Kura Oncology, Inc. (KURA) Q4 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Kura Oncology Fourth 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 is being recorded. I would now like to introduce your host Robert Uhl with Westwicke Partners. You may begin.

Thank you, operator. Good afternoon and welcome to Kura Oncology's fourth quarter and full year 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 Web site 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. Today, I will provide you with an overview of our accomplishments since the last quarterly earnings call as well as an update on our strategy to develop precision medicines including a discussion of our development programs and what you can expect in 2017. Heidi will provide you with highlights of our financial results and after that we all will be available to take your questions. At Kura Oncology, we are committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consist of small molecule product candidates that target cancer signaling pathways and we seek to pair them with companion diagnostics to identify those patients most likely to respond to treatment. Since our last quarterly earnings call, we dose the first patient in our Phase 2 study in chronic myelomonocyticleukemia or CMML. This study is in addition to the three ongoing Phase 2 studies we are currently conducting in HRAS mutant solid tumors, peripheral T-cell lymphomas or PTCL and lower-risk myelodysplastic syndromes or MDS. We also made important progress with our pre-clinical programs. In December, we received clearance from FDA to begin a Phase 1 study for KO-947. And in our menin-MLL inhibitor program, we selected a development candidate KO-539 which we believe as exciting potential for the treatment of certain sub-types of acute leukemia. 2016 was a strong year and it set us up well for the data and milestones, we anticipate in 2017. So, let me start first with tipifarnib, our farnesyl transferase inhibitor. We in-licensed tipifarnib from Janssen and in it we saw an opportunity to take a drug candidate that was ahead of its time and use a precision medicine based approach to identify patient sub-set most likely to receive clinical benefit. We are evaluating tipifarnib in four independent Phase 2 trials. Our goals with these trials are to confirm the clinical activity tipifarnib in each disease indication, to validate biomarker hypothesis and to optimize the dose and schedule to build a data package supporting advancement to a pivotal study. I will turn first to our work on tipifarnib in HRAS mutant solid tumors. Our Phase 2 clinical trial of tipifarnib in patients with solid tumors with HRAS mutations is ongoing. HRAS is an oncogene, a cancer causing gene and we initiated this trial based on the hypothesis that if we can block the farnesylation of HRAS, we could drive anti-tumor activity. I'm pleased to say both our preliminary clinical and pre-clinical data support were on the right track. The trial was initially designed to enroll two cohorts of 11 patients each with HRAS mutations. The first cohort comprising patients with thyroid cancer and the second cohort comprising patients with solid tumors other than thyroid cancer. The primary objective of this study is to investigate the anti-tumor activity in terms of objective response rate. Secondary objectives include progression free survival, duration of response and safety. Further protocol in each cohort, two objective responses are required from the first eleven evaluable patients to proceed to the second stage and enroll an additional seven patients. In the fall of last year we announced that eleven evaluable patients had been enrolled in the non-thyroid cancer cohort with the most common histologies comprising five patients with salivary gland tumors and three patients with squamous cell carcinomas of the head and neck. Furthermore, among the three patients with HRAS mutant head and neck cancer, two had confirmed partial responses and prolonged disease stabilization was observed in the third patient. Based on these encouraging results, we amended the protocol to enroll only patients with HRAS mutant head and neck cancer in the second stage of the non-thyroid cohort. Last week, Dr. Alan Ho from Memorial Sloan-Kettering Cancer Center presented an update on the patients in the first stage of the non-thyroid solid tumor cohort at the targeted anti-cancer therapies meeting in Paris, France. Importantly, the two HRAS mutant head and neck patients with confirmed partial responses remain on study in cycle 19 and cycle 12, which means the patients have been on treatment with tipifarnib for more than 16 months and 10 months respectively. The third patient for whom we have observed prolonged disease stabilization discontinued treatment in cycle 8. We are very encouraged by the durability of the responses we have observed in these patients; durable, partial responses are very unusual in patients with head and neck cancer. Moreover, for each of the three patients the outcome and duration of clinical benefit achieved with tipifarnib represent improvements relative to the prior therapies that these patients received. In addition to our clinical studies, we have continued to conduct pre-clinical testing and we have observed that HRAS mutant head and neck tumors are sensitive to tipifarnib and resistant to cetuximab and/or chemotherapy. Although, our data is still preliminary, we are optimistic that we validated HRAS as a driver-oncogene in head and neck cancer and our clinical and preclinical data support our hypothesis that we can inhibit this activity with tipifarnib and drive meaningful clinical benefit for patients. We are focusing our attention on enrolling the additional HRAS mutant head and neck patients. However, it's proving more challenging than we anticipated. We believe that these challenges are due to two factors; first, most clinical sites do not conduct systematic genetic screening for head and neck patients because there are no standard therapies that require genetic screening for the disease. And secondly, there is increased awareness in use of immune therapies among patients in the U.S. To facilitate enrolment in the second stage of our trial, we continue to recruit head and neck investigators; we are adding additional clinical sites in Western Europe and Asia and we are working with third-party laboratories to facilitate HRAS screen. We anticipate releasing additional data in the second half of the year, although we may have a presentation at ASCO, we anticipate that any such presentation would be limited to a trial in progress due to the conference guideline. Let me now shift to what we are doing with tipifarnib in the treatment of PTCL. We were motivated to investigate tipifarnib in PTCL based on a small Phase 2 clinical trial conducted by Dr. Thomas Witzig and colleagues. In that study an encouraging level of activity in a group of heavily pretreated PTCL patients was reported. PTCL consist of a group of rare and usually aggressive forms of non-Hodgkin lymphoma that develop from mature T-cell. Several drugs have been approved for the treatment of PTCL but patients generally have a poor prognosis with a low response rate and commonly experienced repeated treatment failures. So in our view, there is still a significant need for new and better treatment. Our Phase 2 clinical trial of tipifarnib and patients with PTCL is a two-staged design. If more than one response is observed among the initial eleven patients an additional seven patients will be enrolled for a total of 18 eligible patients. The primary objective is to evaluate the efficacy of tipifarnib in terms of objective response rates. Secondary objectives including evaluation of progression free survival, duration of response and safety. I'm pleased to say both stage 1 and stage 2 of our PTCL trial have been fully enrolled. We have observed initial signs of clinical activity including three objective responses and we have one patient still under evaluation pending best response assessment. Importantly, we have identified potential biomarkers including genes that are expressed and/or altered which appear to be associated with the clinical activity of tipifarnib patients with PTCL. We anticipate providing data from the first and second stages of the trial at an upcoming scientific or medical conference. In addition, we are conducting further preclinical and clinical studies including enrolling a small cohort of approximately twelve additional patients with the goal to confirm the initial findings. We anticipate these data being available in the second half of 2017. I will turn now to lower-risk MDS. Our third Phase 2 trial with tipifarnib is being conducted in patients with lower-risk MDS. MDS are a group of hematopoietic stem cell malignancies characterized by ineffective blood cell production and a risk of progression to acute myeloid leukemia. Our interest in MDS arose based on encouraging results from a previous Phase 2 clinical trial sponsored by Janssen, which was conducted in patients with intermediate and high-risk MDS. We prioritized study of tipifarnib in lower risk MDS because of our belief that the treatment of lower risk MDS remains a significant unmet need. In addition, we have identified biomarkers which we believe maybe predictive of response to tipifarnib in patients with lower risk MDS. Our Phase 2 trial is ongoing and as a primary endpoint of transfusion independence. Based on anecdotal evidence of hematologic improvement observed in several patients enrolled in the study, we have amended the protocol to evaluate dose regimens to seek to optimize those initial findings. Due to the protocol amendment, we are now anticipating having data from this trial in the first half of 2018. Our fourth Phase 2 trial with tipifarnib is in patients with CMML, a disorder of bone morrow stem cells in which an increase in white blood cells or monocytosis is a defining feature. We announced in January that we have dosed the first patient in the trial. We are pleased with enrollment and anticipate having data from this trial to share with you in the first half of 2018. Now, let me update you on our ERK inhibitor program. We are advancing KO-947, our small molecule inhibitor of extracellular signal kinase or ERK as a potential treatment for tumors with disregulated activity of the mitogen activated protein kinase signaling pathway. The MAPK pathway is one of the most frequently disregulated pathways in human cancer. Based on our preclinical investigations KO-947 is a potent and selective inhibitor of ERK. It has demonstrated activity against a broad panel of tumor cell lines and induces regression in animal models. KO-947 demonstrates prolonged pathway inhibition both in vitro and in vivo enabling the potential for intermittent dosing on schedules of up to once weekly. Additionally, the drug properties of KO-947 support an intravenous formulation which may allow for increased drug concentration and potentially improve tolerability. We are developing KO-947 using a precision medicine-based approach through our preclinical studies we have identified potential development opportunities including KRAS and BRAF mutant cancers and squamous cell carcinomas. In addition, we have identified potential biomarkers to enable patient selection strategies for clinical development. Our goal is to identify those indications with the potential for single agent activity which may enable accelerated development. We received clearance from FDA in December 2016 to proceed with our Phase 1 clinical trial for KO-947 and we anticipate initiation of the clinical trial in the first half of this year. Our Phase 1 trial is designed to determine the maximum tolerated dose of KO-947 in patients with advanced non- hematological malignancies. We intend to conduct the Phase 1 at multiple centers in the U.S. and European Union. Data for KO-947 was published in a poster presented at the EORTC, NCI, AACR symposium or the triple meeting in November 2016 and we will be presenting additional data at the AACR meeting in April 2017. Finally, let me mention our menin-MLL inhibitor program. We are developing orally bio-available small molecule inhibitors of the menin-MLL interaction. This includes our development candidate KO-539, which we selected at the end of last year for the potential treatment of several genetically defined sub-types of AML and ALL. We presented a poster for our menin-MLL program at the triple meeting and will be presenting additional data at AACR. We are excited about the novel mechanistic approach and the therapeutic opportunities of this innovative program represents. That covers update of our development program. I will now turn the call over to Heidi for a discussion of the financial results in the fourth quarter and the full year 2016.

Thank you, Troy, and good afternoon everyone. Now, let me review our financial results. Total operating expenses for the fourth quarter of 2016 were $7.5 million compared to $6.8 million for the fourth quarter of 2015. Operating expenses for the full year 2016 were $28.4 million compared to $23.9 million for the full year of 2015. R&D expenses for the fourth quarter of 2016 were $5.5 million compared with $5.1 million for the fourth quarter of 2015. R&D expenses for the full year of 2016 were $20.4 million compared to $17.8 million in 2015. The increase in R&D expenses for the full year 2016 was primarily due to increases in clinical development activities related to tipifarnib. G&A expenses for the fourth quarter of 2016 were $2 million compared to $1.7 million for the fourth quarter of 2015. For the full year 2016, G&A expenses were $8 million compared to $6.1 million in 2015. The increase in G&A expenses for the full year 2016 was to support the increased R&D activities. The net loss for the fourth quarter of 2016 was $7.3 million compared to a net loss of $6.5 million for the fourth quarter of 2015. For the full year 2016, our net loss was $27.6 million compared to a net loss of $22.6 million for the prior year. As of December 31, 2016, we had $67.8 million in cash, cash equivalents and short-term investments and approximately 21.4 million shares of common stock issued and $19.3 million shares of common stock outstanding. We expect that our current cash, cash equivalents and short-term investments will be sufficient to fund current operations into the second half of 2018. With that, I'll now turn the call back over to Troy.

Thanks, Heidi. Last year was a productive one for Kura Oncology and I believe this year will be equally important. We're using a precision medicine-based approach across our pipeline programs with the goal to gain early insight into the therapeutic potential of our product candidates and identify potential avenues for expedited clinical development and regulatory strategies. Although I previously described tipifarnib as a drug developed ahead of it's time, I'm optimistic its time maybe coming. We have multiple development opportunities and we're making good progress toward our goal to initiate a first pivotal trial in 2018. In addition, we're pleased with the progress we've made with KO-947 and KO-539 and we look forward to continuing to update you this year on our progress on these programs. With that operator, we are now ready for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Jonathan Chang from Leerink Partners. Your line is open.

Hi guys, thanks for taking my questions. First for PTCL, can you help us put the initial efficacy signals disclosed today into context in terms of what kind of response rates would be expected with the group agents and remind us those observed in the MCI study in the past in PTCL?

Sure, Jonathan. So maybe we can start with the previous study, the Witzig study. Just to remind everyone there was a previous study conducted by Dr. Thomas Witzig and his colleagues at the Mayo Clinic in the University of Iowa conducted in both B-cell and T-cell lymphomas. Based on a retrospective analysis of that data, we identified PTCL as a potential indication of interest because they saw high level of clinical activity. What was missing from that study was any sort of mechanistic understanding or biomarker, that's what we think we've identified Jonathan to your question. What we've disclosed to this point is, we have three objective responses, one patient still on study, pending best response to evaluation, but we don't want to go too much into the detail of study before it's disclosed in an appropriate scientific meeting. What we can tell you is, we've identified potential biomarkers, multiple biomarkers that appear to be associated with the activity of the drug in PTCL. Now we have to confirm that level of activity, but the level of activity that we're seeing is not inconsistent with what was seen previously and the key to the important sort of step that we've added is the identification of the potential biomarkers. We'll obviously have much more to say about these results once they've been published in the appropriate forum. We want to wait for the data to be presented.

Okay, great. And then, second, can you provide any additional color on the steps you're taking to facilitate enrollment in the HRAS in solid tumor study and also helps that expectations with regards to how much more data we can see in the second half of 2017?

Sure. So, we said on the call today and we said in the press release with -- at the [indiscernible] presentation that we were having challenges recruiting additional patients. But I want to speak to those challenges directly because we're taking -- we think a number of important steps to increase enrollment. The first is that we're continuing to recruit head and neck investigators. When we started this study, this was not a head and neck study, it was an all comers study. Once we pivoted to head and neck, we needed to identify specific investigators and we've done that and we're continuing to do that. And that's really consistent. Its hindsight is 2020. If we had known we're going into head and neck, we might have done things differently, but we're continuing to recruit the investigators who see these patients routinely, we're adding additional clinical sites in Western Europe and in Asia particularly in territories where immune therapies either or not approved or not reimbursed. And finally, we're working with third party laboratories to facilitate HRAS screening at the various sites. Each one of these activities is important. Each one of them takes time. In some cases, a number of months for example to bring new sites online or put in place screening capabilities, but we feel like we're in good shape. We're optimistic that both individually and collectively these steps that we're taking should increase enrollment and we anticipate being able to give additional data in the second half of 2017. With respect to the second part of your question, what will that data look like? Obviously, with each additional patients we -- that gives us more information and greater confidence. What we're looking for is a level of activity in the patients in the second stage of the trial that's consistent with the level of activity we've seen in the first stage. And I don't want to speak to precise enrollment numbers because invariably that's hard to do, but we know what we're looking for, we've seen a very strong signal of activity and now we need to confirm that and I think we've taken all the appropriate steps. So we feel confident that we'll have additional data to provide in the second half of 2017 and will give additional updates as appropriate.

Great, thanks. And then, just one last question, can you elaborate on the anecdotal evidence of hematological improvement observed in the MDS study and talk about the amendments and the dosing regimen?

I can. So just to put this in context, the endpoint for our MDS study is different from the endpoints in the other studies. The endpoint in that -- in MDS is transfusion independence. One of the principal toxicities of tipifarnib is myelosuppression. And what we're doing we've seen anecdotal evidence in several patients, anecdotal evidence, Jonathan of a hematologic improvement. And it's too early to quantify that, it's too much -- it's too early really be able to provide more specifics. But we've certainly seen importantly the evidence of hematologic improvement and the suggestion that we maybe able to optimize that by evaluating different doses and schedules. By evaluating different doses and schedules, we can strike the balance between driving hematologic improvement and managing the myelosuppression. We don't want to get into the specifics right now of what doses and schedules we're looking at. We'll provide additional updates on that when it's time, we want to sort of keep that under wraps for competitive reasons. But we did think it was important to say that we've seen these -- we've observed examples of hematologic improvement and what that means in terms of the timeline which is -- we're more likely looking data here at the first half of 2018 rather than the second half of 2017. All in all, I think its good news, but its preliminary news and we still have quite a bit of work to do in MDS.

Great, thank you.

Thank you. And our next question comes from the line of Joel Beatty from Citi. Your line is open.

Hi, good afternoon, and thanks for taking the questions. First question is on the PTCL data I guess with the pre-responses that you commented on today, could you remind us how many patients that is out of? And then, also for the biomarker data that you will be sharing more information on later this first half, could you just tell us whether the biomarkers you found is consistent with the original hypothesis that you had before the study begun? Thanks.

Sure. So, Joel, the total number of patients on the study is 18. And we've reported, we've seen three objective responses, one patient still on study pending best response assessment. For very deliberate reasons we haven't gotten into anymore specifics about other endpoints that we might have seen in the study. And that will come out at an upcoming medical conference. I think the second question -- your second question around biomarkers is the important one, we've identified multiple potential biomarkers that appear associated with the activity of tipifarnib and PTCL. And mechanistically yes, they're consistent with what we would have expected. So this is a farnesyl transferase inhibitor it inhibits the farnesylation of key proteins in the cell and of those farnesylated proteins play a role in the disease or somehow associated with the disease that's the direction of which we're going and that's where -- our biomarker efforts are taking us not only in PTCL, but in all of the diseases. So the time this data gets released, we'll speak both to the fuller clinical -- set of clinical data in the trial, which is still ongoing as well as to put those biomarkers in context of what did they mean and what would they mean going forward into a potential further development and that will do that just as soon as we're able and as soon as it's appropriate.

Okay. Maybe one more question on HRAS, head and neck cancer patients, could you just compare the data that you've seen so far what might be the minimum hurdle for clinical effectiveness and clinical attractiveness?

Sure. So our study is ongoing and still a relatively few patients, but of the three patients that we've treated with HRAS mutant head and neck cancer. In our view, each of those three patients received clinical benefit and that clinical benefit was greater than the clinical benefit that they received for many of their prior therapies. We have two patients still on study as of the end of February as I mentioned at cycle 19 and cycle 12 and a third patient who had prolonged disease stabilization out to cycle 8, but ultimately withdrew from the study. When we've shown that data to investigators, there has been a considerable excitement, this frequency of response and durability of response is very compelling relative to the standards of care. And I don't want to speak to the other agents, but they're characterized by low to mid teen response rates and that the survival in that population is somewhere between six and eight months. So at this point you really can't compare apples to oranges, what we can say is in the context of HRAS mutant squamous cell head and neck cancer we're seeing -- we think very encouraging signals of activity that's why we're so determined now to increase our enrollment and add additional patients to the study to get a better understanding of both the response rate and the durability than looking toward subsequent steps and development.

Okay. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Konstantinos Aprilakis from JMP Securities. Your line is open.

Hi, good afternoon. Thanks for taking the question. Most of them have already been answered, but I guess this is a good way to segue into KO-947, could you sort of switch gears and discuss what your expectations are for the presentation, I think it's guided for the first half of 2017 where might we expect that and what's the nature of the data that we're going to see additional tumor types perhaps activity in once that haven't been discussed before or what you have in mind, Troy?

Yes. Thanks, Konstantinos for the questions. So we are planning to have a presentation of additional data on KO-947 at AACR. The abstracts are available on the AACR Web site. What we would be looking toward in that presentation is two things, one is further evidence of the mechanism of action and the second is and I think you alluded to this in your question, now transitioning to translational work that we've done to begun to identify potential development opportunities. We characterize this compound through an extensive campaign of translational research including more than 100 patient drive intergraph models and what came out of that were two groups of tumors KRAS and BRAF mutant tumors and then squamous cell carcinomas where we saw an encouraging and high level of activity. We still have -- that's all preclinical data, the point of the Phase 1 trial which we're anticipating initiating here in the first half of the year is a safety study, right? But we're encouraged by what we've seen, we're also encouraged by to differentiation that we've seen pre-clinically between KO-947 and the other inhibitors of ERK that are in various stages of development and the AACR presentation will begun to fill that picture out in more detail.

Great. Thanks, Troy.

Sure.

Thank you. At this time, I am showing no further questions in the queue. I'd like to turn the call back over to Dr. Troy Wilson for closing remarks.

For those of you tracking our progress, here are some key potential milestones we're anticipating. Initiation of the Phase 1 clinical trial for KO-947 during the first half of 2017, presentation of data from the first and second stages of the PTCL trial and associated biomarkers in the first half of 2017, additional data from the Phase 2 trial of tipifarnib in HRAS mutant squamous cell carcinomas of the head and neck in the second half of 2017, pre-clinical data for KO-947 and KO-539 at AACR in April, additional pre-clinical and clinical data for PTCL in the second half of 2017, and finally, data for the Phase 2 tipifarnib trials in lower-risk MDS and CMML during the first half of 2018. We'll be presenting at the Oppenheimer and Company Investor Conference later this month in New York and hope to see many of you there. Thank you, again, for participating in our call today. If you have any additional questions, please feel free to contact us. Have a good evening and afternoon everyone. Thank you.

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