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Onconova Therapeutics, Inc. (NASDAQ:ONTX)

Q1 2014 Results Earnings Conference Call

May 12, 2014 04:30 PM ET

Executives

Benjamin Hoffman - Director of Public and Investor Relations

Dr. Ramesh Kumar - President and CEO

Ajay Bansal - Chief Financial Officer

Analysts

Rich Goss - Leerink Partners

Kim Lee - Janney Capital

Operator

Good afternoon. We will begin the conference 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.

Benjamin Hoffman

Good afternoon and welcome to our First Quarter 2014 Earnings Call. Earlier this afternoon, we issued a press release providing an operational and financial update. 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; 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.

Dr. Ramesh Kumar

Good afternoon and thank you for joining us. At Onconova, we are focused on the development of rigosertib and to bringing this novel therapy to cancer patients need. In February, we announced top-line results of the Phase 3 ONTIME trial for intervenes or IV rigosertib in higher risks myelodysplastic syndromes or MDS.

As previously disclosed, the study did not meet its primary endpoint in the intent to treat population. However, we have noted encouraging survival benefit in subset analysis. Currently, we are preparing to discuss these results with regulatory authorities in the U.S. and Europe. We also continue to evaluate rigosertib and additional clinical trials of patients with MDS and solid tumors.

Now, let me turn to our CFO, Ajay Bansal for an overview of our first quarter financials. Ajay?

Ajay Bansal

Thank you, Ramesh and good afternoon everyone. Our financial results were included in this afternoon’s press release and will also be available with additional detail in our 10-Q. Our research and development expenses were $14.2 million for the first quarter of 2014 and our G&A expense were $4.9 million. In terms of our cash position, we ended the first quarter with approximately $84.6 million in cash and cash equivalents.

Our cash use in operating activities in the first quarter was approximately $15.4 million. This compares to $16.6 million for the fourth quarter of 2013. We continue to manage our resources and sink with our development efforts and at the current blend rate, we have enough cash on hand for the middle of next year.

At this point, let me turn the call back to Ramesh for a more detailed discussion of our development programs in MDS and solid tumors and our upcoming milestones.

Dr. Ramesh Kumar

Thank you, Ajay. First higher risk MDS. As you likely know currently there are no approved therapies for higher risk MDS patients after they fail or stop responding to hypomethylating agents or HMAs. These agents are effective only for a fraction of treated patients in a (inaudible). The general outcome for the majority of HMA-treated MDS patients include either progression of disease, while receiving their initial course of HMA or failure to respond to a full course of HMA treatment. Collectively, these two groups are referred to as patients with primary HMA failure or patients who relapse following an initial response to HMA therapy, these patients are referred to as patients with secondary HMA failure.

In February, we announced results on top-line analysis of the Phase 3 ONTIME trial of IV rigosertib in higher risk MDS patients previously treated with HMAs. Based on ITT analysis the trial did not meet its primary endpoint of a sophisticate significant improvement with median overall survival in the IV rigosertib plus best supportive care arm.

However, the preplanned analysis demonstrated an increase in median over survival of 3.9 month, hazard ratio of 0.66 p value of 0.017 in the subset of patients with primary HMA failure. This subgroup comprised 62% of the patients enrolled in the ONTIME trial and had a median overall survival of 8.5 months in the rigosertib arm versus 4.6 months in the best supportive care arm.

Thus a substantial portion of the total patient population with a short life expectancy and no approved therapies, appear to have benefited in this first ever randomized trial in post HMA MDS patient. The ONTIME trial was conducted in the U.S. and five European countries and we are now in the process of initiating discussions of the medical need and the significance of our data to regulators from both continents. Regulatory feedback expected in the coming month will determine the next steps for rigosertib in this patient population.

We previously announced the initiation of the Phase 3B trial referred to as study 04-24, a single arm Phase 3B trial intended to provide additional tolerability and activity data for high rigosertib and post HMA MDS patients. The trial is designed to enroll 90 patients and is now opened in two dozen U.S. and European sites with a third of the patients already enrolled.

And based upon encouraging non-clinical data in advancing an oral dosage form of rigosertib in combination with azacitidine or (inaudible) for front line higher risk MDS patients. A Phase 1/2 study of oral rigosertib plus azacitidine has completed the first two dosing cohort in the dose escalation stage. Once the final dose is selected, Phase 2 will initiate at multiple sites in the U.S. and Europe. We expect that additional data will be available in the second half of 2014.

Now a lower risk MDS; patients with lower risk MDS [cytopenic] and suffered the burden of frequent transfusions. For transfusion independent lower risk MDS patients, treatment options are limited to Revlimid, which is indicated only for del [5q] patients, ESAs or erythropoiesis-stimulating agents and transfusion supportive care.

Based on encouraging data we presented at the 2013 ASH meeting and regulatory feedback from the FDA, we are advancing oral rigosertib as transfusion spearing therapy for unmet needs of patients with lower risk MDS.

We are continuing our regulatory dialogue with agencies in Europe aimed at establishing the parameters for a pivotal trial. Based on the genomic methylation analysis presented at the 2013 ASH meeting, we are enrolling a cohort of 20 additional patients to further explore this potential prognostic marker or pre-selection of patients who are likely to respond to the recilisib treatment.

Additional supporting data will also be available from an ongoing multisite Phase 2 study referred to as the 09-08 study.

Solid tumor programs: We are also studying rigosertib in solid tumors and recently initiated a Phase 1 trial to evaluate the combination of oral rigosertib plus this platinum radiotherapy or chemoradiotherapy or CRT in patients with head and neck cancer.

Published non-clinical studies provide support for potential synergistic or supper additive benefits of combining rigosertib with CRT. This multi-centered trial determine the maximum tolerated dose of rigosertib while also assessing the safety, tolerability and activity of this combination. In other news, an illustration of breadth and depth of our proprietary pipeline of novel targeted agents is [roster] of presentation from the AACR annual meeting in April.

At AACR, we presented 7 scientific posters highlighting data relating to the molecular mechanism of action of rigosertib and 2 new development programs targeting within PLK2 or Polo-like Kinase 2 and CDK4, ARK5 kinases cyclin-dependent kinase 4 and AMP-activated regulated kinase 5.

In summary, rigosertib is a primary focus of our research and development efforts and we remain dedicated to serving the unmet needs of patients with MDS. Our key upcoming milestones include: One, discussions with U.S. and European regulatory authorities regarding development of rigosertib in higher risk MDS during the second and third quarters of 2014. Two, clarity on the utility of a prognostic genomic methylation marker for transfusion-dependent lower risk MDS patients in the second half of 2014. This could drive the design initiation of the later stage oral rigosertib trial in lower risk MDS. Three, start of the Phase 2 stage of the combination trial of oral rigosertib and azacitidine in first-line MDS in the second half of 2014; plus we have key milestones coming up in the remainder of the year.

This concludes our prepared remarks and we will open the call for your questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question from Kim Lee with Janney Capital. Please go ahead. You may want to check your mute button. Kim Lee, your line is open. Kim Lee, please check your mute button. Next questioner is Howard Liang with Leerink Partners. Please go ahead.

Rich Goss - Leerink Partners

Hi, this is Rich Goss calling in for Howard. Thanks for taking my question. I was wondering, if you give any more detail during the timing of the lower risk phase 3 initiation.

Dr. Ramesh Kumar

Rich, thank you for your question. We have guided second half of the year for potential start and since we are coordinating the efforts in U.S. and Europe, it's very difficult to really narrow it down. So really as I explain there are three factors. One of course is the methylation signature and how best we can incorporate it. Second, guidance; on top of the FDA guidance, guidance from European regulator. So these factors are going to probably make it difficult to define it any further than H2 2014 at this point.

Rich Goss - Leerink Partners

Okay, thanks. And also regarding the milestone payment relating to decision to proceed and lower risk. Do you receive that when the trials initiated?

Dr. Ramesh Kumar

It's difficult to qualify that. At this point really we can't make a specific statement to that effect without consulting with our partner. So that's the best I can say at this point. Ajay, you want to add to that?

Ajay Bansal

No. I think as you've disclosed in our filings. It sort of say that -- [it says it is] due upon joint decision by the parties to proceed with development of rigosertib and lower risk MDS. So whenever we jointly decide that that (inaudible) payment becomes due.

Rich Goss - Leerink Partners

Okay, great. Thank you.

Operator

Next questioner is Jonathan Eckard with Citi. Please go ahead.

Unidentified Analyst

Hi, this is (inaudible) in for Jonathan Eckard. And I just wanted just gain a little bit more color surrounding the combination therapy in front line MDS. So, could you just give us a little bit of a better idea in terms of the primary hurdle as a duration response? Is it overall response; just to get a little more color on that and when we could see an update on the Phase 2 study there?

Dr. Ramesh Kumar

Certainly, thank you Alan. As most of you know azacitidine or Vidaza is a dominant HMA because it’s approved both in U.S. and Europe, whereas azacitidine is primarily used in the U.S. at this point for MDS. And as I mentioned earlier, a lot of patients don’t respond to either Vidaza or decitabine. So, there is an open window for new approaches including combination therapy approaches in front line MDS.

Number two what we have shown and it’s a subject of an issue of U.S. patent is that rigosertib can synergize with azacitidine. So rigosertib plus azacitidine appear to be synergistic in these model systems. So based on these studies, we started a Phase 1/2 development program which is now running at two sites in the U.S. And then this program partially determined the appropriate dose of rigosertib to use with a standard label dose of azacitidine.

So we’re doing it in steps and we disclosed this earlier is that we’re going to go from one dose to the second dose to the third dose and then find out whether we can use the full dose of rigosertib as defined by Phase 2 studies in lower risk MDS patients and full dose of azacitidine as indicated in the label of azacitidine.

And once we reach that, we will expand the study to include more patients back to second half of the trial and/or Phase 2 portion of the trial. So having completed the first two dose cohorts successfully and advanced to the third cohort, we feel that it’s highly likely that we will be able to start the second part of the trial in the third quarter of this year.

So we are also hopeful that later this year we will be able to share safety, tolerability and preliminary efficacy data for the whole program.

Unidentified Analyst

Thank you.

Operator

(Operator Instructions). We do have a question from Kim Lee of Janney Capital. Please go ahead.

Kim Lee - Janney Capital

Good afternoon. Sorry about that [earlier] guys. So quick question on the utility of your prognostic methylation marker; can you tell us your plans going forward for this, I mean is this something you will trying to use in your new Phase 3 studies and just a little more clarity on that would be great? Thanks.

Dr. Ramesh Kumar

Kim, thank you. As you know we disclosed at ASH either that here is a genomic methylation signature that helps distinguish responders from non-responders. In other words, using bone marrow biopsy samples from patients prior to treatment and using methylation as a marker, the investigators were able to call the responders from non-responders. So it’s potentially a very, very useful tool going forward. So in our discussions in the first quarter with the FDA, we had a good discussion on this thing. And although we are certain that we are going to use this marker in our next phase trials, question really is, are we going to preselect the patients for the trial or are we going to use the trial to provide additional stratification or subset information.

And to get a really good handle on that question, we feel that having another 20 patients worth of data would be highly useful. So accordingly we started additional cohort of 20 patients in which the DNA analysis will occur upfront and then the treatment and then we reconcile treatment effect with the genomic results.

So the results which we have in hand are very promising. The validation cohort will direct us more appropriately either to a stratified trial or a selective trial. So those are the 2 things which will become clear after we have the validation work completed.

Kim Lee - Janney Capital

Okay. And just a follow-up question, how did you determine that expansion to 20 patients would be enough data?

Dr. Ramesh Kumar

It was just that when we looked at we what had and it looked like 60 patients study that we presented at ASH, roughly a third of the patients had that data available. And in discussing with the regulators, it became clear that having twice as many samples, [behind up] about 40 would give people a lot of comfort because if you recall about a dozen of those patients were methylation type responders. So having another doubling that number of patient samples would give us more comfort on the value of the potential marker.

Kim Lee - Janney Capital

Right. Thanks.

Operator

We are now out of time for questions. And I would like to turn the conference back to leadership for any further remarks. Thank you.

Dr. Ramesh Kumar

We thank to participants and we look forward to seeing many of you at ASCO or other conferences in our next call. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today’s meeting. This does conclude the program and you may all disconnect. Everyone, have a good day.

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