Clovis Oncology's CEO Discusses Q3 2013 Results - Earnings Call Transcript

Oct.31.13 | About: Clovis Oncology (CLVS)

Clovis Oncology, Inc. (NASDAQ:CLVS)

Q3 2013 Earnings Conference Call

October 31, 2013 04:30 PM ET

Executives

Anna Sussman - Senior Director of Investor Relations

Patrick Mahaffy - our President and CEO

Erle Mast - Chief Financial Officer

Andrew Allen - Chief Medical Officer

Analysts

Ravi Mehrotra - Credit Suisse

Cory Kasimov - JPMorgan

Brian Klein - Stifel

Peter Lawson - Mizuho

Marko Kozul - Leerink Swann

Operator

Good day ladies and gentlemen and welcome to the Third Quarter 2013 Clovis Oncology Incorporated Earnings Conference Call. My name is Dominic and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions).

I would now like to turn the conference over to Ms. Anna Sussman, Senior Director of Investor Relations. Please proceed.

Anna Sussman

Thank you, Dominic. Good afternoon and welcome to the Clovis Oncology third quarter 2013 conference call. You should have received the news release announcing our third quarter results. If not, it is available on our website at www.clovisoncology.com. As a reminder, this conference call is being recorded and webcast would also be accessed live on our website during the call and will be available in an archive for the next several weeks.

The agenda for today’s call is as follows. Patrick Mahaffy, our President and CEO will discuss the highlights of the third quarter and provide an update on our clinical development program. Then Erle Mast, our Chief Financial Officer will cover the financial results for the quarter in more detail and comment on the company’s outlook for 2013. Patrick will make a few closing remarks and then we will open the call for Q&A. Andrew Allen, our Chief Medical Officer, joined us for the Q&A session.

Before we begin please note that during today’s conference call we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our financial outlook and expected business plans. All of these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the date on which they are made and Clovis undertakes no obligation to update or revise any forward-looking statements.

Now I will turn the call over to Patrick Mahaffy.

Patrick Mahaffy

Alright thanks Anna. Welcome everybody. Thanks for joining on Halloween evening. I know many of you have children waiting to start creeper treating or maybe you want to start creeper treating. So I will just start it right away. We made a lot of progress during the third quarter on clinical development programs, I will start with 1686. 1686 is our targeted covalent inhibitor of the mutant forms of EGFR for the treatment of none small cell lung cancer. 1686 targets both the initial activating EGFR mutations as well as the dominant resistant mutation T790M and as such has potential both in newly diagnosed patients as well as those patients who failed in their first TKI.

Because 1686 there is wild type or normal EGFR it has a potential to cause a much lower incidence of toxicities such as skin rash and diarrhea that are normally associated with other EGFR inhibitors. As you maybe aware earlier this week we presented promising clinical activity in safety data from the ongoing 1686 Phase I study at the 15th annual World Conference on Lung Cancer conference in Sydney.

Based on these encouraging data, we intend to accelerate the timing of the initial registration trial for 1686 and second line T790M positive non-small cell lung cancer patient who most recently failed the EGFR directed therapy and that is our stated to begin in first half of 2014. This will be the first pivotal study of our broad and global clinical development plan. And intend to provide a full outline of this development plan early next year.

We use our time in Sydney to meet with our 1686 advisors and investigators who are very enthusiastic about this drug and about our clinical development program. That enthusiasm is driven by continuing encouraging results from the Phase I study. We presented data at World Lung from the 900 milligram BID cohorts of the original three days formulation as well as data from the first cohort treated on the new hydrobromide cell formulation. In the 900 mg BID cohort RECIST partial responses have been observed to date in nine evaluable T790M positive patients 67% objective response rate. Eight of the nine evaluable patients, or 89%, experienced tumor shrinkage greater than 10%. And there has been no evidence of systemic wild type EGFR-driven toxicities to date.

These patients were heavily pre-treated. Eight of the nine patients have progressed on the prior TKI, immediately prior to enrolling in the study and six of the nine patients received two or more lines of TKI therapy. As a reminder these patients were dosed for the three days formulation, which does not have the same attractive pharmaceutical properties as the new hydrobromide cell formulation.

In August, the transition development to this new hydrobromide cell formulation and we present a preliminary PK and safety data from the first cohort at 500 milligrams BID. We were very pleased with the PK and safety results to date. This cohort demonstrated far greater exposures than expected and with reduced variability and no rash or diarrhea. It’s now clear that 500 milligram BID dose and the 750 milligram BID cohort has commenced. Those escalations ongoing as the MTD has not yet been reached.

We expect to select the recommended the Phase II, III dose by the end of the year and so then initiate the Phase II expansion cohorts to assess efficacy in second line T790M positive non-small cell lung cancer patients as well as in the first line EGFR for non-small cell lung cancer patients in early 2014. We also intend to initiate our Japanese Phase I study in early 2014.

Following the productive meeting with the PNDA, the Japanese FDA equivalent, we will be able to initiate our Phase I at, at least 500 milligrams BID and therefore we do not anticipate that the study will last long. We will then be in a position to enroll Japanese patients in our global pivotal study. We will obviously include centers in other Asian countries as well.

In addition, we recently announced an agreement with QIAGEN to develop a companion diagnostic test to identify the T790M resistance mutation in patients with EGFR driven non-small cell lung cancer. As you may know QIAGEN's test is already FDA approved to detect EGFR mutations and including T790M, this really complements our accelerated development plan for 1686 by potentially allowing for a supplemental PMA filing alongside the NDA.

Lastly on 1686, I want you to understand that we understand the great desire for information regarding the progress of 1686. Obviously ASCO will be an important venue for this, but that doesn't occur for seven more months. We use several events between now and then as opportunities to provide initial updates. These include the JP Healthcare Conference in January, it would either be IASLC Targeted Therapies Conference in mid February or the European lung cancer conference in late March. In any of them, we will make sure that updated results from the ongoing study will be provided to you prior to ASCO.

Turning now to rucaparib. Rucaparib is our oral, potent small molecule inhibitor of PARP-1 and PARP-2, which we are exploring as monotherapy and our maintenance setting for ovarian cancer. With encouraging data presented over the past few months of the European Cancer Congress, the [ASCO] Conference and the triple meeting. We selected 600 milligrams BID is the recommended Phase II, III does for rucaparib based on exposure manageable toxicity and clinical activity.

From a safety standpoint rucaparib is well tolerated dose with most adverse events low grade and manageable important for a drug intended for use in a maintenance setting. No patients to-date have discontinued rucaparib due to a treatment related adverse event. Rucaparib also demonstrates attractive PK properties including low patient variability and predictable plasma drug concentration maintained over 24 hour period after BID dosing.

We've also seen encouraging activity including eight RECIST responses in ovarian, breast and pancreatic cancer patients in this Phase I setting. In germline BRCA ovarian cancer patients we've seen one RECIST complete response, two RECIST partial responses and two CA-125 responses. All of these patients are ongoing with maintained responses. These responses have been observed in both platinum-sensitive and platinum-resistant disease. And overall 70% of ovarian cancer patients with germline BRCA mutations treated with rucaparib achieved disease control is defined by complete response, a partial response or stable disease for greater than 24 weeks.

Yesterday, we announced the enrollment of the first patient in the global ARIEL2 study at a U.S. site. ARIEL2 is a single-arm, open-label study designed to identify tumor characteristics that predict sensitivity to rucaparib using DNA sequencing to evaluate each patient’s tumor. With expect to achieve ARIEL3 the global Phase III registration maintenance study by the end of this year. ARIEL3 evaluates platinum-sensitive ovarian cancer patients with efficacy analyses pre-specified in populations defined by deficiency, first in BRCA and then in another DNA paradigms.

Now let me turn the call over to Erle to discuss third quarter 2013 financial results and guidance for the rest of the year.

Erle Mast

Thanks, Pat. Good afternoon, everyone. Our full financial results are included in this afternoon’s press release. So I’ll direct my comments just to highlights for the quarter. We reported a net loss of $20.3 million or $0.68 a share for the third quarter of 2013 and the net for the first nine months of the year was $55.3 million or $2 per share.

Research and development expenses totaled $16.1 million for the third quarter and $44 million for the first nine months of 2013. R&D expenses increased slightly over the comparable periods from last year primarily to expanded development activities for both rucaparib and for CO-1686 partially offset by determination of the CO-101 program late last year.

General and administrative expenses totaled $4.3 million for the third quarter and $11 million for the first nine months of 2013. These amounts represented increases over the comparable periods in 2012 primarily driven by higher stock compensation expense and some third-party professional fees.

And then finally total operating expenses for the third quarter included $2.8 million of share-based compensation and $6.6 million for share-based compensation expense for the first nine months of the year.

Our cash burn from operations totaled $16 million for the third quarter and just under $48 million for the first nine months of 2013 and we expect cash burn for the full year to be approximately $66 million.

As of September 30th, we had $356.6 million of cash and $30.2 million outstanding shares of our common stock.

I’ll turn the call back over to Pat for some closing comments and then we’ll open it up for Q&A.

Patrick Mahaffy

Thanks, Erle. Let me talk about our anticipated milestones for the last quarter of 2013. For 1686 we plan the following to select a recommended Phase II/III dose by the end of the year, to initiate the Phase 2 expansion cohorts to assess efficacy and second line T790M non-small cell lung cancer patients in late 2013 and then first line EGFR non-small cell lung cancer patients in early 2014 and most importantly to accelerate the clinical development program in order to begin the initial registration study in the first half of 2014.

Turning now to rucaparib before the end of the year we intend to initiate the pivotal Phase III study ARIEL3 in platinum-sensitive ovarian cancer patients. In summary we are very proud of what we’ve achieved this quarter look forward to continuing to advance the clinical development programs we have in our portfolio.

With that, thanks for joining. And we will now open the call to your questions.

Question-And-Answer-Session

Operator

(Operator Instructions). And your first question comes from the line of Ravi Mehrotra of Credit Suisse.

Ravi Mehrotra - Credit Suisse

Thank you for taking my questions and congratulations on the progress you’ve made this quarter. Two questions if I may, I know the clinical profile of 1686 and -- is just emerging, but Pat perhaps you could just give us an apples-to-oranges comparisons of the two? And secondly could you also give us more color of the non-invaluable patients from the Phase I data you just presented? Thank you.

Patrick Mahaffy

Yes to both of those. So with regard to comparing in an apples-to-oranges way, AstraZeneca to us, several caveats here, like first of all, this is very early days for both programs and so it’s hard enough and these are clearly and directly comparative studies. In fact I would argue though that in slightly different patient population as I’ll described here in a moment.

A couple of things that I think are emerging that are demonstrating some of the characteristic of compound is reported to-date. It is a very long half hour, at least the key hours maybe longer that has some benefits in terms of the accumulation and perhaps demonstrating efficacy at relatively low doses. It has some possible issues as well particularly in managing side effects when they emerge with the drugs that are going to persist. As you know it’s quite of the sugar and which I actually think in this case we have managed.

We appear to see in the first they made so far but they got the pretty significant amount of variability in their exposure that doesn’t really surprise us kinase inhibitors are notoriously fully absorbed. And as you know we had to fix that problem with 1686 and have very successfully with the hydrobromide cell formulation. And they appear to be doing some work on the new formulation of clinical trials that drug is to be reporting accurately and we will see if they are able to overcome that variability, as well as we do.

I think that the most evident difference is that even if these relatively lower and initial doses of which they are studying the drug, they are seeing a greater incidence, in fact it is positive of EGFR driven toxicities particularly rash. How that will ultimately emerge for them at the dose they select I can't say. But I think so far, we just don't see those types of side effects, particularly rash, I think if that has the potential to be it plays out overtime an advantage for 1686.

In terms of efficacy itself evidently efficacious in both T790M positive patients and in patients who are T790M positive. I think the reason for that activity in T790M negative patients who relates to the patient characteristics in their trial. The majority of patients that have been reported to-date and this will change overtime as they move into the Europe and into United States. The majority of patients that they have treated thus far have been treated major and primarily in Taiwan, where treatment practice is to immediately treat the TKI of patient upon initial diagnosis with an EGFR driven tumor, but then to follow with chemotherapy not to re-challenge with the TKI.

So since 40 plus of the initial patients that they reported on treated with one center in Taiwan, I think that there is a possibility, but what you are seeing with that drug in addition to activity against T790M and then some of these patients you could be seeing every treatment effect as you all probably aware it's quite common for patients who -- placebo or another TKI.

Though on chemo, then to be rechallenged and re-challenge successful, recent publication shows about a 35% response rate to patients who failed chemo and the TKI that are re-challenged with a TKI. In our case you know that of our responders only one followed chemotherapy, all of our patients by and large have been immediate TKI failure. So it's the most rigorous test of T790M inhibitor where you have to show real activity in T790M to have provided the benefit to the patient that we have provided. We will emerge over time. We are in a rates, they are a very able competitor with an active drug, (inaudible) before I'll just say I like our changes. Andrew, would you add or subtract, particularly if you need to subtract from any of that or anything else you’d say.

Andrew Allen

The only addition would be on the issue of wild-type inhibition that the cell line that we have used publicly as the basis for assessing activity of our drug again wild-type EGF receptor the A431 cell line. And the reason we and many others have used our cell line is that it is a cell line that it contains amplified while tighten EGF receptor genes and is driven proliferation of that cell line is driven by the wild-type EGF receptor protein product. And therefore it’s a very sensitive test of wild-type EGFR inhibition and that’s why in our presentations we tend to show that even at the full efficacious dose of 1686 we have minimal inhibition in a Xenograft at the A431 cell line and we showed that in [Sydney] with around 30% inhibition of tumor growth in the Xenograft system of the A431 cell line.

As they have the cells published state within molecule suggesting 78% inhibition at the 5 milligram per kilogram dose which is not that ultimately effective dose when they’re looking for efficacy and thereby show very meaningful inhibition. So non-clinically we have a suspicion that there is less of the therapeutic window to that molecule versus mutant forms of EGF receptor than perhaps we have. The low dose cell line is perhaps not the most useful cell line for the [cap], because it’s a K-Ras mutant cell line and as I think we all know those lines are typically not driven by EGF receptor.

And so showing low activity of a molecule against the low dose cell line but not say a great deal about it, EGFR wild-type inhibit reactivity. We have done (inaudible) in our own hands and our factor EGFR on GI50 is around 2.3 micromolar, a fact it is about 500 nanomolar and AZ data suggests there are four nanomolar to (inaudible) EGFR IC50. So it’s technical (inaudible) apples to pass, but although I am not sure we’re learning at times approximately to see that certainly all molecule has a very big therapeutic window, but I think A431 cell line is more useful.

Patrick Mahaffy

And then [Robin] your second question, I’ll just remind you and everybody, this is a Phase 1 study. So this is not a clean Phase 2 population. We are clearly absolute second line good performance status. These are patients who have been on five or six prior therapies. They are good in many cases. And in every case, I will point out there is growth to participate in these types of studies.

The no-evaluable patients in our trial included one who acute and sent prior to her first stand, I will remind you that that was in (inaudible). Two, unfortunately diet is an underlying disease before they could even get to their first scan. The one we found out actually a person who had who have been treating pretty good response, we've found he was seen two separate oncologists, one the investigator, one a private oncologist and therefore was on additional anticancer medicine (inaudible) 1686, quite frankly is a massage (inaudible) suffer early through these consequences from that decision.

And finally one of the patients enrolled without measurable disease. So 9 out of 14 that actually is a pretty good hit rate and again I would I think it’s very normal in a Phase 1 that this type of characteristics emerges, I will give you an example. AstraZeneca reported on 89 patients that if we were enrolled in their trial but reported only on 18 T790M positive patients and results on a total of 35 of their 89 patients. So I am not saying anything about AV. I am just saying an apples to peers analysis it’s not uncommon to see that you can’t really evaluate every patient enrolled in a Phase 1 study.

Unidentified Analyst

Okay nothing that scary there for us. Thank you for taking the questions.

Operator

Your next question comes from the line of Charles Duncan of Piper Jaffray.

Unidentified Analyst

I think Charles may have dropped off, this is (inaudible). I guess a quick secular question. Have you guys thought about doing any next generation sequencing move maybe the more standard type sequencing try to discover some early T790M clones? Thanks.

Andrew Allen

Your question about looking for T790M at baseline, you’re referring to the sensitivity. It makes strength. You can think that (inaudible). Yes, so obviously it’s a very interesting question. And we’re thinking obviously in the frontline context is that your question?

Unidentified Analyst

Yeah, I guess it would be mostly frontline?

Andrew Allen

So in front line as there is much interest as to whether patients have T790M detectable before they begun any form of therapy the so called de novo T790M patients. The reason that’s interesting is that there is a little bit of data that these patients do have to take T790M baseline, they do poorly on standard front line TGI therapy and there were data presented last quarter this year suggesting that median PSS in such patients within three months or so on (inaudible) data from the Memorial Sloan-Kettering.

Now in using techniques of sequencing which are relatively incentive such as fantasy continue which have the 10% synthetic threshold, you find very, very few patients, you have measurable T790M in the base line meaning wholly less than 1% with more sensitive sequencing and Memorial in the U.S. lung cancer patient can show published on this. You see a figure of around 2% the patients with base line T790M.

There are several groups around the world who published much high figures using different technologies and there is a very live debate in the community as to whether some of these technologies have a problems like positives or whether in fact they are reading correctly, they are just much more sensitive than sequencing approaches.

We oversee our interest in this point because if there is a sizable group of patients who are going to be very fully on (inaudible) because of T790M driven resistance then clearly that’s a good could do very well on 6096. So it matters to us a lot as to whether these patients really exist and really can be found. So we are working in this area, at this point we haven't got any information that we can share.

Unidentified Analyst

Okay. And just a follow-up on that, I think the groups that I have seen published a higher figures, it seems like all the studies were done in Asia, is that correct and is that a possible factor, maybe it's something specific to Asians?

Andrew Allen

Several of the groups have been in Asia, the one well known group is the Spanish group in Barcelona led Rafael Rosell. They have also published series with this quite high to know the T790M rate. So, I don't think that it’s an phenomenon at least at this point it's too early to go that conclusion.

Unidentified Analyst

Okay. Thanks. And then another question on 1686. So you guys are 750 mg BID, but still dose escalating so and for that 750 BID that were not maximum dose. And do you have any idea where you might reach it?

Patrick Mahaffy

We can't say that. We're still in the BID window timeframe for the patients treated with 750 mg BID. The 500 mg BID dose was unbelievable plain. We said that there were no rash or diarrhea or any GI side effects. There was really no side effects, I mean this is a really well tolerated drug. So there is nothing that 500 mg that tells us GI will close and it's probably going to be 750 mg. We are seeing really good exposures and if we continue to see those really good exposures that we anticipate at 750 or even with 100 dose, you can say consistently well that that we need to be at 200 milligram per for 16 hour timeframe or greater. We obviously achieved that with the first patient 3 to 500 BID and (inaudible) margin. I don’t have the PK data yet but 750, I would anticipate that it will be better. And at some point it’s maybe that we just get to a dose because we got great exposures and great activity and not toxicity.

Unidentified Analyst

Okay. Thank you.

Operator

Your next question comes from the line of Cory Kasimov of JPMorgan.

Cory Kasimov - JPMorgan

Hey, good afternoon guys. Thanks for taking the questions. First one I have is on how we're going to know your drug works in patients with primary mutations, because we've seen some data from AstraZeneca’s drug there and appears it is working based on the data. So how do you know your drug works and when will you have data that you can show you can demonstrate that? And then I have some follow-ups.

Patrick Mahaffy

Okay. So I'll give a quick answer and then Andrew (inaudible) we think it will, and then Andrew if you have anything to add. So I'll remind you that we have exclusive data for both T790M positive tumor models as well as for activating mutations tumor models where we felt as active as placebo (inaudible) in a variety comparative studies and in a variety of in vivo models. And I'll just say the T790M data translated handsomely 100% and beautifully from animals to humans that will happen for patients of reactivating the patients as well. This is a very active drug and its behavior is well predicted in animal models.

As to timing where you will see these patients we will start treating patients with treatment naive patients for the activating mutations in early 2014. I would imagine that we will not have, I don’t know we may have, might have some data at ASCO. More likely data later in the year. But at some point in 2014, we’ll be able to demonstrate initial results from an initial group of patients treated with activating the patient to the EGFR.

Cory Kasimov - JPMorgan

Okay. Great and then with regard to your initial registration study, do you know yet how you are going to define what a second line patient is, in terms of time since failure of the last therapy, the TKI or chemotherapy?

Patrick Mahaffy

We do.

Cory Kasimov - JPMorgan

Okay.

Patrick Mahaffy

I am trying to figure out, if I want to say anything about that right now and I think I do not. We thought about this a lot. We have a very expensive clinical development plan, but I think, I will reveal the details of that full program early next year.

Cory Kasimov - JPMorgan

Okay. Well in that case I’ll ask you another question, if I...

Patrick Mahaffy

But I would tell you one thing just to be really clear, at a minimum we’re going to revaluate patients who have immediately failed a TKI, consistent with a patient population that have done so well on the drug in our Phase I dose escalation front.

Cory Kasimov - JPMorgan

Okay. That’s what I assume. And then lastly I guess there is obviously a tremendous amount of buzz around the PD1 class and a lot of data coming there now in lung cancer as well, and expectation this can be used very broadly in that space. So how do you see the roles of 1686 evolving in this treatment paradigm?

Patrick Mahaffy

What are the response rates we’ve seen so far in lung cancer for these immunomodulators?

Cory Kasimov - JPMorgan

Are you asking me?

Patrick Mahaffy

I am asking you to make the point.

Cory Kasimov – JPMorgan

While they are using, they are going a very broad patient population, so I mean you are in the 20s.

Patrick Mahaffy

And we’re in the 60s and we don’t have side effects. So what I think is going to happen is patients who have EGFR driven tumors they are going to be treated orally with a TKI, because they can get great progression free survival with acceptable side effects. And in the case of 1686 I think we have a very good chance of being a very significant player in T790M positive patients who failed the TKI. And I think all of the animal data suggests that we have a very good chance of emerging as a very important first line drug in patients with EGFR driven disease. And given these response rates and the durability of these response rates that have seen in the first line setting in the TKIs, I just don’t believe that the majority of patients are going to go away from that and let something miraculous happens in that response rate for the immunomodulators. But I will let Andrew to add or subtract. Anything you add or takeaway from that Andrew?

Andrew Allen

Well, as you know probably that the higher response rates and the better efficacy outcome with the immunomodulators appear to be in smokers and that story that’s emerging is that perhaps such because these patients have more mutations. So the only mutated at no cost knows of the level of perhaps melting the group of highest responders and obviously particularly because these are non-smoking often young people that get the mutant EGFR lung cancer. So it’s kind of the opposite corner of the metrics if you like from that corner where the immunomodulators are showing their best efficacy.

So I would echo Pat’s point that when we spoken to physicians about their treatment choices well a tolerated effective first line therapy that’s targeted to the disease that patients has is obviously a very, very compelling treatment choice and often the more aggressive in the therapy that carries a very different risk benefit balance maybe reserved for progression. Obviously the interesting question combination arises and that obviously is something we are looking at in the non-clinical setting at this point.

Cory Kasimov - JPMorgan

Alright. Great. Thanks a lot for taking the question.

Patrick Mahaffy

Thanks (inaudible).

Operator

Your next question comes from the line of Brian Klein of Stifel.

Brian Klein - Stifel

Great. Thank you for taking my questions. Just have two. First I like to ask about the two patients who had responses at ASCO and then subsequently progressed, I know it’s a small end, but did you see a similar resistance had on develop in those first patients and do you believe that what you are seeing in terms of resistance profile what translates over into a larger patient population? And then I have a follow-up question?

Patrick Mahaffy

The answer is we don’t know what caused them to progress, remembering these are 6 times, 7 times in one case patients. To really know we would have to mandate that the very events patients undergo a post cellular biopsy and that’s by a large impossible to mandate in the clinical study. We may at some point be back from investigators, not necessarily for these two but for others to then go on the subsequent therapies that are directed at a specific mutation, but we don’t have any information on those two. We do look for some data based on in vitro analysis and what we think resistance mechanism could emerge. Andrew, do you want to talk about that?

Andrew Allen

Yeah. Online cancer discovery take which is in public domain now as well as in some of the post that we would presenting is described that in vitro in several different cell lines, we see epithelial-mesenchymal transformation EMT as the basis for acquired resistance to see at 1686. It’s a -- hypothesis to that will be what we will see in patients with of course cell lines and patients often behaving the same way and in particular with cell lines, and individual cell line can be very hardwired to reproducibly and predictably develop resistance always through the same pathway in another that’s very different from a heterogeneous multiclonal context that we see in patients. So it’s a hypothesis that we are going to be examining in patients when they progress if we are able to get biopsies. But as Pat said getting those biopsies at progression can be very challenging in lung cancer patients.

I mean one of the patients who did lose progression, the progression was with a further CNS metastases which obviously is non-biopsible, typically in some of these cases non-biopsible. Amount of the patient, the patient represented in ASCO who have initial CNS response to drug and then developed secondary progression within the CNS as well. So it just adds to the complexity of the getting materials from such patients.

Patrick Mahaffy

I think one thing to note about one of those PRs, I think it was that patients did have this formal sign of progression, but many other signs of great clinical benefit and it actually remains on drug.

Brian Klein - Stifel

Great. Thank you. And then just a brief follow-up question on dosing in the new formulation. I know that you guys are employing PK parameters to determine whether you have sufficient drug exposure. Would you consider a three time a day dosing regimen?

Patrick Mahaffy

The evidence is we don’t need to. We don’t want to need to, to be clear, because it’s more of a burden for patients, two times a day is actually quite easy, especially because we don’t require fasting which can make a little bit harder, but we don’t require that for 1686. Three times a day, just to be a little bit more of a burden, but there is no evidence from the PK we’ve seen to-date that that’s going to be required, so I think we’ll stick to BID.

Brian Klein - Stifel

Great. Thanks a lot.

Patrick Mahaffy

You bet.

Operator

Your next question comes from the line of Peter Lawson of Mizuho.

Peter Lawson - Mizuho

Patrick, just on rucaparib. What is data expected from ARIEL2 and what are the endpoints of kind of top-line data that we would see?

Patrick Mahaffy

Andrew?

Andrew Allen

Yeah. The data of ARIEL2 will start to become meaningful at the end of 2015. We may or may not be very public with those data because obviously what we’re doing in that study is refining our genetic signature that we’ll be deploying post activity in the ARIEL3 study which will be running concurrently although a little bit behind because it’s a bigger trial. And obviously therefore it may not be something we wish getting announced publicly. So that’s the timeframe and that’s the way in which we will be approaching and using those data, I am not sure it will be visible to you at a real time.

Peter Lawson - Mizuho

Got you. And then just considering recent competitive data, is there any change in ARIEL, you’re viewing the competitive advantages for rucaparib?

Patrick Mahaffy

Andrew?

Andrew Allen

Yeah. As we look across the spectrum of PARP inhibitors some very interesting date have emerged recently that I think have changed the positioning of the different products. If you look simply to efficacy date and I will exclude veliparib here whether the next stage and I think everyone recognize this, at least timing of the drugs which have a mechanism of action. But if you look at rucaparib, olaparib, niraparib and BioMarin’s product, in terms of efficacy and responses in germline BRCA mutant patients to these control rates they all look quite similar.

Tolerability to one difference that’s emerged is alopecia with the BioMarin product and that may relate to the emerging difference in the activity of that drug, which appears to be less through enzymatic immunization of PARP and more through the so called DNA tracking effect, which makes it behave a little more like of PARP 1 inhibitor than it does at straight PARP inhibitor and that maybe why we’re seeing pretty aggressive myelosuppression in alopecia with that product, which is not being same at the other process of PARP inhibitors.

And obviously that may be important in women and undergoing such chemotherapies because obviously that’s a very important issue.

The PK data that has emerged and there are not lots of public data but certainly we like the profile of rucaparib enormously. And when patients are dosed orally with 600 milligrams twice a day, they have a very reproducible and tight plasma exposure which is obviously very good from both managing toxicity, but also ensuring that we will have efficacy in patients, so we like PK profile and certainly it’s amongst the best if not the best of its competitors. And then finally I think it’s the clinical developments strategy obviously that’s really differentiating the different programs.

But hopefully that gives a window on how we are viewing the core attributes of the different drugs that are in the space now.

Peter Lawson - Mizuho

Okay. Thank you. And you may have mentioned this, I think you did. When do you expect to see Phase II data for 1686?

Patrick Mahaffy

I want to make sure, I’ve heard that right. When do we expect to see Phase II data from 1686?

Peter Lawson - Mizuho

Yes.

Patrick Mahaffy

Well, I would imagine that we will have data from the expansion cohort to open label and so we can report certain things along the way. We’ll certainly see data emerging from those expansion cohorts before the end of 2014.

Peter Lawson - Mizuho

Got you. Thank you so much.

Operator

(Operator Instructions) And your next question comes from the line of (Inaudible) of Citi.

Unidentified Analyst

Yes, hi. Thanks for taking my question and also congrats on the great data. So I have two questions one relating, I don’t know if you can help us understand a little bit how are you thinking about the hydrobromide salt dosing, I mean it sounds like you went up 50% from 500 to 750 and you’re still not seeing any [DLT] so kind of how are you thinking about the next dose and do you need to get there? And then I have a follow-up.

Patrick Mahaffy

We wondered not with any great amount of thought, we knew that if we had seen sort of meaningful toxicities emerge at 500 we would have considered going to an interim dose that’s going up to full 50%, we saw no toxicity. So I guess I will make the same claim about 750, if 750 appears to be as clean in this group of patients as it was at 500 then I think we would probably go up in a 50% increment that would be the most likely we may just land on a thousand because that’s kind of a easy number for us given the strength that we are using right now to provide patients.

Unidentified Analyst

Okay. And then, thanks for that. How are you guys thinking about progression free survival sort of durability of disease I mean it sounds like you’re still not, you are over 181 days now you still two patients responding from the initial score ASCO, but one of them is at the low dose, one of them is at the 900. Kind of how are you guys thinking about durability of response?

Patrick Mahaffy

Well, two or three I’d say. One is, the patient is at, just to be clarity he is at very low, he is at 600 mgs BID, so he dose escalated, so at some level I didn’t called that low dose just for clarity. Two, we think it matters a lot, it’s really, we put out that PFS data because we got asked all the time and we’re trying to as transparent as we can with investors, but I’ll point out four patients is hurting the data set. And so I take these expansion cohorts are going to give us some much clear view of the true PFS, you may see more merge as we see efficacy on the dosing cohorts of the hydrobromide cells, it gives us a little more visibility because we’ll enroll more patients at each dose now than we did for hydrobromide 900 milligram BID for three days except the 900 milligram BID.

I have always said, We have always said that for second line drug the target we would have would be minimum five months more like six months PFS. Just the good news is we have 181 days for the first four patients, but I don’t know that that predicts anything. We know how important it is. Andrew anything you’d add?

Andrew Allen

I would just echo that as you say that in this patient group Pfs is a difficult statistic to evaluate because you don’t really know control would look like as even multiply quick treated patient and we do know that Afatinib has been a source of interest to physicians and as the pivotal trial running in that combination right now as best we currently this in late stage, four patient with acquired resistance to EGFR inhibitors. And in the Phase II data presented last year, the medium Pfs for the active combination of full dose was 4.7 months. And so I think we can obviously see that 5 or 6 months with this agent would be a win for patients, but we just don't have enough data to draw meaningful conclusions at this point, although it's certainly what we're seeing is encouraging.

Unidentified Analyst

And Patrick, let me if you don't mind, it's Halloween, I'm going to ask you this question I'm hoping you are going to be willing to answer it. There has been a lot of discussion maybe on Bloomberg and two articles talking about M&A that what was up for sale, I think a week later the other article came out saying that the company is not going to be acquired, there is no interest or and I can't remember exactly all the words that were used. I know we are in a public firm and but I know if you can comment on any of that speculation. Thank you.

Patrick Mahaffy

I guess you are going to trick or treating this Halloween, I know the answer now.

Unidentified Analyst

They are waiting for me outside.

Patrick Mahaffy

Yeah. You know I can't comment. And everyone knows I can't comment, I think everyone probably knows I'm frustrated at the fact that I don't comment. I will say that was a pretty bad week for us apparently is one. And two, I think it is unlikely that any CEO in this industry would think he could charge a buyer $750 million per PR. Good luck with the kids.

Unidentified Analyst

So it sounds like the company wasn't for sale and there was no process selling on, I don't know if you can comment on that?

Patrick Mahaffy

I have given you all, I can give you I have more here in the room looking [daggers] at me right now. We are all trained to say we can't comment on that, it's just frustrating that we were trained to say we can't comment on that, but I can't comment on that.

Unidentified Analyst

Thank you.

Operator

Your next question comes from the line of Marko Kozul of Leerink Swann.

Marko Kozul - Leerink Swann

Hey good evening. Thanks for taking my questions. It looks like change a question that I have is in the regulatory front, we don’t often see promising compounds for a similar indication, I guess everybody wanted to ask you in terms of regulatory president or you understand the regulatory requirements, how does this work if you apply all service and accelerated approval eventually somebody else coming in and following at the same time once you have an outcome to your application I guess if you could give us some color your understanding of what aspect is the my first question.

Patrick Mahaffy

Marko it does not pursuit someone else. So if we want to get an accelerated approval on the day five whatever that is, or if we want to submit for an accelerated approval on day five and if someone else the company who started submitted on day 15 or day 20 I think that they could get accelerated approval, they would have to confirm that we would the data that was the basis of their accelerated approval. But we don’t think there is, we don’t think there is that type of benefit to the first approve drug that it will preclude anybody else from getting approve without to say a comparative study went up. If over time that would occur, but I'll give a recent example both placebo and were approved in sort of a similar timeframe in study they run again chemotherapy, the first one approval to go and run head-to-head to against chemo that will be an elegant situation here. First matters, but it doesn’t matter of that much.

Marko Kozul - Leerink Swann

Sure. So somebody see an approval on T790 company see an approval T790 on it’s first then company have to run test against (inaudible)

Patrick Mahaffy

I think that for we in our no competitor now, I would imagine we will run similar development programs on a similar timeframe and both if the data are positive, be approved on the basis of those trials, if someone wanted to start a trials to those approvals again T790M positive patient, they would have to choose we or that other company that compared to us.

Marko Kozul - Leerink Swann

Okay. Terrific, second question recently, recent utilization effect or retreatment effect, do you know what is more important here, that the TKI holiday lines or prior need of therapies or do you have any understanding of what is small are?

Patrick Mahaffy

Andrew?

Andrew Allen

There is very little published on this topic Mark and so there is no hard data to ask you a question. The (inaudible) that it’s time to offer TKI then methods and that's where you are giving the original maximally fit close which is just kind of the activating EGFR mutation time to reassert itself and grow back to become the (inaudible) clone and that's what been on the previously observed retreatment effect, now the publish mixtures as we presented that in kidney, suggestive response rate of around 30% but in the conversations we have a physicians most of them feels that number it’s higher than they see day today and typically they see clinical benefit, with stable disease, but not such a high response rate.

But in terms of whether it to be number of information PRAP therapies of the holiday I think the feeling is holiday but we don’t have good day to make that a clear definitive statement.

Marko Kozul - Leerink Swann

A question on safety. Two questions here actually. With emerging grade 3 toxicity of the case of diarrhea for one compound and nausea or decreased appetite. Do you have any feedbacks from physicians as far as which of those they had to put here they would prefer to see any compound? And then the second question is, does this provide any sort of our combined ability if that becomes part of the story down the line?

Patrick Mahaffy

I am going to answer this in a exactly what you asked, but one of the things that we are going to be really interested in seeing is what are some of the GI talks that we did see and that really (inaudible) for the three days. It doesn’t show up for the hydrobromide salt as you know for the first patients treated and it was three. So this is a small end. We saw no GI toxicity, no diarrhea, no vomiting, no anything. And at some level it is an early possible, possible confirmation of our thesis that the reason we saw some of that GI talks with the free base as we assess this earlier is that the drug was not well absorbed and at higher doses in particular had a reasonable amount of drug that was in the vicinity of your belly. It’s entirely surprising we may have seen sort of a local GI effect from the free base not a systemic well you didn’t see that but a local one.

So one way of saying I am not sure that the data we have for the free base is going to with the diarrhea is likely to be same for the hydrobromide salt. As to whether a patient would prefer to be there not be very hungry or to have grade 1 vomiting episodes or to have diarrhea, all this answered by saying they would prefer to have none of the above. I don’t know that I could make the judgment about particularly in the case of grade 1 versions of that about which was yours. All are bad if emerge is going to be toxicities, all of those particularly the vomiting and diarrhea will be as hard. I don’t know Andrew do you have a view that one is better than the other?

Andrew Allen

No, it’s a personal judgment but I gave you trying to avoid (inaudible).

Marko Kozul - Leerink Swann

Perfect so that technically last one which is you have interesting (inaudible) we show that you essentially shutdowns the EGFR receptor immediate progressing pathway entirely. Can you talk about the impact and what that suggest that the drug in future development?

Andrew Allen

Sure, well spot. When we develop and try to engine the resistance to 1686 in vitro I mentioned redundant in several cellular backgrounds now. We do find the EMG pathway as I mentioned earlier. What we also find is that the EGF receptor pathway remains shutdown and therefore resistance is emerging through an alternative bypass a set of pathways and we are obviously characterizing it right now because that clearly might suggest combination that could be useful in that cell dissecting or maybe even earlier in the treatment course.

It’s obviously very encouraging to us to see this because of the questions when we started to work was will acquired resistance (inaudible) driven by some sort of change to the EGFR pathway itself, will there be amplification of the gene or will there be a secondary mutation and mutation in the EGFR receptor gene that drives resistance through 1686. We obviously look for that very carefully and have sequence to gene in this resistance cell lines and we're very happy that we don't see that. And indeed that does appear to be a need to bypass EGF receptor pathway completely in order to develop the acquired resistance to the drug.

So, very encouraging and that seems that this is pathway is now shutdown in these cells which augurs very well for the utility of the drugs in the treatment of EGFR lung cancer. But obviously as ever, we will need to combine with something else down the road in order to really time this disease into a chronic illness which of course remains our goal.

Marko Kozul - Leerink Swann

Terrific. Thanks for taking the question.

Operator

This end today's question-and-answer session. I would like to hand the call back over to Ms. Anna Sussman, the Director of Investor Relation for closing remarks.

Anna Sussman

Thank you very much. We thank you for your interest in Clovis today. If you have any follow-up questions, please call me at 303-625-5022. The call can be accessed via replay at clovisoncology.com at about one hour and it will be available for 30 days. Thank you and have a very happy Halloween.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!