Kura Oncology, Inc. (KURA) Q3 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to Kura Oncology Third Quarter Financial Results Conference Call. Currently 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 turn the call over to your host Pete De Spain, Vice President of Investor Relations Corporate Communications with Kura Oncology. Sir, you may begin.

Thank you, operator. Good afternoon, everyone and welcome to Kura Oncology's third quarter 2017 financial and operating results conference call. Joining me on the call from Kura are Dr. Troy Wilson, our President and Chief Executive Officer; Heidi Henson, our Chief Financial Officer; and Dr. Antonio Gualberto, our 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, Pete. Let me pause for a moment to introduce you to the call participants and welcome you to Kura as our Vice President of our Investor Relations and Corporate Communications. We're very glad to have you on Board and we look forward to working with you. Now good afternoon, everyone and thank you for joining us today. Those of you familiar with Kura Oncology know we're committed to realizing the promise of precision medicines for the treatment of cancer. That commitment is evident in our pipeline of small molecule product candidates that target oncogenes and cancer-signaling pathway. In addition, we seek to identify molecular and cellular biomarkers and to pair our product candidates with companion diagnostics that can identify the patients most likely to response treatment. Since our last quarterly financial call, I'm pleased to report we've achieved several important milestones. In September we reported that our Phase 2 clinical trial of tipifarnib in patients with HRAS mutant head and neck squamous cell carcinoma or HNSCC achieved its primary efficacy endpoint prior to the completion of patient enrollment. In October, updated data from this study was presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics or the Triple Meeting. The consistent, durable, clinical activity of tipifarnib in HNSCC patients with HRAS mutations is very exciting and it provides important validation of the potential of our precision medicine-based approach. At the triple meeting, we also presented encouraging preclinical data for KO-539. Our preclinical development candidate targeting the menin-MLL interaction. Specifically we showed that KO-539 has robust and persistent activity in NPM1- and DNMT3A-mutant acute myeloid leukemia or AML, which along with the mixed lineage leukemias comprise approximately 50% of the AML population. On the financial side, we successfully completed a follow-on offering of common stock in August that raised approximately $53.5 million in net proceeds. We appreciate the support of both our new and existing investors. We expect this raise gives us resources to advance our pipeline of precision medicines through a series of upcoming potential data catalyst. Now let me begin with some details around the solid progress with our lead program tipifarnib or tipi for short. The most advanced of our four ongoing Phase 2 trials of tipi as in HRAS mutant HNSCC, which is where I'd like to focus our attention. Following our announcement in September that the HRAS mutant HNSCC cohort achieved its primary endpoint Dr. Alan Ho of Memorial Sloan Kettering Cancer Center provided an update on the trial at the Triple Meeting last month in Philadelphia. Dr. Ho reported that four out of six evaluable HRAS mutant HNSCC patients enrolled in this study achieved a confirmed partial response as defined by standard resist criteria. All six of the evaluable HRAS mutant HNSCC patients received some degree of clinical benefit in terms of tumor shrinkage, including the four with confirmed objective responses. The majority of adverse events reported by the investigators have been mild to moderate and are consistent with the adverse event profile previously reported for tipifarnib. We continue to be very encouraged by the level of clinical activity we're observing in patients with HRAS mutant HNSCC and we believe our results are particularly impressive when we consider the current standard of care for patients with this disease. Response rates for the three agents approved in the second line are in the range of 13% to 16% and median overall survival is six to eight months. In contrast, we observed that two of the responses with tipifarnib have demonstrated durability beyond 18 months. In addition, we've observed responses in patients who progressed on each of the three standards of care cetuximab, Pembrolizumab and nivolumab. This level of activity is extremely uncommon in the relapse refractory setting of squamous cell head and neck cancer. Based on these positive clinical results, we continue to explore available options to rapidly advance the development of tipifarnib and subject to further input from regulatory authorities, we plan to initiate a registration-enabling study of tipifarnib in HRAS mutant HNSCC in 2018. As we prepare for this registration-enabling study, we will continue to focus our efforts on several critical themes. These include adding clinical sites and increasing enrollment in the ongoing Phase 2 clinical trial, engaging regulatory authorities, engaging patient advocacy groups, completing the development and validation of a PCR-based companion diagnostic and refining the potential market opportunity for tipi in HNSCC. In the meantime we continue to enroll patients in our ongoing Phase 2 trial of tipi in HRAS mutant HNSCC and look forward to presenting the next update on the study at the multidisciplinary head and neck cancers symposium, which will be held February 15 to 17, 2018 in Scottsdale Arizona. Now let me shift to what we're doing with tipi in our three other ongoing Phase 2 clinical trials, which include peripheral T-cell Lymphoma or PTCL, Myelodysplastic Syndromes or MDS and Chronic Myelomonocytic Leukemia or CMML Our goal with these other trials as we did with HNSCC is to confirm the clinical activity of tipifarnib, validate biomarker hypotheses, optimize dose and schedule and ultimately determine whether the data are supportive of continued development. Importantly, we've identified that CXCL12/CXCR4 signaling pathway as a potential target of tipifarnib activity. The CXCL12/CXCR4 pathway plays key roles in tumor invasion, bone marrow homing and sights of metastasis. As you may recall at EHA in June, Dr. Thomas Witzig reported data from our Phase 2 trial of tipi and PTCL showing that patients with elevated levels of CXCL12 gene expression had a higher rate of objective response and experienced a median progression free survival of approximately six months, which represents a doubling of the expected PFS in this very advanced patient population. Our efforts to continue to validate CXCL12 is a biomarker of tipifarnib's activity. Our ongoing Phase 2 study in PTCL now aims to confirm the initial observations reported by Dr. Witzig and validate the CXCL12 biomarker. In addition to evaluating tipifarnib and CXCL12 in the ongoing cohort of patients with angioimmunoblastic T-cell lymphoma or AITL, we also plan to evaluate prospectively tipi's activity in CXCL12 positive PTCL patients as determined by a biomarker assays we are developing. Enrollment is ongoing in the PTCL trial and because we're conducting a somewhat more extensive analysis of the role of CXCL12 as well as evaluating additional dosing regimens, we now expect to present more data from this study in 2018. In addition to PTCL, we believe CXCL12 may represent a biomarker of tipifarnib's activity in other hematologic malignancies as well including MDS. In addition, we have also identified an apparent connection between CXCL12 expression levels, isolated neutropenia and clinical benefit of tipifarnib. Based on these findings, we've amended our Phase 2 MDS study to test prospectively whether neutropenia at study entry could enrich the responses to tipi and we anticipate having data from this trial in 2018. In the meantime, we look forward to presenting more details regarding CXCL12 as a potential biomarker for tipifarnib and hematologic malignancies as well as preliminary results from our Phase 2 trial of tipi in CMML at ASH next month in Atlanta. 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. Our Phase 1 dose escalation study for KO-947 is ongoing and the trial design includes a dose escalation, maximum tolerated dose expansion and one or more tumor-specific extension cohorts. We anticipate data from the Phase 1 trial in 2018. For our preclinical menin-MLL inhibitor program, we continue to assess potential of KO-539 in hematologic malignancies beyond the mixed lineage leukemias. In October, we presented data for triple meeting for KO-539 in preclinical models of genetically defined subsets of AML, that was featured as a late-breaking poster session. Dose results demonstrate robust and persistent activity in PDX models of genetically defined subsets of AML, including models with oncogenic driver mutations in NPM1, DNMT3A. IDH1 and IDH2. We estimate that together, these mutations represent approximately half of all patients with AML. Our preliminary data suggests that KO-539 exerts antileukemic activity by induction of myeloid differentiation in AML blas. This mechanism of action is distinct from and potentially complementary to that of existing therapies. The menin-MLL complex appears to be a central node in epigenetic dysregulation driven by several distinct oncogenic driver mutations known to be important in diverse leukemias and myeloproliferative disorders. AML is a relatively common hematologic malignancy with a generally poor prognosis. However the development of novel therapeutic approaches has been hampered by the many different genetic and clinical subgroups of the disease and the relatively short durations of response. We're encouraged by our results that demonstrate that KO-539 has the potential to be active in subtypes, representing approximately half of patients with AML and drive robust and persistent responses in preclinical models. 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 third quarter 2017. Heidi.

Thank you, Troy and good afternoon, everyone. Hopefully you've all had a chance to review our press release this afternoon. For more detailed information I invite you to review our 10-Q filed today. Now let's get started with a quick overview of our financial results. Total operating expenses for the third quarter of 2017 were $9.5 million compared to $7.1 million for the third quarter of 2016. R&D expenses for the third quarter of 2017 were $7.1 million compared to $5.3 million for the third quarter of 2016. The increase in R&D expenses compared to the third quarter of 2016 was primarily due to increases in clinical development activities related to tipifarnib. G&A expenses for the third quarter of 2017 were $2.4 million compared to $1.7 million for the third quarter of 2016. The increase in G&A expenses compared to the third quarter of 2016 was primarily due to increases in non-cash share-based compensation and professional fees. The net loss for the third quarter of 2017 with $9.3 million or $0.30 -- $0.38 per share compared to net loss of $6.9 million or $0.37 per share for the third quarter 2016. I'm pleased to report that as of September 30, 2017, we had $100.8 million in cash, cash equivalent and short-term investment, which includes net proceeds of approximately $53.5 million from our follow-on offering in August. As at the end of September, we had approximately 30.2 million shares of common stock issued and 29.1 million shares of common stock outstanding. We believe that our current cash, cash equivalents and short-term investments will be sufficient to fund current operations into 2019. With that, I will now turn the call back over to Troy.

Thank you, Heidi. Kura was founded on the idea we could build a diverse pipeline of precision medicines for the treatment of cancer. As we've said consistently, our goal is to initiate a first pivotal registration study for tipifarnib in 2018 and I'm very pleased with the team's progress toward achieving this important objective. We are very excited by our data in HRAS mutant head and neck cancer and the promise it offers to patients. We're squarely focused on delivering on our goals and look forward to sharing our continued progress with you. With that operator, we're now ready for questions.

Thank you, Sir. [Operator instructions] Our first question comes from Jonathan Chang of Leerink Partners. Your question please.

Hi guys. Thanks for taking my questions and congrats on the progress. First, can you talk about what the next steps are for tipi and head and neck cancer and what the potential pivotal pass forward could look like?

Hi Jonathan and thank you for the compliments and the kind words. So were in the process of working through Jonathan all of the elements needed to move this program from where it is today as a positive Phase 2 into pivotal development and I alluded to some of that in the prepared remarks relating to engaging regulatory authorities, patient advocacy groups, enrollment and companion diagnostics. We're not in a position today to provide more specificity around the trial design, but as soon as that information is available and it's appropriate, we'll look forward to sharing it. What I think we can say is tipi continues to demonstrate very high level of clinical activity in this population and we're doing everything we can to try to pursue all options for accelerated development. Understand thanks and second question for the Phase 2 HRAS mutant solid tumor study, you've added an SEC cohort that exclude head and neck cancer. Can talk about the rationale for adding this third cohort?

Sure. Jonathan, I'll let Antonio actually answer that question on the rationale for adding the third SEC cohort.

Yes something that we have not -- there is some data in the literature that support the presence of this very similar molecularly HRAS subsets not just in head and neck, but also in non-small cell lung cancer and potentially another squamous histologist. So just because of the similarities you have molecularly between squamous cell populations in different syndication there is a possibility that we may find their activities in other indications. So currently for that cohort is to test the hypotheses and we'll take it from there.

Great. Thanks and last question, looking ahead to ASH, there will be a presentation on CXCL12/CXCR4 as a potential target of tipi and AML and MDS, can you talk about how investors should be thinking about this presentation and how the findings here read through to the ongoing MDS study and opportunities for tipi and he malignancies broadly, thanks.

Sure Jonathan, thank you. So the opportunity in the hematologic malignancies is to try to do what we've done I think very effectively in head and neck squamous cell carcinoma and that is to associate the clinical activity of tipifarnib with the biomarker or some other criterion that allows us to enrich the patient population. As we talked about, we have several different hypotheses. One of them centers around this CXCL12/CXCR4 pathway. A related hypothesis is to use isolated neutropenia as an enrichment criterion in MDS. Our rationale for identifying those as potential enrichment criteria come from both our ongoing experience in the T-cell lymphoma trials where we identified CXCL12 as well as the ongoing MDS and CMML trials. And in addition as you as those on the call may recall, Jansen conducted trials both in MDS and in acute myeloid leukemia and we of course have access to that clinical data. So the way that investors should think about that poster presentation at ASH is we're building the case that we can enrich the patient population in these hematologic malignancies using either a molecular biomarker such a CXCL12 expression or potentially a clinical correlates such as neutropenia and we're building that case if you will brick by brick. This will be an opportunity for us to share with the community the results of the retrospective analysis that we conducted from the previous answer in clinical trials and I'll direct you - the call participants to our abstract that that was published a week or so ago that will hopefully provide more clarity on why we're so excited about the potential to identify a biomarker and he-malignancies and if we're able to then associate one or more those biomarkers with tipifarnib's activity then we can talk about the development path forward and what that might look like.

Great. Thank you.

Thank you. [Operator Instructions] Our next question comes from Chris Shibutani of Cowen. Your question please.

Thank you very much. Troy for tipifarnib when you think about the pivotal trial and identifying patients, you have a partnership with Foundation Medicine. Can you give us a sense for what you think the cadence of identifying and finding those patients and enrolling them might be perhaps it wouldn't be useful to use the proxy from your early experience. I am guess you’re all just trying to gauge kind of when we might be able to anticipate data.

It's a great question Chris and thank you. I think you're exactly right. The historical path that it's taken us to get to where we are today, we don't think it's necessarily representative of what one might expect the pivotal trial, and that's really for the reasons that when we started this Phase 2 trial it was not head-and-neck trial, it was a trial designed as an all comers trial and so as we generated you know this increasingly interesting and exciting data and head-and-neck we had to really work to turn the trial, amend the protocol bring on additional investigator's and so forth in order to generate the data that we have today which is a positive Phase 2, that's positive even prior to the completion of enrollment. Enrollment is very much at the forefront of our minds and as you'll appreciate, one of the things that has a so excited about the head-and-neck opportunity is the very high level of clinical activity both in terms of the response rate four out of the first six patients responding, as well as the durability. So what that means in terms of thinking about pivotal trial is you know you want to focus on what point will - is the trial positive, it's less about total enrollment numbers and more about enriching the patient population to drive the highest and best clinical activity you can. But with that being said, we're clearly taking very seriously what it's going to be required to conduct a global pivotal registration study. It will obviously be many more sites than we had in the Phase 2. We are activating additional site now in the Phase 2 prepping them, expecting that they will roll over and become pivotal sites when the time, the collaboration with Foundation Medicine continues and I think most importantly we now have out there in the public domain this very impressive Phase 2 data set that not only we're talking about but we find the investigators are talking about amongst themselves. And I think you nothing generates excitement around the molecular target or a new compound like really convincing clinical data. And as we've gone out now to socialize this data, we're getting an increasingly warm response still a tremendous amount of work to be done both leading up to the pivotal and then through the pivotal but I think you know Antonio and the team are doing all of the critical steps now to prepare for the conduct of that pivotal trial.

And can I ask you about another important tool free, the CXCL12 assay, that will be helpful for you for patient identification with your targeted approach. Can you give us a sense when is that will be available to help you start selecting those patients? Thank you.

Sure Chris. And let me ask Antonio if he can comment on the timing and the availability of the CXCL12 assay.

So we have already presented some of the data at ECAR that shows the identification of single nuclear type polymer fees on CXCL12 is a robust market of activity. What we are trying now is taste other potential markets so we want to show not only that this need but it's also the pressure at the level of putting also correlated with the activity of tipifarnib. Each one of these assays could be the best assays for clinical practices a question out, we still need to address and next year we will be able to provide additional data. But certainly any one of those who says, could potentially could be a good biomarker in lymphoma and bone marrow diseases for the activity of tipifarnib.

Great. Thank you.

I see no further questions in the queue at this time. I’d like to turn the call back over to Troy Wilson, President and CEO for closing remarks.

Thank you all again for participating in the call today. For those of you keeping track of our progress here are key potential milestones we're anticipating. As we've talked about presentation of preliminary results from our Phase 2 CMML trial at Ash 2017, presentation on the CXCL12 CXCR4 pathway as a potential target of tipifarnib in hematologic malignancies at Ash. Presentation of updated results from our ongoing Phase 2 trial in HRAS mutant HNSCC in February 2018 data. Data from the Phase 2 trials of tipifarnib in MDS PTCL and CMML in 2018. Data from our Phase 1 trial of KO-947 in 2018, and initiation of a registration enabling study of tipifarnib in HRAS mutant HNSCC in 2018. Finally I would like to personally invite you to join us either in person or by webcast for our Investor Day in New York on November 16. More details to follow. If you have any additional questions in the meantime, please feel free to contact us. Thank you and have a good evening everyone.

Thank you ladies and gentlemen for attending today's conference. This concludes the program. You may all disconnect.