Lite Strategy, Inc. (LITS) Q4 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the MEI Pharma Fiscal Year 2017 Results 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 be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I’ll turn the conference to Pete De Spain, Vice President, Investor Relations. You may begin.

Thank you, Nicole. On behalf of our entire management team, I’d like to welcome you all to our fiscal year-end conference call. Before we get started, I want to call your attention to the fact that this conference call may contain certain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You should be aware that our actual results could differ materially from those contained in the forward-looking statements, which are based on management’s current expectations and are subject to a number of risks and uncertainties as discussed in our SEC filings, including our most recent annual report on Form 10-K filed earlier today. On our call today, we intend to discuss the results from our fiscal year ended June 30, 2017 as well as some initial progress we’ve made in the clinic. A copy of our fiscal year 2017 results press release is now available on our website. A replay of this call will also be available on our website approximately an hour after its conclusion. With that said, I would like to introduce our speakers for today. With me, I have Dan Gold, our President and Chief Executive Officer; along with Brian Drazba, our Chief Financial Officer. Richard Ghalie, our Senior Vice President of Clinical Development is also with us and available to answer questions. Brian will start with a summary of our financial results. After which, Dan will provide an update on our clinical programs. Following the prepared remarks, we will open the line for your questions. With that, I will turn the call over to Brian.

Thank you, Pete. Good morning, everyone. I recognize that many of you are eager to hear more about our progress we made in the last year. So, I will keep my remarks brief. For more detailed information regarding our financial results, I invite you to review our 10-K, filed earlier today. I am pleased to report that we finished fiscal year 2017 with more cash on hand than when we started, due in large part to the $20 million in near payments we received in connection with our license, development and commercialization agreement with Helsinn, plus another $5 million in a related equity transaction, combined with tightly managed spend. Our cash expenditures decreased from $17.9 million in fiscal 2016 to $16.5 million in 2017. Similarly, our cash expenditures decreased from $3.5 million in the fourth quarter ended June 30, 2016 to $3.1 million last quarter. R&D expenses decreased from $13.4 million in fiscal 2016 to $7.2 million in 2017, primarily due to a reduction in expenses related to pracinostat pursuant to our license agreement with Helsinn. We had a slight increase in G&A expenses from $7.6 million in fiscal 2016 to $8.6 million in 2017, primarily due to professional service costs. Fiscal 2017 also marked a first for our Company in that we reported revenues due again to our license agreement with Helsinn, which totaled $23.2 million. Cost of research and development revenue consisting primarily of reimbursable third-party pass-through costs was $5 million. Our net income was $2.7 million or $0.07 per share for the fiscal year ended June 2017 compared to a net loss of $20.9 million or $0.61 per share in 2016. As of June 30, 2017, we had cash, cash equivalents and short-term investments of $53.6 million. We have no outstanding debt. In summary, we start fiscal year 2018 with the solid balance sheet. We believe our cash on hand will be sufficient to fund operations into calendar year 2019. And on that note, I’ll turn the call over to Dan.

Thanks Brian and thank you all for joining us bright and early this morning. I’d like to spend a few minutes highlighting some important advancements we’ve made with our programs over the last few months. Let’s begin with pracinostat, our most advanced drug candidate, now partnered with Helsinn. In July, after months of diligent preparation and site recruitment, the first patient was dosed in the highly anticipated Phase 3 study of pracinostat in combination with azacitidine in adults with newly diagnosed acute myeloid leukemia who are unfit to receive intensive induction chemotherapy. This pivotal double blinded placebo controlled study will enroll approximately 500 eligible patients worldwide. The primary endpoint of this study is overall survival. We believe it is a well powered rigorously designed study and we look forward to tracking its progress in the months ahead. As we have discussed previously, Helsinn is responsible for the conduct and funding of this entire Phase 3 program. Meanwhile, our clinical team here at MEI is actively managing our Phase 2 dose optimization study of pracinostat plus azacitidine in patients with high and very high risk myelodysplastic syndrome who are previously untreated with the hypomethylating agent. Based on our clinical experience with this combination, we believe that a reduced dose of pracinostat has the potential to improve tolerability in patients with higher risk MDS. Our experience suggests that prolonged exposure to this combination may translate to greater efficacy compared to azacitidine alone. The two staged study will be conducted at approximately 25 sites and is expected to enroll upto 120 patients. The first patient was dosed in June. While we are responsible for the conduct of the study, the cost is being shared with Helsinn. We look forward to reporting data from the first stage of this study in the first quarter of 2018. Now, I’d like to turn our attention to our PI3 delta inhibitor, MEI-401, an asset that continues to exceed our high expectations. For those of you less familiar with this space PI3K delta inhibitors have demonstrated clear activity in the treatment of chronic lymphocytic leukemia and follicular lymphoma, but unfortunately at the expense of well-documented toxicities. We believe, this provides an opportunity for a drug that is both effective and safe. ME-401 has several attributes, suggesting it is a highly differentiated PI3K delta inhibitor; attributes that we believe could lead to significant efficacy with diminished toxicity. As we reported back in May, an independent safety review committee completed its review of the first cohort of six evaluable patients ongoing in our Phase 1b dose-escalation study of 401 in relapsed/refractory CLL and follicular lymphoma. The committee found no does limiting toxicities with the response rate well in excess of 50% and declared 60 milligrams daily as a minimal biologic effective dose with a recommendation to escalate to 120 milligrams daily dose cohort. The two months safety and efficacy of this second cohort has recently been reviewed by the safety committee. Seeing no safety concerns and response rate again well in excess of 50%, the committee recommended escalation to a third cohort of 180 milligrams. Meanwhile, the study has enrolled an additional six patients into a 60 milligram expansion cohort, raising the total number of patients to-date to 18. While four patients are still too early for response assessment, all 18 are evaluable for safety, having been on study for a median of nearly three months with a range of 1 to 10 months. Notably, no patients have discontinued to adverse events or disease progression. Grade 3 adverse events associated with ME-401 were reported in two patients, one neutropenia and one rash, neither of which were unexpected. In fact, in both cases, the problem was resolved and both patients continue on study. We are very excited by the response and safety data that continued to emerge from this open label study and await the opportunity to present detailed results in an upcoming scientific meeting. In the meantime, we are now expanding this study to evaluate the combination of ME-401 with an anti-CD20 antibody such as Rituxan. Our goal at this time is to submit a briefing package to the FDA regarding our registrational plan for ME-401 during the first quarter of 2018. For the sake of time, I won’t delve into our clinical stage mitochondrial drug candidate ME-344, except to say that we remain very excited by its prospects and anxiously await the results of the hypothesis testing, randomized study underway in Madrid, evaluating ME-344 in combination with Avastin in women recently diagnosed with HER2-negative breast cancer. With that, I believe, we’re now ready for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Stephen Willey from Stifel. Your line is now open.

Hi. This is Sonia [ph] in for Stephen Willey. Thanks for taking our questions. Could you please just confirm again for the ME-401 trial, what the expanded dose escalation trial would be, is it 180 or 120 milligram dose cohort?

Could you ask that again? I’m not quite sure I understood what you’re driving to.

For the recommended dose escalation in terms of safety review, is it to a 180 milligram dose cohort or 120 milligram dose cohort?

I see. So, yes, the 120 mg cohort of six patients was fully enrolled in the safety review committee matters, as I mentioned. We are now open for 180 milligrams. And as soon as that cohort is enrolled, we will then go back and expand the 120 mgs. That’s sort of how we’ve been doing this is escalating and then back expanding, so we can get larger cohorts of at least a dozen patients per cohort for both safety and efficacy.

Great. And so that leads me to my second question. For the combination trial of ME-401 plus anti-CD20, what dose will the combination patients for ME-401 be dosed at, what is the dosing regimen for any 401 with the combination?

Good question. I’m going to let Richard Ghalie, our Head of Clinical to answer that question for you.

Yes. So, this combination regimen, the starting dose for ME-401 is 60 milligrams that dose that was defined as the minimum biologic effective dose at single agent. And then from that 60 milligram dose level, we will go up to 120 if 60 milligram as Rituxan is shown to be safe.

Thank you. [Operator Instructions] Our next question comes from the line of Leah Cann of Oppenheimer. Your line is now open.

Thank you and good morning. So, Dan, a quick question on 401 program. Have you disclosed your site locations and your primary investigator on that study?

Hi, Leah. Good morning. Yes, the primary investigators are first Andy Zelenetz at Memorial; and John Pagel at Swedish in Seattle.

[Operator Instructions] And I am showing no further questions at this time. I’d hand the call back over to management for any closing remarks.

Thank you. On behalf of the entire Board and the management team at MEI Pharma, I’d like to thank you for your continued support. We begin our new fiscal year with strong momentum, a deep pipeline of clinical stage oncology drug candidates, and a healthy cash balance. We are more excited about our prospects than ever, and we look forward to updating you on our progress at every opportunity. In the meantime, I invite you to follow up with Pete, Brian or myself if you have any further questions. Thanks again and have a great day.

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