Karyopharm Therapeutics Inc. (KPTI) Q1 2016 Earnings Report, Transcript and Summary

Good morning. My name is Kelly and I will be your conference operator today. At this time I would like to welcome everyone to the Karyopharm Therapeutics First Quarter 2016 Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Justin Renz, Executive Vice President, Chief Financial Officer and Treasurer of Karyopharm Therapeutics.

Thank you Kelly, and good morning. Welcome to the first quarter 2016 earnings call. This is Justin Renz and I'm joined today by Dr. Michael Kauffman, Chief Executive Officer of Karyopharm, who will provide a brief overview; Dr. Sharon Shacham, our Founder, President and Chief Scientific Officer, who'll provide an update on selinexor's clinical and regulatory progress and development plans; and Chris Primiano, our Senior Vice President of Corporate Development, General Counsel and Secretary. Earlier today we issued a press release detailing Karyopharm's results for the first quarter 2016. The release is available on our website at karyopharm.com. Various remarks we make constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory timelines, the potential success of our product candidates, financial projections and our plans and prospects. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section of our most recent annual report on Form 10-K which is on file with the SEC, and any other filings we may make with the SEC. Any forward-looking statements represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. We expect to file our Form 10-Q later on today. We are happy to take questions following the prepared comments. I will now turn the call over to Dr. Michael Kauffman, Chief Executive Officer of Karyopharm.

Thank you, Justin and good morning everyone. Thank you for joining us on our call today. Since the beginning of the year, we've made great progress towards executing on our clinical strategy. That is to complete the clinical trials necessary to seek regulatory approval and commercialization of our lead product candidate selinexor, and to develop a broad and deep clinical pipeline for the longer term. Selinexor is our first in class oral selective inhibitor of nuclear export or sign compound that we are developing for cancer with significant unmet medical need. Selinexor is being evaluated in multiple later phase clinical trials in hematologic cancers and solid tumors. Near term, we expect to report topline data from two of our ongoing studies STORM and STOMP and relapsed refractory multiple myeloma during the second half of 2016, and in 2017 we expect data from the SOPRA study and AML, the SADAL study and DLBCL and the SEAL study in liposarcoma. Sharon will discuss these trials in more detail later in the call. We are also preparing to establish the commercial infrastructure necessary to support a potential launch of selinexor in North America and Europe as appropriate. We will evaluate potential collaborations within these geographies that enable us to further extend the selinexor development program into additional tumor types, earlier lines of therapy and additional combination regimens. We intent to enter into collaborations for further development, marketing and commercialization of selinexor in particular geographies outside of North America and Europe at an appropriate time as well. Continuing with the expansion of our selinexor pipeline, in January we initiated the Phase 2/3 SEAL study evaluating single agent oral selinexor versus placebo in liposarcoma. This study was designed based on promising clinical data showing durable stable disease and improvement in progression free survival compared to previous chemotherapies in patients with liposarcoma. The FDA has communicated us the progression free survival is an acceptable primary end point and we expect topline data from the Phase 2 portion of SEAL in mid 2017. With respect to our non- selinexor pipeline, we are pleased to have initiated a first in human study of KPT-8602 and novel second generation SINE compound. In patients with relapsed/refractory myeloma. We initiated this study in January and expect topline safety and tolerability data later this year. We also plan to initiate a Phase 1 clinical trial with an another compound KPT-9274, an oral dual inhibitor of PAK4 and NAMPT in patients with advanced solid tumor malignancies, oral lymphomas. We expect this first in human study to commence shortly. Since the beginning of the year, we also presented data at several medical conferences highlighting the depth and breadth of our development pipeline including encouraging preclinical activity with selinexor in combination with immune checkpoint inhibitors in oncology. We also presented preclinical data on our other SINE compounds outside of oncology. At the 2016 American Association for Cancer Research Annual Meeting in April, we presented preclinical data demonstrating selinexor’s ability to promote rapid tumor burden reduction in combination with immunotherapy checkpoint modulators, renal cell carcinoma models. Selinexor may be acting in combination with immunotherapy by priming the inflammatory and immune environment to maximize the effective checkpoint inhibitors. The data also indicated that the efficacy of selinexor might be enhanced by disrupting immune checkpoints in infected cells that is in T-cells and NK cells. These data show selinexor synergies with anti-PD1 to inhibit tumor cell proliferation and to induce apoptosis in vivo. Based on these results in renal cell carcinoma models, and in the previously reported promising preclinical data in colon cancer and melanoma models, combination studies are planned at the M.D. Anderson Cancer Center with selinexor and Merck's checkpoint inhibitor Keytruda in patients with melanoma or non-small cell lung cancer. Outside of oncology, we presented preclinical data on our other oral SINE compounds, KPT-350 in traumatic brain injury or TBI and verdixnor or KPT-335 across the number of viral disease indications. At the 2016 Annual Meeting of the American Academy of Neurology in April, we presented preclinical data demonstrating the activity of KPT-350 for the treatment of neuro-inflammatory disorders including TBI along with its effects on key cancer related protein XPO mediates and nuclear export of multiple proteins that impact neurological, autoimmune and inflammatory processes. Data represented demonstrating that inhibition of XPO1 with KPT-350, exhibited good tolerability in brain penetration, neuroprotective and anti-inflammatory activities with improved functional outcomes including anti-epileptic effects in rodent models of traumatic brain injury. Oral KPT-350 is an IND ready compound. We have a preclinical data package supporting safety and biological activity across the number of neurological autoimmune and inflammatory conditions and we plan to identify partner to advance the clinical development of KPT-350. At the 29th International Conference on Antiviral Research Annual Meeting in April, we presented preclinical data demonstrating the activity of oral verdinexor across a number of viral disorders including influenza, HIV, respiratory syncytial virus and Venezuelan equine encephalitis virus. We plan to continue development of verdinexor as a potential treatment for Influenza and these preclinical data provides strong support for other potential viral indications as well. With that, I'll now turn the call over to Sharon to provide more details on our clinical development plans for selinexor and our pipeline of other drug candidates. Sharon?

Thank you, Michael. As Michael mentioned, we are actively enrolling patients in several later phase clinical studies following the activity of selinexor in hematological malignancies. These include STORM, a Phase 2b study in patients with multiple myeloma, in which we expect data from the first 80 patients to be available in mid-2016. At that point we will review the data and evaluate whether to expand the study. So far, our randomized Phase 2 trial in older patients with relapsed/refractory ML for which we expect to report the outcome from an interim analysis in late 2016 and topline data in mid-2017. In SADAL the randomized Phase 2b trial in patients with relapsed/refractory DLBCL for which topline data are expected in early 2017. For solid tumor indications we are currently conducting company's sponsored trial of single agents selinexor in three solid tumor types. This include SEAL, a randomized Phase 2/3 trial in advanced unresectable dedifferentiated liposarcoma for which we expect topline data from the Phase 2 portion in May 2017. SIGN, a Phase 2 study in heavily pretreated patients with gynecological malignancies. And KING, a Phase 2 study in recurrent glioblastoma multiforme for which updated data will be presented at the American Society of Clinical Oncology Annual Meeting in June. Beyond selinexor we are leverage our leadership in nuclear transport and related targets with the advancement of our earlier stage oncology programs. And as Michael discussed, we initiated a Phase 1/2 study of oral KPT-8602 in patients with relapsed/refractory multiple myeloma. KPT-8602 has reduced brain penetration compared with selinexor and in preclinical models can be given daily with good tolerability. We expect data from the Phase 1 portion in late 2016. We are also planning to initiate a Phase 1 clinical trial to test the safety, tolerability and efficacy of KPT-9274 and oral dual inhibitor of PAK4 and NAMPT in patients with advanced solid malignancies or non-Hodgkin's lymphoma in the near future. Co-inhibition of PAK4 and NAMPT leads to synergistic antitumor effect to a variety of pathways, PAK4 is a critical link between Ras oncogenic signaling and downstream effector pathway including beta test [indiscernible] pathways in additions of PAK4 for blood signaling through these key oncogenic pathways. Separately, NAMPT plays a critical role in supplying high level of energy to cancer cells by replenishing NAD, blockade of NAMPT leads to energy depletion and growth of rest. Normal cells are more resistant to inhibition by KPT-9274 compared with cancer cells due in part to their genomic stability and lower metabolic rates. Since hematologic and solid tumor cells become dependent on both PAK4 and NAMPT pathways, KPT-9274 ability to simultaneously inhibit both these targets as single agent represents potentially important therapeutic advantage. We look forward to continue to provide you with updated results as they become available. Now I will turn the call over to Justin to discuss our financials.

Thank you, Sharon. Since we issued a press release earlier today outlining our first quarter 2016 financial results, I will just review the highlights and then speak to our cash balance and financial guidance. Karyopharm reported a net loss of $27.1 million or $0.75 per share for the quarter ended March 31, 2016 compared to a net loss of $26.1 million or $0.74 per share for the quarter ended March 31, 2015. Our net loss includes stock based compensation expense of $5.2 million and $3.7 million to the quarters ended March 31, 2016 and 2015 respectively. Research and development expense was $21.8 million for the quarter ended March 31 2016, compared to $20.8 million for the quarter ended March 31, 2015. General and administrative expense was $5.6 million for the quarter ended March 31, 2016, compared to $5.4 million for the quarter ended March 31, 2015. Our increase in expenditures is primarily related to the expanded clinical development activities for our lead drug candidate selinexor that Sharon just highlighted. Cash, cash equivalents and investments as of March 31 2016, including restricted cash totaled $187.1 million compared to $210 million as of December 31, 2015. We expect to end 2016 with a cash balance greater than $120 million. Based on our current operating plans, we expect our existing cash will fund our R&D programs and operations into the middle of 2018 including moving the STORM, SOPRA, SADAL, and SEAL studies, our four ongoing later phase clinical trials to their next data inflection points. I will now turn the call over to operator to poll for questions. Operator?

[Operator Instructions] Our first question comes from the line of Brian Abrahams with Jeffries. Your line is open.

Hi guys.

Hi Brian.

Our next question comes from the line of Ying Huang with Bank of America Merrill Lynch. Your line is open.

Hi, good morning, thanks for taking my questions. First one I have is about the multiple myeloma drug. Are you seeing any impact from the availability of two new recent approvals in myeloma including CD38 antibody and also another drug implicitly? And also are you seeing that you are taking more patients for the experience of those two agents from even clinical trials? Secondly, can you highlight the key difference between selinexor and KPT-8602 in terms of the preclinical safety findings? Thank you.

Thank you. I’ll start with the STORM. In the STORM study that includes 80 patients, at least a quarter will be post down on - so we definitely see that there is a wide - relatively wide use of [myeloma] [ph] and we have not had issues in involvement patient post down to myeloma. And when the results will be available we will report them. Regarding selinexor 8602, they are both coherent inhibitors of XPO-1 that slowly reversible. However 8602 has minimal brain penetration and as a result we were able to doze it in the IND toxicology studies five days - with minimal reported anorexia. And we expect this was in both monkeys and rats and we see similar phenomena with mice in which we dozed in the efficacy models everyday and we expect - we hope that it will be also translated into patient.

All right, thanks.

Thank you. Our next question comes from the line of Brian Abrahams with Jefferies. Your line is open.

Hi guys.

Our next question comes from the line of Michael Schmidt with Leerink Partners. Your line is open.

I guys, this is Varun Kumar on behalf of Michael Schmidt. My first question is for STORM trial in multiple myeloma, what are the efficacy and safety criteria to expand the trial in terms of it's balance rate which you guys are looking for?

Yes, our internal hurdles, express this as internal hurdle and based on KOL feedback to expand the study as a response rate of 20% or higher with a focus on the refractory, i.e. patients who myeloma is refractory to their last therapy and at least has exposure to Velcade, Kyprolis, Pomalyst, Revlimid, as well as the CD38 antibody most likely daratumumab. For comparison purposes, as you are all aware of, Velcade's ORR rate accelerated approval is 28%, Pom-Dex combination was 29%,carfilzomib was 23%, and daratumumab was 29%, in patients whose disease was refractory to both produce inhibitors and agents. But we should also point out that dara's activity in patients who are more like the patients who are enrolling, at least 5 refractory had a response rate of about 21%. So we believe that we are treating some of the most heavily pre-treated and importantly myeloma that's refractory to more classes of drugs than has previously been reported to our knowledge.

Okay, great. Second question on the second Jan KPT-8602, you guys are going to report safety and tolerability data in late '16. How do you foresee the dosing regimen change compared to the first Jan in multiple myeloma? Are you guys looking for less frequent or maybe expecting a higher MTD?

The dosing of selinexor twice weekly was 48 hours apart, so Monday, Wednesday, kind of a schedule. 8602 is being dosed 5 days a week. So for example, starting on Monday, Monday through Friday and then the weekend off. So it will be hard to compare the overall, the actual dose but for a cycle, we do expect that we will be able to - or we hope that we will be able to allow more higher level of dosing per cycle of 8602 compared to selinexor.

Okay, great. And my final quick question for STOMP trial in multiple myeloma. The Phase 1b top line data expected late '16, will it include response rate and around how many patient data will be there?

Can you clarify which trial you mean again?

It’s STOPM trial, multiple myeloma STOMP trial.

STOMP has three arms. We are looking at three different combination. One was selinexor pomalidomide, the one other one was Velcade, and the third one was lenalidomide. The first part is a dosage collision. So it’s following a three plus three design. And depending on the MTD that we will be reach in each one of them, we will report these results by the end of the year.

Okay, great. Thank you. Thanks for taking questions.

Thank you. And our next question comes from the line of Brian Abrahams with Jefferies. Your line is open.

Hi, can you guys hear me okay this time? Third time try I guess. I'm sorry about that. Couple of quick questions. I guess, first off, I know you had a couple of questions on 8602, differences from selinexor, can you maybe talk a little bit strategically where that could fit in? What’s the bar for further advancement when you see the Phase 1 data at the end of the year? Should we think about this is like a follow on to selinexor or potentially having differentiated efficacy or safety that might position more optimally in other indications where you are not necessarily pursuing selinexor?

Yes, obviously, it's a difficult question to answer in the absence of data. Just going along with the animal data, if the humans behave similar to what we see in pre-clinical models. We think it’s more of what you suggest in the second part of your question which is to say it would be optimally positioned for different diseases with different kind of unmet medical need profiles. For example, you could imagine this in earlier lines of therapy. You could imagine in MDS, CLL and other diseases where prolong therapy is required and the disease doesn't progress quite as far.

Additionally we might look at specific combination of 8602 that will difference from selinexor depends on partner of the combination and one that have associated with higher fatigue and anorexia on the combination side might be better in combination with 8602.

Got it. And then along the lines of this idea of combinations for either 8602 or selinexor, Michael you mentioned in your opening remarks some thoughts about potential collaboration. I'm curious where you stand in terms of your thinking on types of partnerships, whether you'd be looking for partnership with a preference on economics outside the U.S. or if you are more focused on collaborations - to explore combinations of developments or marketed agents further?

We've had a robust investigator sponsored trial program that as you can see from clinicaltrials.gov has a large number of studies in combination. So we haven’t felt impeded by specific, we haven’t needed specific partnerships to get these kinds of combinations study started or done and we will be reporting on those in the near future. Just to reiterate the M.D. Anderson study for example will have 13 arms now with this new amendment including a Keytruda arm which will focus on melanoma and non-small-cell lung cancer. So we really are not inhibited by or not required to do collaborations to get the appropriate kinds of combinations done. As far as external work we are comfortable with the development of our drug certainly in all of North America and Europe. We keenly interact with EMA as well as Health Canada and of course the FDA. So we really be thinking down the line about relationships that have more to do with commercialization, marketing et cetera, ex-US.

Makes sense. And one more quick one if I may, Sharon you gave a really helpful overview of 9274’s mechanism, was wondering if you could provide any more color on potential Phase 1/2 trial design whether that's going to include solid tumor and NHL patients in one study and what potential timelines for data might be there? Thanks.

So the study will start soon in Q2 and it will be in five different centers in U.S. including patient with solid tumors and non-Hodgkin's lymphoma as we mentioned before. It will have a straight-forward 3 plus 3 design, it's a first in human new mechanism of option and we are working with I think the best centers in the U.S. to learn how to dose this drug in patients. Following that and based on the results, we will identify key indications. Obviously the mechanism option that involves inhibition of KRAS signaling, inhibition of beta containing a pathways and inhibition of or depletion of nod level will help us identify key population that should be more sensitive to KPT-9274.

Thanks very much.

Thank you. Our next question comes from the line of Arlinda Lee with Canaccord Genuity. Your line is open.

Hi guys, thanks for taking my questions. I had some questions about some myeloma programs. Can you maybe characterize, I think you mentioned on SCORE previously that you were in discussions with U.S. regulatory agencies and I was wondering what - can you maybe characterize some of the discussions you’ve been having and what the next steps would be? Thanks.

Yes, we intend to start SCORE in the middle of the year. We are in discussions with FDA and other regulators largely because the landscape in myeloma is changing very rapidly. So we continue to be extremely excited about the combination of Kyprolis with selinexor or dex and also frankly about other proteasome inhibitors with selinexor or dex. But we want to refine that so it’s appropriate to the current myeloma regiments which are a little bit changed even over the last 6 months. So we will have an update later in the middle of this year.

Great. And then maybe on STORM you mentioned that your internal hurdle was in the 28% range for the Penta-refractory, what is the size and kind of scope of the next part of the trial for STORM?

What is that? I missed the word, what scope?

The size and the scope.

Yes, so based - clearly Velcade was in 250 range and Kyprolis in 260 range numbers have come down recently with Pom-Dex in north of 100, and dara in the same region. So, assume that we have 20 plus patients that have Penta-refractory disease refractory disease in the first part of the study if we were to expand it, we think that somewhere north of 100 to 150 somewhere in that range, total would be a relevant number based on recently approvals.

Great. And then I guess how does that, maybe to a prior question – how does that kind of fit with the 8602 plans and timelines.

We really need to not get ahead of our sales with 8602. We are quite encouraged from the preclinical data, but the use of these drugs could end up being very different and don't forget we have over 1500 patients treated across a large number of cancers with selinexor and we are just beginning our studies with 8602, so we have a much larger safety data base. So we don’t think that these are going to antagonize each other. On a contrary, their clinical profiles may look very different and we will be able to move appropriately either alone or in combination with both agents.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Whitney Ijem with JPMorgan. Your line is open

Hi, good morning guys. So going back to the 8602 study, is there a similar requirements or sort of percent of patients who areCD30 refractory or some goal there?

Not in the first portion of the study, but as we can imagine the population that goes into Phase 1 studies in myeloma, are very heavily [pictured] [ph] and many of them already been treated with all available classes of agents, but this is not a requirement until the study designed.

Okay. And then you mentioned the combinability of that versus selinexor, so just curious are there combinations that you have not been able to pursue with selinexor that you think you could now at 8602 or just that some of the combinations may be better tolerated?

So based on the combination of selinexor will be presented later this year and early next year and we'll discuss it but as you can see from clinicaltrials.gov we are perusing a fairly large number of combination with selinexor including standard chemotherapy on both solid and hematological malignancies as well as targeted therapies in both and all of these studies are still ongoing.

Okay. And then last question, you mentioned you are continuing or have plans to continue to develop Verdinex or influ. I guess what are the next steps there?

So we are taking very deliberately approach here. You can imagine it’s a very complicated area. We have done a number of preclinical models, there are few more we are still pursuing and we are looking for potential partnerships or additional funding sources to move the flu along. We should be clear that our current financial situation is very focused on selinexor and 8602 and then shortly 9274. We have completed a healthy volunteers study with verdinexor and we are quite pleased with the results. So this will unable to move into a Phase 2 and a flu situation but we will not pursue that immediately until we have appropriate partnership or other backing.

Got it. Thanks for taking the questions.

[Operator Instructions] Our next question comes from the line of Maury Raycroft with Jefferies. Your line is open. If your phone is on mute, please unmute. [Operator Instructions] And I am showing no further questions at this time. I would like to turn the call back to Mr. Kauffman for closing remakes.

Thank you, Operator. Over the next 6 to 18 months we expect several significant potentially value creating milestones for the company including data from our four ongoing later phase clinical trials, the STORM, SOPRA, SADAL and SEAL studies. We are now well capitalized with $187 million in cash as of March 31, 2016 which should be sufficient to take us through the middle of 2018, beyond advancing these four letter phase clinical studies to their next important key data inflection points. We look forward to sharing with you these several key clinical data read-outs through the remainder of the year and into 2017. Thank you for participating on our call today. And we look forward to seeing many of you at our upcoming medical and investor conferences. Have a good day everyone.

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