ArQule's CEO Presents at Lazard Capital Markets Healthcare Conference (Transcript)

Nov.15.12 | About: ArQule, Inc. (ARQL)

ArQule, Inc. (NASDAQ:ARQL)

Lazard Capital Markets Healthcare Conference

November 14, 2012 11:30 AM ET

Executives

Paolo Pucci – CEO

Brian Schwartz – Chief Medical Officer

Operator

At again at Lazard Capital Markets, next presenting company ArQule is going to give you update on the company and its development plans and like to invite the CEO, Paolo Pucci.

Paolo Pucci

Thanks for the introduction. Thanks to Lazard for having us, thank you for joining us this morning. I’m going to be joined in the presentation by Brian Schwartz who is our Chief Medical Officer and he is going to take over the presentation around the half way. We have had very busy and difficult three months at actual so we are in the process of recalibrating our plans for the future and I’m going to touch about that during the presentation. I would like to say briefly and then let me give you the company overview as it stands today. And along the way I’m going to talk about the most recent enrollments.

So the lead compound of ArQule this (inaudible) which is a first in class c-Met inhibitor. We have the most traded so far activity in two double line randomized trials one in non-small cell lung cancer and the other one in Hepatocellular Carcinoma. For the Hepatocellular Carcinoma we are proceeding two phase III and we have recently announced that we have reached an SPA with the FDA relative to that trial design for the therapeutic and the diagnostic as well.

We are expecting imminently to read out the results from a third phase of three phase II double-blind randomized in colorectal cancer with the tivantinib has been tested as agent therapy to (inaudible) tivantinib in sound second-line colorectal cancer. We have recently had a trial failure and important one that was a tremendous setback for all of us and sad news for our patients as well. We had a large Phase III registration trial ongoing in the western part of the world in partnership with Daiichi Sankyo. The trial was that MARQUEE and it was intended to recruit about a 1000 patients and was intended to have a final analysis with 700 and some events and an interim analysis with closed to 400, it ended after the interim analysis was with more than 400 events and unfortunate this trial was stopped for futility.

At that point in time the analysis focus on the intend to treat population and look at overall survival in PFS. Though the further pursue of the overall survival end point was deemed to be futile at that time. The PFS separation between the two arms the (inaudible) was a significant separation. So we had left to understand over the next few months how did the separation in PFS not translate in overall survival separation. Fortunately for us we are in a strong financial situation. I will give some details. So that frees us from having to consider painful measures relative to our capital position at this time where we have low stock price and though we are been focused and we remain fully focus on tivantinib we also have continue to our pipeline and we are broad two IND and FTI (ph) EBITDA which is quite an interesting profile and we intend to begin a Phase I trial as soon as feasible.

The financial profile that allows us to plan for the future with some focus and some determine as well is as follows and I would just like to know that until we release our Q3 numbers we had a spending guidance that called for closing this year with a 124 to 127 million in cash and since the failure of the MARQUEE trial we have immediately begin to tighten our cost base focusing on the variable cost and that has allowed us to revise upward now or year-end guidance during the Q3 coalition new guidance that calls for finishing this year with a $127 million to $130 million in cash.

Our previous guidance carry with the statement that we saw the debt capital was sufficient to carry the operations of our Q through 2014 that statement stands. It is just that with this revised guidance we are delivering to 2015 that we would have been before.

As far as the cash dividend factors the most important cash burn factor is still in place through the initiatives we have with Daiichi Sankyo in Kyowa Hakko. So we have received questions often time is how are you going to fund the Phase III trial in HCC and the answer is the same way the Phase III trial for non-small cell MARQUEE was funded. We fund 50% of those costs but not out of pocket. So it does not increase the burden on use of capital. So no change there and no change on the ArQule’s front (inaudible) in finances in for all of their trials. So this is the recalibrated stable trails that we have in our running. Unfortunately even that both the MARQUEE trial and the attention trial ATTENTION trial were stopped prematurely.

We don’t have a Phase III trial ongoing, but we are confident that in couple more months we could again Phase III company by bringing to Phase III tivantinib been Hepatocellular Carcinoma. Achieving ESP was a very big step forward toward that objective. It's not that trivial objective to have achieved because it's a first time that we are using a biomarker prospective in this trial and then have significantly to the complexity. Off the other trials I have spoken and I would like to point out that we are going to be in to see next year the results of the single-generating trials that have been initiated over the last two, three years been (inaudible) the NIH and that’s what you see at the bottom of this slide. These would be create a trial with NIH.

Now let me take some time to go through the unfortunate events of the last few months. They are focused entirely on the non-small cell lung cancer program. As I said we had two Phase III trials running, the first one was in the west in partnership with Daiichi Sankyo that was a MARQUEE trial. So the data monitoring committed in early October convened and inform us that it was futile to pursue the primary end point overall survival any further. We did observe a strong PFS signal.

So if you take a step back and you look at the Phase II trial on which basis we launched this Phase III trial. We can say that we successfully replicate the signal that we saw in that Phase II trial with separation in PFS. In that Phase II trial we had observed a trend in OS that was favoring the treatment arm. Unfortunately that trend has now materialized in this trial.

It's important to stress that no new safety signals were identified so on a very large patient population with and the DSMB (ph) analyzed more than 400 events the safety profile of the drug resulted to be roughly as expected. The trial is expected to close formerly as the data matures and that means the database has now been captured.

Two reasons for that, one we will like to us complete as possible a set of data to understand how the PFS separation did not translate in OS and secondly we had to be mindful the need of patients and physicians to have the opportunity to continue to implement where it is deemed to be beneficial for the patients. The final database that will pop later this year very early next and then we will proceed with clean database and (inaudible).

So toward next year we will definitely have the full benefits. I have been asked the questions often time on whether or not the (inaudible) that would translate to HCC. The two more types are so different that unfortunately there is unlikely to be any learning from this trial that can translate to the Phase III they were about to initiate in Hepatocellular Carcinoma.

Let me talk now about the ATTENTION trial. The ATTENTION trial was intended to be a 450 patient trial, looking at tivantinib plus Tarceva against Tarceva in EGFR wild type patients in Japan, South Korea and Taiwan. Now several people have the impression that these trial has concluded than read. This trial has not read, the data that has been outlined relates to the suspected IND (ph) cases. The reason why this trial is suspended has been suspended in terms of recruitment, further recruitment permanently is because 1300 plus patients have been recruited into the trial and in balance in the interstitial lung disease was suspected and validated finally in that there were more cases of interstitial lung disease one there every then on Tarceva.

They might to drug exposure we will need to put it in a prospective once we understand better the performance of Tarceva as far as ILD (ph) whether that arm perform as per expectation more than expectation, less than expectation but suffice to say that though this trial will not recruit patients they have been recruited as of to-date the recruitment was suspended. There is still 300 some patient trial that will give us results in the second half of 2013. So as far as let me wrap up the non-small cell lung plan we are going to have next year before the end of the year the convergence of several data sets. The first data set is the MARQUEE data set, the second data set plus the read out relative to the end point is the attention data set and then we are going to have two Phase II data sets that will converge as well. One is from Daiichi Sankyo that are starting tivantinib Phase II in KRAS patients. KRAS patients in the U.S. and the second one is by Kyowa Hakko Kirin that is study in the Phase II tivantinib in EGFR mutant patients in Japan. Until we see all this data until we pull it and until we have the chance to make the necessary analysis and correlation it is highly unlikely that we will start any additional activity in non-small cell lung cancer.

We need to learn from these convergence of the data to see if there is an opportunity which is not under the one we have originally had imagined for the strong in non-small cell lung cancer. So this is the self-contained non-small cell lung cancer as I said another lot of learning’s that can be applied to HCC. So to turn the page and to go on to a fresh start I would like ask Brian to carry the discussion for HCC. Thanks for your time.

Brian Schwartz

Thanks Paolo. Just to remind the group we started HCC program approximately four years ago based on some strong preclinical rational of the role of the Met in HCC. We started out initially with a Phase I safety trial in psoriatic patients saw evidence of activity and then it led to a randomized Phase II trial which I will present later on which is presented at ASCO a biomarker update was presented again at ASMO (ph) and then at the recent ASDL (ph) meeting in Boston where we presented our final data set.

We also in addition to the single agent program in HCC instituted based on a preclinical model in combination with sorafenib at Phase I trial with an expanded group of patients in HCC in combination with sorafenib. So let me go through the key findings of our Phase II randomized trial in HCC. This trial accrued a 107 second line HCC patients randomized 221 with almost all patients receiving prior sorafenib. Patients could have progressed which is the majority did or failed sorafenib or front line therapy prior to coming on to the trial. The primary end point of the trial was time to progression as at the time of initiating the trial that was felt to be the most appropriate end point for these type of trials and we observed a 56% improvement with a P value of 0.04 in the ITT population. Our primary, secondary objectives of this trial was to see how these patients performed where the target was present. So in the Met positive patients and here we observe the number of very important findings, the first biologically driven trial is HCC with a targeted agent. We observed an improvement in time to progression, progression free survival and overall survival in the Met positive patients and we defined Met positive using immunohistochemistry in a very similar way to the way the Roche Group did in non-small cell lung cancer.

In this trial we did observe a slightly higher incidence of neutropenia in the first group of patients and reduced the dose from 360 milligram BID to 40 milligram in this trial and there were no differences between these two groups. It was a slightly higher incidence of fatigue and our dosemi toxicity (ph) of myelosuppression in the tivantinib group compared to the control group. And as Paolo announced we have received a SPA for a Phase II trial in Met high second line patients which hopefully will start late this year or early next year and I’ll talk a little bit about the design features as we go through the Phase II data. What was also important for us and described prior in the literature is that Met was not only a predictive marker for our agent but it was also a prognostic marker for the disease. Similar data has been shown by Amgen in gastric and by Roche in non-small cell lung suggesting that this marker is a reasonably good prognostic marker for a number of different diseases and here you can see the Met low group did much better than the Met high group in the placebo group.

In terms of time to progression in the Met diagnostic high group here you can see a large a small hazard ratio of 0.45 statistically significant and showing separation and the curves remaining separated for a long period of time in the Met diagnostic high end TTB. What was more impressive was the overall survival which held showing an improvement of survival for just under four months to just over seven months in this cohort of Met positive patients.

Let’s talk a little bit about how we moved forward in designing the optimal Phase III trial which would hopefully lead to registration of this agents and hopefully start up shortly. Here you can see a first block to some of the key characteristics which we use to design the Phase III trial. Obviously we will be using patients enrolling patients who are Met high only as that was favorable, we can see the starting dose here as well which will be 240 milligrams which we will be using. We will be stratifying by vascular invasion (inaudible) and alpha fetoprotein which a lot of other trial showed and we will be making sure that we enroll good performance status patients.

We enroll both HPV, HCV and patients who have nira (ph) into the Phase III trial. The trial the Phase III trial itself, we haven’t announced the full statistics as it hasn’t been published in clinicaltrial.gov yet but we will enroll approximately 300 patients and randomize 221.

The second program that Paolo alluded to which we will read early this year is our third randomized Phase II trial evaluating patients in second line colorectal cancer, KRAS wild type. These patients receive either (inaudible) of tivantinib or the combination and placebo.

In this trial we enrolled in Eastern Europe, Western Europe and the U.S., the primary end point of the trial is progression free survival we announced we completed accrual very early on this year and hopefully will have the PFS events overall survival as well as response rate to evaluate.

Our secondary end points will include biological sub-groups which include Met and other important markers that have been shown in colorectal cancer second line. The next Phase II which is scheduled to read out in the first half of 2013 is the trial in KRAS mutants. Just to remind you we will have a large cohort of patients coming out of MARQUEE which we haven’t valuated yet as well as this trial. The differences between this trial and the cohort and MARQUEE are the following. Our KRAS trial came about as a result of discussions with the lung consortium and data we observed in our Phase II trial where we saw a benefit in KRAS mutant population.

In this trial we will be randomizing patients to a lot of tivantinib versus single agent chemotherapy. We plan PFS our primary end point as the PFS of this group is expected to be relatively short and we plan to enroll a 100 patients in the U.S. which is scheduled to be completed by next year and finally a little bit about the pipeline. We have three Phase Is two of which are completed, our EGFR and our BRF (ph) and as Paolo mentioned a very interesting agent which will soon be entering the clinical our FGFR inhibitor. This is a potent FGFR inhibitor which primarily targets FGFR I and 2, two more potently than one but also has a little bit of an effect of FGFR 3.

The drug showed very good preclinical activity and we presented this data at ASCR (ph) in FGFR 2 amplied models. In addition to this three ArQule programs which we plan to evaluate before deciding to move forward is the outcome of the AKIP collaboration with Daiichi Sankyo. In this AKIP collaboration we identified an AKT inhibitor which is a potent inhibitor of AKT-1, 2, 3 and is ATP independent. The same is true for our FGFR candidate. We on behalf of Daiichi Sankyo are conducting the Phase I trial and anticipate that this trial will be completed by next year and be able to transition the entire program across to Daiichi Sankyo, a very interesting program so far and hopefully we will be able to present some data from it.

So just to wrap up Paolo spoke about our single agent and combination programs with tivantinib. The unfortunate results we observe the non-small cell lung cancer which we would like to understand during 2013. We have an SPA in a targeted population in HCC which has well under way and hopefully will accrue the first patient very shortly, colorectal cancer trial which we will read late this year early ’13 as well as the KRAS trial. We also have which we didn’t really touch on an extensive creative program, the first of which is going to be presented at ASH in multiple myeloma and then hopefully over the course of next year present randomized data in our prostate cancer trial, our uncontrolled triple negative trial. We have a randomized control trial in head and neck and papillary renal which will also hopefully come through in ’13 and ’14 and then a very interesting candidate from our pipeline the FGFR inhibitor which will go into development this year and hopefully read out within a year to two years thereafter. And with that I open it up to any questions.

Question-and-Answer Session

Operator

We have a question in the audience.

Unidentified Analyst

[Question Inaudible].

Brian Schwartz

Most of it is in blocks so with the SPA we have had to get specific criteria, we can’t use formalin fixed tissue but it has to be within a very short time frame when been done. So most of it we expect to come from blocks. We are going to use the same antibody, SP44 from Ventana and Roche and the same criteria which we validated prior to submitting the SPA which is 50% to the tumor sustaining (ph) two plus or greater.

Unidentified Analyst

[Question Inaudible].

Brian Schwartz

I mean it's just the way the processing worked for them but I agree with you that they just want to process that way moving forward and through with the validation.

Unidentified Analyst

[Question Inaudible].

Brian Schwartz

So our non-small cell lung cancer was only nonsquamous.

Unidentified Analyst

[Question Inaudible].

Brian Schwartz

So the way our FGFR it's a Phase I program and we built in a large biomarker component, we will be both looking at amplification as you say which was shown to be important in squamous but we also will be looking at expression because we know to-date we saw efficacy as I mentioned in amplified cell lines but you also some efficacy in certain (inaudible) that highly express it. So we will be looking at multiple ways.

Unidentified Analyst

[Question Inaudible].

Unidentified Analyst

Okay. Thank you.

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