TESARO's CEO Presents at Morgan Stanley Healthcare Conference (Transcript)

Sep.11.13 | About: Tesaro (TSRO)

TESARO, Inc. (NASDAQ:TSRO)

Morgan Stanley Healthcare Conference Call

September 11, 2013 13:30 ET

Executives

Lonnie Moulder - Chief Executive Officer

Mary Lynne Hedley - President and Chief Scientific Officer

Analysts

Yigal Nochomovitz - Morgan Stanley

Yigal Nochomovitz - Morgan Stanley

Okay, welcome, thanks for the bitter end. My name is Yigal Nochomovitz, biotech analyst at Morgan Stanley. I am very pleased to have with me this afternoon, the TESARO management team, Lonnie Moulder, CEO and Mary Lynne Hedley, President as well as Chief Scientific Officer of the company.

Just a remainder, this is meant to be interactive session. So I am happy to have questions at any point during the half hour. We have microphones in the back should you be interested in the questions. So with that, welcome Mary Lynne and Lonnie, great to have you here. Maybe Mary Lynne or either of you just give us a quick overview of TESARO, the business plan since the IPO, the company’s programs and pipeline for those that are maybe less familiar with the story.

Mary Lynne Hedley - President and Chief Scientific Officer

Okay. So, TESARO is a company that started approximately three years ago. We went public last year. The focus of the company is really to in-license at development and commercialization of oncology and oncology supportive care assets. We have a management team that’s obviously done this before, build shareholder value with this particular strategic business plan, and that was very successful with our most recent experience at MGI PHARMA. We are well capitalized. We have $178 million on the balance sheet as of the end of the second quarter, no debt outstanding. So the company at this point has three products in development. We have rolapitant, which is our lead product candidate and that’s in Phase 3 studies with two indications, CINV for patients receiving highly emetogenic chemotherapy or moderately emetogenic chemotherapy that trial data reports out at the end of this year. We have a PARP inhibitor which we recently started a Phase 3 ovarian cancer study will start our breast Phase 3 study at the end of this year. And then finally, our ALK inhibitor and we will report Phase 1 data from that study as long in two weeks.

Yigal Nochomovitz - Morgan Stanley

Perfect, let’s start with the lead asset, rolapitant for CINV chemotherapy-induced nausea and vomiting. This may be an area that’s less familiar to investors relative to sort of the oncology therapeutic assets. So Lonnie, why don’t you take a few minutes to sort of explain the landscape there, what’s the unmet need and still going to be what’s the perspective from the physicians and nurses and patients as far as why we need new therapies?

Lonnie Moulder - Chief Executive Officer

So, chemotherapy-induced nausea and vomiting with today’s agents that are available continues to be an issue for patients. What occurs today in medical practice is with emetogenic chemotherapy, those being chemotherapies that cause nausea and vomiting. A patient is typically administered an anti-emetic as preventative therapy prior to receiving their chemotherapy. So a patient will enter the chemo clinic. They may have some hydration administered via intravenous line. And then they will receive some supportive care product such as an anti-emetic. And virtually all patients that are subjected to chemotherapy that can cause nausea and vomiting receive a 5-HT3 receptor antagonist. And that blocks the serotonin pathway that’s responsible for CINV.

And those agents include the market leader, Aloxi, which is the drug that we launched at MGI PHARMA, and three other products that are generic, Zofran ondansetron, Kytril granisetron and the Anzemet dolasetron. The patients also frequently receive a corticosteroid dexamethasone. Now, the guidelines and this being ASCO or NCCN or EORTC mass established that all patients should receive a 5-HT3 receptor antagonist and dexamethasone to begin with, but dexamethasone in many cases in clinical practice causes side effects or there is some contraindication for it to be administered to the cancer patients, so it’s not always utilized. In addition, the guidelines recommends that patients that receive cisplatin, which is considered highly emetogenic chemotherapy, or HEC, anthracycline/cyclphosphamide combinations for breast cancer, or carboplatin should also receive an NK-1 receptor antagonist and that’s what rolapitant is.

Today, there is one NK-1 receptor antagonist on the market. It’s a product marketed by Merck called Emend. It comes in oral formulation. Aprepitant is the generic name in an IV formulation, fosaprepitant a pro-drug. This drug is recommended to be utilized in what I just described cisplatin, AC and carboplatin can be used in other chemotherapies. And we know from our experience in the marketplace that that market opportunity is about 5 million doses including to what the guidelines recommend. EMEND was launched as a 3 day oral regimen where patients would take it just prior to chemotherapy. But on the second day the day following chemotherapy and the third day they would still have to take an oral medication which was a challenge. And that limited to some degree the market penetration of that product.

So today even though EMEND also has an IV formulation based on the support that Merck had put behind this brand that drug has captured about 1 million, just north of 1 million of this potential 5 million dose market in the U.S. So the opportunity really is to assist clinical oncology practices with implementing the guidelines. The NCCN guidelines, the ASCO guidelines and assuring the patients that should get the protection from nausea and vomiting in particular delayed nausea and vomiting after they leave the clinic have an opportunity to receive an NK-1 receptor antagonist. So we’ll bring rolapitant forward to the marketplace and based upon the education initiatives that we learned are very important when we are marketing Aloxi and the business relationship we need to establish with provider groups that rolapitant should have a place on the pathways within those clinics, so that it’s automatically part of the orders that are fulfilled by the pharmacy and the nurses when a patients receives chemotherapy.

We know and we’ve known this historically that the key healthcare professional is really the nurse here. Physicians obviously are where the field the physicians focused on the anti-cancer agent regimen. The support of care is typically managed by the nurse who sees the patients in the clinic, hears their difficulty when they are home and they call back to the clinic. So, working with the nurses, working with the provider groups to ensure that rolapitant is part of the pathways we see an opportunity to once and for all penetrate this market that should exist because of the guidelines around NK-1 receptor antagonist utilization.

Yigal Nochomovitz - Morgan Stanley

Great, so you mentioned some of the existing mechanisms with the corticosteroids as well as the 5-HT3 receptor antagonist and then the NK-1 space, so tell us a little bit more about what the NK-1 mechanism gets you in terms of protection as well as why this is such an under-penetrated market, why haven’t the guidelines been adopted as widely as they should be?

Mary Lynne Hedley - President and Chief Scientific Officer

So from an NK-1 mechanism perspective for the patients that need this, so that is the patients receiving cisplatin and the breast cancer patients receiving anthracycline/cyclophosphamide regimens and women in particular receiving carboplatin regimens, when you look at the overall clinical data what you see is an additional two out of ten individuals aren’t protected from having CINV symptoms. And in particular in the case of rolapitant what has also been observed is a much faster time to onset for preventing these symptoms. So when we look at the data the Phase 2 data from the clinical study that was performed we see that the Kaplan-Maeier curve start to separate within 3 hours to 6 hours. So this is very fast protection for patients from having nausea or vomiting when we add rolapitant to the standard therapy. So they are already getting 5-HT3 receptor antagonist in that. That’s in contract to Emend where you don’t see those curves start to separate until about 18 hours. So within that first 24 hour period we protect potentially more patients, we protect them faster. And then also into the delayed phase we still see about two additional patients out of ten protected from nausea and vomiting.

Yigal Nochomovitz - Morgan Stanley

And then so just to market penetration aspect on NK1?

Lonnie Moulder - Chief Executive Officer

So I think we discussed the opportunity, the size of it and that the current agent has penetrated about 20% of the opportunity. Something to understand in this field and it was established sometime ago with this serotonin blockers, the 5-HT3 receptor antagonist that the IV formulation of these agents ultimately is used more. So the market for anti-emetics in general and the EMEND brand split between the IV formulation and the oral formulation is 80% IV, 20% oral.

As we move forward with rolapitant the current Phase 3 program consist of two highly emetogenic chemotherapy studies Phase 3 study and one moderately emetogenic chemotherapy Phase 3 study. The opportunity here is to really position this drug, so that should be in the pathways to meet the needs of all those patients that currently are given the opportunity that they receive NK-1 receptor antagonist but also to differentiate from the competition.

There are two agents that will be in the marketplace, were in the market EMEND is one it has an oral formulation as I described before that is a three day regimen and an IV formulation. Another agent that are recently reported Phase 3 data and will likely be submitted to the FDA for approval several quarters before rolapitant will be submitted is in Netupitant. Netupitant is in a fixed oral combination with the 5-HT3 receptor antagonist called palonosetron. But that drug is only available as an oral. So, in the oral part of the market opportunity will compete with Merck’s three day regimen. The Netupitant Helsinn Eisai in the U.S. fixed combination.

In the IV segment which is 80% of the opportunity, we will compete with Merck’s fosaprepitant Emend only. And in addition to this opportunity to have both in oral and IV, our drug with the very long pathway with the single dose protects the patient for the full five days. So we think this package really brings up convenience forward. In addition we have some potential differentiation from the safety standpoint. We know that both Netupitant and aprepitant are substrates of CYP 3A4 and that is a enzyme that’s responsible for metabolism was about 50% of our drugs. And they are potentially significant drug in our actions that can occur with aprepitant or in the Netupitant. With rolapitant we’ve completed the definitive clinical trial in that arena and we are clean as it relates to that liver enzyme.

In addition in the Phase 2 data that we analyzed before in licensing rolapitant, we saw differentiation in a key secondary end point. Now to get the drug approved, we need to demonstrate a significant difference in what’s called CR, complete response, which is no vomiting and no rescue medication. A lot of patients with current therapies still had nausea and a secondary end point called no significant nausea is measured in all CINV studies. The aprepitant outcome the EMEND outcome there is no statistical difference in their Phase 3 program. The Phase 2 program for rolapitant showed a clinically meaningfully difference and statistically significant difference, so we believe it’s in fact the Phase 3 program replicates that we will have some differentiation clinically from an efficacy standpoint related to EMEND. So all of that together we think physicians as well to penetrate the market and as far as our strategy in the marketplace that we learned from our experience with Aloxi, we believe of course this could be a quite meaningful product for the company.

Yigal Nochomovitz - Morgan Stanley

You outlined one of the key aspects of the value proposition for rolapitant that is that you have in oral but you are following on with an IV. So, it will be helpful if you could give our audience a sense as to what’s special about rolapitant that allows due to develop an IV whereas some of your competitors that are still on development had more trouble making that bridge to an IV?

Mary Lynne Hedley - President and Chief Scientific Officer

The general problem with the class in terms of generating the IV formulation is solubility. And of course every chemical entity is different in terms of it’s solubility and how easier it is to formulate it with excipient that allow it to remain valuable and suitable for an IV formulation. So Merck solved that problem after many years by moving to a pro-drug. So the Emend IV version is actually fosaprepitant its not aprepitant. So we just added chemical group that it’s cleared immediately upon delivery into the blood. So that was their solution. With Helsinn they are still working on their solution to our knowledge. And with us we had fortune – good fortune really after many years of sharing work on the formulation to create the IV, so when we in-license the product we will actually – already had an IV formulation available to us. Many animal experiments that already have been completed with this now the preclinical work. So it was really up to us at that point to scale up the manufacturing to submit the IND and then to of course initiate the clinical development. So we saw that the third quarter of this year which we are currently in. We would initiate the clinical development program for the IV formulation and we are on track to do that. So what is that registration, what does that look like? Essentially, we moved through development with the oral formulation, we submit the NDA presumably get approval of the oral formulation, and immediately after that, we would submit the sNDA for the IV formulation. That’s the plan.

What does that consist of? Of course, reference to the oral formulation for a lot of the toxicity in preclinical pharmacology work, but then essentially what this early clinical study will do is dose escalate up to a level, where we would anticipate having equivalent plasma exposure to the single day oral and then we will do an equivalent study to demonstrate that. And what we have also built into the program is a safety bridging. So, that’s all done in healthy volunteers. So then we have built into the program essentially a safety bridging study in patients. Right now, we are thinking of a couple of 100 patients and that’s the package that we would submit to the FDA. So, all of that clinical work will be done in concert with the preparation of the NDA and the review of the NDA, so it’s ready once we presumably have approval.

Yigal Nochomovitz - Morgan Stanley

Right. And Lonnie you mentioned Aloxi in your experience with MGI, so maybe tell us a bit about how the strategy with rolapitant could be different or potentially the same as regard to Aloxi? What are the lessons we have learned from that experience that this could leverage your ability to deliver with rolapitant?

Lonnie Moulder - Chief Executive Officer

A key part of the success of Aloxi related to some differentiation of the molecule itself. The drug has a longer half life than the competition. So there is a great piece of mind that comes with that, because when the nurse administers it in the chemo clinic, they know that when the patient goes home that is still onboard. It’s still in the plasma. It’s still blocking the serotonin pathway for nausea and vomiting. So I think a lot of the marketing center is around that. Rolapitant is a drug that has the longest half life in this category, 180-hour half life, so based on that, the at-risk period is 120 hours or five days. Clearly, there is a plasma level that’s available. And in fact Schering-Plough had conducted a study where they demonstrated that the 200 milligram dose the dose we are developing for rolapitant. When administered once five days later still block the NK-1 receptors in the brain at the level of 90%.

So, this long half-life perhaps has some similarity to what we did with Aloxi. So, obviously we will leverage that. In addition, we learned a lot about how one works with the provider groups that being the oncology clinic networks and the hospital outpatient oncology clinics and how important it is to really partner with them not only clinically, but from a business perspective with contracting that you provide around your product. So as we thought about developing rolapitant, we of course work with many of the large oncology clinic network that put our Phase 3 programs in their hands. So the data that’s generated in our Phase 3 program will have the ownership in. They know the compound already. And of course once we have the data and share with them, we will also have our business discussions just as to how rolapitant should fit into their pathways. So that is automatically the anti-emetic regimen for the appropriate patients under the guidelines in that cisplatin, anthracycline/cyclophosphamide and especially when we are receiving carboplatin. And that is the 5 million dose market that we spoke about earlier.

And just to frame the market, the market in doses is smaller than the 5-HT3 market that Aloxi competed in. In the U.S. last year that market was about 6.7 million doses, whereas the NK-1 is 5 million, but the pricing in the serotonin blocking market, for instance, with Aloxi that was about $170 per cycle, and the NK-1 receptor antagonist market Emend’s pricing for cycle today is about $300. So, the $5 million at the current market pricing is about $1.5 billion opportunity in the U.S.

Yigal Nochomovitz - Morgan Stanley

Great. Let me pass here before we switch over to niraparib, do you have any questions from the audience? Okay and so turning to the PARP inhibitors maybe you could give us a bit of insight into the competitive landscape there. Obviously there are many different PARP inhibitors in development currently we saw a lot of Phase 1 dose escalation data at ASCO. Is there anything we can say about Niraparib in terms of differentiation from the other parts at this point in time?

Mary Lynne Hedley - President and Chief Scientific Officer

Now, starting with the competitive landscape, for simplicity purposes because most of the discussion really is focusing today around (indiscernible) market, that’s there. So, in the ovarian setting it’s really today what I understand AstraZeneca, ourselves and Clovis and in the BRCA setting its AstraZeneca, ourselves, BioMarin. So those are the declared sort of Phase 3 development programs at this point. The way that we’re dealing the ovarian opportunity is based on the data that exists to-date from our agents as well as other agents in the class. Looking at the relapse and maintenance setting in ovarian and both germline BRCA and non-germline BRCA patient population, so the germline BRCA patient population represents about 40%, non-germline BRCA about 60% and activity has been seen in both, so our Phase 3 study will include both of those populations of patients will pre-specify whether or not they are not germline BRCA or non-germline BRCA and completely separately analyze those patient population. So if both are successful, we feel that really optimizes some market opportunity in the ovarian setting if only germline BRCA is successful then we still are able to file on that. So that’s our ovarian strategy.

In addition we will be looking within those populations that other potential markers that help us maybe even further define who could benefit either in the ovarian setting for other tumor indications beyond BRCA. We all believe there is greater opportunity but today none of us know which of those patients, which patients, which genetic marker or profile would really being a harbinger of PARP inhibitor sensitivity. So that’s our effort to further feel. In contrast AstraZeneca is focused in this similar clinical indication, but there are only looking at germline BRCA. So they just announced recently they will be doing two of Ovarian Phase 3 studies same population we are but focused only on germline BRCA and then also in the first line setting only focused on Germline BRCA again in the maintenance setting.

Colvis in contrast is doing a Phase 2 study and a Phase 3 study. Their Phase 2 study is designed to really identify a marker but they can then analyze in the Phase 3. And their Phase 3 will start at the end of this year. Our Phase 3 is already started and AstraZeneca they may – recently announced that, that’s sort of the ovarian opportunity.

Yigal Nochomovitz - Morgan Stanley

And then if I can just stop there and just ask you sort of how the ovarian part of the difference between what Colvis is going and where you are going in terms of how do you approach the biomarker question versus how they approach to biomarker question U.S. is more of as I understand the part of the secondary endpoint analysis in terms of how you are looking at biomarkers?

Mary Lynne Hedley - President and Chief Scientific Officer

Yes, so the way that we get it was very really build it into the Phase 3 because today we don’t know what the right biomarker is and we don’t want to wait for it. So the FDA actually issued a guidance starting at the end of 2012 in which they called out away that you could utilize Phase 3 clinical data retrospectively looking for biomarkers that correlate with outcome, if you pre-specify and our suspend to do that. So that’s essentially what we’ve done so what that translates to is that we are able to access new biomarker as they become available. We can work with several companies to help us identify the appropriate biomarker. And then when we have the data we can use the sample so we’ll collect tumor samples from everyone and we look at the tumor sample related to the biomarker and we compared to outcome.

And we see which is the 10 or 5 of them we choose biomarkers that we’ve tested correlates with PFS outcome. And then that marker we can further test in the rest of the population to have special clinical validity. So we built it and because we don’t believe we understand or anybody understands what the right biomarker is today. Clovis is taking a bet using foundation medicine then they are trying to figure out what that correlation is based on as I understand that a gene signature in the Phase 2 and then they will apply that analysis in the Phase 3 that’s my understanding of the approach.

Yigal Nochomovitz - Morgan Stanley

Sure. And then maybe just a few comments on the breast cancer?

Mary Lynne Hedley - President and Chief Scientific Officer

Yes. So in the breast cancer setting, again as ourselves BioMarin and AstraZeneca and I think the focus is on very similar patient population for all of us. And we are all limiting to my knowledge to germline BRCA. And the reason for that is all of the clinical data to-date really points to the germline BRCA patient population having clinical benefit with the PARP inhibitor treatment. There are probably other subpopulations in breast cancer patients who could benefit, but we don’t know who they are today. So we are focused in the metastatic germline breast cancer patients, who have previously failed AT. They have had no more than two lines of previous therapy for metastatic setting which means very early patients. That’s important, because the response rates that we reported at ASCO 50% RECIST response rate was in patients who had a median number of prior treatments of five. So they were very sick patients. We would anticipate a much greater response rate as we move earlier in lines of therapy. So that’s really our focus. That trial is 306 patients randomized 2-to-1 to physician’s choices, standard monotherapy agents that are available for breast cancer.

Yigal Nochomovitz - Morgan Stanley

And just quickly, so we have plan to get to ALK as well just operationally how are you thinking about the site selection given the number of players that involve in the same – looking for the same set of patients in the United States. And then also in terms of just the timelines for data, could you just lay that out for us?

Mary Lynne Hedley - President and Chief Scientific Officer

So we have in both settings we formed relationships with organizations and got in Europe, big in Europe big/URTC for the breast. And the purpose behind that really was to help us identify key sites in Europe which we think will represent about 50% of the patients enrolled in the study, because we are not sitting in Europe, right. We don’t have extreme familiarity with all of the different investigators in Europe who might be able to really bring patients into this study who have a germline BRCA phenotype. So we focused on using those organizations to help us with that. And also in Europe, there is a real desire and almost need in some cases to have that scientific stamp of approval and it comes from working with those different organizations.

In the U.S., we know a lot of the key players. We have a lot of experience working with community oncologists and academic oncologists. So there we didn’t feel the need to really work with one of those organizations. So by combining those efforts in both settings, we feel we will be able to effectively compete and we are ahead and that helps even by a few months, because of you lock in these sites early on. So that’s generally how we are doing that. In terms of timelines, it’s really too early for me to tell you when. What I do is usually guide people to the Ledermann paper that was published in The New England Journal, that was the Study 19 which was olaparib in the ovarian maintenance setting, similar patient population with 82 clinical sites they did that, they finished enrolment in 16 months. And that provides a general guidance for people.

Yigal Nochomovitz - Morgan Stanley

Okay. And then just in the remaining time, we do have near-term data point just in a few weeks at the end of the month at the ESMO conference in Europe. So tell us a bit about the ALK programs and the dose escalations Phase 1 there, what sort of scope of data do we expect to see that conference and what would be the next steps to look at expansion cohorts?

Mary Lynne Hedley - President and Chief Scientific Officer

Right. So our Phase 1 data is you would anticipate same typical dose escalation data we will show. We have already said we hit the target plasma level, so we will show that data and look at tolerability across the different dosing cohorts and there are any early signs of, of course clinical activity, so all of that will be present in the poster in two months. And then how we think about next steps is really narrowing down what that dose will be and our goal is to identify the recommended Phase 2 dose by the end of the year and then to initiate the cohort expansion. And cohort expansion is to really help us understand how does the drug behave in ALK inhibitor naïve patients? Because if the drug is very effective in those patients, one might think of going up against what will be standard of care we believe in two years which will be coming. And then in the second cohort, that’s really trying to understand how well the drug behaves in patients who received a really good ALK – second generation ALK inhibitor, so either Novartis is compound. We want to understand once you have had one of those do you still respond to a part of an ALK inhibitor or is the response now similar to chemo. And those two sets of data will then drive and looking at business opportunities in both of those settings will drive the decision to move into which registration study to move into.

Yigal Nochomovitz - Morgan Stanley

Perfect. We reached the end of the time. Just one more chance to anyone for questions? Okay, well thank you both very much, much appreciate it, and good luck for the rest of the year.

Mary Lynne Hedley - President and Chief Scientific Officer

Thanks.

Lonnie Moulder - Chief Executive Officer

Thank you.

Question-and-Answer Session

[No Q&A session for this event]

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