Kura Oncology, Inc. (KURA) Q2 2016 Earnings Report, Transcript and Summary

Good day Ladies and Gentlemen, and welcome to the Kura Oncology Incorporated Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Robert Uhl with Westwicke Partners. Sir, you may begin

Thank you, Chanel. Good afternoon and welcome to Kura Oncology's second-quarter 2016 financial and operating results conference call. Joining me on the call from Kura Oncology are Dr. Troy Wilson, President and Chief Executive Officer; Heidi Henson, Chief Financial Officer and Antonio Gualberto, Chief Medical Officer. Before I turn the call over to Dr. Wilson, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Kura's filings with the SEC, which are available from the SEC or on the Kura Oncology website for information concerning the risk factors that could affect the Company. I will now turn the call over to Dr. Troy Wilson, President and CEO of Kura Oncology.

Thank you, Robert. Good afternoon, everyone and thank you for joining our teleconference. On today’s call we will provide a corporate update, including a discussion of our drug, discovery and development pipeline as well as financial results for the second quarter. After that Heidi, Antonio and I will all be available to take your questions. We’ll touch on some specific updates on our Tipifarnib development efforts later in the call, but before we did so, I wanted to take a few minutes to provide some context on two trends that shaped our approach to drug discovery and development. The first is an increased understanding of the molecular basis of cancer. Over the past several decades, scientists have identified hundreds of mutations, amplifications and translocations in DNA that may contribute to cancer. Some of the defects occur in the aero correcting machinery of the cell, others were in the signalling machinery which leads to the transmission of aerosignals. Some defects allow cells to become invasive, disrupting more healthy cells in tissues and finally some defects make the cancer cell immortal [ph] so that it’s resistant both to the body’s natural defense mechanisms as well as anti cancer therapies. At Kura Oncology, we are working to understand how specific molecular defects drive the activity of cancer cells and how we might use our small molecule drug candidates to address these defects. The second trend is how we identify these molecular level defects to prioritize the right therapy for the right patient. We witnessed wide spread migration of multiplex genetic testing from the research lab into the clinic. The promise of genetic testing is that if we can understand the molecular basis of cancer we can direct the patients to a targeted therapy specific for their disease. As a result nearly at nearly all the major cancer centers, oncologists and pathologists are using multiplex genetic testing to make diagnostic and treatment decisions. At Kura Oncology we are capitalizing on these trends. We have an increased understanding of the complex biology of cancer, we have potent and selected small molecule drug candidates that inhibits specific interactions that drive tumor cells and the tools and technologies are now available to identify patients who have cancers that we believe are most likely to benefit. Across to our pipeline our goals are to conduct the best science and to design and execute clinical trials that are disciplined, efficient and based upon a strong scientific and clinical rationale. We have a particular interest in the mitogen-activated protein kinase or MAPK pathway and cancers that may be driven by mutations or other disregulations in that pathway. Previous studies have shown the disruptions of the MAPK pathway are frequent contributors to cancer. Multiple inhibitors of the kinase is RAP and MAC [ph] two of the central nodes of the MAPK pathway have been approved by FDA and other agencies, which underscores the importance of the MAPK pathway in human cancer. Despite the successes of RAP and MAC inhibitors however there remains a significant unmet need for treating cancers that are driven by disregulations in MAPK signalling. Our two most advanced programs, Tipifarnib, our Farnesyl Transferase Inhibitor and KO-947 are inhibitor of the extracellular receptor signalling kinase or ERK blocked signalling of the MAPK pathway and are intended to address this unmet need. As you listen to our program updates on Tipifarnib KO-947 the preceding discussion should help to unify and explain the development decisions we are making across to our pipeline, both today and in the future. We continue to be excited by the differentiated pipeline we are assembling at Kura and we look forward to sharing our progress. I’ll turn now to provide an update on our development program for Tipifarnib. We in-licensed Tipifarnib from Janssen at the end of 2014 and we have worldwide rights for all disease indications with the exception of virology. Several that feature at Tipifarnib that made it a compelling opportunity included substantial safety data base, the fact that it has demonstrated objective responses in patients across multiple indications and evidence of durable clinical benefit. With Tipifarnib, we have a potent and selective small molecule inhibitor, protein farnesylation, a key cell signalling process implicated in cancer initiation and development. After in-licensing the drug candidate we sought to rexamine its potential in the context of the trends I mentioned earlier, namely to look for opportunities to enrich for clinical activity based upon an increased understanding of the molecular basis of cancer and secondly to exploit [ph] advances in next-generation sequencing or NGS or/and other technologies to identify those patients most likely to benefit. Put simply, could we take a drug candidate that works and make it work better by identifying the appropriate patient populations. With that backdrop, we are currently pursuing four initiatives with the development of Tipifarnib, HRAS mutant solid tumors, peripheral T-cell lymphoma or PTCL, lower risk myelodysplastic syndromes or MDS and Chronic myelomonocyticleukemia or CMML. Among these initiatives we currently have three Kura-sponsored Phase 2 trial and one investigator sponsored trial underway, and additional Phase 2 trial planned and if we obtain positive clinical data we envision multiple potential paths through registration enabling studies. So let me begin with an update on our initiative in HRAS mutant solid tumors. The HRAS protein is involved in regulating cell division in response to growth factor stimulation and other signals. HRAS is an early player in many signal transduction pathways and it acts as a molecular on/off switch. Once HRAS is turned on, it recruits and activates proteins necessary propagation of the signal. In certain tumors mutations in the HRAS gene cause the HRAS protein to be permanently on resulting in persistent activation of downstream growth in proliferation signals. We prioritized evaluation of HRAS mutant tumors because we thought that among tumors with mutations in the MAPK pathway those with mutations in HRAS should be uniquely sensitive to Tipifarnib. This is because the HRAS protein is farnesylated and unlike KRAS and NRAS, it cannot be alternatively modified by another enzyme, Geranylgeranyl transferase and thus HRAS mutant tumors should not be able to escape inhibition of the farnesyl transferase enzyme. Furthermore, our preclinical data in patient derived xenograft models indicated that if we inhibited farnesyl transferase in HRAS mutant tumors we should see tumor growth inhibition and in some cases tumor regression. We initiated a Phase 2 trial in May of 2015 to evaluate the activity of Tipifarnib in patients with HRAS mutant solid tumors, and today I am very pleased to report we have observed positive preliminary indications of activity. The primary objective of this study is to investigate the anti tumor activity in terms of objective response rate of Tipifarnib in patients with locally advanced unresectable or metastatic, relapsed and/or refractory tumors that carry HRAS mutations. Secondary objectives include evaluation of progression-free survival, duration of response and safety. This trial is a Simon two-stage design meaning two objective responses are required among the first 11 evaluable patients to advance to the second stage. In cohort two, which consists of patients with non-metalogic tumors with HRAS mutations other than thyroid cancer we’ve met the criteria to advance to the second stage. Cohort one, which consists of patients with thyroid cancers with HRAS mutations continues to enrol patient. The most common histologies in cohort two are c salivary gland tumors with five patients and head and neck squamous cell carcinomas with three patients. Importantly, among the three patients with head and neck squamous cell carcinoma, we observed two confirmed partial responses and disease stabilization in the third patient. The two PR patients have been on study for more than 12 and 5 months, and responses were seen after 6 and 2 cycles of treatment, respectively. No objective responses have been observed in patients with salivary gland tumors; however, 3 of 5 salivary gland cancer patients experienced disease stabilization beyond 6 months at more than 6, 9 and more than 11 months. Although the data set is small with 3 patients, we believe that the activity we observed is meaningful because of the study. HPV negative relapsed/ refractory squamous cell head and neck cancer, these patients have an overall survival of approximately six months and a few therapeutic options and new therapies including immunotherapy, show our response rate in the range of 10% to 25%. We’ve proceeded into the second stage of cohort two of the trial as per the study protocol and will enrol in additional seven patients. Given the unmet need in head and neck cancers including related tumors of the salivary gland as well as the fact that there are no approved treatments that target HRAS mutations specifically we are encouraged by these early indications of activity and we look forward to continuing to invest again the potential for Tipifarnib to provide benefit to patients with HRAS mutant solid tumors. I’ll turn now to give a brief update on our other Tipifarnib trials. We are also evaluating Tipifarnib in multiple Hematologic malignancies. Specifically, we currently have ongoing Phase 2 clinical trials in PTCL and lower risk MDS. In addition, we expect to initiate a Phase 2 clinical trial in CMML later this year. In each of these indications we have evidence of objective responses from prior Phase 2 trials conducted by Janssen and others. In addition, we have identified potential biomarkers in each disease we believe may enable us to identify those patients most likely to benefit. We prioritize these indications for studying because we can conduct small, disciplined Phase 2 trials each for the compelling scientific rationale and strong clinical precendent enabling multiple shots on goal. We remain confident that our ongoing Phase 2 trials and our additional plant trial in CMML provide us with multiple potential opportunities to position Tipifarnib the first registration enabling pivotal study in late 2017 or early 2018. In addition to our efforts to advance Tipifarnib, we are also engaged in identifying and advancing novel drug candidates to treat cancers with significant unmet need. Currently we have two preclinical programs in development. The first is KO-947, a potent and selective inhibitor of ERK. The MAPK pathway is activated in more than 30% of human cancers including cancers arising from mutations in KRAS, NRAS and BRAF. Although inhibitors of both BRAF and MAPK have been approved for treatment of melanoma, acquired resistance to these inhibitors has been documented both in preclinical and clinical samples due to reactivation of ERK1/2 Kinases. KO-947 has a unique profile compared to published data for other ERK inhibitors that translates to prolonged pathway inhibition in vitro and in vivo. KO-947 demonstrates comparable efficacy in vivo including tumor regressions whether dose daily or on interment schedule. This attribute may provide an opportunity to maximise the therapeutic window with flexible administration routes schedules and create a differentiated profile. We're excited by the preclinical safety and efficacy data supporting the potential clinical utility of KO-947 in MAPK dysregulated tumors and look forward to advancing the program into the clinic. However, we have revised our timelines for IND submission and Phase I initiation due to a delay in completion of JMP manufacturing. We're working closely with our contract manufacturing organization to complete the manufacturing activities as IND enabling studies including GLP toxicological studies are otherwise complete. We plan to submit the IND later this year and initiate the Phase I clinical trial in the first half of 2017. Our third program menin-MLL inhibitors remains on track with the goal denominated development candidate for advancement into IND enabling studies later this year. I'd like to now turn the call over to Heidi who will update you on the financial results for the second quarter.

Thank you, Troy, and good afternoon, everyone. Total operating expenses for the second quarter of 2016 were $6.8 million compared to $5.9 million for the second quarter of 2015. The increase in expenses is primarily due to the expansion of our research and development activities and the costs of being a public company. R&D expenses for the second quarter were $4.9 million compared to $4.4 million for the same period in the prior year. Meanwhile, G&A expenses for the second quarter were $1.9 million compared to $1.5 million a year earlier. Our net loss for the second quarter of 2016 was $6.7 million versus $5.6 million for the second quarter of 2015. During the second we put in place a $20 million term loan facility of which $7.5 million was drawn down during the period. As of June 30, 2016 we had $80.1 million in cash, cash equivalents and short term investment and approximately 21.4 million shares of common stock outstanding. We expect that our current cash, cash equivalent, short-term investments will be sufficient to fund our current operations into 2018. With that, I will now turn the call back over to Troy.

Thank you, Heidi. In summary, we are encouraged by the preliminary data from our Phase II trial on HRAS mutant solid tumors. We believe the data provide initial validation of a molecular strategy for the identification of patients who may receive clinical benefit from treatment with Tipifarnib. With several additional trials ongoing, we look forward to further evaluating Tipifarnib and its activity among the additional patient populations. For those of you tracking our progress, the important milestones to watch out for as we move to the rest of the year, our initiation of the Phase II clinical trial for Tipifarnib in patients with GMML planned for the second half of 2016. Submission of the IND for the ERK inhibitor, KO-947, that is anticipated in the second half of 2016. As well as nomination of a development candidate for the menin-MLL program that is anticipated in the second half of 2016. With that, operator, we're now ready for questions.

[Operator Instructions] Our first question comes from the line of Mike King of JMP Securities. Your line is now open.

Good afternoon, guys. Thanks for taking the questions. Troy, I just wondered if you could tell us little bit more about the patients with head and neck cancer. Would this – I mean, another HRAS positive but just wondering if would this be a similar population for Keytruda or can you tell us if they had -- previously had Keytruda maybe just little color in that regard would be helpful?

Sure, Mike. Thanks for the question. I'm going to actually ask Antonio to address your question.

Sure.

So, we're circling on our left to investigate company send the data on the characteristic of the patients in any upcoming meeting. Probably what is important to tell you is that these are refractory patients that are progressing other therapies, patients in which we will not have an expectation to see a response or the responses seeing that setting will be less 10% which certainly not able to come on present time of the relationship with immunotherapies.

Okay. But the response rates you're citing are those that would be associated with patent-based chemotherapies or rituximab and the like, is that correct?

Yes. That is correct. Those sized standard therapies; my understanding is that unnecessary participant in immunology studies.

Right. Okay. And then if I could switch gears to ERK for a moment. I think you're probably aware that selumetinib unfortunately had a negative trial that was announced yesterday, I just wonder how that if any of the – in anyway has caused to rethink about approaching tumors that had MAP Kinase Pathway activation?

Sure. So it’s unfortunate that its population of high unmet need, Mike, but two points of differentiation of our ERK inhibitor relative to other ERK inhibitors for which they has published data as well as MAPK inhibitors. The first is the potency. KO-947 has – we think among the best potency as you look from in Vitro into cells and then ultimately in human whole blood. The second is as I mentioned, you see this prolonged pathway inhibition on a variety of different dosing schedules. And one of the reasons that we chose to move forward with intervenes form of administration is it may offer us the opportunity to provide greater exposure with acceptable tolerability. And clearly this pathway is critically important to a number tumors, non-small cell lung among them. Our view as you really have to inhibit the pathway as stronger and as hard as you possibly can. And as you know we have in IV and in oral formulation we privatize the IV formation for that reason. We've also done an extensive campaign in patients drives xenograft models to try to identify models that are uniquely sensitive to ERK inhibition, and we found some of those models have mutation in members of the MAP Kinase pathway, but other don't have mutations but have other dysregulations. And we're going to continue to look very closely at that pre-clinically and then those are candidates ultimately for expansion cohorts if we're able to find a dosing schedule that will allow us to move forward with 947. So I think in some it's unfortunately. It's particularly unfortunate for that compound, but I think if reinforces the strategy that we're taking with 947, the preclinical data is very promising and we're working as hard as we can now we moved into clinic.

All right. Thanks for asking that answer in such a thorough way. If I could just maybe jump back minute a jippy. I just wondering if you can offer your thoughts about the differences in response in head and neck versus salivary and perhaps your thoughts on the importance of stable disease as a indicator of potential clinical benefit? Thank you.

Sure. I'll comment and then I'll maybe invite Antonio to add his thought. I think we're encouraged by the activity that we've seen in both head and neck cancer and salivary gland cancer. These are with HRAS mutation. These are both cancers of high end met need. We were not terribly surprised that we saw disease stabilization in one setting and regressions in the setting of head and neck. I think we're quite we're quite excited by the activity that we're seeing in head and neck, but its consistent with the hypothesis to drive oncogene and its consistent with the preclinical data that we’ve seen and it tells us, you know this is the first agent we think that is sort of meaningfully inhibited one of the RAS isoforms. So that's -- you know to us that’s something to be quite happy about. We obviously you know -- we are looking to position Tipi for the most efficient pivotal study we can and given the signal that we are seeing in head and neck cancer and the unmet need, you know that’s what makes us so excited about head and neck, but clearly there is also activity in salivary gland cancers and I think you know we’ve validated that HRAS is an oncogene and Tipifarnib is a way of inhibiting that oncogene in such a way that you can provide clinical benefit to patients. I don’t know -- I'll invite Antonio maybe to add his thoughts.

Yes, in the case of head and neck the responses are essential. We obviously currently now are working on the question of differentiation. You mentioned before the Cetuximab based therapies we know of that the HRAS mutation on the [Indiscernible] agent they are not overlapping. The question about PD-1 and immunotherapy is something that we are currently working on. But certainly we are quite enthusiastic to see responses and very good overall responses 11, 12 months in this city. The question of salivary gland is actually much simple. So salivary glands have no standard therapy. The patients basically become Phase 1 patients. They have no other treatments is Platinum-Based major responses in the single digit, so certainly an opportunity for us in the setting in which survival is measured in months to have patients that have been one year on this study.

All right. Thanks again for taking the questions guys.

Sure. Thank you Mike.

Thank you. [Operator Instructions] our next question comes from the line of Joel Beatty of Citi. Your line is now open.

Hi, and thanks for taking the questions. The first is, for the next presentations that you enrolled in the second cohort, would you’ll be looking to enrol you know all -- for HRAS solid tumors or looking to enrol specific types of cancers where you saw these plans or some other method of selecting patients.

A good question, Joel I’ll let Antonio answer that question.

Obviously we are quite excited by the [indiscernible] responses in head and neck. So we are currently discussing amendment of the protocol with the investigators and we solved that fairly quickly.

Thank you. And maybe one more follow up. Could you just discuss how the drugs have been tolerated to date, if there have been some dosing amendments as they [Indiscernible] looking forward there.

Yes they already may have been quite tolerated there are no changes with the profile that we had described previously.

Okay. Thank you.

Thank you. And I’m showing no further questions at this time. I would now like to turn the call over to Mr. Troy Wilson for closing remark.

Thank you again for participating in the call today. If you have any questions, please feel free to follow up with me or Heidi and otherwise we wish all of you a great evening and thanks again for dialing in

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.