe the ability of GMI-1271 to enhance the activities of these agents could provide proof of concept for potential use of this novel agent in hematologic disorders outside of AML. A number of leading clinical centers are now participating in this trail in Germany, Denmark, Ireland, and England. And we remain on track to deliver interim data in the first half of next year. Separately and most importantly in late 2020, we expect topline data from our own GMI-1271 registration trial in relapse refractory AML. This Phase III Trial is our operational focus now and will continue to be so for the next several years as it is central to our efforts to obtain regulatory approval for GMI-1271. In addition, the HOVON Trial in newly diagnosed patients unfit for intensive chemotherapy would be running in parallel. We'll be able to give you a better sense of timing of the readout for that trial once recruitment begins. Now that I've provided a timeline for several value creating events, I'd like to provide everyone with a big more granularity on the design and current status of the pivotal trial we'll be running in relapsed refractory AML. This trial will enroll a total of 380 patients to evaluate overall survival, the primary endpoint for the trial. We believe that overall survival best captures the unique set of benefits seen with GMI-1271 both in efficacy and safety. If successful, and improvement in overall survival will position us with the most convincing value proposition on what is considered to be the global gold standard for demonstration of clinical benefit in oncology. Unlike cytotoxic oncology agents which often trade off increased toxicity for incremental efficacy improvements, we believe the value proposition for GMI-1271 could be augmented by a potential reduction in severe Grade 3 and 4 mucositis, a frequent debilitating complication of intensive chemotherapy for AML which contributes to treatment-related mortality. Improved tolerability of the underlying chemotherapy could be an important benefit of treatment with GMI-1271. Therefore, we will formally evaluate severe mucositis as a key secondary endpoint in this trial. The Phase III study will consist of standard of care salvage chemotherapy consisting of either MEC that is mitoxantrone, etoposide, and cytarabine; or FCI, that is fludarabine, cytarabine and idarubicin; plus GMI-1271 or placebo. Since presentation of our Phase II data at ASH December of 2017, there's been a significant amount of enthusiasm for our Phase III study from the international and hematology oncology community. To date, we've received interest from centers across the U.S., Canada, Europe, and Australia. And we're working to consolidate this list down to 30 to 40 centers. Our objective is to have the majority of the sites in the U. S., but also to ensure that we have meaning participation from leading centers in other strategic countries that will facilitate marketing authorization in Europe and other key markets. The principal investigator for the pivotal study will be Dan DeAngelo from the Dana Farber Cancer Institute. He's been a strong advocate for the GMI-1271 AML program including his leadership of the Phase I-II Trial. And we're thrilled that he'll be leading the registration trial as well. We're using the same CRO as previous, Novella Clinical, a quintiles company that has a primary focus in blood-based malignancies. We're pleased to have continuity with Novella Clinical from Phase I now through Phase III. We're intently focused now on gearing up for study initiation and many activities to support this are well underway. This includes clinical operations as well as manufacturing. We've made excellent progress on all fronts toward initiation of this Phase III trial and we're confident this groundwork will result in first patient first visit in the third quarter of this year. Lastly, planning for the HOVON trial is also well underway. The study with the HOVON Group in Europe is intended to treat patients unfit for intensive chemotherapy who are normally treated instead with hypomethylating agents. Funded in large part by HOVON, the consortium's trial provides us an opportunity both rapidly and cost efficiently to expand the use of GMI-1271 in AML potentially increasing the size of the market opportunity for this novel therapy. Importantly at the AACR meeting earlier this year, for the first time we presented preclinical data supporting the use of GMI-1271 in that setting. Specifically, we demonstrated in a preclinical model of AML since the addition of GMI-1271 to a hypomethylating agent dramatically improved survival compared to a hypomethylating agent alone. This survival benefit could be attributed to the fact that hypomethylating agents up regulate the E-selectin ligands an unintended consequence of treatment with these agents which can lead to more infiltrative unresistant disease. Since E-selectin is the target for GMI-1271, this data provides important support for the clinical trial planned with HOVON. As the HOVON trial will continue dosing with the hypomethylating agent plus GMI-1271 in responding patients until disease progression. This will be an exciting and important opportunity to evaluate GMI-1271 in a longer-term treatment setting which could represent an important commercial opportunity for GMI-1271. Let me now turn the call over to Brian who will review our financials with you. Brian?

Thank you, Rachel. As of March 31, 2018, GlycoMimetics had cash and cash equivalents of $242.6 million compared to $123.9 million as of December 31, 2017. The company successfully completed a follow on public offering of 8,050,000 shares netting proceeds of $128.4 million. Research and development expenses increased to $9 million for the quarter ended March 31, 2018 as compared to $5.9 million for the first quarter of 2017. The increase was due to ongoing costs related to manufacturing and process development for GMI-1271. General and administrative expenses increased to $2.9 million for the quarter ended March 31, 2018, as compared to $2.1 million for the quarter ended March 31, 2017. The increase was due to higher patent, legal, and non-cash stock compensation expenses in the quarter. I'll now turn the call back over to Rachel.

Thank you, Brian. To conclude we believe the company is now well positioned to deliver key clinical readouts over the next several years beginning with big news at the end of 2018 with topline data from the ongoing Phase III trial of rivipansel in sickle cell disease. And followed in 2019 and in 2020 with ongoing data readouts from our own wholly owned GMI-1271 program. Few biotech companies have a platform which continues to provide potentially game change therapeutic opportunities and are so well financed to drive value. With that, I'd like to open the call for your questions.

Thank you, ladies and gentlemen, this is the Operator. [Operator Instructions] Our first question comes from Yatin Suneja with SunTrust. Your lines is now open.

Good morning guys, congratulation on all the progress and thanks for taking my question. Maybe I'll start with rivipansel first. Could you remind us of the differences in the primary endpoint in Phase II versus Phase III? You know your confidence around the time to readiness for discharge and in Phase III?

Sure, I think for that question I'll turn that over to Helen who can speak more specifically to the clinical details.

Yes, good morning, Yatin. So the Phase III endpoint is time to readiness for discharge. It's a simple checklist of elements that are commonly part of the discharge decision for patients with mucositis crisis admitted to the hospital. It is very similar. Extremely similar to the primary endpoint or the efficacy endpoint that we assess in the Phase II which was also a time to readiness for discharge. So we're fairly confident that it's measuring the same things and in the same setting in the same way. And so effectively transfers the learnings from the Phase II trial to a Phase III pivotal setting.

Got it. And then any sort of delta in that particular endpoint you think might be meaningful? And is that the only thing you need to hit to get the approval or do you think the other endpoint - I mean I know they are important from the endorsement and uptick standpoint. So just trying to understand what you need to show and what is meaningful in that endpoint?

Yes, so I think we know from the Phase II data that we saw an improvement in time to discharge for patients on the trial that was fairly large, certainly greater than 24 hours. And we think that something along the lines of a day in the hospital is what you would need to show. Although we did see a larger difference than that in the Phase II. So that I think is what we would be looking for in the read out from a Phase III. We also know that the Pfizer protocol is under a special protocol assessment agreement with FDA. And that means that the protocol is successful as designed with the primary endpoint of time to readiness for discharge meets the agencies requirements for potentially approving. And there are a number of secondary outcomes that are being assessed that were also similar to the assessment of Phase II that would be supportive. But with the special protocol assessment the totality of the data is supportive, but the primary endpoint is what's required for approval.

Also I think that obviously a significant advantage of having response [ph] since there is no other drug approved in this indication. We can be in this trial with the confidence knowing that, as Helen indicated, that is the primary efficacy endpoint is an approvable endpoint. I think it's also important to emphasize that the endpoint in addition to demonstrating clinical benefit speaks to the potential for pharmacoeconomics benefit if we're getting patients out of the hospital faster. And I think that's a really unique potential advantage that this drug could bring if the trial is successful.

Got it. That's very helpful. Then just maybe a couple questions on 1271. Rachel, you did mention that you're planning to do trials in fit patient population. Could you maybe expand on that a little bit? What sort of a trial that might be? Would it be similar to the one that you're doing with HOVON in terms of patient population? What about the U. S.? And any discussion you've had with regulators on using these trials for label expansion?

Yes, so that's a great question, Yatin, thank you. And as a reminder, I think the important point that we'd like to make when we talk about when we talk about 1271 is to emphasize the potential use of the drug across the continuum of care in AML. And we do think that that's a unique value proposition for this drug in contrast to others that are in many cases narrowed to specific patient populations either defined by their disease or by cytogenetics or by other criteria. So yes we do think the drug has the potential to be used across the continuum of care. As we've described, the relapse refractory trial is going to be the cornerstone of our strategy for developing this drug, the cornerstone of a comprehensive strategy. And that's the trial that's going to be company sponsored and company run. As we move to the newly diagnosed populations, we've described what we're doing with HOVON. And you mentioned the third group which we are also actively considering how we're going to go forward in that group. We've had significant interest from investigators in treating patients in that population. And as you know, we did also report on data in our Phase II in the newly diagnosed patients who are fit for chemotherapy. So we do very much think that that's a population that could potentially benefit from our drug. And so we are actively working toward defining the specific program in that patient population. And we anticipate being able to say more about that soon.

Great, thank you very much and again congrats on all the progress. I'll get back in the queue.

Thanks Yatin.

Thank you. [Operator Instructions] Our next question comes from Jotin Marango with Roth Capital. Your line is now open.

Good morning, and congrats on the progress. I have 2 strategy-related questions around what you presented at ACR about 2 weeks ago. The first one is about 1271, and it's really a question about timelines here. In the last year but also in the year ahead sort of an extension of the question that Yatin asked. So at ACR, 2 weeks ago, you showed synergy with HMA. And then a few months earlier you announced that the Europeans were keen on exploring a combo there with low intensities so you're going with a cohort trial in onset patient. But then as I think about it, a year ago you had shown clinical data in induction combo. So I'm just thinking about the drivers of the strategy or what drove the positioning in the front line in low intensity versus actual hard combo given that you had clinical data in therapy and Donarup [ph] in the front line from a year ago. So in a way you were ahead of the game there?

Yes, well you're correct that we do have the clinical data in the front line setting in the patients fit for chemotherapy. And as I said to Yatin's question we remain very interested in that population. It's simply a matter of working with the various consortia and the interested parties that have approached us in working through some of the logistics of study start up and reaching final agreements with the consortia that has driven the initiation and the announcement of the HOVON study prior to the announcement of a study in the other group. We're actually working those processes in parallel because we remain very strongly interested in both. So you should not in any way read into the fact that we've announced the HMA associated trial first. That doesn't mean that we necessarily think that's a better opportunity. We think these are both very excellent opportunities for the product. And we're continuing to pursue them both in parallel. Yes, we're working on the plans for the upfront fit and as I indicated, once we have finalized those plans to the point of having something to announce then we will announce it.

Okay, thank you. And the other question is about 3059 which you showed an interesting poster 2 weeks ago. And the message, sort of my takeaway was okay this mobilizes tumor reactive T-cells which in my mind is pretty big because you can actually use that in a couple of ways. You can use it to harvest cells or you could use it as an add on to immunotherapy off the top of my head, right, clinically. So as you move that further towards the clinic, right, what are your thoughts about how you position that agent? Because as of ACR you could do a number of things there.

Yes, well I'm so glad that you asked that question because we were very excited about that data and see it very much the same way that you have just characterized it. And that is that by mobilizing tumor reactive T-cells it offers us some potential opportunities to move that compound into a sort of immune-oncology space. And we've seen other very interesting activities with that tumor in other preclinical models where we've also for example modified the tumor micro environment and modified the composition of immune cells in the tumor micro environment. So that compound is extremely interesting in terms of the preclinical data that we've generated. That we do believe, as you suggest, that it gives us the potential to move that into more of a sort of immune-oncology type setting with a very differentiated set of actions based on the targets that that drug specifically addresses. So we're actively considering through further preclinical work what we want to do with that compound and how strategically we would be developing it. We have filed an IP on these novel uses so we think we've protected not only the compound but also uses of the compound. And we do think it's going to give us some important opportunities. We've said previously that we intend by the end of this year to describe more specifically what the first patient population will be for that compound, and we are on track to do that. We have done Phase I work now so far in healthy volunteers which is going well. But we intend to give more specific guidance on the first patient population later in the year.

Thank you, Rachel.

Thank you. And our next question comes from Stephen Willey with Stifel. Your line is now open.

Good morning, thanks for taking question. Just as a follow-up to the prior question, should we expect to see any of that 1359 healthy volunteer dose data before the end of the year? I guess either perhaps at EHA or at ASH?

I don't think we would be likely to present that. It's healthy volunteer data. We're basically looking at PK. I think you would be more likely to see that data in the context of data in patients. I view that as more of supportive data as opposed to data that we'd be looking any kind of PK PD type analysis. It's certainly important for our planning, but it's not something that I think we'd likely submit to a scientific community.

Yes, and then just another question on the pipeline. With respect to 1271 you have the ongoing myeloma trial, I think you've indicated we should see some data perhaps maybe early next year. Just kind of curious as to what's your thoughts or what your thoughts are with respect to your ability now to I guess differentiate in the myeloma setting. I mean obviously it'll be pretty data dependent, but just kind of curious as to how you perceive the competitiveness of myeloma right now and whether or not there's an opportunity for another drug to have both clinical and commercial impact.

So I think that's a great question. And so that's why it's important to remember that we have specifically designed this study as what we're calling a proof of concept study. And we're asking ourselves a couple of important questions by doing that. First of all, as a reminder as I just described, we think the drug is potentially unique in that we can go broadly across the continuum of care in AML. Now we're asking the question, can we go even more broadly with this drug into other hematological malignancies? And this is the first setting in which we think we have an opportunity to ask that important question. So is this not just an AML drug but could this be a drug more broadly used in He malignancies? I agree with you that the myeloma space is complex and more crowded than the AML space. And that's why we would be considering very thoughtfully what to do in myeloma. We would be looking at a subpopulation in which we felt we could give some specific advantage. But we would not anticipate going into what's become a more traditional myeloma development program where you go in let's say the fifth line of therapy on top of many other things that have been tried before. So if we do see activity, and by activity again we're measuring M Proteins. So if we're able to see stabilization of M Protein or even a reduction of M Protein with the addition of 1271 that'll be a signal to us that the drug has potential utility outside of AML. And it will give us an opportunity to then think is there a subset within myeloma where we see a more clear development path. And we have a number of ideas around that which we're working through currently. But again, you would not expect to see what has been sort of more traditional myeloma development because I agree with you it is indeed a very crowded space.

Great, thanks for taking the question.

Sure, thank you.

Thank you. And our next question comes from Irina Margine with Cowen. Your line is now open.

Standards of care and transplant procedures compare across geographies, and how harmonized the centers will be based on your experience and working in those geographies?

Hi, Irina, I'm sorry, we missed the beginning of your question. The line cut out. Could you repeat it, please?

Yes, I was just wondering if you could talk a little bit to how standards of care and transplant procedures compare across geographies. And how harmonized the centers are across geographies based on your experience and working with them.

Okay, so I'll turn that question over to Helen.

Yes, good morning Irina. So there are a couple of things that I want to mention in response to your question. There is no single standard of care for the relapsed refractory population that we're targeting with our Phase III. However, there are 2 or 3 regimens that are generally together, considered standard of care in that all centers or the majority of centers will use one or another of those regimens. We have selected 2 of those regimens for use in our relapsed refractory study with investigators choice so that they may select based on their assessment of what will be best for the patient and their own individual physician and site preference. And between those two backed on chemotherapy regimens we think we have a good representation of the regimens that will be relevant for GMI-1271 in the [indiscernible]. We also think that it's important to have representative use of chemotherapy for broad uptake of the drug into that refractory population. And so we are - we think it's important to include both of those options in a trial. And we think that those are used consistently in terms of drug dose and regimen across the centers that we're working with. We have and are assessing an initial survey with the sites of precise regimens that they use to confirm that this is the case for the centers that we're working with. And through that combination of choosing the most common regimens and confirming center to center how they're using it I think we're in a very good position to have consistency of the dosing regimen used across the trial within those 2 induction regimens. The other part of your question was about transplant. Some centers have a lot of experience with transplant. We are working with large academic centers that are highly experienced in treating AML. And the great majority of them also highly experienced with transplant. And so that will be treatment option that is encouraged for patients in remission in our trial and we expect many centers to be doing that anyway as part of their standard of care. We will have information around that across the breadth of the study. But we again are working with multiple different regions. However, we're also working with regions that have a very similar standard of care in terms of both the chemotherapy and their transplant use, and we're working with the referral centers in each of those regions. I think we have confidence that the method of treatment in terms of standard chemotherapy regimen and likelihood of getting to transplant will be similar across the centers that we're using in the study.

I also want to add to that just to remind you all that we're very pleased that we're not going to have to center for transplant in the evaluation of the primary efficacy endpoint of overall survival which enables us to capture the potential benefit of possibly getting more patients to remission and to transplant. So that's another way that we believe we can potentially capture that benefit in the final efficacy analysis.

Thank you very much.

Thank you.

Thank you. [Operator Instructions] One moment while we wait for any further questions to appear. And I am showing no further questions in the queue at this time. I'd like to turn the call back over to Rachel King, CEO, for any closing remarks.

Again, thank you everyone for listening to the call and for your ongoing support of the company. We appreciate it very much.

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