Onconova Therapeutics' CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: Onconova Therapeutics (ONTX)

Onconova Therapeutics, Inc. (NASDAQ:ONTX)

Q4 2013 Earnings Conference Call

March 10, 2014 16:30 ET

Executives

Benjamin Hoffman - Director-Public and Investor Relations

Ramesh Kumar - President and Chief Executive Officer

Tom McKearn - President, Research and Development

Ajay Bansal – Chief Financial Officer

Analysts

Roy Buchanan - Piper Jaffray

Jason Zhang – Edison Investment Research, Inc.

Kim Lee - Janney Capital

Desh Govender - Cedar Lane

Richard Goss - Leerink Swann

Operator

Good afternoon. We will begin the conferece call in just a moment. Initially, all participants will be in a listen-only mode. There will be a question-and-answer session following the conclusion of the prepared remarks.

At this point, I will turn the call over to Benjamin Hoffman, Director of Public and Investor Relations at Onconova. Sir?

Benjamin Hoffman

Good afternoon and welcome to our year-end 2013 earnings call. Earlier this afternoon, we issued a press release providing a financial update and outlining our key objectives for 2014. The press release is available under the Investor and Media tab on our website. A replay of this call can also be accessed on our website approximately two hours after its conclusion. Joining me on today's call are Onconova's President and Chief Executive Officer, Dr. Ramesh Kumar; our President of R&D, Dr. Tom McKearn; and our Chief Financial Officer, Ajay Bansal.

During this call, we will be making statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements. Additional information on factors that could cause results to differ is available in our most recent SEC filing.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

Now, I would like to turn the call over to Onconova's President and CEO, Dr. Ramesh Kumar, for his introductory remarks.

Ramesh Kumar

Good afternoon and thank you for joining us. 2013 was an important year for Onconova and for our lead product candidate, rigosertib. In 2013, we completed patient enrollment in the Phase 3 ONTIME trial for IV rigosertib in higher risk myelodysplastic syndromes or MDS, and recently we announced the result of top line analysis of this trial. At the American Society of Hematology, ASH Annual Meeting in December, we presented positive Phase 2 results in transfusion-dependent lower risk MDS patients treated with oral rigosertib. These results and subsequent discussion with the FDA have led to the design of a pivotal Phase 3 trial for this underserved patient population.

Also during the year we completed our initial public offering. Finally, we presented data showing that rigosertib acts through a novel allosteric mechanism involving the Ras binding Domain.

Let me turn to our CFO, Ajay, who will provide an overview of our fourth quarter and year-end financial. Ajay?

Ajay Bansal

Thank you, Ramesh and good afternoon everyone. Our financial results were included in this afternoon press release and will also be available with additional details in our 10-K. Our R&D expenses were $12.1 million for the fourth quarter of 2013 and $50.2 million for the year ended December 31, 2013. Our G&A expenses were $4.4 million for the fourth quarter of 2013 and $16.8 million for the year ended December 31, 2013. In terms of cash, our cash usage in the fourth quarter was $17.1 million and for full year 2013 our cash usage was approximately $61 million. We ended the year with $100 million in cash and cash equivalent.

I'll now turn the call back to Ramesh for a more detailed update of our development program along with upcoming milestones.

Ramesh Kumar

Thank you, Ajay. We are focused on developing rigosertib for underserved needs of MDS patients. To date, we have enrolled more than 1,000 patients with hematological or solid tumors in clinical trials with rigosertib. MDS patients have impaired bone marrow function leading to cytopenias, poor quality of life and some MDS patients are at a high risk of progressing to leukemia. For many types of MDS patients there are few or no efficacious treatment in their poor overall survival. At Onconova, we are committed to addressing the unmet needs of patients with this disease.

I am going to turn over to my colleague Dr. Tom McKearn who is the President of our R&D, to give you an overview of our work in higher risk MDS.

Tom McKearn

Thank you, Ramesh. Last month we announced results from the top line analysis of the Phase 3 ONTIME trial of IV rigosertib in higher risk MDS patients previously treated with hypomethylating agents, HMAs, their first and only line of FDA approved treatment. The ONTIME trial enrolled 299 patients with higher risk MDS who are either primary treatment failures with azacitidine and decitabine that is their disease had progressed on or failed to respond to treatment with these agents or an additional group of patients who had first responded to HMAs and then suffered relapsed of their disease.

We announced that the overall trial did not meet the primary end point of achieving a statistically significant improvement in median overall survival in the IV rigosertib plus best supportive care arm compared to best supportive care only. We also announced that analysis of a predefined subset of patients demonstrated a statistically significant improvement in median overall survival. This subset involving 184 of the 299 enrolled patients included those patients who had progressed on or failed to respond at all to previous treatment with HMAs, that is to say those patients who did not benefit from front line HMA therapy.

In this subset of patients the median overall survival was 8.5 months in the IV rigosertib plus best supportive care arm compared to 4.7 months in best supportive care only arm, the hazard ratio was 0.67 and the p value was 0.02 in this subset. In contrast, the patients who relapsed after first line HMA therapy did not have a significant survival benefit with rigosertib compared to BSC. Preliminary safety analysis of the entire trial indicates that rigosertib was generally well tolerated in the study population. We expect to present full data from the ONTIME trial at the 2014 ASCO Annual Meeting. We are currently engaging regulatory authorities and key opinion leaders to discuss further development of rigosertib in second line higher risk MDS.

Last year, we had announced initiation of second single arm Phase 3 study of rigosertib. This trial is ongoing and has enrolled 19 second line higher risk post HMA MDS patients. This trial called the O4-24 study was initiated with the encouragement of key investigators who had participated in the ONTIME study. It is a single arm of IV rigosertib and was designed to provide additional tolerability and activity data in this patient population.

A third trial for higher risk MDS patients in the front line setting is now open and enrolling patients. In this study, oral rigosertib is combined with either IV or subcutaneous azacitidine. This Phase 1/2 study is evaluating the activity of rigosertib and azacitidine as a combination therapy. In the first part of this study the full indicated and approved dose of azacitidine is given in combination with escalating doses of oral rigosertib in successive patient cohorts. After determining the maximum tolerated dose of oral rigosertib combined with azacitidine, the second part of the trial will evaluate selected combined doses of rigosertib and azacitidine in an expanded cohort of patients.

A total of up to 40 patients are planned to be enrolled in the study. The study has now completed the first cohort and 140 mg rigosertib BID dose and is being advanced to the 280 mg dose cohort. We expect to provide update on this trial to you in the second half of 2014.

And now I'll turn the podium back to Dr. Ramesh Kumar to discuss our efforts in lower risk MDS patients.

Ramesh Kumar

Lower risk MDS patients suffer from cytopenias and the many problems arising from transfusions. For transfusion dependent lower risk patients' current treatment options are limited to Revlimid which is indicated only for del (5q) patients, ESAs and transfusion as supportive care. New, orally available therapies are needed for this underserved patients. In December 13, we presented positive data at the ASH meeting from a 60 patient Phase 2 trial, showing an overall response rate of 53% and transfusion independence rate of 39% in transfusion dependent lower risk patients treated with oral rigosertib. During ASH we also reported the potential for developing a prognostic genomic test for identifying patients likely to respond to oral rigosertib. In order to validate these encouraging findings, we are enrolling an additional cohort of 20 lower risk MDS patients in the extension of this Phase 2 trial with the objective of prospectively assessing the value of this genomic methylation analysis.

Based on data presented at the ASH conference, we met with the FDA earlier this year to discuss further development of oral rigosertib for transfusion dependent lower risk MDS patients. Based on their guidance, we have designed a Phase 3 protocol. We will seek special protocol assessment or SPA for this randomized, double-blind, placebo controlled study with the primary endpoint of assessing transfusion independence of at least eight weeks in these patients. Trial size, entry criteria, secondary endpoints and the statistical analysis plan will be finalized during the SPA process.

We've also presented the prognostic marker approach to the FDA and they have encouraged us to discuss the results from the validation cohort with them for potential integration of this analytical tool into the pivotal study. We are projecting start of enrollment in this Phase 3 study following the SPA process in the second half of 2014 at multiple sites in the U.S. and Europe.

Finally, we have made a breakthrough in the molecular understanding of the mechanism or action of rigosertib. New data indicates that rigosertib binds to the Ras Binding Domain, an important regulatory region found in many signaling proteins including Ras, Raf and PI3-Kinase. This specific binding of rigosertib to these proteins disrupts protein-protein interaction necessary for signal transduction in the cell. The new data provides a molecular basis of how rigosertib inhibits PI3K and PLK pathways. The unique mode of action of rigosertib suggests novel ways in which cellular pathways could be interrupted by rigosertib and will help in the design of future translational studies.

In summary, rigosertib remains the primary focus of our research and development efforts. We are encouraged by the signal of clinical activity and excellent safety profile from the Phase 3 trial in higher risk MDS and we are committed to bringing these innovative products to higher risk and lower risk MDS patients in need of additional therapeutic options.

We are looking forward to our productive 2014; our milestones for the year include, number one, discussion of the Phase 3 higher risk trial results with regulatory authorities with the goal of determining next steps of advancing development of rigosertib in higher risk MDS. We are seeking a meeting with the FDA in the second quarter of 2014 and plan to meet with various European regulatory agencies also.

Number two, presentation of ONTIME clinical data at the 2014 ASCO meeting in June; three, initiation of a Phase 3 trial for oral rigosertib as first-line treatment for transfusion-dependent lower risk MDS. After we obtain additional regulatory clarity via the SPA mechanism, we plan to initiate this trial at multiple sites in the U.S. and the EU in the second of half 2014. Four, we will report our progress on Phase 1/2 trial for the combination of oral rigosertib and Vidaza in the first line MDS during the second half of 2014.

Finally, at the 2014 AACR meeting in April, we will have multiple presentations highlighting earlier stage programs in our pipeline.

That concludes our prepared remarks. And we will now open up the call for your questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from the line of Charles Duncan from Piper Jaffray.

Roy Buchanan - Piper Jaffray

Hi, guys. It's Roy in for Charles. Thanks for taking the question. I got a kind of broad one you might not be able to answer but I wondered if you could help us understand if maybe there is a mechanism behind -- so you have good results in lower risk MDS transfusion independent and what maybe good results in a subgroup of non responders in high risk, it seems like maybe there is a gap there where the less severe higher risk patients are not responding? Is there any mechanism that might explain that?

Ramesh Kumar

Thank you, Roy. That's really the topic of most of our work currently ongoing. We are looking at the data carefully, consulting the experts, the investigators and we need to take the learning in front of the regulators. So that's our first objective is how can we learn as much as we can from the data. It is a substantial amount of data nearly 300 patients enrolled in 89 sites and six countries. So we are very optimistic that this work will be concluded quickly and we will be able to get the explanation plus the regulatory guidance in front of you and others, hopefully in the second quarter of the year.

Roy Buchanan - Piper Jaffray

Okay, and then kind of a follow up maybe but remind me if you are looking at the genomic methylation in high risk patients?

Ramesh Kumar

The genomic methylation data we presented at ASH was relevant only to the lower risk patients. And it's kind of interesting that the HMAs which are the frontline treatment for higher risk patients are hypomethylating agents. But that just a coincidence. Our focus on genomic methylation as a potential prognostic tool is for lower risk transfusion depended MDS patients only.

Roy Buchanan - Piper Jaffray

Okay. Have you ever looking at the higher risk? Has anyone looked?

Ramesh Kumar

People have looked at it and there is poor correlation in terms of cause and effect between the extent of methylation and the efficacy of hypomethylating agents. Some people have claimed that hypomethylation is a potential prognostic marker, others have said it is not.

Operator

Thank you. And our next question comes from the line of Jason Zhang from Edison Research.

Jason Zhang - Edison Investment Research, Inc

Hi, thanks. Hi, Ramesh, now you have more time to look at the data, I wonder whether you can share with us for example the response rate of the different groups of patients, are they different particularly for those on rigosertib versus those controlled?

Ramesh Kumar

Jason, this is very good question. Thank you. As you know we wanted to get the top line survival data which is our primary endpoint as soon as possible. Things like response and other secondary parameters are being looked at. The data is being cleaned as we speak. So it is going to take us some more time to get to the bottom of all of those questions. What other markers, what other endpoints, and what other measures can we assess and then correlate with the data for the overall trial as well as for the subset that we described. So it is again going to take a little bit more time and we are hopeful that we will be able to take all of these data to the regulatory agencies and then fully present at ASCO and even perhaps talk about it sooner.

Jason Zhang - Edison Investment Research, Inc

So on the meeting with the FDA, you now announced that you are going to have a meeting with them in the second quarter, typically the agency appreciate, you talked to them, give them the data but in terms of path forward, you must have some proposal, after you’ve finished the data of course, analysis and also talking to [your fill outs] [ph], I am wondering whether in your mind are you forming a plan going forward? And of course ask the FDA for advice or you are going to -- you are probably not going to rely on FDA to give you guidance because that's really not their role to do.

Ramesh Kumar

Thank you, Jason. I think that's very fairly put and very clearly put. So I think our objective is to analyze and understand the data as well as we can. And as this typical with these meetings, ask them a series of questions, some for clarification, some for guidance, and have a dialogue which allows us to have a clear plan for the next stage of development of rigosertib in these patients.

Jason Zhang - Edison Investment Research, Inc

So I guess in other words you -- even if you have a plan, you are probably not ready to share that with the investment community or you may not even have a clear plan yet? Because the data --

Ramesh Kumar

Yes, Jason, it will be inappropriate really to discuss this prior to discussing with the Agency because our major objective is to see the best way forward to get the drug to the patients by getting approval in the appropriate patient. So I think although we understand the interest and the importance of getting the information to the investors, we also realize that collectively we want this thing to move forward. And regulatory guidance is a key step in that process.

Jason Zhang - Edison Investment Research, Inc

Okay. I was on another call briefly so I missed that probably, you said in the second half you will probably have update about oral rigosertib in lower risk in terms of the pivotal trial? Is that what you have described or I just misheard?

Ramesh Kumar

Yes. What we announced Jason is that we will start the -- we plan to start -- we project that the Phase 3 pivotal trial will start in the second half. And since we have decided to go down the path of an SPA, some of the details will be finalized in that SPA. And so what we are saying is that the trial will be a placebo controlled, double-blind trial in patients who don't respond to ESA and the trial will be conducted with oral rigosertib. And the trial will have an end point of transfusion independence lasting eight weeks or longer similar to the Revlimid end point. So those are the things we have guided. So I think we are keen to get the SPA completed. We have encouragement from the FDA to go down the path and we hope to announce more details as we get there.

Operator

Thank you. And our next question comes from the line of Kim Lee from Janney Capital.

Kim Lee - Janney Capital

Good afternoon, thank you for taking my question. As you talked about FDA and have this SPA conversation, what has the feedback been from FDA regarding the -- your current Phase 2 dataset and kind of what are you thinking about as far as -- and Phase 3 the number of patients that you will need and kind of your powering assumption? Thanks.

Ramesh Kumar

Thanks, Kim. As you know the data we announced was quite encouraging. 39% of the patients were transfusion independent; several patients were into the second year on the drug of being transfusion independent. Overall response rate was 53%. The drug tolerability improved as we went from continuous dosing to interrupted dosing. And then from 560 BID dosing to 560 - 280 BID dosing. So all of these things were discussed with the FDA including the dose, including the tolerability, including the response rate. And those discussions led to the preliminary design of a protocol which is going to be finalized in the SPA process. Since it is subject to further discussion other than the entry criteria and the primary response criteria, we are reluctant to give more details before we have the SPA process completed.

Kim Lee - Janney Capital

Okay and what's the timeline for the SPA process? I mean you hope presumably you will draw up a trial design and when do you expect the next have conversations with the FDA? And when would we get an update from you? Thanks.

Ramesh Kumar

As you know the SPA process is a 45 day calendar, once you submit the document and in our discussion with FDA we got the impression that they understand the need of the patients, in this indication they want more programs to go down in helping these patients. So they are going to be collaborative [inaudible] in the SPA process. Having said that we expect several months to go through this process by us submitting, having an active dialogue and hopefully coming up with the SPA.

Operator

Thank you. And our next question comes from the line of Desh Govender from Cedar Lane.

Desh Govender - Cedar Lane

Hi, I have a question for Dr. McKearn. In your prepared remarks you said that in the ONTIME trial there was a predefined patient population who on the data that you analyzed there was a signal in a subset of refractory HMA patients, so could you please clarify for everybody, are you saying that in your secondary outcome measures, you had predefined hematological markers that fit that patient population? Or what was predefined and was this analysis therefore a prospective analysis on the subset?

Tom McKearn

Sure. These populations of patients were defined in terms of entry criteria for eligibility to the trial. So they were clearly spelled out and they are in fact internationally recognized guidelines that group the patients in the manner that we chose to use as entry criteria for our trial. So that was the pre specification that I was referring to in terms of identifying them and then as a secondary analysis of the trial. Not the primary, not the ITT analysis but as a secondary analysis. We would look at the survival of these other groups of patients. I hope that helps to clarify that.

Desh Govender - Cedar Lane

So does the refractory HSA population fit into one of those criteria that were pre defined? Hematologically?

Tom McKearn

Yes, of course. So there are three -- there actually were four categories of patients. The three that we defined so patients who together-- two groups of patients no benefit from first line HMA therapy. One of those populations of patients, disease doesn't move, it just stayed the same, they don't benefit. A second population of patient include those whose disease actually worsens when expose to this HMA drugs. The third population of patients is those whose disease initially responds to treatment but later they regress. So they relapse and their disease comes back. So those were the three populations we talked about in today's presentation. There was a fourth population also identified because some patients in some clinics are intolerant of the drug, the HMAs. It turned out that was a category in our trial but there were no patients enrolled in the trial who fit that category. So that's a null set for us.

Desh Govender - Cedar Lane

So we are actually -- just to make it very clear. So your HMA refractory patients were pre defined and your analysis therefore was perspective in these subsets?

Tom McKearn

That's correct.

Desh Govender - Cedar Lane

Okay because some and maybe I am little confused but the press release says something about adhoc or post-hoc but thank you for your clarification. I’ve a follow up on the lower risk trial, given the effect size, can you just talk about potentially then what we saw in ASCO, what would a Phase 3 look like in terms of number of patients? Given the effect size [which extrapolates physically] [ph], are you looking at, you could power a robust trial with the couple of hundred patients? Is that assumption correct?

Ramesh Kumar

Yes, thank you. We would like to power it as robustly as possible for two reasons. One, with an overall agent in the front line sitting where there are a large number of patients available. As you know the higher risk represents about a quarter of all MDS patients prevalent and three quarters of them are lower risk patients. So three in the lower risk setting, there are lot of patients available and we are going in the front line setting with an oral agent. So doing a larger trial even doing it quickly is less of an issue there. And also these patients have pretty robust expectation of survival, median survival ranges five years and upwards. So we are in a better position to do a well or very rigorously powered trial. But we are not guiding at this time on the size of trial itself because that is going to be subject of our discussions, negotiations during the SPA process.

Desh Govender - Cedar Lane

And just last question. When will your payments from Baxter, be triggered specifically for ONTIME given that you are in discussion with the agency? Could you just clarify when you would receive the milestone payment?

Ramesh Kumar

Ajay, do you want to handle that?

Ajay Bansal

Yes. So the milestone payment, Desh, there is two sorts of criteria for that. The first one was if we met the p value in the overall trial which we did not. The second criteria is if there is a joint decision by the two companies to file the MAA in Europe. So as Ramesh and Tom mentioned, we are in the process of having discussions with regulatory agencies and of course internally and with Baxter is based on this discussion. We decided jointly to proceed with an MAA filing for higher risk that would trigger the payment.

Operator

(Operator Instructions). Our next question comes from the line Howard Liang from Leerink Partners

Richard Goss - Leerink Swann

Hi, this Rich Goss calling it for Howard. Thanks for taking my question. I was wondering if you could give us an update on the development status for rigosertib in indications other than MDS? And what the timing of any future trials might be? Thank you.

Ramesh Kumar

Rich, thank you. Our focus right now -- although we believe that because of the MOA of rigosertib, their potential use of rigosertib in many solid tumor indication and additional hematological indications, because of the need to focus and the need to advance rigosertib as early as possible to the market we are going to remain focused on MDS indications. Having said that we have a Phase 2 trial running in head and neck squamous cell carcinoma of the head and neck and other squamous cell carcinoma. And these studies are going on in two different [guys] [ph], one is a single agent oral dosing and the second one is the oral rigosertib in combination with the radio therapy, platinum plus radiation paradigm. So certainly oral agent as well as IV agents are going to be helpful to solid tumor patients but currently we are just focused on getting rigosertib over the line in terms of MDS, making it available for MDS patients.

Operator

Thank you. And our next question is a follow up from the line of Jason Zhang from Edison Research.

Jason Zhang - Edison Investment Research, Inc

Hi, yes, I actually wanted to follow up on the last question because I was a little confused. You said the subgroup that you actually provide overall survival is actually the pre defined subgroup. Again I went back to the previous question you said the post hoc analysis, that usually defined as post study— defined sub group but you mentioned here that the subgroup was predefined and that [analysis] [ph] of course is done by the -- I don't know whether the analysis has a predefined specific role planned but in any case the subgroup was predefined and therefore the data should be [inaudible] the predefined subgroup. Is that a right understanding?

Tom McKearn

Yes, you are actually that's exactly the path. What we wanted to convey was that these groups were identified at a time they are well recognized groups, they are highly relevant groups, they comprise the majority of the patients in the study. It is 62% of the patients fall into these two categories when combined. So and these are the patients who derive no benefit from first line HMA therapy so it is the area of greatest unmet need in this patient population according to most people's assessment. So high enrollment

Jason Zhang - Edison Investment Research, Inc

So when you say that group is predefined I understand that -- I guess the two questions I would ask is, is there a statistic plan? I mean is the method of statistic analysis predefined, it mean p value those kind of thing? Number one. Number two, will the randomization in any way try to balance patient within that group between the treatment and the controlled arm?

Tom McKearn

Yes, we will be presenting all of those demographics at ASCO this year. What you will see and what we are conveying as far as we consider this to be a very well balanced trial. And we will certainly go through the particulars of theses subgroup analysis that have been performed. None of these takes away from the fact communicated front and center, we did not achieve the primary objective of the trial which was the ITT analysis of overall survival in this population.

Operator

Thank you. And I have no other questions. Thank you everyone for joining the call. And we will now conclude at this time.

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