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Ambit Bioscience Corporation (NASDAQ:AMBI)

Q1 2014 Earnings Conference Call

May 6, 2014 05:00 p.m. ET

Executives

Marcy Graham – Executive Director, IR

Mike Martino – President and CEO

Alan Fuhrman – CFO

Bob Armstrong – VP, Preclinical Biology

Athena Countouriotis – CMO

Analysts

Jonathan Eckard – Citi

Howard Liang – Leerink Partners

Nick Abbott – BMO Capital Markets

Operator

Welcome to the First Quarter 2014 Earnings Conference Call. My name is Bekiva, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this call is being recorded.

I would now turn the call over to Marcy Graham, Executive Director of Investor Relations. Marcy, you may begin.

Marcy Graham

Thank you. Good afternoon and welcome to the Ambit Bioscience's Conference Call to discuss financial and operating results for the first quarter of 2014. Joining me today on the call are Mike Martino, CEO; Alan Fuhrman, CFO; Bob Armstrong, our Vice President of Discovery and Pre-clinical development; and our Chief Medical Officer, Athena Countouriotis.

Before we proceed, I would like to remind everyone that statements made during this call regarding matters that are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement.

To learn more about those risks and uncertainties, please read the risk factors set forth in our most recent filings with the SEC. All forward-looking statements made during this call speak only as of the time they are made. We are under no obligation to update these statements.

I will now turn the call over to Mike Martino, President and CEO of Ambit. Mike?

Mike Martino

Thank you, Marcy. Good afternoon everyone and welcome for our first quarter call for 2014. We last spoke just six weeks ago when we provided an update on the full year 2013. So today's scripted comments will be brief.

Our primary achievement in early 2014 was the initiation of our QUANTUM-R registration of Phase 3 Trial comparing Quizartinib as a monotherapy to chemotherapy regimens and relapse to refractory FLT3 ITD positive AML patients. We are also pleased with the acceptance of abstracts for presentation of ASCO and EHA both coming up in just a few weeks.

At ASCO, we'll present data and clinical benefit of Quizartinib as shown in the final results of a Phase 2B study in FLT3 ITD positive AML patients and on the benefit of treatment with Quizartinib and subsequent bridge to transplant for FLT3 ITD positive AML patients. The details of the abstracts to be presented in EHA will be available on their website in mid-May.

With the acceptance of these abstracts, Quizartinib will be then featured in more than 20 presentations at ASH, ASCO and EHA over the past two years and the date has been studied in more than 500 patients in company and investigator-sponsored trials. These studies to this point continue to show that Quizartinib rapidly reduces vulnerable (indiscernible). Reduce a significant percentage of patients to a potentially curative stem cell transplant is generally well tolerated and approves median and overall survival when compared to historical controls in both patients who undergo transplant and those who do not.

These clinical benefits when combined with a convenient once a day oral dose primarily administered an outpatient setting continue to support Quizartinib as the best in class with three inhibitor and clinical development, which continues to be reflected as well in a high level of investigator enthusiasm for the drug.

Based on data from both company and investigator sponsored studies as well as our preclinical data, we're enthusiastic about the potential for Quizartinib. On this point, we thought it would be helpful to have Bob Armstrong speak further on the biological properties that we believe position Quizartinib to move into additional settings including front line and combination and as a maintenance therapy.

Athena will follow with additional detail in our expanded clinical strategy beyond relapse and refractory AMS. Bob?

Bob Armstrong

Thank you, Mike, and hello everyone. As the first receptor (indiscernible) clinical development designed to specifically inhibit FLT3. Quizartinib has demonstrated unprecedented activity as monotherapy and relapse refractory AML. We believe Quizartinib's ability to achieve these responses is a result of its potency, selectivity and favourable pharmacokinetics allowing continuous once daily administration of the drug.

Quizartinib treatment in this context is able to effectively suppress the FLT3-ITD growth signal and rapidly reduce the (indiscernible) for many patients who have limited therapeutic options at this stage of the disease. In my of these patients, this blast reduction is sufficient to allow patients to be bridge to a hematopoietic stem cell transplant and a potential cure.

Recent studies on the genetics of AML, particularly those from Washington University had confirmed that AML is a genetically diverse disease with numerous mutations. The standard of care frontline chemotherapy ablates the bone marrow and non-discriminately reduces a leukemic burden independent of specific genetic mutations.

Following chemotherapy, however, a low level of minimal residual disease is often present and is comprised of chemotherapy resistant clones including those with the FLT3-ITD mutations. Those patients who relapse following chemotherapy who have the FLT3-ITD mutation do so more rapidly and with more aggressive disease in patients without it.

Therefore, the goal of Quizartinib as frontline therapy in combination with chemotherapy is to reduce the FLT3-ITD population of chemotherapy resistant clones before they emerge as the dominant relapse clone. We believe this could contribute to a more prolonged remission and potentially a less aggressive relapse. Results that were presented at ASH last year from both our company-sponsored Phase 1 trial as well as an investigator sponsor study demonstrate that Quizartinib is generally well-tolerated in combination with various chemotherapy regimens.

The biological rationale for using Quizartinib in the post-transplant and post remissions maintenance setting is similar to that to what I described for the frontline setting. i.e., these patients may have a residual FLT3-ITD clones that will re-emerge and drive aggressive relapse. As a maintenance therapy, we believe Quizartinib will serve to inhibit the outgrowth of the (indiscernible) FLT3-ITD positive clones and contribute to a more durable remission.

In all, we believe Quizartinib's properties are potency, selectivity and favourable pharmacokinetics may enable broad application of Quizartinib for many patients with AML.

Next, Athena will provide a clinical development update. Athena?

Athena Countouriotis

Thank you, Bob, and good afternoon everyone.

As Mike mentioned earlier, initiation of the Phase 3 QUANTUAM-R study was a notable accomplishment for our team in 2014. We are currently on track and expect to have interim data in the second half of 2015. In addition, as you all know, we have a number of company and investigator-sponsored studies in settings outside of relapse refractory FLT3-ITD positive EML including the ongoing company-sponsored trial in post transplant maintenance, which we hope to present at a scientific conference later this year.

In addition to this study, both the investigator sponsored combination study with (indiscernible) or low does cytarabine being conducted at MD Anderson and a low intensity one study being conducted in the United Kingdom continue to progress with patient enrolment.

We anticipate a large European Phase 3 AML 18 study to begin enrolling in second half of this year. Following up on Bob's biological rationale, we have presented data in many therapeutics settings of AML with Quizartinib and our observations today continue to provide the clinical support that Quizartinib can play an important role in earlier and expanded settings for many patients with AML.

The Phase 1 data in two studies we presented at ASH last year support expansion of Quizartinib in combination with standard chemotherapy in newly diagnosed patients with the [ITD mutation]. We are evaluating multiply designs in the frontline settings including incorporating maintenance therapy with Quizartinib after either consolidation therapy or transplant.

The details will be discussed as we get close to finalization. With that, I will now turn the call over to our CFO, Alan Fuhrman to discuss financial results. Alan?

Alan Fuhrman

Thank you, Athena.

Revenues were 32,000 for the first quarter of 2014. The quarter-over-quarter decrease of 6.6 million was primarily due to the termination of our collaboration with Astellas which occurred in September of 2013. Research and development expenses for the first quarter of 2014 were $6.3 million. These represents a decrease of $2.7 million from the same period in 2013 and was primarily due to lower Quizartinib research and development expenses resulting from a reduction in a number of patients being treated and followed in our Phase 2B clinical trial. The reduction and expense was partially offset by an increase in startup expenses related to our Phase 3 clinical trial.

General and administrative expenses for the first quarter 2014 were $3.3 million. The increase of $1.5 million in the first quarter was primarily due to increased cost related to stock based compensation expense, personnel expense and public company related expenses.

Other income of 536,000 for the three months ended March 31st, 2014. The change of $4.6 million from the prior year was primarily due to the change in fair value of the company's stock warrant liabilities which is driven by the change in fair value of the underlying securities.

At March 31st, 2014, the company had cash and cash equivalents of $61.9 million compared to $71.2 million at December 31st, 2013. Based on our current operating plan, we anticipate an average quarterly burn rate of between $9 million and $11 million per quarter in 2014 and 2015 primarily reflecting additional expenses as we ramp up our Phase 3 trial. At the end of the first quarter 2014, we had 17.9 million shares of common stock outstanding and 21.8 million shares on a fully diluted basis.

Now, I'll turn the call back over to Mike for his closing comments.

Mike Martino

Thanks, Alan. I'm pleased with our progress during the first months of 2014. At this point, 2014 is primarily about execution on the relapse refractory Phase 3 trial. That's our baseline plan and I want to assure you all that we remain focus on that.

However, we believe we have opportunities to create significant value beyond the relapse refractory market opportunity for Quizartinib and our vision encompasses these opportunities even though we aren't yet allocating significant resources to pursue them. As Athena and Bob had indicated, we believe significant clinical and market opportunities exist to broaden the application of Quizartinib to the treatment of newly diagnosed disease and as a maintenance therapy. Our strategy remains to retain commercial rights to Quizartinib in the US and to pursue strategic partnerships outside North America to both accelerate development of the drug indications beyond relapse refractory AML and expand the commercial opportunity outside the United States.

Additionally, we believe that our two existing pipeline assets, the AC410 and AC708, are highly selected with potent compounds with the potential to be developed in large market indications and represent upside potential. Enabling this broader strategy to both broadening…

Question-and-Answer Session

Operator

(Operator Instructions) And our first question is going to come from Jonathan Eckard from Citi. Please go ahead. Your line is open.

Jonathan Eckard – Citi

Hi. I'm not sure. Hopefully you can hear me. The first question I have is running the Quantum trial, the -- I see that you have the conclusion of the post transplant maintenance for Quizartinib. Other than the potential benefit to those patients, maybe in the survival, is there any potential utility of that being included in future labelling? I'm just trying to understand all the different strategic benefits of having that goes into the trial? And then I also have a question regarding the trial that got through [Alan Burnett] that was running in front line.

I'm wondering if there's any update with that that I maybe missed in your prepared remarks and then there might be a specific question about that trial. Can I ask Athena maybe on that?

Mike Martino

Okay. Hi, Jonathan. Thanks for your questions.

Regarding the maintenance views of Quizartinib in the Quizartinib arm in the trial, we do believe that there was a survival upside patients who receive Quizartinib (indiscernible) transplant and receive Quizartinib as a maintenance therapy, whether or not that would result in specific label claims, I think largely would be a function of discussions with the agency. Although we wouldn't be optimistic frankly without a second randomization that those discussions would be favourable.

Athena, do you want to elaborate on that?

Athena Countouriotis

Yeah. I agree with what Mike said, Jonathan. I think it's a little hard to speculate of what the future labelling will be. Obviously, we've just initiated the trial and I'm optimistic that the trial is going to meet all of the milestones that we've met. But we are ways away from having labelling discussion. So I wouldn’t speculate too much. I would say that obviously I will lobby heavily with the agency for the broadest label that we can achieve from (indiscernible) primary endpoint.

I think that should address hopefully your comments around the QUANTUM-R trial. If you want, I can move on to the [Burnett] trial.

Jonathan Eckard – Citi

Sure.

Athena Countouriotis

So obviously, Dr. Burnett has two trials that he has started with Quizartinib in a Phase 3 that soon to start that I mentioned in my comment. The two trials at the first was the AML 18 pilot that he showed data on at ASH last year. We haven't received any further update of a new analysis from that trial yet. And the second is a low intensity one or the LI 1 trial that is continuing to enrol patients. And we're hoping to project to have interim data towards the second half of this year.

And then as I mentioned in my comments, the Phase 3 AML 18 trial also incorporates Quizartinib will hopefully start in the second half of the year.

Jonathan Eckard – Citi

I guess we're going to have wait till the trial begins in order to get color and its design and overall structure become one of the things about having an independent trial like that is for potential regulatory utility for trials. And then another question on the database sort of ASH last year by Dr. Burnett, more Quizartinib will be front line in combination with chemo. Could you remind us of what the QTC rate was that? I thought it was actually quite a bit lower than what you've seen in the relapse refractory monotherapy. And maybe if you could just touch on, if that is the case, what could be (indiscernible) in that observation?

Athena Countouriotis

Good question. The first thing I would say is I can't speculate in regards to what the registration capabilities of Dr. Burnett's trial will be. Obviously, that's a trial that the design is finalized. We're hoping to start enrolment, as I said, in the second half. And more often than not, he does post the trial to clinicaltrials.gov so that once the trial, in his mind, is ready to be populated there, that's probably the first look that you would have in regards to the design of the study.

But I think then going back to what was presented ASH last year, the pilot is very similar in its concept of combining Quizartinib with kind of standard (indiscernible). So the preliminary design you probably can't get an idea from seeing the pilot last year.

In regards to the QT of the data that was shown at ASH, yes I agree in relation to the higher doses that we saw with Quizartinib, the QT prolongation rate was much lower. But it was based on different cohorts and different dosage. So I think just in general, I would say that, yes, it was lower. It was what we saw as a higher dosage. But as you know, the Phase 2B trial now has a very low rate of QT prolongation. So it's consistent with what we've seen with lower doses, which is what we had in his study.

Mike Martino

Jonathan, you will probably recall that from the podium at ASH in response to a question about QT, Dr. Burnett indicated that he wouldn’t even be mind of doing it if the company weren’t requiring him to do so. That he reviews – he views it as clinically irrelevant.

Operator

And then our next question is going to come from Chris Raymond from Robert Baird.

Unidentified Analyst

Good afternoon, this is Laura Chicko [ph] in for Chris Raymond today. Thank you for taking my question. First, just wanted to make sure I heard this correctly. Athena, did you say the company sponsored post transplant maintenance data would be at ASH later this year or is there a different conference that might make more sense for that?

Mike Martino

Thank you for your questions. This is Mike. I believe what Athena said is that we hope to present that data at a scientific conference later in the year. We weren’t specific either to the timing or the conference itself.

Unidentified Analyst

And then a quick follow up, I think Bob’s walk-through of Quizartinib’s differentiating features was really helpful. I guess kind of related to the competitive landscape, could you help us understand a little bit how might – Quizartinib might differ from something like Astellas FLT3inhibitor 2215 and just to clarify is that distinct from your prior collaboration?

Mike Martino

Regarding the Astellas compound, I mean I think what we can clearly say is that we are aware that they are presenting pre-clinical data at ASCO, we will see that data when the rest of the world does. We would really redirect the attention to the clinical experience with Quizartinib. As I said earlier it’s been featured in nearly 20 data presentations over the past 2 years, it’s been studied in over 500 patients at a variety of doses, variety of clinical settings as a monotherapy in combination and that clinical experience combined with our pre-clinical data really gives us a conference to say that Quizartinib is the FLT3 inhibitor of choice in the space. We believe that opinion would be echoed by investigators, where on the call and you have the opportunity to ask them.

Operator

And then our next question is going to come from Howard Liang from Leerink Partners.

Howard Liang – Leerink Partners

I guess questions on the phase 3, just going back to the post transplant maintenance, is that mandatory or is that optional by physician?

Athena Countouriotis

Hi, Howard, so it’s not mandatory. It would be something that I would assume that investigators especially as Laura mentioned is especially after they see the data that we will present at a conference later this year, I would think that the investigators would recommend this to all patients that make it post the transplant and it would be something that would be restarted within hopefully 30 days after the transplant.

Howard Liang – Leerink Partners

Maybe if you can talk a little bit about what are the next trials, how are you thinking about this agent forward to the front line setting and the significance of new trial by Dr. Cortes?

Athena Countouriotis

Sure. So I think the first thing I would say is that with Dr. Cortes’ trial, Dr. Burnett’s AML 18 phase 3 trial and the low intensity 1 trial, essentially in 2014 we will have 3 ongoing combination trials in newly diagnosed patients with Quizartinib. So we already have the ball rolling quite a bit. In regards to an additional trial that may address a different patient population as I mentioned in my comments, we are looking at multiple designs for that trial based on the data that we showed at ASH last year and I will provide an update as we get further to finalization.

Howard Liang – Leerink Partners

And the last question on ASCO presentations, maybe I don’t know if you can talk about what will be the focus of those presentations and what (indiscernible) before from this trial?

Athena Countouriotis

The one thing I can say is that as you can see from the titles, as the first abstract is in relation to the phase 2b study and as you know the abstracts go live next week, so you will be able to see at least the preliminary data that – essentially data that we’ve already shown in the abstract and the final presentations will be updates of that data. So as you remember, the ASH presentation of the phase 2b trial last year was an interim analysis and here we are with the final data from the phase 2b now, and the second abstract is going to look more heavily at patients specifically that were taken to a transplant and how they have done post transplant.

Operator

And our next question is going to come from Jim Birchenough from BMO.

Nick Abbott – BMO Capital Markets

Hi this is Nick in for Jim. Thanks for taking my questions. First on the (indiscernible) study, notably it’s a very aggressive timeline, I am wondering if you can help us understand and how many sites they are going to be in the trial, how quickly you can bring all those sites online and also whether you have an interim analysis built into the trial design?

Mike Martino

Regarding the number of sites, right now we are aiming towards having about 110 sites onboard by the end of this year and as you can imagine with a study like this that ramps up with month to month additions getting us up to that run rate. As Athena has indicated earlier about 50% of those sites are in Western Europe, there are small number in Australia and most of the balance is in the United States. Regarding the interim design, a quick answer is yes. There is an interim design built into the study. I ask Athena just to remind everyone what the broad parameters of that are.

Athena Countouriotis

Sure. As I mentioned Nick, we are expecting still that the interim data would occur in the second half of next year in 2015 and as I have mentioned previously at that interim analysis the data safety monitoring board has the option to recommend the sample size, the adjustment based on the adapted design that we discussed with health authorities. So the interim would be occurring towards second half of next year with the built in adaptive design based on number of events which is essentially 50% of the events that have occurred in the study.

Nick Abbott – BMO Capital Markets

And just to clarify then, you get the advice from the European regulators on trial design?

Athena Countouriotis

That’s correct. We did receive protocol assistance in regards to the phase 3.

Nick Abbott – BMO Capital Markets

And in terms of – obviously you’re indicating either partner to run a front line study, how the permissive [ph] discussions going, I know it’s a very hard question to answer but ideally when would you like to secure a partner so as not obviously to delay starting the front line study –

Mike Martino

In registrational trial, regarding the status and the timing all I can really say at this point is that we continue to be pleased that there is a high level of interest and we are aggressively pursuing those discussions, that’s really all I can say at this point.

Nick Abbott – BMO Capital Markets

Okay, sorry but just to confirm the $9 million to $11 million burn rate 14 or 15, that doesn’t include starting up a front line trial?

Mike Martino

If it does, it does not, that is correct.

Just to be crystal clear, for everyone the baseline plan is to execute on the phase 3 relapse refractory trial for Quizartinib that is underway. We expect the burn on that as Alan indicated to range between $9 million and $11 million a quarter. That is focused almost entirely on that trial, that does not include material burn towards additional trials, it does include drug supply to support the investigator sponsored studies that are underway, that Athena outlined but it does not include significant burn on pipeline either. So it is primarily Quizartinib the phase 3 trials, drug supply to support the ISTs.

Operator

And we have no further questions at this time. And at this time, I would like to turn the call back over to Marcy Graham. Please go ahead Marcy.

Marcy Graham

Thank you and thank you for joining us today on the call and for your interest in Ambit. We looking forward to speaking with you again soon and meeting with many of you at the investor conferences, I think in the Deutsche conference in New York later this week or Boston actually later this week. Meantime if you have further questions and need additional information, please feel free to contact investor relations at 8858-334-3125. Thanks.

Operator

Thank you ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.

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