ChemoCentryx's (CCXI) Tom Schall on Q1 2014 Results - Earnings Call Transcript

May. 8.14 | About: ChemoCentryx (CCXI)

ChemoCentryx Inc. (NASDAQ:CCXI)

Q1 2014 Earnings Conference Call

May 8, 2014 5:00 PM ET


Susan Kanaya - SVP, Finance, CFO and Secretary

Tom Schall - Chairman, President and CEO


Brian Klein - Stifel Nicolaus

Michael Ulz - JP Morgan

Kumaraguru Raja - Citigroup


Welcome to the ChemoCentryx First Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call will be recorded.

I would now like to turn the call over to Susan Kanaya, Senior Vice President and Chief Financial Officer at ChemoCentryx. Ms. Kanaya, please go ahead.

Susan Kanaya

Thank you. Good afternoon and welcome to the ChemoCentryx's first quarter 2014 financial results conference call. This afternoon we issued a press release providing financial results and company highlights for the first quarter ended March 31, 2014. This press release is available on our web site at

Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide a brief corporate update and review upcoming anticipated milestones for the remainder of 2014. Following his comments, I will provide an overview of the financial highlights for the first quarter before turning the call back over to Tom for closing remarks.

As a reminder, during today's call, we will be making certain forward-looking statements. These forward looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These risks are described in our filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on March 14, 2014. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements.

In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, May 8, 2014. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

I will now turn the call over to Tom.

Tom Schall

Thank you, Susan, and thank you to everyone for taking the time to join us for our first quarter financial results conference call. Today, I will review briefly, the events of our first quarter of 2014 and then turn to upcoming highlights and expected milestones for the remainder of the year.

We are pleased to welcome, Dr. Anne-Marie S. Duliege as Chief of Strategic Development and Head of Immuno-Oncology. Dr. Duliege brings a wealth of strategic clinical and portfolio development expertise to this new role. We look forward to her contributions, as we explore and leverage our rich portfolio of chemo-attractant receptor modulators in the rapidly emerging area of immuno-oncology.

I will now turn to our key development programs, or to what we refer to as our four pillars of value. To begin, let's review our C5a receptor or C5aR program. This program includes CCX168, an inhibitor that targets the receptor for the complement protein known as C5a. CCX168 is currently in a Phase-II clinical trial, named the CLEAR trial, in patients with ANCA-associated or ANCA-associated renal vasculitis.

As you will recall, we reported positive data from steps one and two of the ongoing three step Phase-II trial in this disease back in December, showing greater improvements in patients, who are taking CCX168, than those who are on the standard of care. These improvements were consistent across a number of clinical parameters, including improvements in renal response rates, reduction in proteinuria, reduction in inflammatory mediator [indiscernible] in the urine, as well as in improvements in the Birmingham Vasculitis Activity Score, or BVAS, which is a global disease activity index.

These data will be presented in oral sessions at upcoming medical meetings in Europe. The first is the European Renal Association or ERA-EDTA meeting in early June, and the second is a major European rheumatology conference, the EULAR Meeting, which is taking place in mid-June.

In terms of progress in our ongoing clinical trial, we are pleased to report that we have actively begun enrolling patients in step three of the CLEAR trial which is being conducted in Europe. AS the current protocol is designed, this third step will examine how patients on standard-of-care, which include cyclophosphamide plus high dose steroids, compare to patients treated with CCX168 and cyclophosphamide without steroid.

In terms of progress on the regulatory front, we met very recently with the FDA to obtain input on our CCX168 development strategy. We discussed topics related to chemistry, manufacturing and controls or CMC, as well as non-clinical studies and clinical development. Regarding matters related to CMC and non-clinical support, no particular areas of concern are raised, subject to further review, following the anticipated submission of our investigational new drug or IND application.

In terms of clinical development, we plan to continue with the current Phase-II CLEAR trial in Europe as discussed. Additionally, part of our overall strategy may include amending the protocol of the ongoing clear trial, to include both CCX168 active arms, as we did previously in steps one and two of the study.

Specifically, step three as amended, would include the following three dose groups; first, CCX168 cyclophosphamide plus low dose steroids. Second, CCX168 cyclophosphamide but no steroids; and third, the standard-of-care, which includes cyclophosphamide and high dose steroids.

As a result of our discussions with the FDA, we also plan on filing an IND application for CCX168 in the U.S. in the near future, in order to launch our clinical program in North America. We have identified multiple clinical sites in the U.S. and Canada, including the leading centers for vasculitis, and are ready to move quickly, once plans are finalized. Details of our U.S. IND opening study will be shared, after we have finalized our clinical development plans.

Additionally, we have recently applied for orphan drug designation for CCX168. If we receive orphan status, we may apply for fast track designation as well. If granted, such designations might facilitate expedited review and other regulatory efficiencies.

Turning to our second pillar of value, the CCR2 program, our lead drug candidate, the CCX150, an inhibitor of the chemokine receptor known as CCR2. CCX140 is currently in a Phase-II clinical trial for the treatment of diabetic nephropathy. We remain on-track for a readout of a 52-week data in app 200 evaluable patients in the fourth quarter of this year. We are also examining potential indications for the second generation CCR2 compound, CCX872.

Our third pillar of value is the CCR9 program, which includes vercirnon and CCX507, both inhibitors of the chemokine receptor known as CCR9. We have now received data from our former partner GlaxoSmithKline for all four shield clinical trials for vercirnon, and we aim to present our analysis of that data at future scientific meetings. We are exploring partnering opportunities, to address vercirnon's role in the maintenance of remission of Crohn’s disease, potentially along with CCX507, our second generation CCR9 inhibitor, for the treatment of ulcer diff. colitis among other indication. In the meantime, we expect to complete Phase-I development for CCX507 in the first half of this year.

Finally, we are determining how to best position our pipeline of chemoattractant receptor modulators within the therapeutic landscape of immuno-oncology. Chemoattractant receptors are known to play diverse roles in cancer, such as in cancer growth, metastasis, angiogenesis, and especially, the alteration of the tumor microenvironment.

Innovative therapeutic regimens, with our chemoattractant receptor modulators, could include combination therapy with traditional chemotherapeutic agents, and/or with newer agents, such as checkpoint inhibitors, and therapeutic vaccines, in an approach to maximize therapeutic benefits and overcome resistance mechanisms, typical to standard single agent therapy.

With that, I'd like to turn the call back over to Susan.

Susan Kanaya

Thank you, Tom. As I mentioned earlier, our 2014 first quarter financial results were included in our press release just provided earlier this afternoon. There was no revenue recognized for the three months ended March 31, 2014, compared to $1.9 million recognized in the same period in 2013.

The decrease in revenues in 2013 to 2014 was primarily due to funding of clinical support from our former partner GSK for CCX168 in 2013. Our product development and commercialization agreement ended in November 2013, and therefore no revenue was recognized in 2014.

Research and development expenses for the three months ended March 31, 2014 were $8.2 million, compared to $9.3 million in the same period in 2013. This decrease is primarily attributed to lower expenses associated with CCX872, our second generation CCR2 inhibitor, de to the timing of Phase-I related activities and no spending associated with CCX140, our lead CCR2 inhibitor, due to the timing of patient enrolment and the ongoing Phase-II clinical trial, in patients with diabetic nephropathy.

These decreases were partially offset by higher expenses for CCX168, our C5aR inhibitor, as this program advanced into the third step of the ongoing Phase-II clinical trial in the fourth quarter of 2013.

General and administrative expenses for the three months ended March 31, 2014 were $3.5 million, compared to $3 million in the same period in 2013. This increase was primarily due to higher stock based compensation expense or stock option grants and increased intellectual property expenses and professional service fees, leading to our business development efforts. Cash, cash equivalents and investments totaled $141.9 million at March 31, 2014.

With that, I will now turn the call back over to Tom.

Tom Schall

Thank you, Susan. In closing, we look forward to several key milestones over the next several months. Our CCX168, our C5a receptor inhibitor, we are planning to present data at the ERA-EDTA and EULAR meetings in June. We also look forward to sharing more specifics regarding our clinical development plan for this program.

For CCX140, our lead CCR2 drug candidate, we expect to report 52-week data from the Phase-II study in diabetic nephropathy in the fourth quarter of this year. For our CCR9 program, we aim to report our analysis of the SHIELD dataset at upcoming scientific meetings.

Further, we are exploring the next steps for vercirnon, including exploring partnering opportunities. We will complete Phase-I development of CCX507, our next generation CCr9 inhibitor in the first half of this year.

We look forward to further updating you on these programs, and on our efforts towards advancing our immuno-oncology program. Finally, our quarter end cash and investments of approximately $142 million, puts us in an excellent position, to execute on these plans.

Thank you. And now I will turn the call over for any questions. Operator?

Question-and-Answer Session


Yes sir. (Operator Instructions) Our first question comes from Brian Klein of Stifel. Your line is open. Mr. Klein, please make sure your line is unmute. If you're on a speakerphone, lift your handset sir.

Brian Klein - Stifel Nicolaus

Hi, can you hear me now?

Tom Schall

Yes Brian. I can hear you.

Brian Klein - Stifel Nicolaus

Great. Thank you. Thanks for taking my questions. So may be starting out with CCX168. Can you give us a sense of how long it will take you to enroll in the third step of the ongoing CLEAR trial, and when we might see that data?

Tom Schall

Yes Brian, thank you. So as you know, the step is now ongoing. We are enrolling patients in that step. There are two functions by which enrolment will be completed, or two variables that will determine. One is, the number of sites, and in fact, we are currently contemplating adding more sites to the CLEAR trial in Europe, and so, we will have more about that to say, as soon as we get those sites on-board.

Secondly, there is -- we contemplate the possibility of potentially even amending the trial to expand the enrolment of the clear trial, to even a greater number, as part of a comprehensive -- ultimately comprehensive registration. But currently, as articulated, the step three will enroll 36 more patients, and it’s a little bit early for us to say exactly when we will see that data reading out. Again, I think I am going to defer the question until we understand how many more sites we might bring on board.

Brian Klein - Stifel Nicolaus

Great. What about -- how quickly can you get the drugs in the U.S. to start being evaluated in the clinic?

Tom Schall

We will be filing our IND. We hope to file at some time later this quarter Brian. So as soon as we get feedback on the IND, we are already in the process of setting up the trial sites in the U.S. We have identified them, both in the U.S. and in Canada. So I think we will be able to turn that around quite quickly, and our goal certainly is to start dosing in the U.S. this year.

Brian Klein - Stifel Nicolaus

Perfect. In terms of the data presentation at the upcoming meetings in Europe, will they be for the most part, consistent with what you have already press released or are you expecting to present a new data that we haven't seen yet?

Tom Schall

There will be some more granularity around the data Brian. The top line results are essentially, as we have been talking. Definitely market improvements and people on CCX168, at least in -- in our interpretation of the data set. That we will put a little bit of more analysis around, we will certainly show some of the more per patient data, and dissect a little bit more on the Birmingham Vasculitis Activity Scores as well. Dissecting out renal and non-renal components. I think all of that will be new information.

But principally, the top line results remain exactly as we have been reporting. The drug appears to be quite well tolerated so far. We don't have any safety issues, and when CCX168 is onboard, covering the C5a receptor, the patients appear to read out, in all the industries we have looked at, more beneficially than if they are on the standard of care, which includes cyclophosphamide and steroids.

Brian Klein - Stifel Nicolaus

Great. Thank you for that. And then just last question on CCX140; so now that the patients for the most part have all been treated for several months, can you give us any sense of patient drop-outs or if the patients, in terms of tolerability, is consistent with what we saw after the first three months?

Tom Schall

Yes. I think we can give you a flavor for that without going into too many details as we await the 52-week data later this year. So we can say that the drop out rate continues to be quite low, and we don't see any significant deviation in the rate of drop out from the earlier reports, the 12-week data. That suggests the drug seems to be well tolerated in this patient population. I will also underscore the fact that we have had -- since the 12-week data, we have had at least one more meeting and potentially more than one of the independent data monitoring committee, who will look at all the data on blinded, at least the safety data. They have recommended on all those subsequent meeting occasions, that the trial continue unmodified. So again, they seem to be giving it a stamp as well of a green light.

So I think that all the data so far suggests, as we mentioned before, the drug seems to be quite well tolerated and we have quite low dropout rates.

Brian Klein - Stifel Nicolaus

Great. Thank you for taking my questions.

Tom Schall

Thank you, Brian.


Thank you. Our next question comes from Mark Phrom [ph] of Cowen and Company. Your question please.

Unidentified Analyst

Yes. I was just wondering, with your FDA discussions around CCX168, how much commentary have you gotten on what your regulatory package will need to be in terms of the endpoint that they are going to look at and really, are they accepting that renal remission number that you gave us in the press release?

Tom Schall

Thanks mark for the question. So we have got a lot of different items with the FDA, and we will -- as soon as we get our IND out, we are going to give out more details about our clinical trial [indiscernible] going forward. Sorry there is quite a lot of detail [ph], we must have [indiscernible].

In any case, certainly the renal endpoints were discussed as part of our registration package, as for other ways that are looking at endpoint [indiscernible]. So it will almost certainly be, as we go forward to Phase-III, either a combination of renal endpoints, some of which we discussed, which decreases in proteinuria, improvements in EGFR glomerular filtration rate, and even decreases in inflammatory mediators in the urine, and/or may involve the global BVAS, the Birmingham Vasculitis Activity Score.

In all of the indices that I just mentioned, as you know from the Phase-II data, the step one, step two data that we presented, the drug seems to be performing quite well in those patients. So wherever we end up with the endpoint for the registration package, I think we have got excellent clinical preliminary data so far, that those endpoints will all be very reasonable, measurable, and things that we have -- are reasonable chance of making some positive impact on.

Unidentified Analyst

Thanks. And then on CCX140, with these approximately 200 patients that you're going to have at the end of the year; do you have a feel of how much of that population fits the subset that you guys release the data from?

Tom Schall

Well the subset population that we prespecified and called out in that analysis, is a small subset, and we called it out specifically for a scientific reason, which was that those were the patients that fit best at entry into the trial. The pathophysiological characteristics that seem to match the animal models. Those models that we tested the drugs extensively and in our preclinical testing; and those parameters were gauged upon filtration rates as well as the amount of protein in the urine.

So I would say that the broader population certainly will be quite a bit bigger, there is no question about that. But it was that broad population that I will remind you, at two weeks, the entire population showed a reduction in proteinuria, much like the animal models, even as early as two weeks. So although that represents a much larger fraction than the subset that we called out with some of our analyses, and there will be other subsets that have been prespecified, that we will also analyze in the full 52-week dataset. The broader population, obviously is going to be much larger, and focus a lot more pathophysiological parameters at time of entry.

Unidentified Analyst

Okay. Thank you.

Tom Schall

Sure thing.


Thank you. Our next question comes from Geoff Meacham of JP Morgan. Your line is open sir.

Michael Ulz - JP Morgan

It's actually Mike in for Geoff. Thanks for taking the question. In the past, you guys mentioned about the potential for vercirnon in the maintenance setting, and now you are kind of talking about expanding or exploring potential partnerships. Just curious, what might have changed there? Thanks.

Tom Schall

Mike, thanks for the question. In effect, I don't think much has changed frankly. We have -- since receiving the asset back from our former partner GlaxoSmithKline, I think we have always suggested that the best way forward for us, would be to find a new alliance partner for that program, with whom we would certainly do development in Phase-III for maintenance of remission, and who would essentially share a lot of the investment upfront and share on the upside, as we go forward. We never had contemplated in our long range plan, necessarily Phase-III development of vercirnon, because quite frankly, we expected that to be in the hands of the partner.

So I don't think a lot has changed, since we received the asset back, I think we are continuing to look very carefully on what we know about the program and the data. We have many reasons to believe, that there is a path forward for vercirnon, and we very much like to find a partner, qualified partner with interest in the GI space to do that with us.

Michael Ulz - JP Morgan

Got it. And then for the SHIELD maintenance study, I know those studies were sort of stopped early. Is there -- can you give us a sense of may be how many patients, the data is that you have?

Tom Schall

Yeah. Well, there were a couple of different SHIELD trials ongoing ,when SHIELD-1 went out. SHIELD-II, SHIELD-III and SHIELD-IV; SHIELD-II being the double-blinded and placebo controlled maintenance study, which was supposed to run for a year worth of active dosing against the blinded control. Regrettably, there just isn't a lot of patient data in that trial. We will report some of those numbers later this year we hope, at our gastroenterology conference. So I don't think there is going to be a lot to glean from that study, for a variety of reasons. It just didn't have long enough to go for a sufficient number of patients to conclude the one year dosing across the different groups in that trial.

There will be some interesting information I think to be gleaned from the other trials. SHIELD-IV was an open label -- was a blinded, non-placebo match, but certainly active study that was intended to go for two years, and quite a few people got in that study, and at least went through a year's worth of dosing. There were two doses there, 500 once a day and 500 twice a day. And so, although patients knew that they were on some sort of active medication, they didn't know what dose group.

So I think there will be some interesting data to glean from that, and certain at least the safety data will be very interesting, and you know, to prelude that, we don't really see much of any importance in the safety database at those others. We think that's quite good news.

SHIELD-IV was an open label feeder study that was meant to feed SHIELD-II, the long term maintenance study. And again, quite a few people got into that study and at least concluded, several weeks of dosing. So there again may be some -- at minimum some good [indiscernible] data to be read out from that, and maybe some other parameters as well.

So we are just really in a process now of going through all of that data. You can imagine there is lots of information there. We hope to have it all sorted through and be able to present that later in the year, possibly at a European Gastroenterology meeting.

Michael Ulz - JP Morgan

Great. Thank you.


Thank you. Our next question comes from Yaron Werber of Citi. Your line is open.

Kumaraguru Raja - Citigroup

Hi. This is Kumar Raja in for Yaron. Thanks for taking my question. So my question is, how are the next generation CCR9 differentiated from the earlier version, and also can you talk about the early stage programming immuno-oncology, like do you have any molecules there, or what stage you are and when can we get an update on that?

Tom Schall

Certainly, thanks for the question. So CCX507 is our next generation CCR9 inhibitor. And 507 is a somewhat different chemical class from the first generation. It’s a totally different pharmacological entity if you will. It has its own IP space as well. It is -- among the good properties that we retain from the first generation compound, we improved to somewhat on potency. So it's about minimum five-fold, perhaps even ten-fold, more potent on the targets, than the previous generation molecule. It has some other biochemical properties that make it a little bit easier to get the drug on board and absorbed and in-vivo, in a dose dependent fashion; and all of those have been very useful properties, in terms of thinking about its clinical dosing and usage over time. So I'd say potency and the biophysical properties that make it more readily absorbed in the real world.

And then you also asked about the immuno-oncology space; so there, we are working on, essentially a premise that has gotten a lot of people excited, which includes the idea that in the tumor microenvironment, we essentially attract -- i.e., the tumor attracts a variety of mechanism. Cells that will more often, guard the tumor. So these are immune cells, that could be t-cells or even myeloid derived cells that look like macrophages for example. But in fact, there are cells that are pretty ineffective. They are suppressive in their nature. So whether these so called key regulatory cells or the myeloid derived suppressor cells or MDSCs, those cells are drawn to the tumor through chemoattractants, chemokines and chemokine receptors that are really quite selective to that environment.

So once the tumor attracts those suppressive cells to essentially wall-off or insulate the tumor. As you can well imagine, the tumor has a growth advantage in-vivo, and is not subject to quite so much immuno-factor attack, that is the actual anti-tumor mechanism that would help clear the tumor.

So if one blocks those immune suppressive cells, whether they are T regulatory cells or the myeloid derived suppressor cells, then perhaps, you can have a more positive impact on the tumor, and put the balance of immune surveillance and immune action back to the affector or killing side of the equation, rather than suppressive side.

So those suppressor cells are attracted to the tumor microenvironment, via a number of chemokine receptors that have been well documented by many groups in the literature, both academically and in the private sector. Those receptors include such things such as CCR2, CCR4, CCR5, perhaps CCR6, fairly a newly emerging receptor. Even things like CCR1 and certainly CXCR4 and its very close cousin, CXCR7.

Now I am sorry for that laundry list of preceptors, but I bring that up, because at least in two of those -- for all of those various chemokine receptors, we have unique potent and selective small molecule inhibitors of those receptors. In at least two of those cases, we have compounds that are in the clinic and indeed in Phase-II development for other indications. So for example, CCR2, as you well know, we are in a Phase-II study with CCX140 in diabetic nephropathy and we talked about that a little bit earlier. And in addition, we have a second generation compound called CCX872, which is just finishing up its Phase-I work. So there, in the context of tumor oncology, again envisioning, most likely a combination therapy with something else, either a standard chemo or a radio therapeutic regimen, or much more excitingly, something like a checkpoint inhibitor, you can certainly imagine the use of CCR2 in otherwise difficult cancers, and we have got a couple of ways to do that clinically.

CCR1 has been shown to have a role, another chemokine receptor in multiple myeloma and certainly some of the bone and metastatic consequences of that caner, and again, we have got a compound that went through successfully, a Phase-II proof-of-concept study, CCX354 and another indication of rheumatoid arthritis. But that was a nice and quite successful study, and we have an earlier generation CCX721, which has been shown very clearly to have quite beneficial effects in a very difficult model, a mirroring model of multiple myeloma with dire bone consequences in that disease, and CCX721 is a very beneficial outcome in that model -- those data have been recently published.

In other cases, we have very late preclinical stage compounds, that are ready for the IND enabling path. Whether they are in CCR4, widely reputed as a chemokine receptor that attracts T regulatory cells to the tumor microenvironment, or CXCR7, which again is a fascinating receptor that probably regulates the tumor blood vasculature environment. And then even earlier stage compounds with programs like CCR5 and CCR6.

So all that by way of saying that, we have got a really broad base, a great IP position, lots of great biology and will be ready to start some initiations with these compounds, I think in the relevant clinical setting fairly soon; and we are certainly entertaining a number of ways to do that, including alliances.

Kumaraguru Raja - Citigroup

Are there any particular cancer you guys are focusing on initially or like based on cell data? Like do you see any particular highly enhanced effect in particular areas as such?

Tom Schall

Well, there is a lot of data from us and others, and I think to sift through it would require a longer call than we had today. But suffice it to say, that there are other programs as well, for example, with CCR2 inhibitors, looking at pancreatic cancer for example. We think there is lots of very interesting data around CCR2 and pancreatic cancer, as well as other cancers frankly. There are some other programs with colorectal cancer, looking at CCR5. The biology of CCR2 and CCR5 are often linked incidentally. So I would also say that CCR2 could very well have a role there.

So certainly pancreatic, colorectal cancer, and then other very interesting environments like glioblastoma, recurrent glioblastoma caused by [ph] radiation. Very clearly a role for CXCR7 and its close cousin CXCR4, and CXCR4 has an extensive literature over the years about its role in things like breast cancer and its metastasis. Some of that biology may well be going through the close cousin CXCR7, and some of this will undoubtedly be worked -- will be worked out in the clinical setting.

Kumaraguru Raja - Citigroup

Thank you so much. It is very helpful.

Tom Schall

Thank you.


Thank you. At this time, I'd like to turn the call over to President and CEO, Dr. Thomas Schall, for any closing remarks. Sir?

Tom Schall

Thank you very much and I want to thank everyone for taking time to be on our conference call today and asking some excellent questions. We look forward to updating you next quarter on the many programs that we discussed today, and I wish everyone a great day.


Thank you, Dr. Schall, and thank you ladies and gentlemen. That does conclude ChemoCentryx's first quarter 2014 financial results conference call. You may disconnect your lines at this time. Have a great day.

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