Kura Oncology, Inc. (KURA) Q1 2017 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, and welcome to the Kura Oncology First Quarter 2017 Financial Results. 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 like to introduce your host for today's conference, Robert Uhl from Westwicke Partners. Sir, you may begin.

Thank you, Operator. Good afternoon, and welcome to Kura Oncology's first quarter 2017 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. As we review the results for the first quarter of 2017, we're focused on operational execution, delivering on our portfolio, and achieving key milestones. Since our last call, we dosed the first patient in our Phase 1 study of KO-947, our small molecule ERK inhibitor. Our preclinical investigations have shown KO-947 is a potent and selective inhibitor of ERK with differentiated physical-chemical properties, and significant anti tumor activity. And as we'll discuss in more detail later in this call, we believe KO-947 has exciting potential to address cancers with mutations and/or disregulations of the Mitogen-Activated Protein Kinase, or MAPK pathway. In addition to KO-947, we're continuing development of tipifarnib, our lead product candidate. We're currently conducting four Phase 2 trials of tipifarnib in patients with HRAS mutant solid tumors, Peripheral T-Cell Lymphomas or PTCL, lower risk Myelodysplastic Syndromes or MDS, and Chronic Myelomonocytic Leukemia or CMML. We also continue to advance our menin-MLL inhibitor program, which includes our development candidate KO-947, which is in preclinical studies. We believe a menin-MLL inhibitor could hold exciting promise in the treatment of certain subtypes of acute leukemia. We'll talk about each program in turn, so let me begin by providing a short overview of where we are with tipifarnib, our farnesyl transferase inhibitor. We're evaluating tipifarnib in four independent Phase 2 trials. Our goals is to confirm the clinical activity in each disease indication to validate biomarker hypotheses, and to optimize the dose and schedule to build a data package supporting advancement to a pivotal study. Our first Phase 2 clinical trial is being conducted in patients with solid tumors with HRAS mutations. Our Phase 2 HRAS trial was originally designed to validate that HRAS is an oncogene, and to test the hypothesis that we could use tipifarnib as an inhibitor of HRAS farnesylation to drive meaningful anti-tumor activity. Although we did not initially design this Phase 2 study to focus on HRAS mutant head and neck cancer, we prioritize that indication for further evaluation based on the encouraging clinical and preclinical data we've observed. We continue to recruit patients in the U.S. and Western Europe, as well as facilitate HRAS screening at our clinical sites. At ASCO, we will have a trial in progress [technical difficulty] poster presentation, including supporting rationale from patient-derived xenograft models. We also anticipate releasing additional data on the expanded cohort of patients with squamous cell carcinomas of the head and neck in the second half of the year. Now, let me shift to what we're doing with tipifarnib as a potential treatment for patients with PTCL. In our previous call, we announced that both stages of our Phase 2 trial for tipifarnib and PTCL have been enrolled, and we have observed initial signs of clinical activity. Importantly, we also announced that we've identified potential biomarkers, including genes that are expressed and/or altered in patients with PTCL which appear to be associated with the clinical activity of tipifarnib in that population. We will be presenting data from the first and second stages of the Phase 2 trial at the upcoming European Hematology Association conference, being held in Madrid from June 22nd to the 25th. We are conducting further clinical and preclinical studies, including enrollment of a cohort of approximately 12 additional patients with the goal to confirm the biomarkers and associated clinical activity. We anticipate these data being available in the second half of 2017. Turning now to lower risk MDS, our third ongoing Phase 2 trial with tipifarnib is being conducted in patients with lower risk MDS, and as a primary endpoint of transfusion independence. As we discussed in the previous call based on evidence of hematologic improvement observed in several patients enrolled in the study, we've amended the protocol to evaluate additional dose regimens that may allow us to optimize those initial findings. We're enrolling patients under the amended protocol, and we continue to anticipate 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 marrow stem cells where an increase in white blood cells of monocytosis is a key feature of the disease. We dosed the first patient for this trial in January, and we're pleased with the pace of enrollment. We expect to have data from this trial to share with you in the first half of 2018. Now, let met talk about KO-947, our small molecule inhibitor of extracellular-signal-regulated kinases. We are developing KO-947, our small molecule ERK inhibitor using a precision medicine approach as a potential treatment for tumors with dysregulated activity of the MAPK pathway. The MAPK pathway is dysregulated in more than 30% of human cancers, including tumors arising from mutations in KRAS, NRAS, and BRAF, encompassing multiple cancer indications with significant unmet medical need. Our preclinical investigations have shown KO-947 is a potent and selective inhibitor of ERK, and the compound has potentially differentiated properties compared to the reported data from other ERK inhibitors. KO-947 demonstrates prolonged pathway inhibition, both in vitro and in vivo. This property provides the opportunity to dose on intermittent schedules. And animal models have demonstrated that KO-947 can induce tumor regressions with up to once-weekly dosing. In addition, the drug properties of KO-947 support an intravenous formulation, and together with the potential for intermittent dosing, this may allow for increased dose intensity and improve tolerability. We've identified potential indications for clinical development based on a broad panel of in vivo models utilizing patient derived xenografts. Preclinical data presented at the AACR meeting in April demonstrated robust and durable activity, including tumor regressions in lung, colorectal and pancreatic tumors, harboring KRAS and BRAF mutations, and in squamous cell carcinomas of the head and neck and esophagus with no mutations in the MAPK pathway. We've identified potential biomarkers to enable patient selection strategies in later clinical development. Our goal is to identify indications single agent activity which may enable accelerated development. We dosed the first patient in the Phase 1 trial for KO-947 in April. Our Phase 1 study is designed to determine the maximum tolerated dose of KO-947 in patients with advanced non-hematological malignancies. The trial design includes a dose escalation, maximum tolerated dose expansion, and one or more tumor-specific extension cohorts. Additionally, we are pleased that in April the U.S. Patent and Trademark Office issued a composition of matter patent to Kura that cover KO-947 and structurally related compounds, as well as methods of using the compounds for the treatment of diseases including cancer. We believe the unique and differentiated drug properties of KO-947 as well as a significant body of preclinical data make it a compelling therapeutic candidate, and we look forward to reporting clinical and further preclinical data in due course. Finally, let me mention our menin-MLL inhibitor program. In January of this year, we selected KO-539 as a development candidate for this program. In preclinical studies presented at AACR, KO-539 demonstrated robust and durable tumor regressions in multiple aggressive models of MLL rearranged leukemias that correlated with modulation of target gene expression. In addition, the menin-MLL access has been implicated in a number of other disease indications, and we are evaluating the potential of our menin-MLL inhibitors in that context. That covers the update on our product candidate development programs. I'll now turn the call over to Heidi for a discussion of the financial results for the first quarter of 2017.

Thank you, Troy, and good afternoon everyone. Let me review our financial results. Total operating expenses for the first quarter of 2017 were $7.7 million compared to $7 million for the same period in 2016. R&D expenses for the first quarter of 2017 were $5.5 million compared with $4.6 million for the same period in 2016. The increase in R&D expenses was primarily due to an increase in clinical development expenses associated with our ongoing clinical trials for tipifarnib. G&A expenses for the first quarter of 2017 were $2.1 million compared to $2.4 million for the same period in 2016. The decrease in G&A expenses was primarily due to a decrease in professional expenses. The net loss for the first quarter of 2017 was $7.5 million or $0.39 per share compared to a net loss of $6.6 million or $0.36 per share for the same period in 2016. As of March 31, 2017, we had $59.2 million in cash, cash equivalents and short-term investments, and approximately 21.4 million shares of common stock issued, and 19.7 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 will now turn the call back over to Troy.

Thank you, Heidi. Kura continues to build momentum in 2017, and I'm pleased with our progress. From our Phase 2 trials with tipifarnib to our Phase 1 study with KO 947, as well as our preclinical work with KO-539, we're focused on operational execution, delivering on our portfolio, and achieving key milestones. We founded Kura with the goal to build a diverse pipeline of precision medicines for the treatment of cancer. Our goal is to match the right drug to the right patient at the right time, and our emerging clinical data for tipifarnib and our preclinical data for all of our programs continues to support that this is the right approach. With that, operator, we're now ready for questions.

Thank you [Operator Instructions] And our first question comes from Konstantinos Aprilakis from JMP Securities. Your line is open.

Thanks guys, and thanks for taking the question. My question regards the tipifarnib PTCL data presentation slated for EHA. I'm not sure how much you can share there, but I was wondering if you could provide further detail on what we can expect. I believe the last we heard was three objective responses and there was a patient pending. So are we going to see complete response data from the first stage of the trial. How much of the second stage will we see? And will we see any biomarker data? I know there was an additional 12 patients enrolled. Are we going to see data on those additional 12 patients? Thank you.

Thanks, Konstantinos, for the question. So, you're correct. In our last call we mentioned that the first and second stages of the trial had been fully enrolled. And I think you correctly summarized where we were. We are looking forward to Dr. Witzig's [ph] poster presentation at EHA for the results. There will be an emphasis on the biomarkers, as I think we've mentioned in the last call and reiterated in this one, we've identified multiple potential biomarkers that appear associated with the activity of tipifarnib in PTCL. As for the specifics, as you probably appreciate, given that the data has been accepted for presentation at EHA there's not really much more we can say because the data is currently under embargo, but we'll look forward to talking with you and others about it once it's been presented.

Thanks. Looking forward to it.

Sure.

And our next question comes from Joel Beatty from Citi. Your line is open.

Hi, and thanks for taking the question. The question is on the head and neck data, -- actually the next update is at ASCO, but could you tell us whether there'll be any update on the clinical outcomes data there?

Yes, Joel, thank you for the question. As you may know, the ASCO guidelines are stringent, and I think a little bit unique in that for trials that are ongoing you're actually not allowed to present ongoing clinical data. So as we mentioned, the data that will be presented at ASCO is a trial in progress poster presentation. We'll speak to the parameters of the trial. We'll also -- there'll be supporting information from the patient-derived xenograft models. We're not going to be in a position though to give an update on the clinical data that was presented the last time at TAT. We are continuing to work on the second stage of that trial, the various topics we talked about last time relating to adding additional sites, facilitating screening. And we will look forward to having that data released in the second half of the year. But it will not be at ASCO this June.

Got it. And then just a follow-up question, with that data you're expecting from head and neck in the second half of this year, do you expect that will include additional patients beyond what was presented earlier this year?

Yes, we do, Joel.

Okay, great. Thank you.

Sure.

[Operator Instructions] And our next question comes from Jonathan Chang from Leerink Partners. Your line is open.

Hi, thanks for taking my questions. For the upcoming PTCL data at EHA, can you talk generally about just sort of how well characterized the identified biomarkers are? And whether these biomarkers are in line with your expectations given tipifarnib's mechanism of action?

So, Jonathan, it's -- what I think we can tell you again, let's begin with the preface that the data is under embargo, so, have to be very careful what we say about it. The potential biomarkers that we've identified we believe are associated with the clinical activity of tipifarnib. They're also consisted with what we understand the mechanism of action of tipifarnib to be, namely inhibition of farnesylation. Obviously there'll be much more to say when we can identify the potential biomarkers, and share the data with you, and the rationale as well as the implications. But that'll have to wait until the data has been presented by Dr. Witzig. We don't want to get ahead of him or EHA on that regard.

Understood. Maybe just one more, how much information should we expect to see in the EHA abstract published later this week.

So, let me ask Dr. Antonio Gualberto, Jonathan, to respond to that question.

Yes, what you can expect, certainly, the 18 patients will be fully characterized. We have [indiscernible] for all the patients for all the biopsies -- tumor biopsy for all the patients. Plus, we have done full-exon [ph] sequence for every other patients. Obviously, we cannot say what the markers are, but I think it's fair to say that there is a strong rationale both with the mechanism [indiscernible] tipifarnib with what known of the biology of the disease. And we will do the typical biomarker to affect interactions with -- on the statistical analysis. And nothing else, that's as much as we can say at the present time.

Great. Thank you.

And at this time, I'm showing no further questions. I'd like to turn the call back to Dr. Troy Wilson for any closing remarks.

Thank you, Operator. For those of you keeping track of our progress, here are key potential milestones that we're anticipating. A trial-in-progress poster presentation at ASCO for the Phase 2 HRAS mutant squamous cell carcinoma, the head and neck trial, including supporting rationale from patient-derived xenograft models, presentation of data from the first and second stages of the Phase 2 tipifarnib trial in PTCL and associated biomarkers at EHA, 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, additional preclinical and clinical data for PTCL in the second half of 2017, data from the Phase 2 tipifarnib trials in MDS and CMML during the first-half of 2018, and data from the Phase 1 trial of KO-947, in 2018. We'll be presenting at the upcoming Jefferies, and JMP healthcare conferences in June, in New York, and we 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 day everyone.

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