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Executives

Nicole Jones

Jonathan J. Lewis - Chief Executive Officer and Director

Jason A. Amello - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Jim Birchenough - BMO Capital Markets U.S.

Jason N. Butler - JMP Securities LLC, Research Division

Vernon T. Bernardino - Brinson Patrick Securities Corporation, Research Division

Charles C. Duncan - Piper Jaffray Companies, Research Division

Matthew J. Lowe - JP Morgan Chase & Co, Research Division

Ziopharm Oncology Inc (ZIOP) PICASSO 3 Trial Results Conference March 26, 2013 8:30 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the ZIOPHARM Oncology Conference Call regarding PICASSO 3 trial results. [Operator Instructions] As a reminder, this conference is being recorded. I would now turn the call over to Nicole Jones. Please go ahead.

Nicole Jones

Thank you, and thanks to everyone on the call for joining us today to this -- to present the outcome of the PICASSO 3 trial for which we issued a release earlier this morning. With me on the call today are Dr. John Lewis, Executive -- Chief Executive Officer and Director; and Jason Amello, Executive Vice President, Chief Financial Officer and Treasurer.

Before we get started, I'll remind you that we will be making forward-looking statements during today's call that represents the company's intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors, risks and uncertainties such as those detailed in today's press release announcing this call and in our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements.

In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statement.

I will now turn the call over to Dr. John Lewis, Chief Financial -- Chief Executive Officer.

Jonathan J. Lewis

Thank you, Nicole, and again, many thanks to all that are joining us this morning. The purpose of today's call is to discuss the results from the PICASSO 3 trial, the Phase III trial of palifosfamide in metastatic soft tissue sarcoma and to outline our decision to place exclusive strategic focus going forward on our synthetic biology programs.

PICASSO 3 is an international randomized double-blinded, placebo-controlled trial in which 447 patients, first-line metastatic soft tissue sarcoma were randomized to receive intravenous palifosfamide plus doxorubicin or placebo plus doxorubicin. These patients were enrolled at about 150 sites around the world, including North America, Europe, South America, Australia, Israel and Asia. The primary endpoint for the study is improvement in progression-free survival, or PFS, with overall survival, or OS, as a key secondary endpoint. The other secondary endpoints include quality of life and safety and probability of this combination.

As we reported earlier this morning, PICASSO 3 did not meet its primary endpoint of progression-free survival. PFS for the control arm doxorubicin plus placebo was 5.2 months with the treatment arm showing approximately 1 month improvement. The recommendation of the studies, Independent Data Monitoring Committee, or IDMC, is that the study could continue to be followed for overall survival. However, we do not expect to perform this follow-up as it will not change the standard of patient care and it will not enable approval.

Also, all patients from the trial have completed treatment at this point. Palifosfamide was well tolerated with a safety profile observed in the study that was comparable with the other palifosfamide clinical trials in soft tissue sarcoma. Based on the IDMC's review and comment, we know that PICASSO 3 was rigorously designed and executed with outstanding study conduct, evaluation criteria and distribution of data. There was very little missing data and the quality of data was very high. The full data from PICASSO 3 will be submitted for publication.

We are sincerely grateful and thank the trial investigator of the clinical sites and the ZIOPHARM team for their relentless hard work and support. And importantly, we are deeply appreciative to the cancer patients and their families for their participation in this trial. This news is clearly very disappointing to us and it underlies inherent risk in going from further [ph] Phase II randomized data to a larger outcome study.

It is imperative, however, that we emphasize now the strong future of ZIOPHARM as we make this strategic decision to prioritize our world-leading synthetic biology program. As many of you know, this is a platform being developed in partnership with Intrexon that employs an inducible DNA delivery system for the controlled delivery of DNA that produce therapeutic proteins to treat cancer. This next-generation platform has the potential to clearly lead the biotech 2.0 revolution and will now be the center of our go-forward strategy.

The lead candidate of this program is Ad-RTS IL-12, which is a DNA therapeutic to enable controlled delivery of therapeutic IL-12, interleukin-12, a protein crucial for the immune response to cancer. It is currently being tested in 2 Phase II studies, with the first for advanced melanoma, the second in combination with palifosfamide for breast cancer, which is non-resectable, recurrent or metastatic.

We also engage in extensive and deliberate discovery and preclinical development of multiple other payloads to be used in the treatment of patients with cancer. Our highly focused team within the company will be deployed in support of these programs. As a result, a restructuring plan is immediately being put into place to align staffing to come to objectives and to marshal our resources toward achieving success with our synthetic biology programs.

We also expect to evaluate all our ongoing palifosfamide programs, which will result in the conversion of the Phase III MATISSE study to a randomized Phase II study. We expect that the ongoing Indiana University-sponsored Phase II testicular and ovarian trial will continue unchanged. These restructuring and reprioritization of programs is expected to provide additional runway to execute and execute well on our synthetic biology strategy.

While today's news of PICASSO 3 is clearly very difficult for all of us, ZIOPHARM's future, which is now fully vested in our world-leading synthetic biology program and platform, is one of great promise.

We thank you profoundly, our shareholders, for your loyalty and support throughout this period. This concludes our prepared remarks, and I would now like to turn the call over to the operator to open up the line for questions. Again, thank you all very much.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Jim Birchenough from BMO Capital.

Jim Birchenough - BMO Capital Markets U.S.

So I guess, moving to the synthetic biology program, John, can you go over how many patients have been enrolled in the melanoma and the breast cancer study, the time lines to get to some data from those programs? And you mentioned extending the runway. Your prior guidance was for cash to second half of this year. How far can you extend your runway with the restructuring?

Jonathan J. Lewis

Jim, thank you for your question. The melanoma study has completed Phase I and started Phase II recently. The Phase I component was approximately 12 to 14 patients. The Phase II is ongoing with enrollment. I don't have the exact number. We have not disclosed that. But we expect to present data from the melanoma Phase I at the upcoming American Society of Cell & Gene Therapy Meeting in the middle of May this year and oral presentation with Dr. Nemeonidas [ph] that will outline the Phase I up until this point. The Phase II data, we expect to get to some time in the second half of this year. As regard to the breast cancer study, we issued a press release approximately 10 days ago. So that study has just started. We expect to see quite a fast ramp-up with that to get to completion probably in the first half of next year and potentially to interim data from that as soon as the end of this year. To your third question, which is runway, and again, the key component here is that we've -- what we've done with this is set up runway here to execute and execute well. I'm going to hand over to Jason, the CFO, to give you some product guidance with this. Jason?

Jason A. Amello

Jim, as you mentioned the guidance that we previously gave was that our cash at the end of the year, which was around $73 million, would get us into the second half of this year. Obviously, that remains true. We are expecting that, that will last significantly longer. However, with this news being very, very current, although we planned for it, we didn't expect it, we are still finalizing that plan. So it's a little too premature right now to kind of give an exact window of runway. But if you look at the fact that we are significantly changing the focus of the company in moving out of the palifosfamide trials which were rather expensive. Basically, when you look at the burn associated with those, this will definitely provide us significant runway going forward. But right now, I can't give you a specific window just because we have some, obviously, more finalization to do on the plan plus we have some restrictions around what we can say right now just due to SEC and accounting requirements. But we plan to communicate again very shortly once the plan is finalized.

Operator

Our next question comes from Jason Butler from JMP Securities.

Jason N. Butler - JMP Securities LLC, Research Division

Just on the MATISSE study, could you give us any more details about the amended trial design? And then just on PICASSO 3, could you talk about what you saw in terms of bone marrow, toxicity specifically, in the trial?

Jonathan J. Lewis

Right. Let me start with your second question first. And so in PICASSO 3, as we said, the safety was pretty much as expected. What we saw with bone marrow tox was that there was a doubling in the rate of febrile neutropenia in the palifosfamide arm. That went from about 9% to about 18%. Importantly, though, with that, that the rate of discontinuation of treatment was the same between both arms. In other words, while there clearly was a doubling in the rate of febrile neutropenia, the bone marrow effect, patients both stayed on the drug at the same rate as compared to the control arm. Your first question, which is the MATISSE study. And so again, as you understand, the -- all of this is very fresh, and we are in the process of sorting through this. As we've disclosed before, there are 150 or now more patients randomized in that study. There's more in the queue as well. So the number is going to go up from there. And we're in the process of again going through how best to convert this into a randomized Phase II. But what we do expect is that sometime in the middle of the second half of this year to get to randomized Phase II data based from our survival analysis.

Operator

Our next question comes from Vernon Bernardino from Brinson Patrick.

Vernon T. Bernardino - Brinson Patrick Securities Corporation, Research Division

It's still somewhat seems like it's, at least to some, a drastic move, especially to terminate the program, especially in light of the continued study of palifosfamide in small cell lung cancer and there is initiation of the AD-IL-12 candidate in combination with palifosfamide. Can you comment on the IDMC's recommendation regarding the top line PFS and why the IDMC recommend to continue following for overall survival?

Jonathan J. Lewis

Sure. So Vernon, thank you very much. As you know, as you know me, we are very, very data driven. And again, there is really no better data especially with a well-conducted study as this was than randomized blinded Phase III data. And so we really are just following this data in sarcoma very strictly here with this. And so in terms of, again, starting with the sarcoma part of this, based on PFS, we know that there is no way that this drug will get to approval in any country in the world, specifically, with OS. As you know as well, I and we are very patient focused. That's our fundamental tenet. In terms of the OS follow-up, and we've looked at this critically and carefully, it will not enable approval of this drug anywhere in the world. It will not change the outcome in patient care as regard to the treatment of metastatic soft tissue sarcoma. What it may do is inform future development of palifosfamide in sarcoma. But again, if we've made the strategic decision here, as we said, that our exclusive strategic focus now is going to be on synthetic biology, for all the reasons we articulated before. And I think just to come back to, we are very data driven, we're very patient focused, and that's the rationale for our decision.

Vernon T. Bernardino - Brinson Patrick Securities Corporation, Research Division

Just as a quick follow-up then, you mentioned submitting for publication of the results, the full data in a scientific journal. Will you be posting also the final overall survival results for the Phase II study with palifosfamide?

Jonathan J. Lewis

Yes, I expect it will be comprehensive and includes all the data. But obviously, focused on a Phase III study.

Operator

Our next question comes from Charles Duncan from Piper Jaffray.

Charles C. Duncan - Piper Jaffray Companies, Research Division

John, wondering if you could just run through that PFS observation again. You went pretty quickly. And if you saw any, call it, geographic impact on PFS in terms of imaging or treatment standard and if you think this calls into question the activities of the alkylate or mechanism generally in soft tissue sarcoma? Or was it a potency problem for palifosfamide specifically?

Jonathan J. Lewis

Charles, thank you for question. Specifically, with PFS, what we saw was for the whole group plus [indiscernible]. The treatment on [indiscernible] 1 month improvement. Your [indiscernible] of the drug. And again, this data are really fresh. So we've not done a detailed analysis. As we mentioned before, we [indiscernible] on bone marrow. But clearly, as I mentioned before, we're very data driven. [indiscernible] at the data. There really is no [indiscernible] effect. As regards to your [indiscernible] stratification, et cetera [indiscernible] if we answer the [indiscernible]. And none of us are [indiscernible] here. In other words, [indiscernible] well-conducted study, very high quality [indiscernible]

Charles C. Duncan - Piper Jaffray Companies, Research Division

And with regard to the alkylate or mechanism , your thought of generally in soft tissue sarcoma, is this being called into question? Or do you think that this is a problem with the potency of palifosfamide specifically?

Jonathan J. Lewis

Again, I think it's [indiscernible] To really speculate [indiscernible] phase. So [indiscernible] is we don't know. We do know from a lot of [indiscernible] and clinical trials [ph] that this has been a potent drug, certainly in Phase III trials, and that's why we do this Phase III trials, and we do it well. The product have not shown [indiscernible] for [indiscernible] as regards to [indiscernible]

Charles C. Duncan - Piper Jaffray Companies, Research Division

And John, with regard to the trial, do you think the approval of Votrient may have impacted this? Is there -- is it possible that patients wanted to come off of this trial to somehow make themselves available to Votrient? And could that have impacted the outcome of this trial?

Jonathan J. Lewis

The answer is no. And the reason we can say that is that, again, the study was -- the blind was really to maintain with high integrity. But there specifically, there was a very high concordance rate between the investigator review and the independent review of radiology. In other words, there was very little investigator bias here -- and/or patient bias because the independent review really validated that. But concordance rate between the 2 was well into 90% [ph] range.

Operator

Our next question comes from Cory Kasimov from JPMorgan.

Matthew J. Lowe - JP Morgan Chase & Co, Research Division

This is actually Matt Lowe in for Cory today. Just wanted to ask, if you're taking the MATISSE study from a Phase III to a randomized Phase II. I guess, what happens if the Phase II survival data warrants further investigation?

Jonathan J. Lewis

Again, as you can understand, this is already quite fresh. So I don't have specific details for you. Except to say that if there's a clear signal there, we will certainly -- there's going to be obviously a lot of value in this, and we will certainly take that value and make sure that it is realized. We have been in dialogue. And again, it's been very limited so far, but we have been in dialogue with the PI from that's running this study, who's very experience. And so we're evaluating several ways forward here. But really, the logical first step is to take a look at the data because there are sufficient patients on that study to give us a clear sense of what's going on.

Operator

[Operator Instructions] Our next question comes from Jim Birchenough from BMO Capital.

Jim Birchenough - BMO Capital Markets U.S.

So just to follow up again on the program with Intrexon. Can you just remind us if there's any additional cash that would be coming from Intrexon as part of moving the Phase II program forward for IL-12? And is there any obligation on your side of things to maintain a certain cash balance or anything that we should be aware of that might be at risk right now with that collaboration?

Jonathan J. Lewis

Sure. So thank you for your question. Let me just go back to high altitude [ph]. As we have said, the synthetic biology is now exclusive focus. This clearly, with Intrexon, is the most advanced in technologically sophisticated synthetic biology technology and program in the world. We're in Phase II, as you've said. And important to outline here, we have the full support and commitment of Intrexon. There are no contractual obligations in terms of, again, financing one or the other. There is a contractual agreement in terms of Intrexon and R.J. Kirk participating in further financing. But again, let me just come back to what I said that as we're doing this, we do have the full support and commitment of Intrexon.

Jim Birchenough - BMO Capital Markets U.S.

And John, just looking ahead to the data that you'll present in May, what should we be looking for incrementally relative to what we've seen previously from the Phase I data?

Jonathan J. Lewis

I think there will be greater detail as regards to what we've said before. And let me just briefly reiterate what we've said before, and that is that what we're able to do with this program, with IL-12, is inject the DNA. We can have it switched off or switched on, and we can switch it on to varying degrees. In other words, there's a very clear dose response. With that dose response, what we've seen and what we do see is levels of IL-12. With that dose response as well, we see different levels of immune response and potentially as well, different levels of clinical response. And what we expect to do is to outline this in greater detail at this presentation in May.

Jim Birchenough - BMO Capital Markets U.S.

And then a final question. Just on MATISSE, I'm still trying to understand going from a Phase III to a randomized Phase II, are you downsizing the study or what's involved in that? What are the implications of that?

Jonathan J. Lewis

So I think again, this is still very fresh and we've not drilled on further detail. As part of our scenario planning way back, while we never expected this to happen, we had different plans for this. And so we've looked at that as a potential possibility. And again, we've not spoken to the key statisticians recently with this [indiscernible]. This was several months ago as we are planning. But we know that having a reached 150 patients, we kept sufficient statistical power to convert this into a really a quite a well-powered randomized Phase II, which again, will just give us a very clear sense here of futility and an understanding of how best to proceed.

Jim Birchenough - BMO Capital Markets U.S.

I guess I don't understand, why not keep it as a Phase III?

Jonathan J. Lewis

I think, again, to come back to that, as we're focusing our resources here, what we want to do is have synthetic biology as our exclusive strategic focus, and then just be very wise as we again spend on other programs.

Operator

[Operator Instructions] Our next question comes from Vernon Bernardino from Brinson Patrick.

Vernon T. Bernardino - Brinson Patrick Securities Corporation, Research Division

I guess it's a 2-parter. Is-- With the change in the MATISSE design, will it continue to be -- and if that -- well, I guess, it has to continue at that clinical trial design?

Jonathan J. Lewis

So again, it's really too fresh for me to give you any kind of definitive answer there. I mean, we're looking at several different components here. But really, the focus for that is to get the data sometime soon that we can get a clear sense of what's going on in that study.

Vernon T. Bernardino - Brinson Patrick Securities Corporation, Research Division

Okay. Well, because it started initially, it began as adaptive clinical trial. And along the way, you have the opportunity for -- with using prospectively design rules to change and reestimate the sample size to get to your interim analysis. Can you comment as to what the enrollment, ahead of schedule, what does that exactly mean? Is it still going to be, I forget the number now, the number of patients or -- and the number of events will still be 125?

Jonathan J. Lewis

Again, it's too soon for me to comment on what the number of events will be as we do this kind of analysis. We know if we were to follow up for a substantial period of time, we could get there. But we're going to -- and we are clearly looking at this now as to what is the best way forward to get the data.

Operator

[Operator Instructions]

Jonathan J. Lewis

With there being no more questions, again, I want to take the opportunity to thank each and every one of you for your ongoing support, and we look forward to continue to speak with you in the near future. Thank you all again very much.

Operator

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect, and have a wonderful day.

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