Crescent Biopharma, Inc. (CBIO) Q2 2019 Earnings Report, Transcript and Summary

Good morning, and thank you all for joining GlycoMimetics Second Quarter 2019 Conference Call. [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. Today, we will highlight the key achievements of 2019 second quarter. The press release we issued this morning on our Q2 financials is available on the company's website at www.glycomimetics.com, under the Investors tab. 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 in the Investor Relations sections 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 will 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, GMI-1359 and for rivipansel, GlycoMimetics product candidate, exclusively licensed to Pfizer, our development and commercialization partner, as well as 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 statements. Please refer to GlycoMimetic's filings with the SEC, which are available from the SEC or on the glycomimetics website, for information concerning the risks 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. Today, I'd like to begin by highlighting the second quarter's achievements. Top of mind for all of us is the expected readout from Pfizer's pivotal Phase III study of rivipansel. In May, we announced that Pfizer had completed enrollment. In their earnings call earlier this week, they updated their plan to release top line data and indicated that this is now expected to occur in the current quarter. We're coordinated with Pfizer around communication of the top line results. Other than that, I'm unable to give you more details as we eagerly await news from our partner. Suffice it to say, if positive, this will be a significant achievement, and we remain enthusiastic about the potential impact that rivipansel could have on people living with sickle cell disease. Currently, there is no treatment for patients experiencing a vaso-occlusive crisis, other than opioids, and rivipansel is the only investigational drug in late-stage testing for the acute setting. If approved, it would be the first drug indicated to treat an ongoing crisis. Importantly, it would be a new nonnarcotic option that selectively targets the underlying cause of a crisis, dispositioning differentiates rivipansel from other therapeutic alternatives and avoids the challenges of prophylactic approaches. Furthermore, we believe that the clinically meaningful endpoints that are being evaluated as part of the pivotal program could support a compelling pharmacoeconomic argument. For reimbursement authorities and payers, we believe that positive data would underscore a strong value proposition for this novel therapy. Clearly, there is both clinical and economic value as patients treated with rivipansel can reduce their use of opioids and be able to leave the hospital sooner than is currently the case. As you know, commercialization will be Pfizer's responsibility. And in their recent public statements, rivipansel is described as a potential blockbuster with possible annual peak sales of greater than $1 billion. We know from an article published a few years back that patients living with sickle cell disease are extremely dissatisfied with their current level of care for acute vaso-occlusive crisis events. These patients often feel their disease is poorly understood and poorly managed in the acute setting. We believe this indicates a high level of unmet medical need and that a new nonnarcotic option that disrupts the vaso-occlusive event, would be transformative for both physicians and patients alike. This suggests to us that if rivipansel were approved, patients could well increase their health care utilization. Another key differentiating factor for patients is that rivipansel is a nonnarcotic treatment that could actually decrease the need for IV opioid medications. Thus, patients may be more comfortable seeking care. Simply put, it's our strong belief that if an effective nonnarcotic treatment option becomes available, it could change the treatment paradigm with the resulting market expanding effect, namely that more patients may come to the hospital to seek care earlier in the progression of their crisis, and that this change in patient behavior could drive the commercial value of rivipansel above consensus expectations. While our goal has always been to improve the lives of patients with this devastating disease, a positive outcome in the Phase III rivipansel trial would be meaningful to us in other ways as well. First, 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 regulatory and development 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 sales of the drug, which further strengthen our already excellent financial position and would allow us to accelerate the development of our novel pipeline of GlycoMimetics drug candidates. Second, 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 selective as well as the value of our unique glycobiology platform. Turning now to uproleselan. This wholly-owned program is now in the Phase III registration trial in patients with relapsed or refractory AML. This is the pivotal trial under Breakthrough Therapy Designation, and it's already enrolling patients at sites in the U.S., Australia, and now in Europe. We continue to open sites in all 3 geographies, and we anticipating treating patients -- and we anticipate treating patients in Canada shortly as well. We've explained our strategy to you in prior calls, namely to collaborate with 2 different consortium, one in the U.S. and one in Europe, to evaluate uproleselan in other AML populations beyond that targeted in our company-sponsored registration trial. Importantly, in the second quarter, we announced that enrollment has initiated in the pivotal study being led by the MCI, to evaluate previously untreated newly diagnosed patients with AML, who are fit for intensive chemotherapy. This is our second study initiation among 3 planned, late-stage uproleselan clinical trials. We're encouraged by its feasibility and by the investigator enthusiasm that surrounds it. The HOVON consortium in Europe continues to progress towards initiation of a trial in newly diagnosed AML patients unfit for chemo. Across our GMI, NCI and HOVON-sponsored programs, we plan to have over 850 patients treated in Phase II or III clinical programs, evaluating uproleselan in North America, Europe and Australia. If the results from these studies are positive, we expect that the totality of the data could support a broad label across the continuum of care in AML. GlycoMimetics third clinical program, GMI-1359, advanced in the second quarter as we announced plans to initiate a trial for breast cancer patients with bone metastases. 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 is a proof of mechanism trial that evaluates safety and pharmacodynamic markers of activity as we dose escalate, and into the single center study being done at the Duke Cancer Institute. We plan to initiate this trial before year-end. Its results will be used to inform a broader Phase II program in cancer. The rationale for our focus on breast cancer was reinforced in part by studies reported in the April issue of Nature Cell Biology, that showed that E-selectin is key to tumor growth and metastasis to bone. Specifically, the paper describes how Tumor cells engage specific stroma components, most notably E-selectin, for propagation and outgrowth. In summary, important progress was made in the first half of 2019. In clinical development, our focus is on efficiently advancing our portfolio of investigational drugs, and we're pleased to have the financial resources to take us forward into 2021, without relying on potential milestone payments from rivipansel. Our pipeline is robust, with all programs stemming from the company's specialized GlycoMimetics chemistry platform. And we have a stellar team in place to deliver results. Let me now turn the call over to Brian, who will review our financials with you. Brian.

Thank you, Rachel. As of June 30, 2019, GlycoMimetics had cash and cash equivalents of $184.2 million as compared to $209.9 million as of December 31, 2018. The company's research and development expenses increased to $13.1 million for the quarter ended June 30, 2019, as compared to $9.3 million for the second quarter of 2018. This increase was primarily the result of expenses related to the company's Phase III clinical trial of uproleselan in relapsed/refractory AML patients, and supporting the clinical trials of uproleselan conducted by or in collaboration with third parties. The company's general and administrative expenses increased to $3.8 million for the quarter ended June 30, 2019, as compared to $2.8 million for the quarter ended June 30, 2018. The 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 this novel pipeline. I'll now turn the call back over to Rachel.

Thank you, Brian. With the readout of rivipansel now in sight and with 2 of 3 key trials in AML actively recruiting, we're confident that the second half of the year will be transformative for us. Our goal is to continue to deliver a series of value-creating accomplishments for the 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]. We have our first question from Ritu Baral with Cowen.

This is Subbu Nambi on for Ritu Baral. I was wondering if you're seeing the same amount of refractory/relapsed patients that you had originally assumed? And then, what is the screen failure rate, drop-out rate? Any color would be helpful.

I'll turn to Helen. I'll make the general comment that we are seeing enthusiastic response of investigators around the trial. But Helen, would you like to comment?

Yes. So the Phase III trial, we are enrolling a population that is a high-risk population, including both the refractory and the relapse group. We are in the context that this trial, seeing a population that is similarly high-risk to the Phase II trial. We did refine the eligibility criteria for this trial, slightly, in order to focus on those patients most likely to respond to the selection antagonism approach. And we do see a balance, I think, and a good distribution so far in patients enrolled.

Got it. And I have one more follow-up question. Did you guys see any side effects in healthy volunteer study in your Phase I for sickle cell? Like increased white blood cells, which might have gotten missed in the Phase II because of its small size. Should we watch out for something mechanistically in the Phase III data readout?

We were very pleased, obviously, with the safety profile that we saw in the drug, in both the Phase I and Phase II trials. So again, let me turn that to Helen for further color.

Yes. And so to reiterate what Rachel just said, the Phase I studies in sickle cell disease demonstrated a safe profile, benign profile for rivipansel. There were some biomarkers of activity that were recognized in healthy volunteer studies, and then further assessed and observed in the early studies in patients, those have been very consistent throughout a program and are also being assessed in the Phase III program. There is -- so there's nothing identified as a concern from a safety perspective early in the program that would have any impact on the Phase III readout. In terms of the question about white blood cells. There is a variability of white blood cell levels in patients with sickle cell disease. That variability was present in our Phase I trial. We did not observe any differences in that, either concerning or otherwise in the Phase I trial, and we would expect that to be similar with the remainder of the program.

I would add that the safety profile in the Phase II was encouraging enough that the FDA did agree that we were able to enroll down to H6 in the Phase III.

And I would add one comment in terms of addressing any potential safety risk for the program level. As with any pivotal program, Pfizer has independent oversight of the program for a safety review and -- so a DMC or a DSMB is standard in that process, and Pfizer has followed standard procedure. If there was any concern about safety, we would expect that to have been identified. And I think simply proceeding with the trial throughout the trial to closure is a signal that there is no untoward concern observed by the independent oversight group.

Your next question comes from the line of Peter Lawson with SunTrust.

Rachel, just on data readouts for the next year or so. Are there any ISTs that we should be looking at and thinking about that could potentially have data over the next 12 months?

We haven't disclosed any ISTs. I will say that we are current -- we are continuing to look for additional opportunities for expanding the use of uproleselan, and we will share those with you as they become -- as they advance, but we've not announced any current ISTs.

And then, Rachel, just your thoughts on the potential impact from Novartis' crizanlizumab on the uptake of -- or potential use of rivipansel. Any thoughts around that would be appreciated.

Yes. I'll make -- I have two comments about crizanlizumab. One is that, first of all, I think it's worth noting that it is also a selectin antagonist. And actually, the selectins, I believe, are the only target in sickle cell disease, where there are multiple clinical trials that have been randomized and controlled. And that have targeted the selectins and showed clinical benefit that would be their criz trial and our Phase II. So I think we can feel confident that the target, at least, has been -- the importance of the target in sickle cell disease has been well established. With respect to uptake, we don't expect that there could be -- that there's going to be significant impact on the market for rivipansel. It's possible that there could be a slight reduction in the number of patients who present with crisis as a result of the use of crizanlizumab. But at the same time, we think that there could be an increase in the number of patients seeking care if rivipansel becomes available. And I think if the acute setting is one in which the treatments are more adequate to address the patient's needs, I think the bar goes up for patients on chronic therapy. I'd also add that I think if you look back at the data from crizanlizumab, at hydroxyurea, you'd see that they both had, actually, comparable impact on reduction of crisis. And since hydroxyurea has been on the market, there's been virtually no impact on the presentation of patients to the emergency room for occurrence of -- for hospitalization for vaso-occlusive crisis. So I think that our market is going to remain intact and important for the treatment of crisis.

Your next question comes from the line of Danielle Brill with Piper Jaffray.

Rachel, I know you said you're coordinating plans around disclosure of the rivipansel data. Just curious when you last communicated with your counterparts at Pfizer? And how much of a heads up you're expecting before the results are released? And also, we've been getting a lot of questions from investors about the recent failure of Modus' sevuparin. Curious to hear your take on this, and whether you see there's a risk for rivipansel?

Sure. Sure. Yes. As far as communication with Pfizer, I would say, it's the normal type of communication you'd expect between partners in a situation like this, and we expect to be coordinated. And if things are proceeding with an open communication channel, again, as I would say, in the normal course of things as you might expect in a good partnership. As far as sevuparin is concerned, that -- yes, that did recently fail. That was actually a heparin analogue, which importantly targets P-selectin and possibly L-selectin through what we believe is a charged effect, but does not target E-selectin. And I think that's a really important point because rivipansel as a pan-selectin antagonist, of course, targets all 3, but in particular, is potent in its targeting of E-selectin. And there's actually a lot in the literature, independent of work conducted by GlycoMimetics. But in the hands of other investigators and through other observations, it's been made clear, in our view, that actually E-selectin is key in the development and the exacerbation of a crisis itself. So sevuparin does not target E and rivipansel does. So we don't think that, that has any read-through to rivipansel and it's actually not unexpected in our view that a compound that fails to target E-selectin would have no impact in crisis.

Your next question comes from the line of Stephen Willey with Stifel.

Maybe for Rachel, just curious if it's your expectation that if rivipansel does succeed in Phase III, if it would receive a genotype-specific label? And if so, how that may impact utilization among some of the other genotype patients are responsible for I think about 20% to 30% of some of the crisis?

Yes. Actually, no, we don't expect there could be any limitation by genotype.

Okay. And can you just remind us what the current DRG payment is for sickle cell patient in crisis?

Actually, I don't know what the current DRG payment is. As you know, Pfizer is commercializing the drug, and so they're in the process of handling all of the reimbursement issues. I do know they are actively engaged as you'd expect they would be, around all of the issues associated with marketing, launch and reimbursement, et cetera.

Okay. And then, I guess you've introduced 1687 to us at ASH. Just curious how far away from the clinic is that asset? And do you actually move that into a Phase I prior to a Phase III AML readout?

Yes, we could, actually. And in fact, we're continuing to advance that. And we've not given specific guidance as to when we're going to take that into the clinic, but we are continuing to work toward that objective. And we do think that could go into the clinic prior to the Phase III readout. That actually is -- I didn't mention that in my prepared comments, but we are actually quite excited about that as a potential follow on. It is in our preclinical models of 500 to 1,000 times more potent than uproleselan or than rivipansel with respect to the E-selectin binding. And we've seen activity in a number of different animal models that suggest that, that could really be an exciting follow-on product for us.

And then just one last clarification question. So in the Phase III AML study, I know you're allowing for consolidation with uproleselan. Is -- are the number of cycles a patient can receive in consolidation capped? Is it 3?

Go ahead, Helen. I leave for Helen to...

Yes. Consolidation is often given for one, 2, sometimes 3 cycles in standard therapy, especially in patients who are eligible for transplants to get them to the point of readiness for transplant. In the protocol, we do allow up to 3 cycles of the consolidation. It's not expected that patients would necessarily use all 3 cycles, and often, patients will go to transplant prior to that.

Sure. I would add that it is really exciting to us that we have the opportunity to have these extra cycles of consolidation on protocol. So as a reminder, in our Phase II study, almost all of the patients were treated with only one cycle of therapy, with uproleselan. And we were very encouraged by the results that we saw in that trial. So we think that the opportunity for multiple cycles continuing on protocol could potentially add to the differentiation between the treatment and the placebo group. So we're actually quite excited about that aspect of the study design.

Your next question comes from the line of Biren Amin with Jefferies.

Just on the rivipansel Phase III, Rachel. How much data are we going to expect to receive from the top line press release that -- when Pfizer announces that data?

So I think you can expect to see something fairly similar to what companies typically do in the situation, which would be some kind of meaningful information around the top line and some comment that further details would be available at a scientific meeting or in a publication. So I think you can expect something fairly typical in that regard.

Got it. And then, I guess, just on the Phase III analysis. Is it going to be based on ITT? Or is there going to be a modified ITT on the primary endpoint?

So I can't describe right now what exactly will be disclosed initially. And I don't know if Helen can say more about that, but we're going to -- I think the initial disclosure would be fairly high level.

Yes. And I don't think we can answer that specifically, but I could say that, generally, a pivotal trial would be based on an ITT analysis.

Got it. And then, on 1359, what type of patients are you enrolling, in terms of breast cancer study? But can you just give us -- provide more detail on that trial?

Sure. Again, I'll turn to Helen, for the description of the patient enrollment, patient detail.

So that study is assessing for proof of mechanism and for pharmacodynamic markers. For that, we are enrolling -- we'll be enrolling patients with breast cancer and with bone metastasis -- stable bone metastasis, in order to assess the impact of antagonism of E-selectin and CXCR4 on the disease, including on the bony metastases. We think that, that is a particularly important aspect of the potential use for GMI-1359. And so pharmacodynamic data around effect on bony metastases, including things like the ability to detect and perhaps increase circulating tumor cell counts under the -- well, in the setting of therapy. And also assessing other markers of disruptions of the bony metastatic process. We'll be looking for things like that. We also know that, that mechanism is one that can affect hematopoietic stem cells, and we'd be looking for markers of that. It might also inform other aspects of the program later on.

So I guess, just in terms of dual antagonism of E-selectin and CXCR4, why have you chosen ER/PR-positive patients versus, for example, like triple negative? What gives you confidence that's going to work in this subset versus other subsets?

That's a great question. And we don't think that the effects or the potential benefit would be limited to one population or another. We have chosen the population in part because of relevance in the Phase Ib clinical setting and the ability to access patients who are stable in terms of their metastatic disease and on appropriate therapy for us to assess this molecule as an early exploratory proof of mechanism study. But we think that this could be quite relevant for addition to therapy for patients with multiple tumor types of breast cancer.

[Operator Instructions]. Our next question comes from the line of Ed White with H.C. Wainwright.

Most of them were asked and answered already. But just, maybe, a follow-up on 1359. With the Phase Ib start in the second half of '19, can you give us any expectations for timing to the data? And also, the number of patients that you're expecting to enroll?

Yes. This will be a small trial. So it will be less than a dozen patients, and we would be hoping to have some data readout by the end of 2020.

Okay. And then just on the other AML trials. Are you going to be able to provide any kind of updates as to enrollment and how enrollment is progressing? I know it might be difficult with the NCI study, but maybe with your own study?

Yes. So we're not going to be providing details as to how many patients are enrolled. But if there's any impact on time lines, we'd let you know. But -- so our objective is to work toward the data readout and to focus timing on that -- timing issues around that.

Okay. And then maybe, just lastly, on rivipansel. Following the top line release by Pfizer, do you plan on hosting your own conference call?

So again, I don't think the top line release is going to be at a level of detail that's -- we're not going to be -- we're not going to go beyond what's in the press release until there's some opportunity to share a broader data set, as I said, in the context of a scientific meeting or in a publication. So I don't currently plan to host a separate conference call because we don't believe we're going to be able to do anything beyond what's in the press release. I mean, that being said, we're always happy to take questions and calls, but I think we'll be sticking with what's in the press release in terms of the data disclosure at that time.

I am showing no further questions at this time. I would now like to turn the conference back to Rachel. Please go ahead.

Great. Thank you. Thank you, everyone, for your questions and for taking the time to listen to the call. We appreciate your interest in the company.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.