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Patrick Mahaffy - President and CEO

Analysts

Clovis Oncology (CLVS) Morgan Stanley Healthcare Conference September 11, 2013 10:00 AM ET

All right. Thank you very much everyone for coming. My name is [indiscernible] analyst at Morgan Staley. It's my pleasure to have with me here Patrick Mahaffy, President and CEO of Clovis. This is meant to be interactive Q&A session, so don't be shy to ask questions. There are microphones in the back which we can provide for you. So with that, welcome Patrick. Glad to have you here.

Patrick Mahaffy

Thank you.

Unidentified Analyst

I think most of the audience is probably familiar with the company, but maybe just in the interest of completeness, just take one or two minutes to provide a quick overview of Clovis, what are the assets in the pipeline and sort of from the news flow maybe for the next 12 months.

Patrick Mahaffy

Okay, we are an oncology focused company based in Colorado, but with offices in the Mission Bay area in San Francisco and in Cambridge in the UK. We are a company that is focused on licensing and attractive novel targeted therapies. We are completed committed to developing those therapies towards subset populations with companion diagnostic to allow us select patients most likely to benefit from the drug. So we are taking as more of a 21st century approach to drug development.

The two programs that we have underway right now, both in the clinic, are first parp inhibitor called Rucaparib that we acquired from Pfizer about two years ago. It is currently in the Phase II portion now of the Phase I(2) study. It will also be the subject of both the Phase II biomarker validation study and then a Phase III study ovarian cancer beginning in the -- towards the end of this year.

We are also developing a drug called 1686 which is I guess we call a third generation EGFR inhibitor. It is a covalent inhibitor of the mutations of EGFR and was specifically designed to be a very potent inhibitor of the activating mutations of EGFR. So it is as potent as the Tarceva or Afatinib and has potential therefore in the first line setting. But perhaps most interesting about the compound is, it is also a very potent inhibitor at the primary resistant mutation that arises in response to Tarceva or Afatinib therapy. It’s a target called T790M. It was also designed not to inhibit wild type EGFR and thus far in clinical development, consistent with everything we saw in the animal models, we do not see any diarrhea or rash that is associated with EGFR, with wild type EGFR inhibition.

We reported at ASCO this year that as we have dose escalated in the Phase I, when we got to a 900 milligram BID dose, three out of the four were valuable patients treated at 900 mg BID and a partial response. And those partial responses were confirmed as we announced on the conference call that we had in August.

This is the first time any monotherapy has shown any evidence of activity against T790M associated lung cancer. So it was a very exciting news for us and for our investigators. We are continuing dose escalation with an improved formulation of the compound which had better pharmaceutical properties than the original fee based formulation. We expect to achieve a dose by the end of this year and we anticipate initiating a registration study in the latter half of 2014 for the compound. So it’s a very exciting time for us. In terms of news flow we are very active participant in medical meetings, particularly those associated with either ovarian cancer or lung cancer. We will have updated Phase I Rucaparib data at ASMO at the end of September in Amsterdam. There is a lot of attention on what data we will have at the world lung meeting which is a bi-annual meeting that this year takes place in Sydney at the end of October where we will update 1686 and of course continue with medical meeting presentations over the course of 2014.

And with that, I will be happy to answer any questions.

Questions-and-Answer Session

Unidentified Analyst

Okay, that's terrific. Let`s start with 1686, you mentioned that the T790M efficacy as well as activating mutations of EGFR, give us a sense as to relative selectivity on those two fronts, are they relatively the same or do you see more inhibition with T790, give us a sense of the profile there in more detail.

Patrick Mahaffy

We have single digit animal inhibition of T790M, similar inhibition of the activating mutations of EGFR, particularly del19 and l858R. and we have about depending on the assay, a 20 to 200 fold greater affinity for those mutations than we do for a wild type inhibition or for a wild type EGFR and we have not seen evidence of wild type inhibition as we see get to these higher -- even as we get to these higher doses in the clinic and we now would be surprised if wild type inhibition and the side effects associated with the turned out to be our dose limiting dose limiting toxicity, I think something else will emerge part of that.

Unidentified Analyst

Great, and maybe just a few comments in terms of how you see 1686 competitively versus some of the other EGFR inhibitors, for example catnip, Afatinib and even areas 113 compound.

Patrick Mahaffy

Well catnip was meant to be directed at T790M and they have animal data that demonstrates that they are entering T790M directed or associated tumors. But even in those models, the mice became very sick, they lost a lot of weight and the reason for that is that a Afatinib is an even more potent inhibitor of wild type EGFR. In their clinical experience, because of their inhibition of wild type EGFR, it can't get to a high enough dose to get to T790M. So they've shown no activity as a monotherapy in the clinic versus T790M.

Similarly, these other known EGFR directed therapy, the first and second generation compounds are very potent first line inhibitors, excuse me activating mutation inhibitors, they are also very potent inhibitors of wild type EGFR, which relates to the rash and diarrhea you see all over these compounds. And none have shown any activity against T790M.

We are certainly aware of the area and compound and I understand they'll have an updated data set at ASMO, to date shown no activity against T790M, so you probably should direct your questions to them.

Unidentified Analyst

Okay, great. In terms of some of the details of the data for the pre-patients that you saw PR [ph] with, maybe give us a sense as to whether those patients achieve trough level over 200 mg per mil and what level of target inhibition are you seeing there as dose concentration.

Patrick Mahaffy

I can't really into the second question because it's hard to measure but we've had serial biopsies but in the -- one of the things we learnt from the animal models is that the driver of efficacy here is not C-Max or area into the curve, it’s a C-Min that is above a stated threshold and the threshold we saw that were -- they demonstrated consistent activity in the mouse models was 200 nanograms per million for a sustained period of time. And for each of the patients where we have shown a PR and there are four, they had very good PK including in every case, blood levels above 200 nanograms per mil for greater than 16 hours in maybe 24 hour periods. And that's what we have been targeting. It was a delight to see the animal data which doesn’t always translate really well into the human experience.

And obviously we are pleased that we were able to deliver that, as what we note we have a suboptimal dose with a suboptimal compound and so now as we are dose escalating again, with the improved formulation, we think we have a good opportunity to not only maintain that, perhaps get to an even better sustained blood levels of the drug hopefully without meaningful side effects which we had yet to see.

Unidentified Analyst

All right, maybe at a high can we talk a bit about the longer term development plan 1686, are you looking at the Tarceva progressors, either with or without the T790M mutation as well as potential development plans in the frontline for patients with EGFR activating mutation.

Patrick Mahaffy

For sure I'll address those. So in the second line setting, what we know now from the clinical experiences about between 50% and 60% of patients who fail on Tarceva or Afatinib failed because of the emergence of P790M. There is another collection of other mutations that can arise and cause progression. We do not address any of those. So, if you progress but not because of P790M, you will not benefit from our growth. So we will only direct our activity at P790M positive Tarceva or other PKI failures. Our plan is to initiate and expansion cohort, two expansion cohorts in a sort of second line setting beginning, towards the end of the period when we have a dose. One would be in patients who have immediately failed Tarceva, so this is a pure second line study. And another will be in patients who not only failed Tarceva, but then went on to chemotherapy and failed that as well. And we want to see if we see a differential response rate and differential progression free survival in these two patient populations.

We also at the same time, will initiate a study in the first line setting where we look to see in patients who are treatment naïve and have the activating mutations of EGFR. We'll study expansion cohort of 40 or so patients looking not only at response rate and duration, at response to looking at progression free survival. The hope here is that by inhibiting both the activating mutations which we do, but also T790M, we may be able to prolong that period of progression free survival by preventing the primary resistance mechanism from emerging and we hope we can deliver a Pfs that is on the order of 13 or 14 or 15 or 16 months which would be a meaningful step forward relative to the 10.5 months or so that both Tarceva and Afatinib delivered in their Phase III studies.

In the event we do that, we would then plan to initiate a head-to-head trial against I think Tarceva, I think Tarceva will remain the dominant EGFR inhibitor in the first line setting, even in the face of Afatinib, with the hope that with that first line label and extended Pfs and what we believe will be a much better tolerability profile given that we don't see the rash and the diarrhea that can plague the use of both Tarceva and Afatinib, that we will become the dominant drug in the EGFR space.

Unidentified Analyst

Great. Let me pause here and see if we have any questions from our audience. Okay. We have one.

Unidentified Analyst

Can you talk about both the timing and what you hope to see and gain from the hydrobromide formulation?

Patrick Mahaffy

The timing is now, so we started enrolling patients at 500 milligrams BID with hydrobromide formulation in late August. And so we chose a dose that was related to the exposures we saw with the 900 milligram BID dose of the free base. Our plan is to dose escalate with the hydrobromide till we get to an MTV or see a plateauing of exposures, either one of which will cause us to choose a dose and then run the expansion cohorts. But the reason we like the hydrobromide so much relative to the free base is the free base is like a lot of TKIs was relative insoluble compound. Our head of CMT called it brick dust which is not what you want to hear as you try this. And therefore the absorption of it was fairly poor in a number of patients and we had great amount of variability of absorption.

What we see now in healthy volunteers where we compared the free based to the hydrobromide salt is about two to three fold increase in exposures, which is great on the hydrobromide and maybe more importantly, we saw about a fourfold reduction variability and the driver of most of that reduction in variability is that we didn’t see any longer, any poor absorber. So everybody absorbed the drug relatively well. The reason that's so relevant is you set a dose based on the MTV and the MTV is often driven by high absorber, so to bring in more drug and therefore more prone to side effect because they have higher concentrations of the drug in the system. And if you have a highly variable drug, you're going to have a number of patients who are therefore under dosed because they don't absorb enough of the drug to get a benefit. So with that reduction in variability we hope we can deliver a more consistent -- once we achieve a dose, a more consistent result in patients that we treat.

Unidentified Analyst

Maybe you could talk a bit about the passive market in for T790M, how big is that commercial opportunity and whether you would at some point in the future consider head to head against Afatinib?

Patrick Mahaffy

Well we are not going to do a head to head against more than one compound in the first line. So there is no head to head against either of those in the second line setting because they don't work. So, no. and in the first line setting, we'll do a head to head against one of the two. They have very similar results in terms of Pfs, Afatinib is widely believed to be a more difficult drug to take. And so that's why we think Tarceva is the more likely comparator for us in the first line of setting.

Our path to market in the second line setting, we hope is going to be analogues to the path that Pfizer took with crizotinib and there you saw targeted therapy with the companion diagnostic, identifying patients that would benefit from its [indiscernible] inhibitor, identifying those mutations. For there is a single arm study, with response rate at the end point as the basis of their approval and then of course it was conditioned upon running a confirmatory study, in their case head to head versus chemotherapy in patients without mutations.

We think that given the unmet medical need that clearly exists in T790M positive patients, and their very poor prognosis on standard chemotherapy that that path will exist as well for us. We think that to follow that path, we are going to have to have a response rate of somewhere between 30% or 40% as a minimum. Obviously the higher the better, so I'll remind you crizotinib is at 55%, so it’s a very active drug.

We would plan to initiate that study in the second half of 2014 pending data from the ongoing Phase I in the beginning of the expansion cohort and hope to have a submission in late '15, early '16 in front of the FDA.

We estimate the market size to be in the United States alone, there are around 30,000 patients every year who report with the Lung Cancer Associate with the activating mutations EGFR and a 50% or 60% of those will ultimately, assuming treatment by Tarceva or Afatinib develop T790M driven tumor then the patient population is somewhere between 15,000 and 18,000 a year in the United States, that's slightly larger in Europe just because there are more humans in Europe and surprisingly a similar patient population in Asia, perhaps even larger because the epidemiology is different. In United States and Europe about 15% of lung cancer is driven by mutation to EGFR. In Asians its 30% to 35%. So the demographics are different.

Unidentified Analyst

You mentioned Asia, maybe go into a little bit more detail there, I understand you are starting or are about to start a Phase I with the new version, the hydrobromide salt as well as some comments on the progress of the companion diagnostic for the P790M patient.

Patrick Mahaffy

Sure. In -- we were required to do a Phase I in Japan as anybody would be and our intent is to start that Phase I towards the end of this year, early next year once we have established a dose in the United States and Europe with the hydrobromide salt and then we'll use that dose to align the Phase I study with the US, European dose and hope to achieve a dose relatively quickly. That is start a dose that is just a modest number of cohorts below the US European dose.

With regard to the companion diagnostic, we have a partnership, or a collaboration actually I should say with Roche Molecular. They developed already an assay for the activating mutation to EGFR which is associated with Tarceva. It is a very straight forward program.

Unidentified Analyst

Let`s switch over to the parp side of the story in Rucaparib. I think it will be helpful if you could walk us through the Phase III strategy, the area of food trial, going to some detail as far as how the biomarker study which you're conducting now, will help you with the gating now to aerial free and explain to the audience how that gating analysis works step wise.

Patrick Mahaffy

Okay, these are two sort of embedded protocols, one is a Phase II, the other a Phase III. What we know from all of the published data and all the activity we've seen with parp inhibitors is that parp inhibitors have a tremendous amount of activity in patients with BRCA mutations, whether its ovarian cancer or breast cancer and we've even seen it as others, in other tumor types, where BRCA mutations exist.

What we also believe and have been reported is that there are a number of other genes and ovarian cancer is about 28 that like BRCA are associated with deficiencies, DNA repair, where a parp inhibitor should have similar activity in those patients that which should has in patients with mutations in BRCA. There is a belief as well that platinum responsiveness is a pretty good predictor of parp inhibitor responsiveness. We think that is not perfectly true and that the driver of the activity in platinum sensitive patients is in fact either BRCA mutations or [indiscernible] this complex of other genes and their mutations that are related to BRCA like effects. So what we are doing, is we are doing a Phase II study with Rucaparib based on a robust preclinical program looking at that gene signature and looking for activity of Rucaparib that gene signature and trying to identify which of these identified, these 28 identified genes are most associated with Rucaparib effects. We will then apply that analysis to the Phase III study and the Phase III study is a comparative study in a maintenance study in ovarian cancer in patients who've responded to platinum based therapy where in a placebo controlled trial, we were hoping to improve the Pfs of those patients to progression free survival for a meaningful period of time. And while the enrollment criteria is primarily related to platinum responsiveness, the primary analysis are first in women who have absolute mutations of sematic or germ-line BRCA, so that represents about 23% of patients with ovarian cancer. And that is a step down without alpha spend that looks at the net population of women with BRCA miss so that's just gene signature that we think represents about another 25% of women and if that successful then we are allowed to look at the entire population, so to the extent that we are wrong, it is really just platinum that drives responsiveness, we would capture that in this trial.

What we believe is we will see a really meaningful improvement in Pfs in the BRCA patient population, a similar improvement in Pfs in the BRCA in this population and a far weaker improvement in Pfs in the overall platinum responsive population and since we know that progression free survival is not FDA's favorite end point in this indication, we are well aware that the Pfs deliverable has to be quite high. So we're very confident that we can do that as can other parp inhibitors in the BRCA and mutant population, we're the only one that's looking at this BRCA in this population. We think we are going to see a meaningful Pfs improvement and hopefully have a differentiated label because of it.

Unidentified Analyst

What was the strategic thinking behind setting up the trial with this gated analysis versus potentially just having parallel arms where you would say, look at the BRCA positive, the [indiscernible] sensitive population. How does that come about?

Patrick Mahaffy

Well we had a long dialogue with our investigators about the best way to run these trials and they are -- what we are looking for in the first trial is more of a response rate as a deliverable and so it’s a different patient population who have just failed at platinum versus progression free survival in a maintenance setting, whoever are looking at patients who have benefited from a platinum. So it's pretty hard to have that be the same trial.

Unidentified Analyst

Okay, got it. Maybe we could talk a bit more about what we're going to learn, coming after ASMO for a catnip, in terms of the expansion of the data for the Phase I trial, as well as can you discuss the thinking behind you arrived at the 600 milligram BID dose which I don't think we knew about at ASCO.

Patrick Mahaffy

You did not. We announced at our call in August. We -- first of all there will be an update of the Phase I experience, but as you know, the Phase I study like other Phase I studies for parp inhibitors was relatively well enriched with mutant BRCA with ovarian and breast cancers. So there will be an update, of course I am taking our ability but also efficacy in the selected mutant BRCA patient population.

We arrived at the 600 milligram BID dose because this is a really well tolerated drug and what we believe is that you pushed the dose to get to the highest response rate you can and we don't even really see much in the way of side effects as the 600 milligram dose at least at the onset of first one or two cycles. We do see and you'll see this at ASMO that after three or four cycles, you do begin to see some mild suppression which in a funny way we wanted to see because the mild expression is generally associated with parp inhibitors but it is a well-tolerated drug and which is particularly important in a maintenance setting where you are hoping you are giving this drug for a relatively long period of time.

Unidentified Analyst

Obviously the parp space is a competitive one with a number of other players at a similar stage of development as Clovis, any thoughts there in terms of how you could look at differentiation given that everyone is really looking at relatively early data, Phase I dose escalation, is there anything to set our capital apart at this point?

Patrick Mahaffy

I think it's hard for any of us to claim superiority. There is no comparative data to say the least and all of these drugs are very active in women with BRCA mutations that have shown that activity in their Phase I studies. So to make those kind of cross trial comparisons is difficult and would be I think dissentious, won't do it. What I do believe will differentiate the drugs ultimately will be the clinical development path and for their label and an assertion I will make is that labels matter now and they will only matter more in this era of high priced drug as a mean for insurers to prevent reimbursement of drugs beyond their labels.

So the days of off label use in oncology are I think rapidly becoming good afternoon thing of the past. So we believe our label will drive the utilization. I think our label will be meaningfully differentiated. So if you look at the ovarian space or three of us we're developing parp inhibitors. AstraZeneca's elaborate trial is limited to women with germ-line mutations of BRCA. So I believe their utilization will be limited to women with germ-line mutations of BRCA.

Our friends at [indiscernible] are developing a drug as well as germ-line mutations in BRCA both with myriad blood cancer test, but they are then looking at a brown population of platinum responders. So we know that they will likely see some benefit but the question is how attenuated that Pfs is versus the Pfs that we see in a more selected population than women who I think are more likely to have activity from the drug. So what we believe will differentiate us? There's two things. One, the first analysis we are doing is not limited to germ-line mutations but because we are using a tissue based assay will detect both germ-line and sematic mutations of BRCA. So at a minimum, our sort of -- the label that in the BRCA mutations alone would allow for sematic and germ-line mutations of BRCA and that will unique to us and that represents 23% of patients as opposed to 15% of patients.

And then secondly, we are the only ones looking at this BRCA population and if our biological hypothesis is accurate, we should see a very significant improvement in Pfs and if we do, I think that will differentiate the label, demonstrate a differentiated drug and drive a significant utilization in that population.

Unidentified Analyst

Great, maybe in the last two minutes we could just look at sort of the high level in terms of your strategy on the financial side, you have a [indiscernible] position I think about 360 million by the end of the year and you are only burning 65 a year. So what's your appetite for additional assets beyond the 1686 for Rucaparib as well as, we haven't talked about it yet, but the early stage CK inhibitor discovery program?

Patrick Mahaffy

Well it's no secret that we like to add at least one additional compound to the portfolio. We did do a significant financing in June. We had not been an active seeker of that asset prior to that financing, because we wanted to preserve our runway for the two programs that we have now. We sort of reengaged in a VD outreach, beginning in the summer. If we're lucky enough to find something consistent with the portfolio we have, something that is a targeted therapy, directed at subset population that can be identified with a companion diagnostic within the next 12 months or so, I would be really happy to add something to the portfolio and w have the financial wherewithal to support that now.

Whether we can or cannot, I don't know, it's great news for the biotech industry that you all are willing to finance lot of late stage startups, it's not so great for BD types like me, who would like to acquire assets but they get more money from you than they get from me. So it’s a little different in the current environment but I've looked at these cycles before and they don't tend to last forever.

Unidentified Analyst

Why don't we spend a few minutes discussing the CK program and plans to nominate a clinical candidate there and what the thesis is on developing that assets?

Patrick Mahaffy

There are a number of mutations of CK that aren't addressed with any of the present compounds, and so we are directing and discover effort at those mutations both as a sort of third line drug and possibly for drug that could be used in combination with let`s say [indiscernible] in a first line setting to cover all of the potential mutations. The discovery work is being done by our partners at array, the hope has been that we would identify lead if not by the end of this year, maybe in the first quarter, and when we identify a lead it would be about 12 months from the identification or naming of that lead to the filing of an IND.

Unidentified Analyst

What about the combo trial, the Rucaparib covered platniums, you did see two out of seven PRs there at assay. What's the plan for that double therapy?

Patrick Mahaffy

Not much. We inherited that study. It was underway when we were [indiscernible] the drug. There is interest in combinations with parp inhibitors and platniums, but no one really has found the exactly the right place and the right combination. There is still a debate about whether you want more parp and less platinum or more platinum and less parp inhibition and there are some synergistic toxicity, so you are going to have to modulate them to some extent. We were able to dose a pretty dose of both the parp [indiscernible] the platinum so we were pleased with that. It probably would have been best if that study had been done in combination as well with Taxol (ph) so that would have been more [indiscernible]. So we're really focusing our development work on the monotherapy. We'll not -- we don't see a path forward right now for that combination.

Unidentified Analyst

And then maybe just one last question I'll squeeze in. Since the IPO, how has the strategy of Clovis changed or is it really just the same strategy that you embarked upon when you went public?

Patrick Mahaffy

It hasn’t changed at all.

Unidentified Analyst

Okay, perfect. That answers that. All right. Thank you very much Patrick. Appreciate it.

Patrick Mahaffy

You bet. Thank you.

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