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Oncothyreon Inc (NASDAQ:ONTY)

Q1 2013 Earnings Call

May 09, 2013 4:30 pm ET

Executives

Julie Rathbun

Julie M. Eastland - Chief Financial Officer, Principal Accounting Officer, Vice President of Corporate Development, Secretary and Member of New Employee Option Committee

Robert L. Kirkman - Chief Executive Officer, President, Director and Member of New Employee Option Committee

Analysts

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

Simos Simeonidis - Cowen and Company, LLC, Research Division

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

Gregory R. Wade - Wedbush Securities Inc., Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Oncothyreon First Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this call may be recorded.

I would now like to turn the call over to Julie Rathbun, Investor Relations. You may begin.

Julie Rathbun

Thank you. Good afternoon, and welcome to Oncothyreon's financial results conference call for the first quarter of 2013. With us this afternoon are Dr. Robert Kirkman, Oncothyreon's President and CEO; and Julie Eastland, Oncothyreon's Chief Financial Officer and Vice President, Corporate Development.

In the first part of the call, Ms. Eastland will review Oncothyreon's financial results for the first quarter of 2013. After that, Dr. Kirkman will review Oncothyreon's corporate and pipeline highlights and discuss upcoming milestones. We will then open the call to questions.

Before I turn the call over to Ms. Eastland, let me first remind you that during this call, we will be making a number of forward-looking statements. These forward-looking statements include Oncothyreon's expectations regarding the use and adequacy of cash resources, future expenses, the clinical development of L-BLP25, the commercial outlook for L-BLP25, and clinical development activities of PX-866 and ONT-10. Forward-looking statements involve risks and uncertainties related to Oncothyreon's business and the general economic environment, many beyond the other company's control. These risks and uncertainties and other factors could cause Oncothyreon's actual results to differ materially from those projected in the forward-looking statements. For a detailed description of these risks and uncertainties, you are encouraged to review our quarterly report on Form 10-Q filed with the SEC and other official corporate documents filed with the securities regulators in the United States on EDGAR and in Canada on SEDAR.

I would now like to introduce Julie Eastland, Oncothyreon's Chief Financial Officer and Vice President, Corporate Development. Julie?

Julie M. Eastland

Thank you, good afternoon, everyone, and thank you, Julie. As reported in our press release this afternoon, loss from operations for the first quarter of 2013 was $8 million compared with $5.7 million for the first quarter of 2012. The increase in loss from operations primarily resulted from an increase in research and development expenses to $5.8 million from $4.3 million and an increase in general and administrative expenses to $2.2 million from $1.5 million. This increase in research and development expenses was primarily the result of increased development activity for Oncothyreon's product candidates, PX-866 and ONT-10. While the increase in general and administrative expenses was primarily the result of a noncash expense in share-based compensation related to the change in the fair value of the restricted share unit liability, whose value was affected by the change in our stock price. In addition, the increase in general and administrative expenses was also the result of higher salaries and benefits expense due to increased headcount and partially offset by lower legal expenses related to patents.

The net loss for the quarter ended March 31, 2013, was $8.3 million, or $0.14 loss per basic and diluted share compared with net income of $9.7 million, or $0.22 earnings per basic share and $0.13 loss per diluted share for the quarter ended March 31, 2012. The net loss for the quarter ended March 31, 2013, compared to the net income for the prior-year period was primarily attributable to a noncash expense of $0.3 million as a result of the change in the fair value of warrant liability for the quarter ended March 31, 2013, compared to the noncash income of $15.6 million for the quarter ended March 31, 2012. As of March 31, Oncothyreon's cash, cash equivalents and investments were $76.8 million compared to $83.8 million at December 31, 2012, a decrease of $7 million or 8.4%. The decrease was primarily attributable to $6.9 million in cash used in operations during the quarter ended March 13, 2013.

Before I turn the call over to Bob, I'd like to provide financial guidance for 2013. Please note, that we believe this guidance to be correct as of today but that circumstances may change and we assume no obligation to update this guidance. Expenses in 2013 are expected to be slightly higher compared to 2012 primarily as a result of the continuing development of PX-866 and the ongoing Phase I clinical trial of ONT-10. Oncothyreon currently expects cash used in operations in 2013 to be approximately $30 million to $33 million.

As a result, Oncothyreon estimates that its existing cash, cash equivalents and investments will be sufficient to fund our operations for at least next 12 months.

This concludes the financial update. Now please let me turn the presentation over to Oncothyreon's President and CEO, Bob Kirkman. Bob?

Robert L. Kirkman

Thanks, Julie. With a number of data events for the company imminent, I'd like to keep my remarks brief today. My focus will be to provide you with a short outline of upcoming events, both for the next few weeks and later this year.

I'll begin with PX-866 and our small molecule PI-3 kinase inhibitor for which we have a broad clinical development program underway. PX-866 is currently being evaluated in 5 clinical trials in 6 different cancer indications. All but 2 of these indications are now fully enrolled, with several data points to come this year.Our intention is to take all of these data points together as we consider next steps for this product candidate. A randomized trial of PX-866 in combination with docetaxel in patients with locally advanced recurrent or metastatic non-small cell lung cancer who are receiving second or third line treatment enrolled a total of 95 patients, 48 in the PX-86 plus -- PX-866 plus docetaxel group and 47 in the docetaxel alone group. This trial has now concluded and did not demonstrate an improvement in progression-free survival in the combination group when compared to docetaxel alone, the primary endpoint of the trial. We're continuing to analyze these data, which will be submitted for presentation at a subsequent scientific meeting. Late-stage lung cancers of difficult-to-treat patient population in need of additional therapies and we're disappointed that we could not show an improvement in PFS in this trial.

As you will recall, we're also conducting the randomized trial of PX-866 in combination with docetaxel in patients with squamous cell carcinoma of the head and neck. We completed our planned enrollment in this portion of the trial last week with 81 patients now enrolled. We expect to have the top line data in this indication late in 2013.

Our randomized Phase II trial of PX-866 in combination with cetuximab in patients with metastatic colorectal carcinoma, who have a history of progression or recurrence following prior treatment regimens containing irinotecan and oxaliplatin has enrolled a total of 85 patients. Primary efficacy data from this portion of the trial are expected later this month, including both objective response rate and progression-free survival endpoints.

The randomized trial of 866 in combination with cetuximab in patients with squamous cell carcinoma of the hand and neck is also now completely enrolled with a total of 83 patients. We expect top line data from this trial in the fourth quarter of this year. Additionally, we have our 2 single agent trials of PX-866 in patients with glioblastoma and prostate cancer, respectively, which are being conducted by the National Cancer Institute of Canada clinical trials group. Data from both the glioblastoma trial and from the original cohort in the Phase II castration-resistant prostate cancer trial have been submitted to the American Society of Clinical Oncology and will be presented during that conference, which begins the last day of this month.

The second part of the prostate trial which focuses on patients who are resistant to abiraterone is now about 50% enrolled. And finally, there's our Phase I/II trial of PX-866 in combination with vemurafenib, being conducted in collaboration with the Melanoma Research Foundation Breakthrough Consortium. We're getting close to the end of the Phase I dose escalation portion of that study and we are currently discussing next steps with the consortium. As you can see, there will be several different data sets for PX-866 this year. We think it's important to examine all of these data together as we plan the future of this compound. Given that we want to have the full data set to make decisions about next steps, we'll probably need to wait for the head and neck data later this year before deciding on those next steps.

Let me now turn to our cancer vaccine programs, beginning with L-BLP25, formerly called Stimuvax. As you know, it was reported in December last year that the START trial, a pivotal Phase III clinical trial of L-BLP25 in patients with unreceptable locally advanced stage IIIa or stage IIIb non-small cell lung cancer who achieved a response or a stable disease after chemo radiotherapy failed to meet the primary endpoint of an improvement in overall survival. That trial was conducted by Merck Serono, a division of Merck KGaA at Darmstadt, Germany under a license agreement with Oncothyreon. At the time this was announced, our partner, Merck Serono, indicated that notable treatment effects were seen for L-BLP25 in certain subgroups, and that they would discuss the data with external experts and regulatory authorities. The data from this trial will be presented at the American Society of Clinical Oncology meeting, which takes place at the end of May and beginning of June. We're looking forward to that presentation and to being able to review the data with you. The additional trials of L-BLP25 are continuing and to our knowledge, Merck has not made a decision about the future of this product candidate. While we await the upcoming data presentation and Merck's decision regarding L-BLP25, we are continuing with the development of ONT-10, our fully owned follow-on vaccine directed against the same target, MUC1.

ONT-10 is a liposomal vaccine that incorporates a larger and glycosylated antigen and a novel proprietary adjuvant, which has demonstrated a robust tumor response, as well as a cellular response in preclinical studies. We're currently conducting a Phase I dose escalation study of ONT-10 in a variety of patients with tumor types that are express MUC1.

We're about to begin enrolling patients in the final of the preplanned dose cohorts in this trial. The trial has gone very well and we are considering expanding this trial to additional and higher dose cohorts. The primary endpoint of this trial is safety and we're also examining the immunogenicity of ONT-10. We'll be guided by what we see in the L-BLP25 data to help determine next trials for this vaccine. It is our current expectation that we will begin one or more Phase II trials for ONT-10 late this year or early in 2014.

In closing, it's an exciting time for us. We have a lot happening and a lot of data events coming up for the company. As always, we appreciate your continued support and thank you for your time today. Operator, we'd now be happy to answer questions

Question-and-Answer Session

Operator

[Operator Instructions] First question is from Joel Sendek of Stifel.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

So I just want to get a feel for what we're going to see by the end of the month. I guess, you have 3 potential opportunities for success here in colon and the randomized study and on CLEO at ASCO and CRPC at ASCO. And given the fact that the head and neck isn't going to be reading out till the end of the year, I'm wondering if any of these 3 earlier studies are positive. Whether you can kind of move forward at all with that or whether you're still going to wait for the head and neck data?

Robert L. Kirkman

I guess, it's going to partly depend on the strength of the results. But my expectation is that we will probably wait for the head and neck data. Realistically on our own, we can only afford one Phase III trial and we want to pick the one that's most likely to be successful. We've said before that we do think we'll try to partner this product for Phase III development but I think for the trial, we'd want to start on our own, we'd probably like to see all the data before we make that commitment.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

And then I also wanted to ask, with the abstracts coming out on Wednesday, a lot of companies on the calls now are kind of guiding people to maybe look beyond the abstract of the meeting. What should we do? Might there be responses in the abstract? Or how do you suggest we interpret what we see next week?

Robert L. Kirkman

I think that for the 2 trials of -- the single arm trials of 866 that are going to be there, we'd encourage you to wait for all of it, which -- because the abstracts are written before we have all of the data. I think the exception to that, for me, is actually not related to 866 but to L-BLP25. I think there will be significant data in that abstract that will make clear what we've been talking about.

Operator

The next question is from Simon Simeonidis of Cowen and Company.

Simos Simeonidis - Cowen and Company, LLC, Research Division

Bob, on your last comment, distinguishing between the ASCO abstracts for the monotherapy trials and the abstract for L-BLP25, and then that...

Robert L. Kirkman

We lost you, Simos.

Operator

Yes, it does look like his line dropped off. We'll take the next question from Mara Goldstein of Cantor Fitzgerald.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

Just on the 866 and the non-small cell lung cancer, you said that you didn't see any difference in PFS. Was there any decrement in PFS related to 866 or anything that can be gleaned yet out of the side effect profile that might be helpful to us? And then secondarily, on ONT-10, you made some commentary about the trial is going well and I'm just wondering what parameters is it that you're looking to make that decision to expand out into different doses?

Robert L. Kirkman

Sure. So with respect to the non-small cell lung cancer, no, there was no decrement. This was not a difference or an improvement in PFS that wouldn't let us see a benefit there. The safety profile was very similar to what we have seen in all of our other trials, but diarrhea being the primary side effect. So we didn't see anything in the trial, new from a safety perspective, that's of concern from us. With respect to ONT-10. Of course, the primary purpose of a Phase I trial is safety. And by going very well, I mean that we have not seen a safety signal at all so far. And that's a good thing because of the novel adjuvant, which is present in this vaccine. So that's going to let us go a little bit higher than we were originally planning to go or at least, we're talking about it. We don't -- we haven't talked about any of the other data from the trial. But that's primarily what I mean that we haven't seen a safety signal that would tell us we should stop.

Operator

The next question is from Greg Wade of Wedbush.

Gregory R. Wade - Wedbush Securities Inc., Research Division

Bob, I just wondered if you might give us a hint as to the subgroup signal that we might see in the ASCO abstracts. From what you are aware, is there a compelling enough subgroup with which to pursue development of ONT-10 in at this point?

Robert L. Kirkman

I'll answer that question in 2 ways. One is we're obviously going forward with ONT-10. And so, that may be a part of the answer to your question. Whether we will choose to do that in the same indication, I think, is a decision that's going to partly depend on several factors. I suggest we have that discussion in more detail after the abstract is in the public domain.

Gregory R. Wade - Wedbush Securities Inc., Research Division

Okay. Have you had the opportunity to look at patient level data from the Phase III study in order to better inform where to test ONT-10?

Robert L. Kirkman

Well, we don't have access to the actual case report forms. No.

Gregory R. Wade - Wedbush Securities Inc., Research Division

Okay. What types of access do you have?

Robert L. Kirkman

We have seen the data that's going to be presented, but again, I'd like to hold that discussion until next week, when we can talk about it in detail.

Operator

And the next question is from Simos of Cowen and Company.

Simos Simeonidis - Cowen and Company, LLC, Research Division

I missed what happened while I was trying to dial back in but on the previous question, you answered that you're not sure whether you might go in an ONT-10 trial in the same indication. You mean in lung cancer? Or in the different disease setting was in NSCLC?

Robert L. Kirkman

Whether we would choose lung cancer or not.

Simos Simeonidis - Cowen and Company, LLC, Research Division

Okay. And then in terms of what you could possibly tell us about the 866 trial in NSCLC, first of all, are you going to show the complete data at some point? Or is there anything you can tell us about the data that might help us, maybe have a read-through for the -- either the other head and neck trial or the other trials?

Robert L. Kirkman

Well, we will submit the data for presentation. I mean, we haven't, at this point, fully analyzed it ourselves and all we can really say at this point is that we didn't make the top line endpoint that we were looking for. I think the only read-through that's directly relevant for the other indications at this point is really on the safety side, where we did not see a safety signal in this trial. It's at all of concern from what we might see in the other trials. I think we just have to look at the data before we can really answer your other question about efficacy. I would not, myself, want to make any conclusions from what is, I think, one of the hardest indications out there, namely, end-stage lung cancer to what we might see in some of the other indications. I think that would be a mistake. Which is not to say I know what's going to happen in the others, because I don't. But I think, I would not make the conclusion that we could read through directly to what will happen on the other trials.

Simos Simeonidis - Cowen and Company, LLC, Research Division

And the colorectal trial that you said it's going to be -- going to have the data later this month. So is it safe to assume a few days before ASCO?

Robert L. Kirkman

I'm only prepared to say later this month because I don't know exactly when we're going to get it. But again, it's probably going to be about the same level of detail that you just got for the lung cancer trial at this point, because we did not have data in time to submit that one for the upcoming ASCO meeting.

Simos Simeonidis - Cowen and Company, LLC, Research Division

And in terms of the safety that you just mentioned, I mean, was safety pretty similar among the 2 arms of the trial? And was safety consistent with what you're seeing in your trial so far?

Robert L. Kirkman

Yes and yes. There were no obvious safety differences between the 2 arms of the trial. There wasn't particular difficulty combining the 2 agents. And yes, the safety issues, which were primarily limited to diarrhea and to low-grade LFT elevations were similar to what we've seen before.

Simos Simeonidis - Cowen and Company, LLC, Research Division

I mean, were you able to see any efficacy into the secondary endpoints? Or any biomarkers like were you measuring whether the PI-3 kinase signaling was blocked, inhibited, in the 48 patient arm?

Robert L. Kirkman

Again, we're still analyzing all that data and other than the top line data, I really don't have anything I can tell you about today.

Operator

I will now turn the call back to Dr. Kirkman.

Robert L. Kirkman

Well, thank you very much. We very much appreciate your time today. And we will look forward to seeing all of you at the upcoming American Society of Clinical Oncology meeting. Thanks very much.

Operator

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.

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