ARIAD Pharmaceuticals' CEO Presents at Bank of America Merrill Lynch Health Care Conference (Transcript)

May.14.13 | About: ARIAD Pharmaceuticals, (ARIA)

ARIAD Pharmaceuticals, Inc. (NASDAQ:ARIA)

Bank of America Merrill Lynch Health Care Conference Call

May 14, 2013 13:00 ET


Harvey Berger - Chairman and Chief Executive Officer


Rachel McMinn - Bank of America Merrill Lynch

Rachel McMinn - Bank of America Merrill Lynch

Thanks again for joining us. I’m Rachel McMinn one of the biotechnology analyst here at Bank of America Merrill Lynch. Hope you guys are enjoying the first day of the conference in Las Vegas. My pleasure to introduce our next speaker Dr. Harvey Berger, CEO of ARIAD Pharmaceuticals and hope to have plenty of Q&A’s from the audience. Thanks very much.

Harvey Berger - Chairman and Chief Executive Officer

Thanks so much Rachel. It’s real pleasure to be here this morning and have an opportunity to share with you an update after our first quarter sales of Iclusig. So it’s a great time for us either to have these brief introductory remarks and then I hopefully can leave a lot of time for questions.

Before I start off I just remind everybody of that I’ll be making forward-looking statements and refer everyone to our SEC filings. So 2013 is off to a great start. First quarter sales of almost $6.5 million a positive opinion from the CHMP for a approval in Europe. Our European team hired in place ready to go. We transitioned in Japan to Phase 2 for Iclusig. So we are on track for our registration trial now and file regulatory filings in Japan and 113 expected to be transitioning to the Phase 2 portion of our development program in the next several weeks by ASCO.

So first quarter and the beginnings of 2013 very strong. So let’s talk for a just a couple of moments about the launch of Iclusig. Net sales of $6.4 million another $3.3 million on top of that was deferred that’s largely excuse me inventory. We had really a strong demand through the first quarter and into April with over 400 patients now on Iclusig in the United States with over 300 unique physician prescribes.

Some of the interesting thing yes that picked up from the first several months of being in the market place for Iclusig is that of those greater than 300 unique prescribes about 70% I think this is backwards about 70% of the physicians are community physicians and about a third are academic physicians all lines the patients who are being treated really spend the entire spectrum from 25 with about 25% or quarter the patients in the true second line and less than 10% of the patients with the T315I mutation.

So broad adoption of Iclusig across all lines of resistance and tolerant treatment with very strong payor support. In terms of Europe we are fully up and running an operational. We expect European commission approval later this quarter. So very soon we have a recommendation for approval for broad label that’s starts with the second line patients who have failed any of the second generation medicines of nilotinib and dasatinib we see a significant incremental market opportunity on top of the U.S. with the patients who are switching tyrosine kinase inhibitors thought to be about 3,800 resistant intolerant CML and Philadelphia positive ALL patients.

So the launch in Europe will of course start with the countries where we can begin commercializing immediately that’s French, Germany and the U.K we already have an ATU program underway in France having shifted about $3.2 million of Iclusig between the fourth quarter of last year and the first quarter of this year. Our management team is highly experienced and in place and ready to take on the new challenges of Europe.

So as we look beyond our first approval it’s driven by our core strategy internal discovery global capabilities and a strategic approach built around full global integration. A very important part of how we had built the area to-date and continue to do so going forward. This translates we believe into a long-term value proposition a sustainable, fully integrated global oncology business.

Now AP26113, is another of our internally discovered cancer medicine. It is a tyrosine kinase inhibitor that was specifically designed to inhibit ALK, anaplastic lymphoma kinase, EGFRm, the mutative form of epidermal growth factor receptor and as well ROS1, we have presented at ESMO last year well we see as compelling proof-of-concept for patients with ALK positive lung cancer we are as mentioned earlier, transitioning into the Phase 2 portion of the Phase 1, 2 trial and we’ll explore in depth the second and third promising opportunities for AP26113.

These transitions to Phase 2, are expected to occur by the time of ASCO will provide an update on the Phase 1 results as well as the Phase 2 dosing plans for a subsequent trials at ASCO so ASCO will be a very important time with respect to moving AP26113 forward. We also expect in our planning to initiate the pivotal trial of AP26113 in ALK positive lung cancer patients next quarter, third quarter of this year.

So in the Phase 1 trial as we recently updated on our quarterly call, we escalated to 300 milligrams per day, we have studied in depth multiple doses below 300 milligrams as well as more than one schedule of administration and have done so in expanded patient cohorts. Doses less than 300 milligrams provide based upon these data that were prior to exposure for targeting both ALK and EGFRm. And thus that will provide us with a basis for making a decision on the Phase 2 dose and going forward to the Phase 2 cohorts and the pivotal trial.

So 2013 will be a year of multiple value drivers led by the strong launch of Iclusig in the U.S. followed by approval pricing and reimbursement and promotion of Iclusig in Europe with a global, with an increasing global presence, including moving forward on our own in Japan thus building a global development and commercialization engine for oncology products. We also anticipate expanding the Iclusig opportunity not only in CML and Philadelphia-positive ALL, but as well broadly in other cancers such as GIST, gastrointestinal stromal tumors.

We will be initiating as I mentioned the pivotal trial for AP26113 in ALK positive disease and anticipate moving quickly on AP26113 in Phase 2 in patients with EGFRm disease or non-small cell lung cancer with the next presentation following ASCO being at the European Society of Medical Oncology in Amsterdam in late September. So the next several months will be filled with important drivers of value for the company but most importantly drivers of value for patients with difficult to treat cancers as we move forward on both Iclusig and AP26113.

So ARIAD really over the past several years we have been able to build what we see as a sustainable fully integrated global cancer company able to discover, develop and deliver breakthrough medicines to patients in need. So with that why don’t we move to questions?

Question-and-Answer Session

Rachel McMinn - Bank of America Merrill Lynch

Great, well. Please from the audience feel free there is somebody walking around with mic. Why don’t we just start off with Iclusig I think you’ve kind of given out this number of Iclusig having about a 40% higher rate of initial prescriptions than Tasigna which would be a very reasonable proxy to think about in the salvage market, what does that tell you about the overall opportunity was that actually better than your internal expectation then how do you see this playing out as the kind of the curve start to build up upon them though over the course of the year?

Harvey Berger

Sure that number comes from aligning the first three to four months of Iclusig sales in terms of prescriptions over laid on top of the same period from the, for the initial launch of Tasigna or Nilotinib obviously that’s several years ago relative to where we are today but if you align the two launches you see the Iclusig prescriptions are on average about 40% above those four Tasigna.

Now we didn’t expect to get to that point as early in the commercialization of Iclusig as this would suggest. In part because Nilotinib or Tasigna launched into a market that it only had one other medicine namely Sprycel that could be used in patients who are resistant intolerant.

Iclusig is being launched into a market with two or if you include Bosulif three other medicines that can be used in the resistance, intolerant patient population. So particularly striking that we are well above 40% above Tasigna where three or four fold greater than Bosulif which is the most recent entry into this area. So it tells us a lot about the way it positions or seeing Iclusig in the market and in their decision making they are using and have realized that the data support Iclusig is used by virtue of it’s board activity it’s potency deep responses and from data’s that have been presented thus far potential for the long-term benefit in patients.

And I think that’s what’s driving the utilization across of the lines of resistant intolerant disease including a quarter in the second line and about 60% to 65% of patients who are receiving Iclusig have chronic phase disease. The chronic phase CML patients are the ones who in whom you could expect much longer term durations of treatment than in the blast phase or in stage patients.

So all of this suggests that the uptake well above Tasigna is very good indicator of physician uptake and physician adoption of the profile of Iclusig for CML.

Rachel McMinn - Bank of America Merrill Lynch

Any questions from the audience? Yes please over here

Unidentified Analyst

Can you give me your view on the uptake of Xalkori ALK testing and how much of the heavy lifting do you still think that is left to do with regards to ALK education?

Harvey Berger

Very good question. What has limited broader use of Xalkori early in it’s launch is availability and more importantly utilization of an ALK test to determine which lung cancer patients actually are ALK positive you got little justification forgiving Xalkori or for that matter 113. If you don’t know a patient has ALK positive lung cancer and while there is an approved test in the U.S it’s companion diagnostic here in the U.S. in Europe it’s CE Mark available ALK test as well but the uptake in utilization of the test I think Pfizer would be the first to day has been slower and harder than they had predicted.

So if you go to a major cancer center and you thought that lung cancer there is no question you are going to get genome profiling of your tumor whether they look at EGFR, ALK, KRAS a couple of them or whether if you go to a bigger center that’s more interested in that then you got a panel of ten different likely oncogenic target or if you go to a few centers that do much broader testing. If you go to a major cancer center you’re going to be tested but as we know that’s not that whole market certainly in the U.S or in Europe for the utilization of any of these new medicines or the treatment of lung cancer and to the challenge which thankfully Pfizer is leading the effort on with the help of Abbott who makes the test is to get broader and broader testing. So they are doing a lot of the heavy lifting that will help all of the second generation medicines of which 113 will be one of them that really can help us over the long-term.

If we start our pivotal trial next quarter and you start to when do we get to market I think by the time which won’t be that far off but when we get to market a lot of the hard work over the next year will have been done by the Xalkori franchise namely by Pfizer. So, I don’t think it’s going to be the big challenge for us but it is definitely what impacts I believe on what the market near term is for Xalkori but that will eventually catch-up and then you will look the second generation medicines they will take advantage of that hard work.

Rachel McMinn - Bank of America Merrill Lynch

And just well we’re I guess just to stay on that theme for just few minutes ask about the abstracts coming out tomorrow we would expect since Novartis had some initial data a year ago that they are going to have substantially more patients I don’t know if the number is 80 or100 patients but should we assume then that Novartis is going to be filing for approval in the back half of this year and so that they are about a year ahead of you guys is that the way your are thinking about it?

Harvey Berger

Well I can only speak to what they said, which is that they are going to file in the first half of next year but I think it should come out of whether it’s the abstracts are more important ahead of the presentations that there are two or three ALK inhibitors that are close in the clinic, our medicine LDK from Novartis and the Chugai Roche drug. So, there are going to be at least three likely, three ALK inhibitors that are better than Xalkori the Pfizer medicine. I think it will be difficult at this point and time to differentiate among the three certainly at the abstract level maybe that will become clearer as one goes to the presentations in Chicago in June.

But I think largely what will ultimately differentiate the three, two or three new medicines in this class are the safety and tolerability profiles, the reproducibility of the effects among patients not so much with the acute near term response rate is but is what really matters is are the responses reasonably durable and do patients tolerate the drug and do are there escape mechanisms in terms of resistance mutations.

So that if as you and importantly what will clearly differentiate any of these medicines I know, it will differentiae 113 is does it work in patients with brain metastasis because the single largest cause of failure of crizotinib is disseminative brain metastasis for which there really is no adequate treatment whatsoever.

And so, if one can effectively treat brain metastasis or ultimately prevent them from happening that will be the winning formula and the winning message I believe with respect to an ALK inhibitor especially in patients, who have failed crizotinib. So, I think that’s where it will play out and in the end the response, tolerability, reproducibility, durability of response and (indiscernible) are sort of the parameters that I think will allow one eventually to compare and contrast two or three new medicines in this class.

Rachel McMinn - Bank of America Merrill Lynch

While safety and tolerability is something that ultimately has to be blend out in the clinic from an advocacy perspective do you have any view on what like whether you would be, have an advantage on durability of response based on your activity in the trial?

Harvey Berger

Well certainly 113 was designed to be as broad and inhibitor of the ALK and the mutations the cause resistant in ALK. We’ve demonstrated pre-clinically that 113 at concentrations we know we can achieve is essentially a pan ALK inhibitor much like Iclusig is a pan BCR-ABL inhibitor so that if we can maintain broad inhibitory activity that should translate into better more long-term responses and durability. Pre-clinically that’s the profile of 113 just as it was for Iclusig or ponatinib at the time. So, I think that will play right into how 113 ultimately performs, in the clinic and in the registration trials and in the trails that precede that.

Rachel McMinn - Bank of America Merrill Lynch

And just to wrap-up on that topic, are we looking at like 20 patients with the data at ASCO something along that line for 113?

Harvey Berger

Whether we’re ready I think 20 patients at ESMO so we I think said to expect about 50 or 60 patients totaled at ASCO some of which are patients that have already been studied some of them are new patients and some are patients that have remained on drug now for a long periods of time. So the follow-up on the original patients is probably as important as new patient responses that will be reported both at in the abstract and more importantly on the final cut of the data which hasn’t even happened yet.

Rachel McMinn - Bank of America Merrill Lynch

And before we do back to Iclusig just a big picture balance sheet question and how you are thinking about running the business obviously you are going to be investing as much as possible into the Iclusig launch and all the trials that you’ve laid out. How should we think about your goals for profitability balance with pipeline investment?

Harvey Berger

Well one of the things that we have which I think is the envy of many is multiple products with multiple potential indications that are highly likely to succeed whether it’s the expansion of Iclusig into front-line us whether it’s 113 and ALK positive disease either Crizotinib failures or others potentially as well 113 in EGFR disease, Iclusig and just AML and lung cancer. All of that points to the need to invest judiciously but to invest and building the pipeline. We also own the global right and are commercializing in U.S, Europe and we will in Japan as well.

So we have the ability to realty drive the top line over the next several years but virtue of the strength f our global commitment and global ownership of the product. We have are really focused on being prudent on what we spend to meeting our financial projections investing judiciously in commercial as well as clinical activities of course what’s going to be the key players the key variable it’s a bit early to know how strong Iclusig sales will be and that of course as a huge impact on our overall balance sheet to next several years but one quarter into it. We are very, very positive about how Iclusig sales will impact upon that plan.

Rachel McMinn - Bank of America Merrill Lynch

And should we think about your business model as always being internally not always is not a good work but over the next several years being focused on internally derived molecules are there any notion within the company that look externally for additional assets?

Harvey Berger

It is absolutely unequivocally internally focused on continuing to deliver innovative internally discovered cancer medicines again to Iclusig 113 and the other earlier legacy products that we discovered early on in our history. Never say never as you point out but we have, we don’t have a business development department in the company. So it would be very hard to go actively pursue internal in life.

Rachel McMinn - Bank of America Merrill Lynch

Got it. That was very clear. Questions from the question. Can I go back to Iclusig and other trials that I don’t want to are there issues from the table and then alright. So let’s go back into the launch a little bit you gave a lot of different nuggets I think you had mentioned at breakfast this morning that this 70% of prescribers being community to docs is actually well ahead of almost the inverse of what you would expected in fact somebody got it wrong on the slide there. So maybe that was like a left reverse life but I was like?

Harvey Berger

I would say great I made that.

Rachel McMinn - Bank of America Merrill Lynch

So I guess how do you see that play count over time does that if that really were the bulk of these resistant patients are being seen do you think this will bode well for earlier switches?

Harvey Berger

Well I think it’s a great statistic not only near term but if you look long-meeting and then next here when we stated to have data in the front line let’s face it and most of the patients who are newly diagnosed are treated by oncologists and hematologists in the community. If you present with CML you are rarely rushed to end the end there is an for your first treatment or another but another big cancer center. So having a present with the community HemOnc and having them the believers and perscribers of Iclusig in the resistant intolerant patient is not only great for that franchise but for the front-line franchise as well. And we thought it was going to take more work and take longer to get the community physicians to embrace a new medicine in a field, where there are at least two maybe three medicines that I have been around for a while that they can choose from. So, it’s relatively easier to convince a key opinion leader to say we were involved in the clinical trials; you have been to all the meetings whether you are in the trial or not try out Iclusig or they come to us and say I want to try Iclusig. You have to, you have to go out and be sure that the community physicians want to know about ARIAD, know about Iclusig, know about the clinical data.

And I think what it says is that the community hematologist and oncologist are extremely sophisticated. They go to the major meetings. This is not like commercializing a medicine to internists. Many products in our industry the primary target let’s take an example might be to route to subspecialty rheumatologist. But we know that rheumatoid arthritis is taken care by internists as much as it is by rheumatologist. Well that’s a very different module and challenge than what we have which is going to the very well educated, very up to-date and experienced demons in the community. Those doctors are very sophisticated and know the data.

CML was not taken care by internists. It’s taken care of by internists, who are sub-specialist in hematology and oncology either in the community or in the academic center so that really bodes well for both the near term franchise because that’s much bigger and of course long-term for the front line that’s exactly where we got to be. So, this is a great, great metric for early adoption.

Rachel McMinn - Bank of America Merrill Lynch

And I know, you have been very consistent since the label was issued with a black box warning that you didn’t think this could be a stumbling block it doesn’t seem to have impacted up tick certainly among community physicians, which might be most sensitive to safety issues. Are you going to have some new data at ASCO and without trying to break anything there was embargo rules can you just give us your perspective on once physicians see this data how it will influence their thinking about the safety profile?

Harvey Berger

Sure. The abstract as you can imagine has some of the data but clearly has a good summary of the findings having seen what’s going to be presented at ASCO. I mean, we go integrate that, that’s been great coyer to really play out all of the data on the patients, who account for the arterial thrombosis bucket of diseases. Arterial thrombosis is not a disease. The diseases that get lump together represent a variety of different diseases from coronary disease to myocardial infarction to stroke to thromboembolic disease to peripheral arterial disease to claudication and those are actually the diseases and they all got lump together.

What I think physicians want to know is tell me about those patients, tell me about what did, they have longstanding heart disease or are they patients with angina and coronary disease, who have had angina a few years ago on your – go on an Iclusig trial and lung (indiscernible) continue to have angina or might have an MRI well patients with angina have MIs and if that they expect predates the trial its very helpful to understanding the cardiovascular profile of those patients. And so, it’s very clear that the presentation and the abstract as well will provide insights for physicians and others to understand the basis for the description of the various cardiovascular event that have been talked about.

And I think, when one looks at the data in that context it’s consistent with what we anticipated but what we’ve seen in the marketplace, which is why physicians we didn’t aware of it and we embraced our full label to understand that and its really nothing new for them and thus hasn’t to the best of our knowledge impeded in anyway the uptake or adoption of Iclusig even in second line patients.

Rachel McMinn - Bank of America Merrill Lynch

And when we think about I think, one of the big fears for investors not necessarily physicians but for investors coming out of the label there is this concern that there would be some sort of true imbalance on cardiovascular events for Iclusig versus Gleevec and that would be apparent in the EPIC trial? So, I know, it’s a blind of study its on group value to you guys ongoing. But what can you say about if I‘m asking you to speculate on what the safety profile will prove out to be in that trial how you are thinking about it?

Harvey Berger

Well, we know that patients on nilotinib and dasatinib have various different cardiovascular events. We know the rate of events particularly pulmonary excuse me, peripheral arterial occlusive disease, so vascular disease involving the periphery which has been studied the most is far greater on patients of nilotinib but for dasatinib especially on the nilotinib then it is for example on Gleevec.

So it’s certainly possible that there is a difference EPIC trial between the Gleevec ARM in the Iclusig ARM the issue is now whether there is a different but what sort of response, what sort of cardiovascular or other events one sees and roughly how does that compared to physician’s experience with this class of medicines with BCR-ABL inhibitors and experience with patients who are newly diagnosed CML.

So I have no idea today as I'm purely speculating but there is no question that BCR-ABL inhibitors as our class especially nilotinib has been shown to have an increased incidence of peripheral arterial disease and that may not be because of the drug that may be largely because of the patients that have been studied, the patients who are have a high incidence of preexisting cardiovascular disease, but whether it’s exactly bouncing on the EPIC trial we can’t predict today. We certainly from everything we know of the use of Iclusig in the community and thus far is that this is not an issue that anybody has raised a lot of them are concern about.

Rachel McMinn - Bank of America Merrill Lynch

Then I will have to leave it there, thanks everybody.

Harvey Berger - Chairman and Chief Executive Officer

Thank you Rachael.

Rachel McMinn - Bank of America Merrill Lynch


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