Crescent Biopharma, Inc. (CBIO) Q1 2019 Earnings Report, Transcript and Summary

Good morning, and thank you all for joining GlycoMimetics First Quarter 2019 Conference Call. [Operator Instructions]. I would now like to turn the call over to Sheri Annes of Investor Relations Group at GlycoMimetics. Please go ahead.

Good morning. Today, we will highlight the key achievements of 2019's first quarter and update you on our key clinical development program. The press release we issued this morning on our Q1 financials is available on the new section of the company's website at www.glycomimetics.com. This call is 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 on 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, Senior VP and 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. We'll then open the call for Q&A. I'd 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 uproleselan, formerly known as GMI-1271; and for rivipansel, GlycoMimetics' product candidate exclusively licensed to Pfizer, our development and commercialization partner; and our other pipeline program. Such statements represent management's judgment and intention as of today and involve assumptions, risks and uncertainty. GlycoMimetics undertakes no obligation to update or revise any forward-looking statements. Please refer to GlycoMimetics fillings with the SEC, which are either 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.

Thank you, Shari, and thank you all for joining our call. This morning, I'd like to begin by updating you on our clinical development pipeline, for rivipansel, for patients experiencing sickle cell crisis; uproleselan, for patients with AML; and GMI-1359, for breast cancer patients with bone metastases. Our pipeline is robust with all programs stemming from the company's specialized glycomimetic chemistry platform. And during this quarter, we and our partners continued to make significant progress with the intent to bring these novel therapies to patients who so desperately need them. First, with respect to rivipansel, we're pleased to report that Pfizer has notified us that the Phase III trial is expected to complete enrollment at the end of this week. When enrollment is complete, we'll issue a press release to that effect. Once Pfizer has finalized and locked the database, we anticipate top line data. This will be a significant achievement, and we remain enthusiastic about the potential impact that rivipansel could have on people living with this devastating disease. As you know rivipansel is the only investigational drug being developed for the acute setting and if approved, it will be the first drug indicated to treat an ongoing crisis. This positioning differentiates rivipansel from other therapeutic options and importantly avoids challenges from prophylactic approaches. As I elaborated on our last call, our confidence of a positive outcome is very high for a number of reasons: The strength and consistency of our Phase II data across all endpoints and sub-groups; the trial size and powering at about 4x out of the Phase II; the special protocol assessment or SPA, which gives the program a pre-negotiated regulatory path forward in United States; and the validation of selectins as targets in sickle cell disease, not only by GlycoMimetics but by others as well. We also believe that clinic -- that the clinically meaningful endpoints that are being evaluated as part of the pivotal program have the potential to generate pharmacoeconomic data that could support strong value proposition for this novel therapy. Clearly, there is both clinical and economic value if our drug can get a patient out of the hospital and back to normal function faster than is currently the case. Commercialization is Pfizer's responsibility. Pfizer's recent public statements have described rivipansel as a potential blockbuster with possible annual peak sales greater than a $1 billion. Well, our goal has always been to improve the lives of patients with this devastating disease. A positive outcome in the Phase III rivipansel trial will be meaningful to us in other ways as well. First and foremost, positive data would reinforce our leadership in the field of glycobiology, an emerging space and an untapped source of novel therapeutics. It would confirm the value of our targeting of the selectins as well as the value of our unique platform. Secondly, positive data may trigger development, regulatory and commercial milestone payments of up to $285 million in the aggregate with the next milestone payment due to us on acceptance of an NDA. After that, we're entitled to a further milestone payment upon the first commercial sale in the U.S. We're also eligible for similar regulatory and commercial milestone payments based on progress in the EU. The royalties are based on rivipansel product sales. They begin in the low double digits and go to the low teens. The very meaningful milestone payments, together with potential royalties from the sales of the drug, would allow us to accelerate the development of our novel pipeline of glycomimetic drug candidates. Turning now to uproleselan. We've retained rights to this program and are conducting a Phase III trial in patients with relapsed/refractory AML. This pivotal trial, which is being conducted under Breakthrough Therapy Designation with the FDA, is progressing as planned. Already enrolling patients in the U.S. and Australia while our clinical team is initiating additional sites in these 2 countries as well as in Europe and Canada. In parallel, we announced collaborations with 2 consortia; one here in the U.S. with the Alliance for Oncology and the National Cancer Institute; and one in Europe with the HOVON group, to study uproleselan in 2 additional patient populations. The NCI study have now begun enrollment, and we expect the HOVON study to initiate later this year. Across our GMI, NCI and HOVON sponsored programs, we expect to have over 850 patients treated in Phase II/III clinical programs evaluating uproleselan in North America, Europe and Australia. If the results from each of these studies are positive, we expect that the totality of the data could support a broad label across the continuum of care in AML. Last month, we also announced an exploratory clinical trial of GMI-1359 in patients with breast cancer that has metastasized to bone. As you know, GMI-1359 is a dual inhibitor of CXCR4 and E-selectin. Both of these targets are involved in tumor trafficking and metastatic spread. This specific trial will evaluate dose escalation as well safety and pharmacodynamic markers of activity. This will be a proof of concept to pharmacodynamic single-center trial at the Duke Cancer Institute. The results of which will be used to inform our Phase II program for this dual-function antagonist in cancer patients. We plan to initiate this trial in the second half of this year. In summary, important progress has been made so far in the first half of 2019. In clinical development, our focus is on sufficiently advancing our portfolio with investigational drugs, and we're pleased to have the financial resources to take us forward well into 2020 without relying on potential milestone payments from rivipansel. Finally, before turning the call to Brian to comment on our financials, I'd like to welcome to the senior team, Dr. Eric Feldman, leader in AML clinical research, who is our Vice President of Clinical Development; and Christian Dinneen-Long, an experienced biotech attorney, who has joined us as Corporate Counsel and Corporate Secretary. Let me now turn the call over to Brian, who'll review our financials with you.

Thank you, Rachel. As of March 31, 2019, GlycoMimetics had cash and cash equivalents of $195.6 million as compared to $209.9 million as of December 31, 2018. The company's research and development expenses increased to $11.8 million for the quarter ended March 31, 2019, as compared to $9 million for the first quarter of 2018. These increases were primarily the result of the company's Phase III clinical trials in relapsed/refractory AML patients. The company's general and administrative expenses increased to $3.4 million for the quarter ended March 31, 2019, as compared to $2.9 million for the quarter ended March 31 2018. These increase -- this increase was due to higher patent, legal and noncash stock-based compensation expenses. In summary, GlycoMimetics is in an excellent financial position to carry out its planned initiatives and to advance its novel pipeline. I'll now turn the call back over to Rachel.

Thank you, Brian. So with the rivipansel readout now -- or with the -- yes, the readout of rivipansel now in sight, and with 2 key -- 2 or 3 key trials in AML actively recruiting, the next quarter should reflect our ongoing commitment to execution and continued progress. Our goal is to continue to deliver a series of value-creating accomplishments with patients, caregivers, employees and strategic collaborators for whom and with whom we work diligently. With that, I'd like to open the call for your questions. Operator?

[Operator Instructions]. Our first question comes from the line of Peter Lawson from SunTrust Robinson.

This is Ben on for Peter. Congrats on the progress this quarter. I guess really quick on 1359, so you've announced going into breast. Are you also still expecting to announce the second tumor type this year? And will that depend on, I guess, some data coming out of possibly the Phase I trials from [indiscernible] pharmacodynamic markers in breast or is that going to be independent?

Actually, we don't intend to announce the second tumor type. What we've -- just to be clear, we intend to do the initial trial in breast cancer patients with metastases to bone. What we have shown, and what you may be thinking of is that we have -- we've got a rich set of preclinical data with this molecule, which has been tested in multiple different tumor types. So what we intend to do is to conduct this first study for doze escalation and to gather some data on pharmacodynamic markers, and then with that data, that will inform the next study that we do, and at that point, we'll determine what tumor type that trial will be addressing.

Okay. Great. Very helpful. And then I guess for the HOVON, so initiation of that trial is to open this year. Is there like a lag in the -- between administration and enrollment? Is enrollment also expected, I guess, maybe sometime this quarter as well. Or is that going to be throughout -- I guess the first enrollment, is that still for this quarter?

Yes. As far as the HOVON group goes, we continue to make progress with them in terms of getting that trial up and running. As you know, with the consortia trials, the company doesn't control the initiation of the trials. Those are more -- we collaborate and we support the consortia, and then the consortia, actually, it sponsors and runs the trial. So we're working diligently with HOVON to get that trial initiated and to, we hope, initiate enrollment as part of that within the second half of this year.

Great. Got you. And then one final one from us. With the milestones coming from the rivipansel from Pfizer, do you guys have a timing on -- expectation of -- I guess, is that -- I guess, sometime next year, you're expecting the about $70 million for the regulatory filing. And then I guess would the next milestone of around $80 million also be next year as well or is that thinking a little bit later?

Okay. So we haven't given specific guidance as to that timing. I think, let's take it one step at a time. We'll get through top line data and then at that point, I think, you can probably expect Pfizer to give more specific guidance as to their plans for filing and launch. The milestones to us are driven by acceptance of the NDA, launch in the U.S. and then acceptance of a filing in Europe and launch in Europe. So I'm not prepared today to give specific guidance as for those. But as you've indicated, they're all substantial milestones, and we do expect them in the fairly near term following on if there is success, obviously, in the top line data readout for rivipansel.

Our next question comes from the line of the Ed White of H.C. Wainwright.

So just on the HOVON study, Rachel. I know it's not your study, but is there any issue that you're aware of with the start of the trial as far as -- an issue with the site or enrollment or any patient issues or is it just sort of them having to work with institutions to get things going?

No. It's just a matter of logistics and getting things up and running there. But there's no -- no specific other challenges.

Okay. And as far as the enrollment in the U.S. and Australia, I'm just wondering if you're seeing any issues there in enrolling patients due to new treatments that are available in the many ongoing clinical trials that are already open?

Actually, in the relapsed/refractory setting, we feel the path is still fairly clear as far as new drugs are concerned. Perhaps Helen could comment on that a bit more, but we're generally very pleased with this -- the startup and the enthusiasm that we're seeing in terms of getting sites up and running and in terms of getting patients enrolled. Helen, you want to add to that?

Yes. Thank you, Rachel. So we have there some new drugs available for treatment of patients. We are working, as Rachel said, in our Phase III in the relapsed/refractory population and there's still significant unmet need there. We've seen quick initiation centers and early accrual centers as they open, indicating to us that there is significant need in that area, regardless of the treatments that are becoming available. Perhaps because they are largely in the frontline setting. And we're optimistic also for the Alliance trial where that is looking at patients who are fit for intensive chemotherapy and the need there for treatment is -- remains robust. And so we're looking forward to seeing a rapid accrual there as well.

Okay. Great. And then just a quick question for Brian, R&D expenses down slightly sequentially, which was a bit surprising seeing how you're starting up the trials or ramping up. I'm just curious if there is any onetime things going on in the first quarter that will no longer play on the second quarter and should we continue to expect R&D to accelerate through 2019?

From an R&D standpoint, 2018, a lot of heavy spend was on manufacturing for the clinical trial supply. So I think that wound down. And then during the first quarter, expenses were winding up for the Phase III trial. So there, you can continue to see overall expenses on the R&D side increase over the next 3 quarters.

Our next question comes from the line of Irina Margine from Cowen.

I was wondering on rivipansel, since the data is coming up, perhaps could you expand on your latest understanding of the market it addresses. How many crises lead to hospitalization these days, and how do you that might change upon a potential approval for crizanlizumab and voxelotor perhaps too in coming months?

Sure. So there's about 100,000 hospitalizations per year in the United States for treatment of crisis, and we expect that the -- that, that need is going to continue to remain even in spite of the potential of some of these drugs that could be more preventative. As you know, hydroxyurea has been on the market for many years and it's had very little impact on hospitalization for crisis, even though in that Phase III trial, which actually stopped a year early because it was so -- the drug was so effective, it showed a significant impact on prevention of crisis. So we do think that even if there are drugs that are -- that can show some reduction in crisis, we expect the treatment of the acute setting to continue to be an important clinical need. We also think it's possible that if a drug is available to treat patients in the acute setting, that, that could actually drive more patients to seek care when they're experiencing painful events in the clinic or the hospital setting. So I think the market is going to be evolving and dynamic in a number of ways. But as you know, rivipansel is the only drug that's in late-stage development for the treatment of crisis and so we think it's going to be very well positioned to address what we expect to continue to be a very important unmet need for these patients. Unmet until rivipansel is approved.

Okay, right. Exciting times. And then I might have missed this, but did you guys say when the data from the GMI-1359 study is going to be available and then when that Phase II might start?

So we didn't say that specifically but I can answer the question that we intend to initiate that study in the second half of this year so we would expect to have data during 2020. We have not given specific guidance as to when a trial following that would start. That would depend on the data and on the selection of the indication and on a number of other factors. But we do expect data from this recently announced 1359 trial to be available in 2020.

Right. And so that would be -- that will likely be a biomarker-based Phase II. So...

That's correct. Yes, that's correct. And I think -- and we'll be saying more in the future about what those biomarkers are and what we're evaluating. We're very excited about the opportunity to get a look at some pharmacodynamic activity of the compound. Also, it's important to get to the normal dose escalation and safety evaluation. So we'll be doing both in this trial, and we think this trial is a unique setting that gives us the opportunity to evaluate both. So we're very encouraged and I think, excited by the study design at the chance to look at the activity of this drug in this type of patient.

Our next question comes from the line of Stephen Willey from Stifel.

This is actually Steve on for Steve Willey. Was just wondering if you can elaborate a bit on how you're thinking about the Phase II trial design for 1359, particularly with respect to the dosing schedule to be utilized and how you see that playing into the breast cancer treatment paradigm?

Yes. So the dosing schedule is really oriented around getting through as against sort of normal dose escalation questions, and then in that context to evaluate biomarkers. So I think it's actually too early to talk about how that might play out in the breast cancer setting in particular, because there are a number of issues that we want to explore in the context of these pharmacodynamic markers and also as we think about what setting would be appropriate for drug a like this. So I think it's a bit early to -- it's a bit early to answer those questions but as we move forward, we hope to be able to say -- to be able to say more about it. I think most important is to define the active range of dose for this drug and then based on what we see in the pharmacodynamic markers to define a subset of patients. I want to be clear. One of the themes that we've struck, I think, at GlycoMimetics that you've seen is that we've done very focused clinical trials that have enabled us to address specific patient populations and we recognize that by looking at breast cancer patients, we're really going at what is potentially a very large group of patients. So what we want to do is by understanding more about how this drug could work in that context is to define specifically the patient subset that would be most likely to respond, most likely to benefit from an approach like this.

[Operator Instructions]. Our next question comes from the line of Biren Amin from Jefferies.

So on the upro Phase III relapsed/refractory trial, I know you started to open site. Can you just talk a little bit about patient enrollment? How many sites have been open? And how many additional sites will be opened through the remainder of this year?

Yes. So we've decided we're not actually going to be giving specific updates on accrual and sites as the study goes forward, but I can tell you that it's been a robust pickup. We've got sites in the U.S. and Australia already enrolling. We're about to open sites in a number of different European countries and in Canada. The interest is high. There are not very many other studies that are currently enrolling in that setting. And I think it's also really helping us that not only do we have the sites and the investigators on our Phase III trial that are engaged but through the collaboration that we now have in place with the National Cancer Institute, there are many sites. I mean I think they've got over 100 sites in that network now in the U.S. that are also getting enthusiastic around the program. So I think it really is helping the program overall that we have these multiple consortia that are engaged around it. But I said that we're not giving specific details, updates on enrollment, but I think I can speak to the general level of enthusiasms, which is high.

Got it. And then on rivipansel, I think you noted in your prepared remarks patient enrollment should -- could complete by end of this week. How long do you think it'll take for Pfizer to analyze the data and to issue a top line?

Yes. So that's really up to Pfizer, I have to say, in terms of how long it's going to take them, what I can say is they're running the trial, they're anxious to get to the data as we are. I think the fact that they're close to closing enrollment is a significant accomplishment that gives us confidence that the top line data is going to be forthcoming. And I do want to really commend the Pfizer team for getting to this point in the trial. I think it's a significant accomplishment. It's been a challenging trial, these always are, in the acute setting, and I think it's a significant accomplishment to have got to this point. So I can say that I think the data will be forthcoming, but I don't feel I could give any more specific guidance than that.

Well, I think in their slide deck, they communicated that data in second half '19. So clearly, that's a shift from the end of June timeline that was previously communicated. So do you -- I guess, should one expect that if enrollment is about to complete, that, that would probably imply like a July timeframe for data?

Well I think you are correct that it's not going to be the end of the second quarter. I think that's clear. And it's true, I know that in that particular slide, Pfizer communicated for all of their programs, just to -- they gave 6-monthly guidance as opposed to quarterly guidance. And so we'll stand behind that, that they're looking for data in the second half of the year. Second half begins in July, but I think it's going to take -- it will take some time to, in the normal course of things, simply finalize and lock the database and analyze it and get to top line data. But I don't expect any untoward delays, but it will take -- it will take the diligent effort that it normally takes to do those activities.

[Operator Instructions]. And there are no further questions at this time. You may continue.

Well, thanks very much, everyone, for participating in the call. We very much appreciate your interest and your support of the company.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.