OncoGenex Pharmaceuticals' CEO Discusses Q4 2013 Results - Earnings Call Transcript

Start Time: 16:35

End Time: 17:01

OncoGenex Pharmaceuticals, Inc. (NASDAQ:OGXI)

Q4 2013 Earnings Conference Call

March 11, 2014 4:30 PM ET

Executives

Susan W. Specht – Director-Investor Relations

Scott Cormack – President and Chief Executive Officer

Susan D. Wyrick – Chief Accounting Officer and Senior Director-Finance

Cindy A. Jacobs – Executive Vice President and Chief Medical Officer

Analysts

Katherine Xu – William Blair & Co. LLC

Gena Wang – Leerink Partners LLC

Arlinda A. Lee – CRT Capital Group LLC

Chad J. Messer – Needham & Co. LLC

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Operator

Good afternoon, ladies and gentlemen, and welcome to the OncoGenex Fourth Quarter and Year-end 2013 Financial Results Conference Call. My name is Karen and I will be the operator assisting on the call today. All participants are currently in a listen-only mode. After the speakers prepared remarks there will be question-and-answer session.

At this time, I would like to turn the call over to Susan Specht, Senior Director, Investor Relations with OncoGenex Pharmaceuticals. Please go ahead.

Susan W. Specht

Thank you, and thanks, everyone, for joining us. With me today from OncoGenex are Scott Cormack, Chief Executive Officer and Susan Wyrick, Principal Accounting Officer; also on the call are Cindy Jacobs, Chief Medical Officer and Jaime Welch, VP of Marketing and Corporate Communications.

Before we begin, I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and actual results may vary materially from those projected. Please refer to OncoGenex's documents filed with the SEC concerning factors that could affect the company, copies of which are available on the website.

I'll now turn the call over to Scott.

Scott Cormack

Thanks Susan. Good afternoon and thank you for joining us. In 2013, we’ve made exciting progress to what our goal of developing innovative treatments for patients suffering from variety of cancers. Today, I’d like to provide a brief status update on the Custirsen and Apatorsen development programs. And highlight the much anticipated critical milestones that will make 2014 a truly transformative year for our company.

Beginning with our lead product candidate, custirsen, which is being evaluated in three Phase III clinical trials two in metastatic castrate-resistant prostate cancer or CRPC and one in metastatic non-small cell lung cancer.

Our primary registration Phase 3 SYNERGY trial is designed to evaluate a survival benefit of custirsen in combination with first-line docetaxel chemotherapy, in men with CRPC. Last month we’ve announced as a number of events required to conduct a final analysis for SYNERGY has been reached. We continue to expect the final analysis of survival results to be announced by mid-2014. As a reminder, survival results will remain blinded to both OncoGenex and Teva until all study data have been thoroughly reviewed and prepared for final analysis.

Also in CRPC we’ve made significant progress in our enrolling patients in the Phase 3 AFFINITY trial is designed to evaluate a survival benefit for custirsen, in combination with cabazitaxel as second-line chemotherapy. We expect to enroll approximately 630 patients to AFFINITY by the end of this year. Finally, the Phase 3 ENSPIRIT trial continues to enroll patients. ENSPIRIT is designed to evaluate a survival benefit for custirsen in combination with docetaxel treatment as second-line chemotherapy in patients with non-small cell lung cancer. There are two formal interim futility analyses planned, the first of which will occur in 2014.

In addition to the continued momentum for custirsen, we continue to make great strides in advancing the apatorsen ORCA program. Through collaboration and partnership with leading cancer centres and experts, apatorsen is now been evaluated in a total of seven randomized Phase 2 clinical trials in advanced bladder, lung, pancreatic and prostate cancers.

In July of 2013, we completed enrollment in Borealis-1, a Company-sponsored randomized, placebo-controlled Phase 2 trial, evaluating the overall survival of apatorsen in combination with first-line gemcitabine and cisplatin in patients with metastatic bladder cancer. We expect to announce Borealis-1 results in the second half of this year and are incredibly enthusiastic about the potential of this novel agent. Additional Phase 2 trials of apatorsen in advanced bladder, lung, pancreatic and prostate cancers continue to enroll patients.

At this time I will turn the call over to Susan, who will provide an overview of our financial results. Susan?

Susan D. Wyrick

Thanks, Scott. We ended the year with approximately $39.2 million in cash, cash equivalents, and short-term investments. This is above our guidance of $25 million to $35 million largely due to the timing of payments for our clinical trial. We believe we have sufficient operating capital to fund our currently planned operations beyond the first quarter of 2015 and through the expected release of final survival results from the SYNERGY and Borealis-1 trials and through the completion of enrollment in AFFINITY and Spruce.

Revenue for the fourth quarter of 2013 decreased to $8.6 million, compared with $9.8 million for the prior year quarter. Revenue for the year ended December 31, 2013 increased to $29.9 million, compared with $20.1 million for the same period in 2012. Revenue in both years was earned through our strategic collaboration with Teva. The increase in 2013 compared with 2012 was due to patient enrollment and treatment in the AFFINITY trial.

Total operating expenses for the fourth quarter of 2013 decreased to $15.6 million, compared with $16 million for the same period in 2012. Total operating expenses for the year ended December 31, 2013 increased to $65.2 million, compared with $46.1 million in 2012. The increase in 2013 compared with 2012 was primarily due to higher clinical trial expenses; toxicology expenses related to apatorsen and OGX-225 and increased headcount to support our clinical development activity.

Net loss for the fourth quarter of 2013 was $6.7 million, or $0.45 per diluted common share, compared with $4.1 million, or $0.28 per diluted common share, for the prior year quarter. Net loss for the year ended December 31, 2013 was $31.8 million, or $2.17 per diluted common share compared with $21.1 million or $1.56 per diluted common share for the same period in 2012.

The net loss in the year ended December 31, 2013, included a non-cash gain on revaluation of our warrant liability of $3.2 million compared with $4.5 million in the prior period.

In summary, we believe we have sufficient operating capital to fund our currently planned operations beyond the first quarter of 2015 and through the expected release of final survival results from the SYNERGY and Borealis-1 trials and through the completion of enrollment in AFFINITY and Spruce. This concludes a prepared financial results discussion.

I’ll now turn the call back over to Scott for closing remarks.

Scott Cormack

Thanks Susan, our enthusiasm for custirsen and apatorsen continues to build as we approach major milestones that have the potential to redefine treatment paradigms and breakthrough the pervasive challenge of treatment resistance. We remained confident in our ability to execute and in the potential of our products to change the lives of cancer patients and their families. We look forward to sharing more updates with you in the coming months. Thank you again for joining us.

Operator, please open the line for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Katherine Xu from William Blair.

Katherine Xu – William Blair & Co. LLC

Good afternoon.

Scott Cormack

Hi Katherine.

Katherine Xu – William Blair & Co. LLC

Hello, okay great. Hi, team. So, I’m just wondering from the ENSPIRIT study, you said there are two interims scheduled or designing as well and the first one is coming up this year. Could you just tell us bit more about the core design and what the interim [indiscernible] or is that there is efficacy looking there as well.

Scott Cormack

Sure, we can speak to this, the utilities that we are referring to or looking at, the first one specifically is looking at progression free survival and then overall survival and the way these are designed is we’ve established pre-defined criteria if we don’t need those criteria we’d go ahead and stop that trial, but there are not designed as early stocks for efficacy. Cindy I am not sure, if you want to add anything additional on to that. We have not given the additional details around what drive the PFS or OSF at this time as far as the statistical parameters.

Cindy A. Jacobs

Now, just again to ask the interim analysis after futility only the early one is designed to look at in adequate evidence of clinical benefit or survival futility. And then the second one is survival futility alone.

Katherine Xu – William Blair & Co. LLC

Okay, so it’s that make sense similar to SYNERGY?

Cindy A. Jacobs

No, this is a little different than SYNERGY, SYNERGY have survival futility one not as early as this and the ENSPIRIT trial. And then the other one later for survival futility. So, SYNERGY has two strictly survival futility assessment.

Scott Cormack

And SYNERGY also had interim analysis for efficacies, where ENSPIRIT does not have.

Katherine Xu – William Blair & Co. LLC

Got it, okay. And for Borealis is good sized study and if the data is positive, what would the next step be would there be an abbreviated path going forward depending on the strength of the data or what are the consults here.

Scott Cormack

Yeah, Katherine I’ll go ahead, and let Cindy answer that question for you.

Cindy A. Jacobs

Our plan obviously if we have positive survival benefit would be to meet with FDA to discuss a Phase 3 using that Phase 2 as a supportive trial, very similar is what we’ve done the SYNERGY. We went and asked for the Phase 2 survival study to be a supportive trial and only have one Phase 3 study and that would be the path that we would go for bladder cancer with apatorsen.

Katherine Xu – William Blair & Co. LLC

And finally with the SYNERGY the biggest reveal what’s – if you just let us know what is that I mean is on going with the steps that you and the third parties are going through right now. And then looks like we are going to see a data during second quarter

Scott Cormack

Yes, the process as we’ve announced last month we hit the number of events that drive the final analysis and then the process that goes on there is to basically ensure that we have all the case report forms for all the patients, we’re doing the analysis on and ensuring that all of the parameters that are to be collected or collected for each of the patients that the units are consistent across all the patients, those kinds of activities to ensure that the data set is complete before you go to that full lock, Cindy again if you want to add anything additional to that.

Cindy A. Jacobs

Right, when you have final database lock, you need to make sure all the central lab data is also in the data sets. All of the independent radiographic reviews that are part of the secondary end points are done and in the data sets, and there’s also some final monitoring and making sure all significant queries have been answered by the site.

Katherine Xu - William Blair & Co. LLC

Great, thank you very much and all the best.

Scott Cormack

Thanks a lot, Katherine.

Operator

Thank you, and our next question comes from the line of the Howard Liang from Leerink Partners.

Scott Cormack

Good afternoon, Howard.

Gena Wang – Leerink Partners LLC

Hi, this is Gena Wang dialing for Howard, thank you for taking my questions.

Scott Cormack

Hi, Gena.

Gena Wang – Leerink Partners LLC

Following Katherine’s questions on SYNERGY, I’m just wondering, should we expect CFS and CFA data as well in addition to the OS final read out?

Scott Cormack

Yes, so and good question, I think the expectation at this point is to basically announce top line data only which would be typical of other biotechs in similar stages and the main purpose of that is that, we want to preserve other parameters for presentation at appropriate scientific congress and as you know on, if you reveal too much into releases in the top line, then you haven’t preserved novelty for the ability to present it some of the congress and so, there is still some active discussion with our partners to have on exactly what that will look like, but pretty certain it would be fairly top line only to ensure that we have an ability to present at inappropriate congress, because that is our primary marketplace for advancing the reveal of the dataset.

Gena Wang – Leerink Partners LLC

I see. So, should I expect this would be a press release first, and then should anticipate in the upcoming medical conference, and then following that question, how will SYNERGY outcome effect the second-line study, AFFINITY, do you see a scenario, where SYNERGY does not work, but AFFINITY works.

Scott Cormack

Okay, so to answer your first part of the question, yes you would expect a press release, first we would give top line results and that would be followed at the next available scientific congress, where the full results would be available lower than more detailed our results would be available and then the third element to that would be a manuscript actually that would be the complete review of the entire study.

Then with regards to the SYNERGY trail, if there is a couple of – as the playout there, SYNERGY succeeds and you hit the intended target for hazard ratio and p value as you may recall we have both in SBA, with the FDA for this trial that indicates that we can go forward on the SYNERGY trial only similar concept with EMA for scientific advice and again that trial would be sufficient for filing and using our randomized Phase 2 as supportive. If you end up in a situation where your P value is in the area you haven’t quite achieved the objective of the trial, but its still significant then you maybe in a situation where you will be looking at the SYNERGY trial as a confirmatory trial and you think we’ve seen this in another companies. And so in that circumstance you may be looking at SYNERGY to confirm the clinical benefit that was observed in SYNERGY.

The third scenario is if the results are not there with SYNERGY you could still be looking at AFFINITY as basically as case for approval in a separate marketplace so there is those three scenarios where AFFINITY becomes important to us.

Gena Wang – Leerink Partners LLC

Thank you.

Scott Cormack

You are welcome.

Operator

Thank you. And our next question comes from the line of Arlinda Lee from CRT.

Arlinda A. Lee – CRT Capital Group LLC

Hi guys.

Scott Cormack

Good afternoon.

Arlinda A. Lee – CRT Capital Group LLC

My question I said just wanted may be follow up on further detail on SYNERGY or you guys you said, you mentioned that you're in a process of locking the database and describe how what’s entailed. Do we have an estimate on more specific timing is that there be close fitting is there a chance that you might meet the ASCO lead out trial

Scott Cormack

Yeah so we haven’t given any more specific Arlinda, we basically what we’ve said is by midyear and that’s because what’s no longer that we hit number of events and it takes a while go through and see with the out status of the case report forms are in and all the details have been there. So we haven’t really heightening up the timeframe with regards to timing other than just to say my mid year.

Arlinda A. Lee – CRT Capital Group LLC

Okay and then secondly on Borealis, you mentioned that if the results were positive that you go through the typical I'm asking FDA or Phase III input would that include, are you planning on asking for a special status like breakthrough and other such things.

Scott Cormack

Go ahead Cindy

Cindy A. Jacobs

It was depending on the data. Yes, anything might be asked for breakthrough is one that we are discussing as well as then getting by [indiscernible] of Phase 3 with FDA as soon as possible.

Scott Cormack

Yes, I think that’s an important point as I think many of our listeners and stakeholders would recognize bladder cancer is a – a disease, but where not seen improvements for a couple of decades and I think if Borealis-1 trial demonstrates statistical significance in survival. Yes you’d be perused a number of different opportunities with the FDA I think that the logical what is to pursue at Phase III but if those results are very strong you’d be talking about a much more aggressive strategy and forward-looking statements very much defined on that particular statement we expect that you are going to the Phase III but obviously if those results are positive you would want to be doing something to bring a product to those patients who desperately need new therapies given we haven’t seen anything for decade. So we are trying to advance that is quickly as possible both with FDA and elsewhere.

Arlinda A. Lee – CRT Capital Group LLC

Great thank you very much.

Scott Cormack

Thank you.

Operator

Thank you. (Operator Instructions) Our next question comes from the line of Chad Messer from Needham & Company.

Chad J. Messer – Needham & Co. LLC

Hi, guys. Thanks for taking my questions it’s very exciting as we get into these final meeting at least for SYNERGY. Last quarter you spend some time on the call talking about, some concerns people might have to the market of in prostate cancer given all the new antigen agents. I was just wondering if you had any updated thoughts with three more months now, since we had the extended data any updates on what you are seeing I am sure you guys are paying very close attention to what’s going on in the prostate cancer market.

Scott Cormack

Yes, thanks for the question Chad and I very much appreciate the inside on particularly the landscape. We do get a number of questions about particularly the relevants of chemotherapy in the landscape given that you had new agents enter new prostate treatment paradigm and as we explore that question not only with keeping meters and investigators throughout the world. And also looking at script data, I think it’s fairly clearly that chemotherapy remains a primary modality of therapy for patients with advance prostate cancer.

We have looked at some of the data sets that prevail data in particular I guess the most recent data sets and as I think everybody is very impressive with the data set that is there. For I think that message remains the same as it was and we are talking about this few months ago that the improvement teams to be delay and the developments or the delay in development of the diseases and primarily access to chemotherapy, but once those patients get to the part where chemotherapy is indicating as typically Metastatic, symptomatic patient group the survival from that point on, and you could look at that is as the time from radiographic progression to pass in way is constantly around 18 months or 19 months.

It’s the same as what we saw with Zytiga pre-chemo study, I think PREVAIL is showing pretty much the same timeframe and that ironically is the same as it was with TAX 327 approximately 10 years ago. So from our perspective while these new therapies have done a really nice job of extending this delay the unfortunate pieces once they do progress and they do start to need chemotherapy because the advanced disease – the time period from that point – really passed away remains unchanged.

So from our perspective there continues to be a massive need for something that’s going to improve on chemotherapy, because as these agents migrate to content of the disease, we’re still left with the issue what you do with a man that’s got advanced disease and approximately two years of life expectancy. We need to improve on that just like we did 10 years ago. And they think that’s changed in the marketplace at all.

Chad J. Messer – Needham & Co. LLC

Great. Thanks so much.

Scott Cormack

Thanks a lot, Chad.

Operator

Thank you. And our next question comes from the line of Stephen Willey from Stifel. Mr. Willey your line is open. Could you please check your mute button. Stephen Willey your line is open, are you there?

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Yes. Hi, guys, sorry for the delay there.

Scott Cormack

Hi, Steve.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Have you guys disclosed the number of events that are required to trigger Borealis?

Scott Cormack

No, we haven’t given the specifics on the Borealis analyses either, always indicated is that we would be there in the second half of the year and obviously the main primary endpoint for that trials overall survival.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Okay.

Scott Cormack

Yes.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

And the thought process there on a OncoGenex's control arm is still in the kind of 13-month to 15-month range?

Scott Cormack

Yes, I think it’s a pretty much in the loan where we’re looking for the front-line treatment with Gaman sys [ph]. I think MVAC shows pretty much the same survival time period, I think that’s a fairly good number, particularly given that we haven’t seen any new therapies coming to this marketplace for a couple of decades. So I think that’s a pretty equally relied upon number actually.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Okay. And then do you have any idea as to where Sanofi is right now just in terms of the Phase 3 study comparing about the cabazitaxel, docetaxel head to head?

Scott Cormack

Not with authority. We have asked the Rumor Mill but probably can’t comment on what Rumor Mill is telling us. So I don’t think we have it from authority from Sanofi at this point.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Okay. And then maybe just lastly just kind of the your interactions with Teva, I guess over the course of the past few months or so and is the question that we get with respect to just kind of what happened maybe post SYNERGY to some of these other programs and then and there is obviously been a little bit of churn there from a managerial perspective, so maybe just wanted to be just kind of comment on just how you perceive to be the level of commitment from Teva specifically with some of these other studies? Thanks.

Scott Cormack

Sure, yes, thanks for the question, Stephen. So I think it’s important to recognize with – partnership with Teva, we get similar questions, because there have been changes, at the top end particularly with Jeremy's departure. Well arrival and then departure. You should recognize that given that we’re in Phase 3 development, our interactions are much deeper than just of a senior management level as if you are trying to do a deal.

The regulatory people on both sides of the companies are interacting on a regular basis, same with data, same with clinical, same with manufacturing and so you’ve got the team interactions where the companies have actually been very, very stable, same personal has been there for a number of years and that level of collaboration and interaction as they are remarkably stable and somewhat independent of what’s going on at the top levels because this is an active partnership where we are looking on Phase 3 and preparing for NDA filings and so on.

So I don’t think we’ve really noticed that change as much as perhaps some other companies would be if you – kind of do a deal with them or to early start off when you’re trying to establish the relationship because those teams have been working together for a number of years now.

As far as the effective SYNERGY on the rest of the programs, we don’t see obviously any change and what’s happening with AFFINITY and ENSPIRIT those continued to enroll, there is not any difference on that front. And then obviously the question becomes what a SYNERGY does or does not succeed if it succeeds obviously things would continue.

In the alternative I think we talked about this on many conference calls previously the agreement that we have that is available for people to view is the commitment from Teva is to basically fund those three Phase 3 clinical trials. There is a couple of exceptions, safety patent, issues and so on and anything like that we would see that they would continue to do that on the basis of that agreement, so we wouldn’t see that that would change.

So hopefully that answers your question Steven, I think we are in pretty good position and we are particularly looking for the next couple of months and to reveal our SYNERGY.

Scott Cormack

All right, operator I believe that is the end of our queued questions at this point and I just wanted to thank everybody for participating on the conference call. Obviously the next couple of months are going to be very critical and exciting for us and we look forward to providing you an update and that next update likely is going to be around the timing of our data set and thank you very much for joining us.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone, have a good day.

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