Traws Pharma, Inc. (TRAW) Q1 2018 Earnings Report, Transcript and Summary

Good morning and welcome to Onconova's first quarter 2018 earnings call and webcast. At this time, all participants have been placed on listen-only mode. At the end of the prepared statements, participants will have the opportunity to ask questions. [Operator Instructions]. Please note that the remarks today will include forward-looking statements and that actual results could differ materially from those projected or implied in our forward-looking statements. For a description of important factors that could cause actual results to differ, we refer you to the forward-looking statements in today's press release and a note on forward-looking statements in the company's SEC filings. It is now my pleasure to turn the call over to Onconova's CEO and President, Ramesh Kumar. Dr. Kumar, please proceed.

Thank you, Victor. Good morning and welcome to our first quarter 2018 results call. Joining me from Onconova's management team is our CFO, Mark Guerin. Earlier this month, we completed a $28.75 million upsized underwritten public offering. The proceeds from this offering, combined with funds raised in February, significantly strengthened our balance sheet and provided us with the resources needed to advance our INSPIRE Phase III of IV Rigosertib to complete enrollment and topline data. The cash infusion strengthens our leadership position in the important indication of higher-risk MDS, for which there are no FDA-approved therapies available for patients who are refractory to hypomethylating agents. In addition, we're also advancing our Phase II combination therapy program after full enrolling the expansion Phase II trial and the CDK inhibitor program towards an IND after completing pre-IND discussions with the FDA. Since the start of 2018, we have made progress in clinical development of Rigosertib, including announcing a promising interim result in the Phase III INSPIRE study. Looking ahead, we expect that topline analysis from the expanded INSPIRE trial could be concurrent with enrollment completion, both of which we believe can be achieved in 2019. We have also continued to advance our strategic business development objectives, illustrated by the securing of regional licensing agreements for our pipeline candidates. As a reminder, we entered into an agreement with Pint Pharma, which is based in Vienna, Austria to commercialize Rigosertib in Latin America. Pint has an existing hematology/oncology portfolio and a wide footprint in Latin America. In addition, our China regional license collaboration agreement with HanX Biopharmaceuticals for ON 123300, a first-in-class dual inhibitor of CDK4/6 + ARK5 has put ON 123300 on an IND track in towards Phase I trial in 2019. We also reported that we had entered into a CRDA, or cooperative research and development agreement, with the National Cancer Institute. A clinical protocol under this CRDA is now being reviewing with the anticipation of a first patient in pediatric cancer associated RASopathies trial this year. Collectively, these agreements underscore our ability to leverage our pipeline assets to advance multiple programs. After interim analysis of INSPIRE Phase III trial, we also reported positive results across our MDS pipeline in recent months. We presented initial Phase II data from the expansion study of oral Rigosertib and azacitidine combination in patients with MDS at the 6th International Bone Marrow Disease Failure Symposium on March 26. We also published results from the Phase I/II study of IV Rigosertib in patients with MDS, showing that patients with response or stable disease lived a median of one year longer than non-responders. Based on the continued progress in our oral Rigosertib/azacitidine combination Phase II program in frontline MDS, we are working towards additional regional collaborations and partnerships to help advance to a pivotal Phase III trial for oral Rigosertib. We look forward to keeping you apprised of our progress. In March, we presented an abstract at the 6th International Bone Marrow Symposium in Maryland, describing safety and pharmacokinetics of a dose exploration study in high-risk MDS patients, focusing on the impact of risk mitigation strategies [indiscernible] adverse events, including hematuria. The data demonstrated elimination of grade 3 or grade 4 adverse events after implementation of these mitigation strategies. The previously presented studies of the combination regimen of oral Rigosertib with azacitidine have demonstrated impressive evidence of efficacy in HMA naïve and HMA refractory patients with high-risk MDS. Since the success of a combination therapy is greatly influenced by the safety and tolerability of the regimen, the new results of improved tolerability are of great importance for the proposed pivotal study of this combination. The ability to ensure longer duration of treatment without interruption or dose reduction can ensure optimal benefit for patients. In April, at the AACR 2018 Annual Meeting, we presented new preclinical data on our investigational drug ON 123300, a novel dual inhibitor of CDK4/6 + ARK5, with potential application across a variety of cancers. The preclinical data revel differential metabolism of ON 123300 in male versus female rodents where the drug exposure is almost two to threefold higher in female rats. Based upon preclinical animal liver microsome studies, this differential effect appears to be limited to rodents and is not observed with human liver microsomes. Based on the metabolism data from other species, relevant species have been selected along with dosing strategy to be implemented in GLP toxicology studies to be conducted by HanX. As a reminder, CDK inhibitors have emerged as promising and potentially targeted large market cancer therapies. ON 123300 has the potential to overcome many of the limitations of current generation CDK4/6 inhibitors. We believe that ON 123300 may act as a single agent due to the unique targeting of ARK5 as well as CDK4/6, making it potentially suitable for indications that may not be responsive to the current generation of CDK4/6 inhibitors. In February, our scientists and collaborators from the Mount Sinai School of Medicine presented two abstracts at the American Chemical Society National Meeting. And the first abstract related to the stability of the clinical product during storage and describes the synthesis and characterization of a desulfonylated product of Rigosertib. The second abstract described a new chemical entity, ON 150030, a Type 1 preclinical stage inhibitor of FLT3 and Src pathways, believed to be important for targeted therapy of relapse and refractory AML. Business development remains a key initiative for Onconova, illustrated by our Greater China partnership with HanX. In March, we jointly completed pre-investigational new drug or pre-IND consultation with the US FDA. These discussions have provided guidance for the manufacturing of ON 123300 and the preclinical development plan for the submission of an IND application. At this time, we are advancing the INSPIRE pivotal trial based on the data monitoring committee's recommendation for a one-time expansion and enrollment using a preplanned sample size re-estimation, which is consistent with our statistical analysis plan previously discussed with the FDA and EMA. As mentioned in the past, the SAP for the INSPIRE trial featured an adaptive trial design permitting several options, following the interim analysis which included discontinuation of the trial for futility, continuation of the trial as plan, or trial expansion using preplanned sample size re-estimation, and trial continuation, but limited only to the predefined treatment subgroup of patients classified as very high risk based on the revised IPSS system. After the interim analysis, the third option was selected based on the review of the data by the DMC. Accordingly, the INSPIRE trial will analyze both ITT and very high-risk populations for the primary endpoint of overall survival. In the INSPIRE trial enrollment so far, the predefined subgroup of the very high-risk patients constitutes greater than 70% of the patients enrolled, a much higher proportion than that was observed in the on-time study. We remain blinded through the interim analysis results. The INSPIRE study is active in nearly 170 sites across four continents and we're adding sites in Europe and new territories. We look forward to completing enrollment in the first half of 2019 and for the opportunity to analyze overall survival in the MDS patients. We believe that this trial is the most advanced study for new therapeutic agents for MDS patients after failure of front-line HMA and we look forward to completing enrollment and to analyze overall survival in MDS patients. Our second most advanced program is an oral Rigosertib plus azacitidine combination intended for use as a potential first-in-line therapy for patients with high risk MDS. The Phase II expansion trial of the combination is now fully enrolled, with the addition of 45 patients. Once the expansion trial is evaluated, we plan to submit the pivotal Phase III protocol to the FDA under special protocol assessment process. The initiation of the Phase III trial requires additional financing and our business development transactions. We presented initially data from the expanded study recently and plan to present additional data at scientific conferences throughout 2018, highlighting the results of dose selection and optimization of the combination regimen and the potential for combination therapy in MDS and AML. I will now turn the call over to Mark Guerin, our CFO, for a discussion of our financial results and the full year. Mark?

Thanks, Ramesh. Net loss was $5.1 million for the quarter ended March 31, 2018 compared to $8.3 million for the prior-year quarter, primarily due to a decrease in the fair value of warrant liability and also the recognition of revenue during the quarter from our license and collaborative development agreement with HanX Biopharmaceuticals. Research and development expenses were $4.6 million for the first quarter of 2018 compared to $4.9 million for the first quarter of 2017. General and administrative expenses were $1.9 million for the first quarter of 2018 compared to $2.1 million for the first quarter of 2017. At the end of the first quarter of 2018, cash and cash equivalents totaled $7.3 million compared to $4 million at December 31, 2017. In May, we announced the closing of a $28.75 million upsized underwritten public offering of approximately 67.6 million shares of common stock or common stock equivalents and warrants to purchase an aggregate of 1.7 million shares of Onconova's Series B convertible preferred stock. This included the exercise in full of the underwriter's option to purchase additional securities. I'll now hand the call back to Ramesh for his closing remarks.

Thanks, Mark. Our key objectives for development are to advance INSPIRE to topline data, initiate Phase III trial design and preparation for the combination therapy pivotal trial, advance our novel CDK-directed compound to the clinic and follow the progress of the RASopathy trial at the NCI. Our business development objectives are to enter into additional collaborations and geographic licensing agreement for our entire pipeline. With a much strengthened balance sheet and encouraging data across our pipeline, 2018 promises to be an important year of progress. We look forward to keeping you informed of our progress and achievements. I would now like to open the call to questions.

[Operator Instructions]. And our first question comes line of Joe Pantginis from H.C. Wainwright. You may begin.

Hey, guys. Good morning. Thanks for taking the question. I want to focus on Rigosertib, obviously, for my first couple of questions if you don't mind. With regard to the INSPIRE study, Ramesh, you alluded to, today and also in the past, opening new sites for this study. Just curious, as the study is enrolling, how impactful do you think or how much needed are these new sites to be able to increase the enrollment for INSPIRE?

As you know, second line MDS is a life-threatening disease. And the patients who fail HMAs and are eligible for second-line treatment, which are not available. So, nothing is approved by the FDA. So, they get basically physician's choice, best supportive care. And for these patients to be motivated to go into a randomized controlled trial is a challenge and this is something we have said before. But the advantage we have is that since there is no other Phase III trial available to these patients and there is a lot of data supporting Rigosertib activity in this patient cohort, we are successful in attracting patients, but we have to go wherever azacitidine is widely available. So, five, six years ago, azacitidine was limited to Western Europe and the US. And now, what we're finding out that a lot of eligible patients are available in Japan where our partner Symbio is enrolling patients for us. And then, in Europe, outside of the five major countries, for example, we find countries like Hungary, Estonia, Poland to be very rich source of patients and very, very motivated doctors in a very good medical care system. So, we're just taking advantage of what's available to get the appropriate patients. Joe, as you know, we have very, very stringent eligibility criteria. We cannot accept every second-line patient who comes through the door. We have to make sure that they meet the nine-month previous HMA treatment. And to do that and to also conclude the trial in a timely fashion, we think it's important to eliminate non-productive sites and add new sites. And that's the background. I hope that's clear. And sorry for the long answer.

No, no. It certainly isn't. Thanks for those details. And, I guess, the next question just has to do with BD because it's, obviously, important to Onconova's thesis. When you look at the, I guess, continuum of ongoing BD discussions for the oral program, I guess, how would you sort of describe the continuum, the word that I just used actually, with regard to where these discussions stand and do you think many of these or all or some will wait for you to do the leg work in submitting the protocol and getting FDA feedback for the SPA before you get any potential term sheets or is it sort of wide open right now?

Thank you. That's a very important question for us. As you know, we now have two partners already on board. We have had Symbio as our partner since 2011. And in this year, we signed up Pint. Both of these partners are extremely motivated that we start the Phase III with oral because, as you know, the frontline market is significantly larger than the second line market. And the oral is a very attractive product for these territories, like Japan and like Latin America. So, there is a lot of pressure, a lot of support. And both of these partners are willing to step up and help us with the trial, the pivotal trial. Then you asked a question of what is a trigger that makes a new partner, say for China or for Europe, step up and do a deal with us, I think there were two triggers. The first was the interim analysis. And that was really important because no company was going to go forward and make a large deal without knowing that the INSPIRE trial will continue and it has a promising signal. We delivered that in January. So, really, it opened up a lot of discussions which were sitting and waiting for the interim analysis. So, a lot of active discussions right now and you're absolutely right. Getting to a pivotal trial design and getting to a special protocol assessment, this sets forth the doors we will use, sets forth the patients we will find and, most importantly, sets the benchmark for the approval, what efficacy is required to get the drug through the NDA. And one good thing we have going for us is that when we completed the Phase II trial of the combination, we took it to the FDA with the end of Phase II meeting, so they gave us written commentary on what the patient population looks like, what are the statistical parameter and that helps us in our business development discussion. So, you're right, the next step, next trigger, next catalyst for doing a significant BD may be the Phase III protocol. And the good news is we're moving very rapidly towards a final Phase III protocol that we could submit to the FDA. Obviously, we would like to analyze the data from the expansion cohort of 45 patients, but that's also around the corner.

Got it. Thanks a lot, Ramesh.

And our next question comes from the line of Jason McCarthy from Maxim Group. You may begin.

Hey, guys. Thanks for taking the questions. Ramesh, you had discussed briefly potential timing for the trial to complete enrollment possibly concurrent with completion of the trial, if I heard that correctly. Can you walk us through just a little bit of the expectations around the timing for completing the trial because it is event driven? But unlike the prior trial, this one already has over 70% very high risk patients that are enrolled and our assumption is that the expectation is very low – unfortunately, very low life expectancy where the trial could end relatively quickly even before you complete enrollment.

Thank you, Jason. That's very perceptive, very good comment and question. You're right. We were pleasantly surprised at the interim analysis to see more than 70% of very high-risk patients. Just to remind everybody, there are actually, what some people say, two shots on goal, meaning that when we have topline analysis, we can look at the ITT population. If that's positive, we get approval with a white label. And if that, for some reason, falls short of the p value, then we can do a second analysis in the 70% very high risk group and we can get approval based on that subgroup. So, those two shots on goal make this trial quite interesting. And as you mentioned, Jason, the very high-risk patients have a median survival expectancy without any drug of about four months. So, as you know, we have 360 patients in the total trial and we need 288 events or death events to get to topline data. So, you're absolutely right. It's quite possible in some scenarios that the enrollment of the 360th patient may not even be required to reach the 288 event threshold. So, obviously, this is something we will monitor very carefully and we will send a signal if it looks like the topline data may be either concomitant with 360-patient enrollment or even a bit sooner than that. So, this is a very interesting nuance that we do not anticipate before interim, but interim analysis really opened up this script for us.

Okay, great. And just want to shift gears briefly, if you could talk just a little bit about the CDK, I know it was a really interesting partnership where you could do the IND-enabling work or have your partner do it and then you'd bring the drug essentially back to the US for the Phase I study here. Can you just discuss, in a little bit more detail, the plans for the CDK, potential indications that you would target, would they be Ibrance resistant or Verzenio resistant? Can you just elaborate a little bit there?

Thank you. CDK, as you know, is becoming one of the top new therapeutic areas. After Ibrance was launched in 2015, it's already close to $5 billion in sales per year. And then, both Novartis and Lilly have launched me-too drugs in that space. So, our drug is differentiated. So, as you pointed out, when Ibrance or Kisqali fail, there is a chance that some of these patients, particularly Rb negative patients could be candidates for our treatment. So, that's one therapeutic pathway that we have. Another pathway we have is because of ARK5 as a target. We're able to go after some hematological cancers. We have very strong data in multiple myeloma, including in Revlimid refractory multiple myeloma and we have very, very strong data in lymphoma, particularly mantle cell lymphoma. So, those are opportunities for very quick, as you know, accelerated pathways. But, first, we have to get an IND and that's where the HanX deal is huge for us because they are putting up all of the money and all of the resources to do the remaining manufacturing, the GMP manufacturing and also to do the toxicology studies, which are required. So, they're putting up a big chunk of money. We had done about 60% of the IND-enabling studies already when we met them, but the remainder of the 40% is expansive and they're footing the bill for those studies. So, when those studies are done, we'll be able to file an IND with them. We can do a Phase I in US and Europe and they will do the same in China. So, that's a great opportunity for us to advance a very high-value program in unmet needs into the program. Just to remind, few smaller companies, which are developing CDK molecules, they're all very highly valued, the Phase II companies in excess of $1 billion in value. So, everybody knows that CDK compounds are big market indication. That gives us two chances. One, we can quickly show proof of concept; and two, we can partner that asset also beyond China as we go forward. So, I think the CDK program in summary is in very good position and we're very likely going to announce important results for CDK program either in concert with our progress of Rigosertib or maybe even sooner than Rigosertib milestones.

Great. Thanks for taking the questions, Ramesh.

Thank you, Jason.

[Operator Instructions]. Our next question comes from the line of Leonard Ellman from – a private investor. You may begin. Your line may be on mute.

Hello.

Hi, Dr. Ellman, how are you?

I'm well. How are you, Ramesh? I was wondering if your efforts have led to an increase in patients entered on INSPIRE?

Yes. I think it's – and you were kind enough to suggest some strategies that we should adopt and we have adopted all of the strategies. We are finding that interim analysis was a hold back for some people. They didn't want to put patient in a futile study, but after we announced the data, people have perked up a lot more meetings. And at the forthcoming ASCO and other meetings, we are seeing very perceptive views. Just to remind you that in the Bone Marrow Foundation Meeting in March, we presented data in the combination trial, but one of the presentations at the conference by the Bone Marrow Foundation was from a lady who was a patient and who had received single agent, IV Rigosertib in a previous trial after HMA failure. So, this lady was alive almost five years after participating in the trial because this lady got a bone marrow transplant, which for the most parts can be curative. So, Dr. Ellman, that was very heartening and the presentation on meetings like that, combined with the little advertising we're doing in hematology, ASH News and hematology publications is starting to stir the pot and we'll, hopefully, be able to report to you that these things are taking effect and the enrollment is accelerating in the future.

Thank you.

Welcome.

And our next question comes from the line of Joe Pantginis from H.C. Wainwright. You may begin.

Hey, guys. Thanks for taking the follow-up. Ramesh, in your prepared comments, you mentioned obviously the first pediatric patient is expected to be enrolled as part of the RASopathy program this year. So, I'm just curious if you could provide any more details because, obviously, if I recall, you'll have the benefit of not really having to provide any funds for this because they should be investigator-funded types of studies, but you will get the benefit of the data. So, which indication are you looking at first? And I would imagine because of these really orphan diseases, you could get to a meaningful data relatively quickly.

Thank you, Joe. This is a very important program for us for two reasons. One, as you pointed out, the NCI is funding it and they have no limitations on how many patients they could enroll. We believe that JMML – juvenile myelomonocytic leukemia – patients which are like children with MDS are likely to be one set of patients. But other RASopathy cancers, including NF1 disease, are also likely to be enrolled. So, as you know, the big hurdle with NCI protocols is the protocol review takes time. We have been working with them very closely and we believe that the protocol is very close to being completed. And then, it's a matter of having a patient. And as you know, each patient represents a trial in itself. And since these patients are children with very clearly defined disease, for example, JMML patients present with large spleens, so spleen size reduction is very easy to monitor and very easy to report. And the blood counts. And then, in NF1, very easily measurable either by sonogram or by scanning, tumors are found. So, we believe that each of these patients represents an opportunity to get proof of concept for Rigosertib – single-agent Rigosertib, which resonates with what we expect for INSPIRE and may also have a bearing on our combination program because, remember, in combination program, we are doing both frontline and second line and Phase II, whereas in the Phase III we'll do frontline patients. So, RASopathies is one of the three Rigosertib catalyst for us. The ultimate, of course, is INSPIRE Phase III pivotal trial, which will readout next year. Then the combination advance into a pivotal Phase III trial, randomized controlled trial will be a big advance in Rigosertib. And the RASopathy in between the two presents a very, very interesting and satisfying opportunity for us.

Got it. Thanks again.

Thank you.

I'm showing no further questions at this time. I would like to turn the call back to Dr. Kumar for closing remarks. Thank you all for attending and asking really good questions. I think we are very well poised to make our investors pay more attention to our progress and we hope to have, for the remainder of this year, a series of announcements, catalysts and, hopefully, productive business development alliances. So, again, we thank the investors and thank the analysts for their interest and for the questions. 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.