Kura Oncology, Inc. (KURA) Q4 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Kura Oncology Incorporated Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Pete De Spain, Vice President, Investor Relations. Sir, you may begin.

Thank you, Heather. Good afternoon, and welcome to Kura Oncology's fourth quarter and full year 2018 conference call. Joining me on the call from Kura are Dr. Troy Wilson, our President and Chief Executive Officer; and Dr. Marc Grasso, our Chief Financial Officer and Chief Business Officer; Dr. Antonio Gualberto, our Chief Medical Officer and Head of Development is also with us, and available to answer questions during the Q&A session. 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. With that, I will now turn the call over to Dr. Troy Wilson, President and CEO of Kura Oncology.

Thank you, Pete, and thank you all for joining us this afternoon. At Kura, we're committed to realizing the promise of precision medicines for the treatment of cancer. Approximately one year ago, on our year-end call, we talked of taking another step toward achieving that goal, following a successful end of Phase 2 meeting with FDA. Now a year later, I'm very pleased to report that our registration directed trial of tipifarnib in HRAS-mutant head and neck squamous cell carcinomas is under way. In addition to our efforts in HRAS-mutant solid tumors, we've also made considerable strides over the past year to broaden the potential to treat patients with tipifarnib. We demonstrated how to enrich for clinical activity in multiple indications, showed clinical proof-of-concept in angioimmunoblastic T-cell lymphoma or AITL, validated CXCL12 as a therapeutic target of tipifarnib in peripheral T-cell lymphoma or PTCL, and identified the potential association between CXCL12 expression and clinical benefit in pancreatic cancer. Together, these efforts are helping us to expand the opportunity for tipifarnib well beyond HRAS-mutant solid tumors. Now as we look forward to date in the year ahead, from each of our three ongoing Phase 2 clinical trials of tipifarnib, the execution of our registration directed trial remains our top priority. As a reminder, our registration-directed trial of tipifarnib in HRAS-mutant HNSCC has two cohorts; a non-interventional screening and outcomes cohort, which we call SEQ-HN, and a treatment cohort which we call AIM-HN. SEQ-HN is designed as a case control study to determine the treatment outcome of patients with recurrent or metastatic HNSCC with HRAS mutations. The primary objective of SEQ-HN is to determine the objective response rate of first-line therapy in patients with HNSCC that carry HRAS mutations compared to those without a known HRAS-mutation. In addition, the screening and outcomes cohort is expected to enable the identification of patients with HRAS mutations for potential enrollment into AIM-HN. AIM-HN is designed to enroll at least 59 patients with HRAS-mutant HNSCC who have received prior platinum-based therapy. The trial's primary endpoint is objective response rate. AIM-HN has approximately 80% power to detect a difference between a null hypothesis of 15%, which is the point estimate of the objective response rate of second-line therapy for recurrent and metastatic disease and 30% an objective response rate considered of interest. AIM-HN initiated in November of last year and is expected to take approximately two years to fully enroll. However, based upon the statistical assumptions, the trial could be positive as soon as 15 confirmed responses are observed, in order to reject the null hypothesis. Based on feedback from FDA, we believe that AIM-HN if positive, maybe adequate to support a new drug application seeking accelerated approval. We anticipate providing more information regarding the design of our registration directed trial at an upcoming medical meeting. Meanwhile, we continue to enroll HRAS-mutant HNSCC patients in our ongoing Phase 2 trial, which we call RUN-HN at clinical sites that have yet to open in AIM-HN. We plan to provide an update from RUN-HN in the second half of 2019, and we expect this update will include follow-up on ongoing patients in the trial, as well as preliminary data on newly enrolled patients in both our HNSCC and other SCC cohorts. Among the compelling features of the tipifarnib program, when we in-licensed it from Janssen where anecdotal reports of anti-tumor activity observed across various cancers, including lymphomas and leukemias, as well as certain solid tumors such as pancreatic and breast cancers. Given that these tumors do not typically carry HRAS mutations, we hypothesize there might be a molecular mechanism that would relate the observed anti-tumor activity to the inhibition of the farnesyltransferase enzyme in patients. Despite the fact that multiple large pharma companies worked on farnesyltransferase inhibitor programs for more than a decade, no such molecular mechanism had been described. Our previously reported preliminary results from our ongoing trial in PTCL, most recently at ASH in December 2018, showed a significant association between CXCL12 expression and clinical benefit. The data have also provided a clinical proof of concept in patients with AITL, an aggressive form of PTCL often characterized by high levels of CXCL12 expression. Of the 13 valuable AITL patients in the trial, two achieved a complete response and four achieved a partial response for an objective response rate of 46%. We also identified a particularly responsive patient subset in the Phase 2 trial. Specifically, patients with a high ratio of expression of CXCL12 to its receptor CXCR4, experienced a 50% objective response rate and a clinical benefit rate of 90% with tipifarnib. In other words, of the 10 patients in the trial, with a high ratio of CXCL12 to CXCR4 expression, only one patient progressed. This level of clinical activity was particularly noteworthy given that the patients were in the salvage setting, having experienced the median of three prior therapies. Results from an ancillary non-clinical study indicate that high CXCL12 is a negative prognostic factor for standard-of-care PTCL therapy. Our data suggests that as many as 40% of PTCL patients express high CXCL12. We believe the preliminary results reported at ASH, validate our observation that the CXCL12 pathway is a therapeutic target of tipifarnib and provide a potential path to pursue the development of tipifarnib using CXCL12 related biomarkers to enrich for patients most likely to benefit from treatment. We are encouraged by these lymphoma data in late-line patients and believe this represents another potential registrational opportunity. We anticipate providing an update on our ongoing Phase 2 trial, including duration of response data from the AITL cohort and additional data from the CXCL12 high PTCL cohort in mid-2019. We're also working to validate the utility of CXCL12 pathway biomarkers, as a strategy for patient enrichment in relapsed, refractory myeloid tumor indications. Enrollment in our ongoing Phase 2 trial in chronic myelomonocytic leukemia or CMML is stratified based upon levels of CXCL12 pathway biomarkers, and we've observed encouraging signs of clinical activity in patients with CMML. If confirmed, we believe this approach may allow us to extend the potential use of tipifarnib to other myeloid indications in settings, including previously untreated, poor risk in elderly patients with acute myeloid leukemia or AML. We anticipate presenting additional data from our CMML trial at a medical meeting later this year. The CXCL12 pathway plays critical roles mediating the growth and homing of lymphoid and myeloid cells. We are encouraged that our ongoing trials in PTCL and CMML, as well as our retrospective analysis of Janssens trials in AML and other diseases may allow us to pursue a biomarker guided approach to the development of tipifarnib across these and other CXCL12 expressing indications including diffuse large B-Cell Lymphoma, Hodgkin's lymphoma and Mycosis fungoides a form of cutaneous T-cell lymphoma in which evidence of activity an unselected populations has already been reported. Such a biomarker guided approach is currently being pursued successfully by others, against targets such as CD30 that are relevant across multiple Hematologic Malignancies. The progress we've made in Hematologic Malignancies has also motivated us to investigate the role of CXCL12 in pancreatic cancer. Among its many roles, CXCL12 and its receptors are known to contribute to metastasis, an elevated CXCL12 expression is known to be a Poor Prognosis factor in patients with certain solid tumors including pancreatic cancer. In January 2019, we presented new findings at ASCO GI identifying a potential association between CXCL12 expression and clinical benefit in patients with pancreatic cancer treated with tipifarnib. We believe these findings support the notion that tipifarnib is acting through modulation of the CXCL12 pathway, and furthermore, we believe they support further development of tipifarnib in pancreatic cancer. We're currently working with key opinion leaders and investigators on the design of a proof-of-concept study in this indication and we expect to provide an update on our plans in this area later this year. Although we see a significant opportunity for tipifarnib in many CXCL12 mediated solid tumor and Hematologic Malignancies, it's also important that we prioritize our efforts. In this regard our Phase 2 study of tipifarnib in myelodysplastic syndromes has been deprioritized and is not currently enrolling new patients, so that we may redirect those resources toward our effort in other CXCL12 pathway indications. Meanwhile, we've been actively working to further elucidate the biology of farnesyl transferase and the specific molecular mechanisms of action of tipifarnib. Our R&D team has made progress toward the identification of farnesylated protein targets as well as the potential mechanistic linkage between farnesyl transferase inhibition and CXCL12. We expect to have more to say on these topics at medical meetings this year. We've also expanded patent protection for tipifarnib to include AITL and certain CXCL12 expressing cancers, providing commercial exclusivity in the US to 2037. This is an important part of our strategy to generate intellectual property related to the use of tipifarnib in genetically defined patient populations and disease indications, and we're continuing to pursue additional US and ex-US patent. In summary, I'm very pleased with the progress we've made in our tipifarnib development program over the past year. We have better insights into why tipifarnib is active in different clinical settings and a better understanding of how to enrich for clinical activity. We're excited to explore these opportunities and broaden the potential clinical utility of tipifarnib, as we continue to execute on our registration-directed trial. Now, let's quickly turn our attention to our two emerging pipeline programs. Beginning with our ERK inhibitor KO-947. KO-947 is a potent and selective small molecule inhibitor of extracellular signal-related kinase, which we are advancing as a potential treatment for patients with tumors that have dysregulated activity in the mitogen-activated protein kinase or MAPK pathway. Our preclinical data suggests that KO-947 has anti-tumor activity in KRAS or BRAF-mutant adenocarcinomas, as well as certain subsets of squamous cell carcinomas. We continue to evaluate a number of doses and schedules for KO-947, and we anticipate having data from our Phase 1 trial in 2019. Our third product candidate is KO-539, a potent and selective small molecule inhibitor of the menin-mixed lineage leukemia or menin-MLL, protein-protein interaction. We've generated preclinical data that support the potential anti-tumor activity of KO-539 in genetically defined subset of acute leukemia including those with rearrangements or partial tandem duplication of the MLL gene, as well as those with oncogenic driver mutations in genes such as NPM1. I'm pleased to report the FDA has cleared our IND application, and we anticipate initiating our Phase 1 clinical trial of KO-539 in relapsed or refractory AML next quarter. With that, I'll now turn the call over to Marc Grasso for a discussion of our financial results for the fourth quarter and full year 2018.

Thank you, Troy, and good afternoon everyone. I'll provide a brief overview of our financial results here on the call, and invite you to review our 10-K filed today for a more detailed discussion. Research and development expenses for the fourth quarter of 2018 were $12.1 million compared to $8.1 million for the fourth quarter of 2017. The increase in R&D expenses was primarily due to an increase in clinical development activities, related to our registration-directed trial and ongoing Phase 2 trials for tipifarnib. R&D expenses for the full-year of 2018 were $46.8 million compared to $26.4 million for the prior year. General and administrative expenses for the fourth quarter of 2018 were $4.6 million compared to $2.9 million for the fourth quarter of 2017. The increase in G&A expenses was due to increases in non-cash share-based compensation, professional fees and personnel costs. G&A expenses for the full-year 2018 were $16.1 million compared to $9.7 million for the prior year. The net loss for the fourth quarter of 2018 was $16.1 million or $0.42 per share compared to a net loss of $10.7 million or $0.37 per share for the fourth quarter of 2017. Net loss for the full-year 2018 was $60.4 million or $1.72 per share compared to a net loss of $35.4 million or $1.52 per share for 2017. As of December 31, 2018, we had cash, cash equivalents and short-term investments of $179 million compared with $93 million as of December 31, 2017. We expect that our current cash, cash equivalents and short-term investments will be sufficient to fund current operations into 2021. We continue to believe our current cash puts us in a strong position to fund the registration-directed trial for tipifarnib in HRAS-mutant HNSCC. We believe our ongoing efforts in both HRAS-mutant solid tumors and CXCL12 driven indications, including AITL, other PTCL and pancreatic cancer provide us multiple leverage to create value and we plan to invest accordingly. With that, I will now turn the call back over to Troy.

Thank you, Marc. Before closing, I'd like to take this opportunity to welcome Mary Szela to our Board of Directors. Mary joined our Board late last year, bringing nearly 30 years of industry experience, including 25 years at Abbott Laboratories, where she led the world's largest selling pharmaceutical product Humira, through the launch of five indications. Her expertise in marketing, business development, and strategic planning maker her a timely addition to our Board, as we execute our registration-directed trial and prepare to incorporate commercial planning into our strategy and operations. This concludes our prepared remarks. However, before we jump to Q&A, let me quickly lay out our anticipated near-term milestones. For tipifarnib, additional data from our Phase 2 trial in AIT - AITL and CXCL12 high PTCL in mid-2019. Additional data from our ongoing Phase 2 trial in HRAS-mutant HNSCC and other HRAS-mutant SCCs in the second half of 2019. Additional data from our Phase 2 trial in CMML in 2019, and additional data on the molecular mechanisms of action of tipifarnib in 2019. For KO-947, data from the dose escalation portion of our Phase 1 trial in 2019 and for KO-539 initiation of our Phase 1 clinical trial in the second quarter of 2019. With that Operator, we are now ready for questions.

[Operator Instructions] And your first question comes from Jonathan Chang with STB Leerink. Your line is open.

First question, following your ASCO GI presentation in pancreatic cancer. Can you talk about how you're thinking about the pancreatic cancer opportunity and development path forward?

So that's exactly what we are currently discussing with investigators, so our justice is just not to conduct those - just to conduct a proof-of-concept study, but also or proof-of-concept study identify what would be a path for registration. You can consider different settings, you can go to a single agent, you can do second-line, obviously if you go in the first-line at this point will be a triple combination, so we still have not decided what the final design for this study will be, but those are the options that we have under consideration. Again with the idea that that proof-of-concept, will open the opportunity to this sign registrational study.

And second question, can you help set investor expectations on the Phase 2 RUN-HN study update, that you expect in the second half both in head and neck and others squamous cell carcinoma?

Sure. Jonathan. So it's worth mentioning. We anticipate, we may be in a position to give poster or a presentation on the design of the trial. Perhaps at ASCO, obviously abstracts aren't out yet. This is the design of the AIM-HN study for this - the up-to-date update in the second half of the year for RUN, we will give an update on every patient on the study at that time. In addition to all the patients who remain on study, we have had new patients come on both to the head and neck and the other squamous cohorts, and we will give a data update on all those patients at that time. We wanted to guide to an update in the second half of the year, you know, ideally around ESMO, so that we'd be in a position to give a more meaningful update.

And just one last question from me. Congrats on the IND clearance for KO-539. Any color you can provide at this time on the planned Phase 1 study design? And how should we think about timelines for the program?

Yes, it will be a fairly standard dose installation study. We feel it a typical rules of escalation for this type of Phase 1. Maybe a key questions at this point, although it's a strong indication that they may work in particular subsets, the initial enrollment will be an outcome, we believe that will provide us with the better opportunity to proceed more quickly through the escalation. But at some point, we will select the patient population based on what is known about this again is likely to work better in the MLL rearrangement as well as in certain mutants such that NPM1 mutations.

Your next question comes from Chris Shibutani with Cowen. Your line is open.

This is Pam, on for Chris. We had a couple of questions. The first one has to do with the timing for and tracking of the pivotal study. I believe that you announced it had begun in November of last year, and I think we were under the impression it would take maybe a couple of years to enroll and maybe about six months beyond that to finish up for results. So is thinking mid-2021 for the first data from that study accurate, if an investor came to us and asked that that was reasonable?

So at this point you're correct. The study was initiated in November of last year. We've reaffirmed our guidance that we think it will take approximately two years to fully enroll the study, and there will need to be obviously a certain response rate and certain durability. As we highlighted in the prepared remarks, the study - we can reject the no hypothesis with as few as 15 confirmed objective responses. If the trial has to go to full enrollment to reach its primary efficacy endpoint, then - that's why we're guiding to the two years. As to when to expect data, I think at this point, we've given about as much as we can on the enrollment timelines, and we'll - we may be in a position to give you further updates as we go. But at this point, I think the best we can do is probably reaffirm that two year enrollment timeline.

And my second question has to do with the hematological updates expected mid-year. Would you plan to present those at a medical conference or perhaps in a press release? Thank you.

So I think our expectation is, if possible, we would prefer to have the clinical data released in the context of a scientific or medical conference. There - of course there would be a press release associated with that. But, given where we are and given the encouraging level of activity that we're seeing, we think it's appropriate that the results to be presented at a medical conference, which is why we've guided to mid-year for the lymphoma studies, and maybe more into the second half of the year for the CMML study.

Your next question comes from Alexander Duncan with Piper Jaffray. Your line is open.

In regards to the KO-539 trial, could we potentially see a meaningful number of quizartinib failures or patients ineligible for quizartinib in the initial dose escalation. And secondly, does tipifarnib have activity in the same models as KO-539. And if you successfully move both of these compounds through development, do you anticipate tipifarnib and KO-539 to overlap in terms of the opportunity, or are they distinctly different AML patient population? Thanks.

Yes. So in principle, fairly on stronger therapies, they will be eligible to join the study. And as you can imagine, this is Phase 1 salvage setting and obviously that data will be very much of interest to the investigators and to the community in general. Your question actually about tipifarnib and KO-539, it's essentially very good question, and that's one of those questions that we have considered internally. In principle, the company is sort as a precision medicine company, so we try to identify what is the base population for each one of the compounds. So think about potential partitioning of the population, with different patients indicate that for - or so certain ages indicative for certain patients. But that possibility of combination is also possible, considering that you can find patients that may have the MLL rearrangement and also high expression CXCL12. So in that setting, one could consider that the type of combination that you mentioned could be of interest.

Your next question comes from Jay Olson with Oppenheimer. Your line is open.

I was wondering if, at some point, it would make sense to pursue a tumor agnostic indication in patients with HRAS mutations with tipifarnib.

So, that's certainly something that we've considered and obviously other agents have had some success. At this point, in addition to advancing the registration directed study in HRAS-mutant HNSCC, we have an exploratory cohort open in HRAS mutant other SCCs, and that's sort of a number of different histologies there's penile, vulvar and cutaneous. We want to get a better sense of the level of clinical activity, and then we can make a determination about how it has to proceed. But certainly we've looked, we followed the progress of other agents that have taken a tumor agnostic approach, and that stems from - as Antonio was saying in response to the last question, being able to understand the biology, being able to assign a biomarker and then enrich for clinical activity. And I think we're seeing that consistent theme in HRAS, you're now starting to see it unfold in lymphoma and hopefully, we see that trend continue.

And maybe if I can mention, so the RUN-HN is not sort as a registrational study. But obviously it will be a part, will be a supporting trial of our submission package. Do that means that the FDA will consider those responses that is squamous cell part of the open label, that is difficult to say at this point that is going to be highly depending of their medical need in the setting and the rate of response that we may observe. But just to be clear that we will soon need the totality of the data, the head and neck registration, directed trial plus the information on the RUN-HN or responsive in other squamous indications.

And then maybe as a follow-up if I could. Now that you have three molecules in the clinic. I was curious about what your appetite is for managing three potentially complex clinical programs versus potentially partnering one or more of those programs. Do you plan to take all three all the way through to commercialization independently or do you plan to seek a partner at some point?

Partnering is going to be an important part of our strategy going forward, as you rightly note with three wholly owned assets for clinical development stage like Kura that's a lot to handle on a worldwide basis. That said, we remain in a strong position from a capital standpoint, a resource standpoint to execute on our current development plans, and we'll keep you posted, as things mature on the partnering front.

[Operator Instructions] Your next question comes from Joe Beatty with Citi. Your line is open.

The first one, is on the discontinued hematological program that I think that was mentioned during the prepared remarks. If I heard right, I think about CMML, but not certain on that. Could you just discuss why that enrollment was discontinued, and why the other hematological indications appear more promising than that one?

So Joel, as you have noticed, currently we have very good data in head and neck. We have been reporting complete responses in PTCL. We have been doing retrospective analysis on AML, we have good data in CMML. So how we have undone in the MDS, that is not the case. It is just, is a large number of opportunities and we have to set to a level of priority. I'm trying to focus our efforts in those indications that had the higher probability of success. So second, it doesn't mean that we have given up of MDS, it's just taking a lower priority versus the other indications, that it feels like they're reaching their registrational level that we have already reached in HRAS-mutant head and neck.

And then another question is on the lead Phase 3 program, which will be finer than HRAS head and neck. Looking at the Phase 2 data not only was there a high response rate, while we also saw long durable responses, and I'm curious how that will be taken into consideration the durability of the responses in the Phase 3 trial. We know that there needs to be 30% response rate or higher to succeed. But is there a certain durability of responses needed for the trial to be considered a success? And then you know additionally what if that 30% happens to be missed a little bit, in sort of a way that the trial could still succeed if a longer responses are repeated?

Yes, but there is nothing particular implying our duration of response in the trial. Definitely the FDA will look at that data, and we have also said so far that we are seeing fairly durable responses. That said, taking to account, what is the cycle in the second-line, so we are talking about perhaps two months progression-free survival in the second line maybe a month in the third line. The last time that we reported this data I think when we were about six months of progression-free survival. When we present at the end of the year, and again there needs to be a set as a single we are discussing potentially a small, so there will be some follow-up for the patients that we are currently enrolling with a new criteria. So we'll present an update of that data, how that compared to the last prior line of therapy and certainly we believe the FDA will take that into consideration when the future label of PP funding will be discussed.

Thank you. And I am showing no further questions at this time, I'd like to turn the call back over to Troy Wilson, President and CEO for closing remarks.

Thank you, Heather. And thank you all once again for participating in our call today. We'll be at the Cowen Healthcare Conference in Boston, next week and at the Oppenheimer Healthcare Conference in New York, the following week. We look forward to seeing a number of you there. In the meantime, if you have any additional questions, please feel free to contact Pete, Marc or myself. Thanks again and have a good evening everyone.

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