Kura Oncology, Inc. (KURA) Q3 2016 Earnings Report, Transcript and Summary

Good afternoon, Ladies and Gentlemen, and welcome to the Q3. 2016 Kura Oncology Inc 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 turn the conference over to your host, Mr. Robert Uhl with Westwicke Partners.

Thank you, operator. Good afternoon and welcome to Kura Oncology's third 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 Dr. 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 the conference. On today's call we are going to provide a corporate update including a discussion of our drug discovery and development pipeline, as well as the financial results for the third quarter. After that Heidi and Antonio and I will b available to take your questions. I'll start with an update of our development program for our lead drug product candidate tipifarnib. We unlicensed tipifarnib from Janssen and have worldwide rights in all fields except virology. Several of the features that made tipifarnib a compelling opportunity included substantial safety database, the fact that it's demonstrated objective responses in patients across multiple indications, and evidence of a durable clinical benefit. What we believe we can do differently with tipifarnib is to enrich for clinical activity based upon our increased understanding of the molecular basis of cancer and to exploit advances and diagnostic technology including next generation sequencing to identify those patients most likely to benefit from treatment. Put simply, we can take a drug candidate that has an attractive safety profile and is active and make it work better by identifying appropriate patient population. The result of this approach is the four potential indications we are currently pursuing with tipifarnib. HRAS mutant solid tumors, peripheral T-cell lymphoma or PTCL, lower risk myelodysplastic syndromes or MDS and Chronic myelomonocyticleukemia or CMML. In addition to our initiative with tipifarnib, we are advancing two preclinical programs, an ERK inhibitor KO-947 and inhibitors of the menin-MLL interaction. We are making good progress on both programs and I'll provide update to that later. First, let me begin with an update on our initiative in HRAS mutant solid tumors. You may recall that concurrent with the release of our second quarter financial results, we provided an update on our Phase 2 clinical trial in HRAS mutant solid tumors, specifically on three patients with HRAS mutant head and neck squamous cell cancer and five patients with HRAS mutant salivary gland cancer. Among the three patients with HRAS mutant head and neck squamous cell cancer, the two patients with confirmed partial responses have been on study for 15 months and 8 months. Responses were seen after six and two cycles of treatment respectively. With regard to the patients with HRAS mutant salivary gland cancer, although no objective responses have been observed, two of the three salivary gland cancer patients who experienced prolong disease stabilization remain on study for 14 months and 10 months respectively. We are excited about the level of clinical activity we've observed in patients with HRAS mutant head and neck cancer. Although the dataset is small, we believe the activity we've observed is meaningful because of the setting. HPV negative relapsed/ refractory head and neck squamous cell carcinoma. This patient population has an overall survival of approximately six to eight months and few therapeutic options. New therapies including immunotherapy typically show response rates in the range of 10% to 20%. We've recently presented additional data on the first three patients with HRAS mutant head and neck squamous cell carcinoma as well as data from preclinical studies at the 9th European Scientific Oncology Conference or ESOC-9 and the presentation is available on our website. Included in the presentation our data suggesting the patients with HRAS mutant squamous head and neck cancer may derive limited clinical benefit from prior treatment with anti EGFR therapies including cetuximab which further highlight an unmet medical need in this population. To summarize the status of our Phase 2 trial in HRAS mutant solid tumors, stage one of the thyroid cohort continues to enroll. With respect to cohort two, which is comprised of patients with solid tumors other than thyroid cancer, we've amended the protocol to focus the second stage exclusively on the enrollment of patients with head and neck cancer. Our goal is to be able to provide additional data from this trial in the first half of 2017. Let me now turn to PTCL and MDS. We initiated our Phase 2 trial of tipifarnib and PTCL based upon previous phase two trials sponsored by NCI in adult patients with relapsed/refractory lymphoma. That study demonstrated the tipifarnib can be administered for prolong period and may produce durable responses as a single agent in relapsed lymphoma in a group of patients including those with PTCL who were heavily pretreated. Our Phase 2 trial in PTCL is designed to confirm the level of activity and to validate certain biomarker hypothesis including mutations and changes in expression of gene implicated in T-cell regulation, which we believe may allow us to enrich for those patients most likely to respond. The trial is ongoing and we anticipate announcing top line data from the study in the first half of 2017. Our Phase 2 trial in lower risk MDS is also ongoing, we expect to announce top line data in the second half of next year. In addition to confirming the level of clinical activity that was observed in a previous Phase 2 trial, our efforts have focused on the validation of specific biomarkers including certain markers of autoimmunity which we believe could predict which patients with lower risk MDS are mostly likely to respond to treatment with tipifarnib. The fourth of our Phase 2 trials for tipifarnib is in patients with CMML or Chronic myelomonocyticleukemia. CMML is a population for which prognosis is very poor with the three year survival rate estimated at less than 30%. Objective responses including complete responses have been previously observed in tipifarnib and CMML. As part of our Phase 2 study, we are confirming the level of activity of tipifarnib in the setting as well as testing of biomarket hypothesis relating to mutations and the proteins KRAS and NRAS which we believe may allow us to identify those patients with CMML most likely to experience durable responses. We've initiated the first site for our Phase 2 study and expect to begin dosing patients shortly. In summary, we are pleased with the progress in our tipifarnib development program. We believe each of the four Phase 2 studies has a strong scientific and clinical rationale and provide multiple potential opportunities for registration enabling studies. Now let me turn briefly to our preclinical programs. The first KO-947 is a potent and selective inhibitor of ERK. KO-947 has a unique profile compared to published data for other ERK inhibitors that we believe translates into prolonged pathway inhibition in vitro and in vivo. KO-947 whether dose daily or on intermit schedules demonstrates comparable activity in vivo including tumor regression. The potential to drive efficacy with flexible administration routes and schedule may provide an opportunity to maximize the therapeutic window and create a differentiated profile. We've evaluated KO-947 in more than a 100 different PDX models representing approximately 20 different therapeutic indications. We've observed consistent and compelling activity in a number of potential indications and identify potential biomarkers to support clinical development. We provided some preclinical data at the ESOC meeting last week and we anticipate providing additional preclinical data at the upcoming EORTC meeting in Munich later this month. In summary, we are excited by the preclinical safety and efficacy data supporting the potential clinical utility of 947 and look forward to advancing the program into the clinic. I am pleased to say we believe we've resolved the GMP manufacturing issues associated with our previous liquid formulation that led us to revise our timelines for IND submission and Phase 1 initiation. We are now advancing [lyo] flush formulation and believe we are on track to submit the IND for KO-947 in the fourth quarter. Lastly, let me comment briefly on our menin-MLL program. This program is focused on the discovery and development of novel small molecule inhibitors of the interaction between the proteins, menin and MLL or Mixed Lineage leukemia; we've identified a series of highly potent and selective small molecule inhibitors of the menin-MLL interaction and characterized their activity in biochemical and HRAS assays as well as in vivo model of leukemia. Our goal remains to nominate a development candidate for the program before year end. We anticipate providing preclinical data relating to our menin-MLL program at the upcoming EORTC meeting. I'd like to now turn the call over to Heidi who will update you on the financial results for the third quarter.

Thank you, Troy, and good afternoon, everyone. Total operating expenses for the third quarter of 2016 were $7.1 million compared to $6.4 million for the third quarter of 2015. R&D expenses for the third quarter came in at $5.3 million compared with $4.6 million for the equivalent period in the previous year. Meanwhile, G&A expenses for the third quarter were $1.7 million compared to $1.8 million a year earlier. Our net loss for the third quarter of 2016 was $6.9 million versus $6.1 million for the third quarter of 2015. As of September 30, 2016 we had $74.6 million in cash, cash equivalents and short-term investment and approximately 21.4 million shares of common stock outstanding. We continue 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.

Thanks Heidi. For those of who you that are tracking our progress, let me review the upcoming milestones we anticipate near term. First, submission of IND for KO-947 by the end of the year. Second, nomination of a development candidate for the menin-MLL program also by the end of this year. Third, initiation of a Phase 1 clinical study for KO-947 in the first half of 2017. Fourth, top line data from the Phase 2 study of tipifarnib and PTCL in the first half of 2017. And finally, additional data from the Phase 2 study of tipifarnib in HRAS mutant tumors in the first half of 2017. With that operator we are now ready for questions.

[Operator Instructions] Your first question comes from Jonathan Chang of Leerink Partners. Your line is open.

Hi, guys. Thanks for taking my questions. First big picture. Can you talk about how tipifarnib could be positioned in head and neck cancer? And the responses you are seeing on patients who've already seen cetuximab. Could you also talk about the potential for tipifarnib in earlier lines of treatment?

Sure, Jonathan. Thanks for the question. I am going to let Antonio address your questions.

Yes. Currently the data that we have seen in relapsed/ refractory setting, obviously it is kind of early to indicate what could be our initial thoughts but that seems to be an obvious thought because of the opportunity of facilitated approval or kind of accelerated registration. But that obviously does not preclude that we can go early setting particularly in the subset of patient that carry HRAS mutation. That we have been seen in many other indications of Alan, I think is the best example and there have been passed to other agents that follow.

Great. And second question, on your recent presentation slide it was noted that one of the head and neck cancer patient, this is 005- 007 experienced the disease stabilization that lasted seven months but then the patient left the study due to symptomatic deterioration. Could you provide any additional color on that patient?

Sure. So this is a patient that was relatively young compared with the other patients. His tumor type you probably saw in the slides carry 12 additional cancer related mutations. He was also expected to have a large tumor Baldwin, he was a patient that receives prior cetuximab, and this case has a single agent and progressed very quickly. So he is a patient which is extremely difficult to see any level of clinical benefit. That said, the patient was stable after two course of tipifarnib treatment. And he was stable for an additional seven months. The patient decided to move to other therapies and currently as you could see from the slides was censured because of the absence of progression by any, in this case patient leave the study because his own decision and of course as such we reported.

Great. That's helpful. And then last question on your ERK inhibitor KO-947. And I know you touched on this in your prepared remarks. But could you elaborate on how your programs differentiated from other ERK inhibitors I guess previously in development given that Celgene terminated their study earlier in the year and I think Roche announced on their 3Q update the removal of their ERK inhibitor from Phase 1?

Sure. Joanthan thanks for the question. KO-947 to us represents a really compelling opportunity because of its potency, its selectivity and the potential to drive prolonged pathway inhibition whether we give it daily or intermit schedules. I think KO-947 to our knowledge is the only drug candidate moving forward that's being -- that has the potential to be given on intermit schedule. And in our view that's potentially a major point of differentiation because we would envision giving the compound intermittently perhaps as often as once weekly and then giving the patients holiday. We were very encouraged by the fact that we could drive durable activity including regressions on a number of different schedules ranging from daily out to weekly in the preclinical models. And so we are fully focused on getting the IND submitted this quarter and then looking forward to the clinical trial in the early part of next year and we will see whether the ability to give it on this intermit schedule with an IV formulation gives us a differentiated profile relative not only to the companies that you mentioned but to other players that have ERK inhibitors that they are moving forward.

Your next question comes from the line of Mike King from JMP Securities. Your line is open.

Hey, guys. Thanks for taking the questions. Just wanted to maybe explore a little bit further into the head and neck, I just wondering if you could say anything about whether that patient was positive for HPV?

So we don't have that data, our expectation is that those HPV negative patients because if you are looking the literature and the database, the large majority of the HRAS mutant patients actually are HPV negative and as you know also those are the patients that have worse prognosis.

Okay. Fair enough. And then just wanted to maybe explore a little bit further into the biomarker program and how are you thinking about that? I am just wondering if you could be more forthcoming about kind of things you are looking for. Whether you are looking for pathway activation? Are you looking at farnesylated proteins? Are you looking for proteomics or genomic signature et cetera? And how much you can say about it?

Are you asking Mike with respect to tipifarnib or KO-947?

Yes, no sorry, tipifarnib.

Tipifarnib, so central pieces of what we are doing across all the trial is to try to be guided by biomarkers, clearly in head and neck and in a solid tumor population we did a prospectively on the basis of HRAS mutation. As I indicated in the prepared comments in CMML, we'll be looking at the influence of KRAS and NRAS mutation because it is thought that those tumors that have those mutations will be less likely to be treated by Farnesyl transferase inhibitor. With respect to PTCL and MDS, we are looking at -- so in all cases I think you are looking at signaling pathways that are driving either the growth of proliferation and differentiation of tumor cells, so we are looking at mutations, we are looking at expression, we are looking at a number of different parameters. And importantly, for each of them they are well defined hypothesis. It is not fishing expedition. We have a number of biomarker hypotheses that we can test both pre-clinically and clinically. And we are looking forward to providing that additional data for PTCL in the first half of next year and in MDS in the second half of next year. But it's too early at this point to say much more than that.

Okay, fair enough. Sorry I jumped on the call little bit late because the operator I don't know I was sort of in phone mail jail, so then the other question is regarding sort of basket study, I know that you guys had -- were exploring upwards of something close to a dozen different tumor types in the HRAS, you had HRAS driven Urothelial but are you sort of done exploring these other tumor types and kind of limiting now yourself to head, neck or where can we just maybe getting a status on that.

Sure. I wouldn't say that we are done at all. I think what we are doing is seeing relative -- although it is a small number of patients, a high level of activity in the patients you have HRAS mutant squamous head and neck cancer. Obviously, we are evaluating Urothelial cohort through an investigator sponsored study that's when where the investigators in-charge of the study and determines both the conduct and the timing of data release. So there is not much more to say there. Cohort one of the ongoing Phase 2 study is in thyroid patients, that cohort is still ongoing. And with respect to cohort two we amended the protocol to focus specifically in head and neck. Our thought being if you look at the potential patient population it is a significant fraction of those patients. And an area of high unmet need where we are seeing demonstrated levels of clinical activity that we think are differentiated. So we would rather focus and try to drive that forward but leaving open the options to go to other indications as time and resources allow. Our view is we wanted to make sure that we push as hard as we can on the squamous cell head and neck because we are seeing very encouraging signal of activity.

Okay. So the head and neck would be more of a though of as a sort of those expansion study, is that a good way to look at it?

Yes. Let me just say something about it, let me just say that I wouldn't discuss any of the other indications. The reason why we are currently focusing head and neck is because this is a patient population with the characteristics of population you will rarely see responses in the city. The standard of care [that we see] in addition to chemotherapy is really ineffective. We have seen a couple of responses, a good disease stabilization in other patient. So there is more we are looking or study data appear to us or to a number of -- particularly meaningful. So that could be an opportunity to move quickly in this indication but that doesn't mean that we will not retake the orders at that stage. [Multiple Speakers]

Just to add Mike, yes, one more comment. I also think it's important to draw distinction, I don't think that we would be looking at getting a label in all HRAS mutant tumors. That question has come up in the past. Our view is even between the squamous cell head and neck patients and the salivary gland cancer patients you see differences. We, to Antonio's point we are seeing levels of activity that we think are very encouraging in the head and neck cohort, we need to drive forward with that and continue to evaluate that population. But in terms of a basket approach of getting some sort of broader label on HRAS mutant tumors that is not currently what we are thinking. We want to really understand the level of activity initially in the head and neck squamous population. And then as Antonio mentioned additional populations to come in the future.

[Operator Instructions] I am showing no further question at this time. I'd now like to turn the conference back to Troy Wilson, CEO.

So thank you all for participating in the call today. We'll be participating and presenting at a number of conferences including the Credit Suisse Conferece, Stifle and the Oppenheimer Summit later this month. We would be happy to see many of you there. If you have additional questions, please feel free to follow up with either me or Heidi. We appreciate everyone's participation and we hope that you have a great evening. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.