Kura Oncology, Inc. (KURA) Q2 2017 Earnings Report, Transcript and Summary

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

Thank you, Operator. Good afternoon, and welcome to Kura Oncology's second 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 website for information concerning 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, and good afternoon everyone, and thanks for joining us today. We are excited to update you on our pipeline progress and provide highlights of our financial results. At Kura we are committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target oncogenes and cancer signaling pathways and we seek to pair our product candidates with companion diagnostics to identify those patients most likely to respond to treatment. We will touch on each of our development programs in turn, but let's start with an update on our progress with our lead program, tipifarnib or Tipi for short. We are evaluating tipi in four Phase 2 trials. We are taking a disciplined step wise approach with a goal to confirm clinical activity to identify and validate biomarkers of activity to optimize the dosing schedule and to build a data package supporting advancement to our pivotal study. I’ll start first with an update on our progress with tipi in HRAS mutant squamous cell head and neck patients. Our Phase 2 trial in HRAS mutant patients was originally designed as a signal seeking study with a goal to validate HRAS as an oncogene and to test the hypothesis that we could use tipi as an inhibitor of HRAS farnesylation to drive meaningful anti-tumor activity. Initially the trial was designed to enroll two cohorts each of 11 evaluable patients with HRAS mutations; the first comprising patients with thyroid cancer, the second comprising with solid tumors, other than thyroid cancer. As per the trial protocol, at least two responses must be observed in the first stage of each cohort in order to proceed to the second stage. The thyroid cohort is ongoing in the first stage. As we previously reported among the 11 evaluable patients in the first stage of the second cohort we observed two objective responses out of three patients with squamous head and neck cancer and as a result we amended the protocol to enroll an additional seven head and neck patients in the second stage. As of the data call out on July 27, 2017, among the three head and neck patients who were enrolled in the first stage of the trial we have one patient with a PR who remained on study through cycle 20, and then came off study in cycle 21 due to progressive disease. As a reminder each cycle is 28 days. The second patient with the PR is ongoing in cycle 18 of treatment. The third patient experienced tumor shrinkage and prolonged disease stabilization and withdrew from the trial at cycle eight. Turning to the second stage of the trial, we had enrolled an additional three patients as of the data cut-off. Of those three patients our preliminary data shows that the first patient has also experienced a PR according to the resist criteria. And that patient is currently in cycle four. The second patient is in cycle two and was reported as having stable disease and the third patient is pending objective response assessment. In order to appreciate the potential significance for these results, it's important to consider the prognosis of individual patients. As we consider the outcome of the therapies the patients on our study received prior to entering our trial it's notable that none of these five patients were reported to have experienced an objective partial response on their prior line of therapy. And three of the five patients experienced only progressive disease on their prior line of therapy including one patient receiving pembrolizumab. Thus we so far have three confirmed partial responses out of five evaluable HRAS mutant squamous cell head and neck cancer patients and one additional patient currently pending evaluation. Enrollment is ongoing. In brief patients on the study who had failed therapy with cetuximab, with or without chemotherapy or immune therapy have achieved objective partial responses upon treatment with tipifarnib. Tipifarnib also continues to exhibit a manageable safety profile. We believe our results thus far are particularly impressive when we consider the current standard of care for patients with squamous cell head and neck cancer. Response rates for the three agents approved by the FDA in the second line are in the range of 13% to 16% and median overall survival is up to 7.5 months. In contrast we have observed confirmed partial responses in three of five evaluable patients and two of the responses have demonstrated durability beyond one year. This is extremely uncommon in the relapsed refractory setting of squamous head and neck cancer. We are continuing to recruit patients in both the U.S. and Europe. With the three additional patients and the additional confirmed partial response we’re reporting today, I want to remind you that as the trial was initially designed we need one additional response for the trial to be positive for the study protocol. Given the totality of the clinical data we have observed thus far, we are internally discussing the next steps for the program. Since our last call we have continued to increase our outreach to and education of physicians and patients. In July we announced a collaboration with Foundation Medicine to support patient identification and enrollment for our ongoing Phase 2 trial. Foundation Medicine is a leader and an innovator in applying comprehensive genomic profiling to the development of precision medicines and we are excited to partner with them as we seek to identify patients in the U.S. who may benefit from treatment with tipifarnib. Another important aspect of building value in drug discovery and development is the ability to maximize potential commercial value of product candidates. In July we announced the issuance of a U.S. patent directed to the use of tipifarnib in the treatment of patients with relapsed and/or refractory HRAS mutant squamous cell carcinomas of the head and neck. That patent has an expiration date of August 2036 and provides a significant increase to the protection that maybe offered by orphan exclusivity. We continue to pursue additional patent protection in the U.S. and other countries based on our clinical and preclinical data and our novel insights in the biomarkers of tipifarnib activity. The issuance of the patent illustrates the potential of that broader strategy to generate intellectual property related to tipifarnib and its use in human diseases. Now let me shift gears and talk briefly about what we are doing with tipifarnib in patients with peripheral T-cell Lymphoma or PTCL. In June we presented clinical and preclinical data for our PTCL trial at the Lymphoma meeting in Lugano -- Lugano and at EHA in Madrid. The data presented showed that seven out of the eighteen or almost 40% of patients in an unselected population with a median of four prior therapies, who were treated with tipifarnib, received clinical benefit in terms of either partial response or disease stabilization. Importantly we identified CXCL12 as a potential biomarker of tipifarnib activity in PTCL. Patients with elevated levels of CXCL12 gene expression had higher rates of objective response and experienced a median progression free survival of 190 days, a doubling of the expected PFS in this very advanced patient population. Having identified the CXCL12 chemokine as a potential biomarker we are now working to validate it as a biomarker of tipifarnib's activity in PTCL. We have extended our Phase 2 study to enroll 12 additional patients with angioimmunoblastic T-cell lymphoma or AITL, a subtype of PTCL characterized by high CXCL12 expression, with a goal to confirm these observations and validate the biomarker. We aim to release additional data on our efforts to validate the CXCL12 biomarker later this year. I want to turn now to our third Phase 2 trial in patients with Myelodysplastic Syndromes or MDS. We were motivated to investigate tipifarnib in MDS based on the previous Phase 2 clinical trial sponsored by Johnson and Johnson that demonstrated an encouraging level of activity for tipifarnib in patients with intermediate and high risk MDS. As just discussed data from our PTCL study identified CXCL12 as the potential biomarker of the activity of tipifarnib. CXCL12 is a chemokine known to induce homing of myeloid cells in the bone marrow. In the most extreme cases such as rare conditions with activating mutations in the CXCL12 pathway, patients course [ph] with persistent neutropenia. We hypothesized that the observation of isolated nuetropenia or neutropenia without myelo-suppression could be employed as a surrogate marker of high CXCL12 activity in the bone marrow and consequently sensitivity to tipifarnib. We retrospectively analyzed data from the previous Phase 2 clinical trial in MDS sponsored by Johnson and Johnson and observed that the majority of responders to tipifarnib were patients with neutropenia at study entry. Based on these data and the relationship between CXCL12, neutropenia and the activity of tipifarnib we are modifying our MDS study to test prospectively whether neutropenia at study entry could enrich the responses to tipi. We plan to enroll two cohorts of up to 18 patients each with a Simon two-stage design similar to our other trials. We will open the inclusion criteria to MDS patients of any risk group and modify the primary endpoint from transfusion independence to objective response which may provide a more rapid read out. The trial will enroll patients who have failed up to two prior therapies. Two responses are needed to move from the second stage of each cohort and the trial is positive with four or more responses in either cohort. 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 Chronic Myelomonocytic Leukemia or CMML, a disorder of bone marrow stem cells, where an increase in white blood cells or monocytosis is a key feature of the disease. We continue to expect to have data from this trial to share in the first half of 2018. Now let me turn briefly to our other pipeline programs. We're developing KO-947 our small molecule ERK inhibitor as a potential treatment for tumors with disregulated activity of the mytogene activated protein kinase signaling pathway. We're currently conducting a Phase 1 dose escalation study for KO-947. The trial design includes the dose escalation, maximum tolerated dose expansion and one or more tumor specific extension cohorts. The trial is ongoing and we anticipate data in 2018. For our menin-MLL inhibitor program, we continue to assess potential of KO-539 in hematologic malignancies and solid tumor indications. We're excited about the novel mechanistic approach and the therapeutic opportunities that this innovative program may be able to pursue. 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 second quarter of 2017. Heidi?

Thank you, Troy and good afternoon everyone. Let me review our financial results. Total operating expenses for the second quarter of 2017 were $7.9 million compared to $6.8 million for the second quarter of 2016. R&D expenses for the second quarter of 2017 were $5.7 million compared with $4.9 million for the second quarter of 2016. The increase in R&D expenses for the second quarter was primarily due to increases in clinical development activities related to tipifarnib. G&A expenses for the second quarter of 2017 were $2.3 million compared to $1.9 million for the second quarter of 2016. The increase in G&A expenses versus the second quarter of 2016 was related to increases in patent and professional fees and non-cash share based compensation. The net loss for the second quarter of 2017 was $7.8 million or $0.40 per share compared to a net loss of $6.7 million or $0.36 per share for the second quarter of 2016. As of June 30, 2017 we had $53.2 million in cash, cash equivalents and short term investments and approximately $21.4 million shares of common stock issued and 20 million shares of common stock outstanding. We expect that our current cash and 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. We started Kura with the objective to build a diverse pipeline of precisions medicines for the treatment of cancer. I am really pleased with the progress our team has made with tipifarnib towards our goal to initiate a first pivotal study in 2018. We're very excited by the data we've generated to date and squarely focused on delivering on our goals. With that operator, we're 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, thanks for taking my questions, and congrats on the continued encouraging data in head and neck. First question, I just want to make sure, I'm reading the press release correctly. Can you talk about how many of the five head and neck cancer patients and how many of the responding patients had anti-PD-1 before tipifarnib?

Yes, Jonathan, thanks for the question and thanks for the congratulations. So of the five evaluable patients, for which we're reporting data, with three partial responses, one of the patients was previously treated with Pembrolizumab and received no clinical benefit.

Great, thanks. And then on any color you can provide in terms of the safety side and in terms of what you're seeing in the study?

Let me ask -- in terms of the safety side, Jonathan, let me ask Antonio if he can speak to it.

Yeah, there are no meaningful differences with the known profile of tipifarnib.

It continues, Jonathan to be well tolerated in this patient population.

Great, thank you. And then can you help set expectations for the next head and neck cancer data update in terms of how much more data we might see.

So Jonathan, as you know this trial is ongoing single arm open label. We wanted to give up an update at this point in time because we have three out of the five evaluable patients with PRs which is very uncommon, and two of those PRs demonstrating durability out beyond a year. We are working as quickly as we can to continue enrolling the trial. I can’t give you specifics on when you might expect an additional data update, except to say that we remain on track to provide additional data on this trial later this year. Our goal is to report the data at an upcoming scientific or clinical meeting.

Thanks. And then just lastly can you talk about how you are thinking about next development steps and a potential pivotal study in terms of timing and patient population and study design?

Yes, so at this point I mean we continue to reaffirm our guidance that we believe we are on track to initiate a first pivotal registration study in 2018. Obviously the data update here is in HRAS trail where I think we are very encouraged with the preliminary data we have generated to-date. We are also very encouraged by the data that we have generated in T-cell Lymphoma. We don’t want that to get lost. But there is still a quite a bit of work to be done to -- leading up to the initiation of our first pivotal trial. I can’t really give you any more specifics today, but as soon as we have updates we will provide them.

Great, thank you and congrats again.

Thank you, Jonathan

Thank you. [Operator instructions] And our next question comes from the line of Mike King from JMP Securities. Your line is open.

Yes, hi guys thanks for taking the question and congrats on the progress. Certainly seems like you have got a signal with tipi and HRAS head and neck. My question were -- starting question were a little bit along the lines of the previous, because if one thinks about rapid registration pathway, obviously it's along the path of unmet need. So maybe I’ll ask it this way, for the one patient Troy, that you had, that had previous exposure to PD-1 you said you had no response there. I mean how should we think about that? I mean would you expect tipi to work in a population that was previously exposed to PD 1? Do you have any preclinical biology suggesting how tipi might do in kind of a post checkpoint setting?

Yes, Mike. So let me see if I can tease your question, apart. We are currently gathering both clinical and preclinical data on the activity of tipifarnib, both after immune therapy and in combination with. I think it's too early to say, is the short answer. The patient that we refer to unfortunately didn’t receive any benefit from treatment with pembrolizumab, did fortunately have a confirmed partial response with treatment with tipifarnib. That’s early and preliminary data, it's in --

Okay, so that I have it reversed. So they didn’t get benefit from pembro, but did get benefit from tipi.

Correct, and we -- I went over that rather quickly. I think the point is we now have examples of patients who received no clinical benefit from cetuximab, cetuximab plus chemo and pembrolizumab, right, through each examples. The -- and in each case, received benefit from tipifarnib. That’s the key message here today. It’s a small dataset but it's trending in a very positive direction. We have more work to be done but I -- that’s one of the take homes is these are very durable responses and you have patients who are responding who receive no benefit from prior therapy. They were -- in other words on the line they were on prior to treatment with tipi, they were progressing on that line at the time of their first scan, then they went on to tipi and had a response. That's significant in our mind, in this setting of relapsed refractory squamous cell head and neck cancer.

Right, okay, superb. Thanks for the clarification. Do you have any information Troy about kind of the temporal response to tipi? If you -- you had a patient who experienced a confirmed PR in cycle 4. Can you say when the PR occurred and the second patient in cycle 2 have they experienced any tumor shrinkage at all?

So the first patient Mike, who is in cycle 4 and experienced a confirmed partial response, that patient had the first -- the first scan in the cycle 2, and then was confirmed in Cycle 4. The second patient at the time of the scan, that patient is in cycle 2. So that patient's been scanned once. And at the time of that scan that second patient had stable disease. And the third patient hasn't been scanned yet. That patient is pending an objective response assessment.

Okay, terrific. And finally, what should we think about as far as where we might see a fuller exposition of the dataset. Would that be this year, possibly next year?

Our goal, Mike would be to try to --, our goal is first to continue the trial. And this is very encouraging but more work to be done. We'd like to be in a position where we can present a more complete dataset ideally later this year. And there is a number of venues that we're looking at. And as soon as we have sort of more information we'll give you an update.

Great, thanks so much.

Thank you. This concludes today's Q&A session. I would now like to turn the call back over to Troy Wilson for closing remarks.

Thank you, operator. For those of you keeping track on our progress, here are our key potential milestones we're anticipating. Additional data for our ongoing Phase 2 trial of tipifarnib in HRAS mutant squamous cell head and neck cancer in the second half of 2017; additional data from our ongoing Phase 2 trial in 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 KO-947 trial in 2018. 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. Thank you.

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