Ignyta's (RXDX) CEO Jonathan Lim on Q2 Results - Earnings Call Transcript

Aug.12.14 | About: Ignyta, Inc. (RXDX)

Ignyta, Inc. (NASDAQ:RXDX)

Q2 2014 Results Earnings Conference Call

August 12, 2014, 04:30 PM ET


Jonathan Lim - President and CEO

Jacob Chacko - CFO

Zachary Hornby - COO


Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

Gena Wang - Leerink Partners


Good day, ladies and gentlemen. And welcome to the Ignyta, Inc. Second 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 and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I'd now like to turn the call over to Jacob Chacko. Sir, you may begin.

Jacob Chacko

Good afternoon everyone, and thank you for joining us today to discuss Ignyta's second quarter 2014 company highlights and financial results.

On the call today are Jonathan Lim, Ignyta's President and Chief Executive Officer, Zachary Hornby, our Chief Operating Officer, and me, Jacob Chacko, the company's Chief Financial Officer.

First some housekeeping issues before we start. If you would like to be added to Ignyta's email list, to receive company information or if you would like to change your contact information, please visit the Investor Relations page of our website.

In addition, be advised that this conference call is being broadcast live on the Investor Relations page of Ignyta's website at investor.ignyta.com. A playback of this call will be available for two weeks and maybe accessed on the Internet at that site.

Please note, that all of the information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during the call, management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business.

These forward-looking statements are qualified in their entirety by the cautionary statements contained in Ignyta's SEC filings including our Annual Report on Form 10-K and the Quarterly Report on Form 10-Q that we filed earlier this afternoon.

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 12, 2014. Ignyta undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call.

With that said, let me turn the call over to Jonathan Lim. Jonathan?

Jonathan Lim

Thank you, Jacob, and good afternoon everyone. We appreciate your joining us to discuss company highlights and our 2014 second quarter financial performance.

We've continued to make solid progress toward our vision of becoming a leading precision medicine biotechnology company dedicated to discovering or acquiring, then developing and commercializing targeted therapeutics for cancer patients whose tumors harbor specific activating molecular alterations.

Today I'll provide an overview of that progress and our strategy, goals and programs before turning it over to Jacob to discuss our financial performance for the second quarter of 2014.

We are pursuing an integrated drug and diagnostic or RXDX strategy, where we anticipate pairing each of our targeted drug candidates with biomarker based companion diagnostics, developed by us or by third-parties with whom we may partner. They are designed to identify the patients that are most likely to benefit from the use of the drugs we may develop.

Our lead product candidate is RXDX-101, the tyrosine kinase inhibitor in Phase I/IIa studies that we in-licensed from Nerviano. 101 is a targeted therapy for patients with cancers that harbor oncogenic driver alterations to the Trk family of tyrosine kinase receptors including TrkA, TrkB and TrkC as well as ROS1 and ALK proteins.

We are increasingly excited about the potential of this product candidate. Research to-date indicates that each of TrkA, TrkB, TrkC, ROS1 and ALK gene rearrangements and fusion proteins, can be driver alterations in certain solid tumors and that TrkB and TrkC over expression is correlated with worst prognosis and recurrence in certain others solid tumors.

The potential ability of RXDX-101 to act as a protein inhibitor of the Trk, ROS1 and ALK proteins, as well as its absorbed ability to be administered orally and reach systemic circulation and to cross the blood brain barrier in pre clinical studies, attracted us to the profile of this drug candidate and supports the market opportunity for the product.

In July, we were thrilled to announce that we had initiated a new multicenter global Phase I/IIa trial of RXDX-101. The new study is called STARTRK-1 which stands for Study Targeting ALK, ROS1 where TRKA/B/C, and is a Phase I/IIa, multicenter, single-arm, open-label study of oral RXDX-101 in adult patients with locally advanced or metastatic cancer confirmed to be positive for relevant molecular alterations.

STARTRK-1 involves a continuous daily dosing schedule of RXDX-101 as oppose to the intermittent dosing schedule that had been utilized in the ALKA-372-001 study in Italy that we assumed from Nerviano late last year.

We anticipate that the STARTRK-1 Trial will involve clinical sites in the U.S., Europe and Asia. Sites that have dosed or that we anticipate were dosed patients in the Phase I portion of the trial, include Chao Family Comprehensive Cancer Center at UC Irvine, Lombardi Comprehensive Cancer Center at Georgetown, Massachusetts General Hospital, Memorial Sloan Kettering Cancer Center, Sarah Cannon Research Institute, and the University of Texas M.D. Anderson Cancer Center.

Nerviano had previously initiated the ALKA-001 study of Phase I/II clinical study and patients with solid tumors that are positive for alterations in TrkA, ROS1 or ALK. We assume the responsibility for managing and funding this study late last year and the study is currently ongoing at two clinical sites in Italy.

At the ASCO Annual Meeting in May, we announced promising interim results from the Phase I portion of the ALKA-001 study. This dose escalation study was designed to determine the maximum tolerated dose and recommended Phase II dose, as well as preliminary anti-cancer activity of single agent RXDX-101 in patients with solid tumors with molecular alterations in the TrkA, ROS1 or ALK tyrosine kinase receptors.

For each of the first three weeks of each 28-day dosing cycle, patients received RXDX-101 for four consecutive days, followed by three days without dosing. During the fourth week of each such dosing cycle, patients were not dosed.

At the time of the May 2014 data cut-off, 20 patients had been enrolled, with 19 having been dosed in the six dose cohorts. As you may recall the interim findings showed, no dose-limiting toxicities had been observed, no drug-related serious adverse events had been observed and no patients were discontinued from the study due to adverse events.

Six patients remained on active treatment, four patients with partial responses and two patients with prolonged stable disease, with three patients having received 12 to 16 cycles of treatment.

RXDX-101 demonstrated partial responses in patients with three different cancer histologies including colorectal cancer, non-small cell lung cancer and neuroblastoma, and in patients with each of TrkA, ROS1 and ALK alterations.

And a patient with TrkA positive metastatic colorectal cancer had a partial response, with this patient representing what we believe to be the first reported case of a patient with a TrkA positive tumor to be treated with a TrkA inhibitor.

We are excited by these results which were demonstrated despite the fact that patients dosed with the intermittent dosing schedule, received a drug for only 12 days out of each 28 days cycle. We look forward to continuing to execute our RXDX-101 clinical development program and to the potential impact we believe this product candidate can have for cancer patients.

Building on the solid progress of 101, just last week, we announced the acquisition from Nerviano of exclusive global development and commercialization rights to two new drug development programs, which we are calling RXDX-103 and RXDX-104.

We are excited to have bolstered our pipeline with these additional programs from Nerviano. Each of them has the potential to become a first-in-class oncology therapeutic and they both bid with our RXDX strategy. We discussed these new programs in some detail last week. So, today I’ll just provide a summary of each new program.

RXDX-103 is a selective potent inhibitor of the Cdc7 cell cycle protein kinase with broad therapeutic potential across multiple tumor types. Potentially including dose that are relevant to the patient populations that we are targeting with RXDX-101.

RXDX-104 is a selective protein RET inhibitor program, that is complementary to our RXDX-101 program. For example, we can leverage the same relationships we are building with thoracic and head and neck oncologist for RXDX-101 to advance the clinical development of RXDX-104.

We can also leverage our existing companion diagnostic infrastructure and expertise that we are building for RXDX-101 where the technology used in 101 can be readily applied to detection of RET fusions and other molecular alterations.

In fact, we can incorporate Trk, ROS, ALK and RET alterations into a single diagnostic assay. Each of these programs is in preclinical development for the potential treatment of multiple cancers. RXDX-103 is in the development candidate stage, while the 104 program is in lead optimization stage with two lead candidates.

Under the license agreement, we will immediately assume sole responsibility for RXDX-103 global development and commercialization. For RXDX-104, we will assume sole responsibility at the earlier of development candidate selection or the end of this year.

Turning first to RXDX-103, loss of cell cycle control is a hallmark of cancer and interfering with the DNA replication process is a proven strategy for cancer therapy. DNA replication occurs in two steps, DNA initiation and DNA elongation.

Currently available chemotherapies classically take a broad based approach to inhibiting the elongation step of DNA replication. This strategy has led to successful treatment outcomes but off target affects can lead to dose limiting toxicity.

Cdc7 is a serine/threonine protein kinase essential for the initiation step of DNA replication during the synthesis or (NYSE:S) phase. We believe that inhibiting the initiation step rather than the elongation step of DNA replication by targeting Cdc7, could offer a more targeted therapeutic strategy for disrupting DNA replication.

Compounds that inhibit Cdc7 kinase activity provide a potential therapeutic advantage because by targeting the initiation step of DNA replication rather than replication or progression, toxicity maybe decreased due the activation of a cellular checkpoint response in normal cells.

This checkpoint response is often deranged in tumor cells, which leads to apoptosis or cell death, once the initiation step is halted. However, normal cells have intact replication checkpoints that simply arrest the cell cycle and then resume replicating once Cdc7 inhibition has been removed.

As a result, targeting Cdc7 may have potential benefits as a single agent and in combination with other cell cycle inhibitors that target elongation or other aspects of the cell cycle or perhaps even in the drug resistance setting.

Shifting gears to RXDX-103, or 104 based on preclinical studies conducted by Nerviano against defined tumor types as well as initial biomarker data, we believe that we may explore RXDX-103 as a combination therapy in breast cancer, colorectal cancer and ovarian cancer.

Our in-house diagnostic experts are taking over the work initiated by Nerviano to define a robust biomarker strategy for 103. Nerviano has developed an oral formulation of RXDX-103 with good drug like properties and this development candidate could potentially enter the clinic in the first half of 2016.

So, now I'm going to really shift gears to RXDX-104, which is at a slightly earlier stage of development compared to the RXDX-103 program. But we feel that RET is a compelling oncology target that can integrate seamlessly with our pursued of Trk, ROS1 and ALK with our RXDX-101 program.

The 104 program consist of an effort to develop selective RET inhibitors which is currently in lead optimization stage with two lead molecules. The two lead molecules have proteins and selective activity in various in vitro and in vivo models of RET altered tumors. And both molecules have promising drug like properties.

The RET proto-oncogene is a typical receptor tyrosine kinase that sits at the cells surface, and when activated initiates well-known downstream cellular proliferation and survival pathways such as map kinase, PI 3-Kinase and PLC gamma.

Similar to Trk, ROS and ALK, RET can be prone to gene rearrangements and other activating mutations that can cause autophosphorylation and become an oncogenic driver by constitutively activating these downstream signaling pathways.

These alterations have been observed in a high percentage of medullary thyroid cancer, papillary thyroid cancer and non-small cell lung cancer. And we believe that RET activation occurs in some additional important tumor types.

Because these RET fusions and certain RET point mutations are well understood to be oncogenic, clinicians have begun testing multi kinase inhibitors with RET inhibitory activity in such patients.

However, the shortcoming of the existing agents is that, each of them was designed to have activity other than RET. And RET inhibition may not have been intentional for these other multi-kinase inhibitors.

The consequence is that these other compounds have limiting toxicities from their other mechanistic affects, such as VEGF inhibition, resulting in black box warnings, Risk Mitigation Programs or REMs and in some cases temporary market withdrawal in clinical holds.

Based on these shortcomings and direct input from our oncologist advisors at leading academic institutions, we believe that there is a compelling clinical need for a selective RET inhibitor. The 104 program was engineered specifically the result in selective and potent RET inhibition.

And our RET inhibitors demonstrate potent and dose dependent single agent activity in tumor xenograft models. This program fits alongside RXDX-101 sharing potential commercial call targets, clinical development infrastructure and a likely companion diagnostic testing paradigm.

Specifically the companion diagnostic technologies we are using in our 101 program can be applied to RET alterations. We believe our RXDX-104 program to be the most advanced selective RET inhibitor in development. We anticipate that a development candidate maybe selected by the first quarter of 2015, providing an opportunity for RXDX-104 to also potentially enter the clinic in 2016.

The expected timing of each of these product candidates entering the clinic fits into our preexisting pipeline, slotting in between RXDX-101 and our preclinical Spark programs.

Turning to the Spark programs briefly, to-date, we have identified six molecular targets denoted Spark-1 to Spark-6 that appear to be commonly altered in different cancer tissues. To our knowledge, no other commercial entity is currently developing clinical stage drug candidates that are specifically directed to these molecular targets.

We have prioritized three of these six targets, denoted Spark-1, Spark-2 and Spark-3 and have initiated target validation and drug discoveries activities against some of them. These are at early stages of development but we are enthusiastic about continuing to move them forward using our team of experienced oncology drug developers. We remain on pace to potentially identify our first lead candidate against our first Spark target by the end of this year.

We've also continued to recruit outstanding talent to our team. Yesterday we announced that, Adrian Senderowicz joined us as Chief Medical Officer and Senior Vice President of Clinical Development and Regulatory Affairs. We also hired Jacob Chacko, as our new CFO in May. Jacob assumed his role from Zachary Hornby who is appointed to the newly created role of Chief Operating Officer.

We are enthusiastic about the talent we have been able to assemble throughout our organization. And we are optimistic that we can continue to attract top talent as we grow in part due to our access for the deep growth of both RX and DX talent in San Diego.

All of our growth is directed to allowing us to continue to execute our 20-year vision of being a leading precision medicine oncology company with multiple focused drug candidates and commercial precision medicine products, each paired with companion diagnostics to identify patients most likely to benefit from the drugs we develop.

And now, let me turn the call over to Jacob, for a review of our financials for the second quarter of 2014. Jacob?

Jacob Chacko

Thank you, Jonathan.

For the quarter ended June 30, 2014 we posted a net loss of $5.4 million, or $0.28 per share, which compares with a net loss of $1.1 million, or $0.84 per share, for the second quarter of 2013.

We recorded revenue of $150,000 for the three months ended June 30, 2014. We did not record any revenue for the three months ended June 30, 2013. The increase was due to a one-time service fee for research services conducted in the second quarter of 2014.

Research and development expenses were $3.6 million, for the second quarter of 2014 compared with $0.6 million for the second quarter of 2013. The increase was primarily due to an increase in activities relating to the development of RXDX-101.

The increase between periods was also due to personnel expenses related to hiring and engaging additional employees and consultants to help us advance our product candidates and facilities related expenses as a result of the expansion of our leased facilities space.

General and administrative expenses were $2.0 million for second quarter of 2014, compared with $0.5 million for second quarter of 2013. The increase was primarily caused by increases in personnel, audit, legal and intellectual property costs, some of which resulted from activities relating to operating as a public company, and facilities related expenses as a result of the expansion of our leased facilities space.

With regard to our cash position, at June 30, 2014 we had cash, cash equivalents and marketable securities totaling $95.1 million and current and long-term debt of $10.0 million.

At March 31, 2014 we had cash, cash equivalents and marketable securities totaling $100.4 million and current and long-term debt of $10.0 million. At December 31, 2013, we had cash and cash equivalents totaling $51.8 million and current and long-term debt of $10.0 million.

As of June 30, 2014, we had $19.6 million shares outstanding and $21.9 million fully diluted shares, which includes our outstanding options and warrants.

With that and for the time available, Jonathan, Zach and I, would be happy to address any questions you may have. Operator?

Question-and-Answer Session


Thank you. (Operator Instructions) Our first question comes from Kevin DeGeeter of Ladenburg. Your line is open.

Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

Hey, good afternoon guys, and congrats on, recognizing some revenue on the quarter. Can you talk a little bit about the upcoming medical meetings in the fall? And specifically can you comment for ESMO whether or not you - you hope to have, in all presentation [opposed] (ph) to and what that may mean for the amount of data we may see at that meeting?

Jonathan Lim

Yeah, Kevin. So, we haven’t announced yet the nature of ESMO but we have said that we submitted an abstract to ESMO we have been accepted. And so, as we get closer to the meeting, we'll put an announcement forward in terms of the nature of the presentation.

The data will be an update on the ALKA Italian study and it will be an update of the patients that are currently in the study. And as we decided previously, there are also some alternative dosing regiments that are being explored.

So, there maybe some patients from those exploratory dosing regiments present in the presentation as well.

Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

Okay, great. That’s helpful. And, should we look for Ignyta to have their presence at other medical meetings in the fall or is ESMO going to be the primary focus?

Jonathan Lim

ESMO is the primary focus we may have at preclinical presence at EORTC as well, but the ESMO from a clinical perspective is the main conference we're focused on.

Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

And then, maybe just one from me, then I’ll jump back in the queue. Can you just talk a little bit about your evolving understanding potential resistance mechanisms for TrkA targeted product? And the potential benefits of having multi-kinase approach like 101 versus a more narrowly targeted kinase approach?

Jonathan Lim

I think scientifically, no one really knows yet what the resistance mechanisms are. I can say that we have dedicated effort internally to better understand it from a preclinical perspective. And so we've got some very interesting work going on to explore that.

And we do think it's theoretically possible that resistance could happen within Trk in terms of other potential pathways. But, it just hasn’t, I don’t think anyone knows yet, so we’ll have to see how the science evolves.

Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

Terrific. And then maybe just one more housekeeping question from me. Do you anticipate the in-licensing of 103 and 104 that moves the needle with regard to kind of quarterly R&D expense or keeping in mind the bill that we expect around STARTRK-1? Just give us some parameters as to how to think about for 2014, 2015 financial implications on R&D for those programs. Thanks.

Zachary Hornby

Yeah, Kevin. That's a good question. So, as you know, as we announced on the call last week, on August 14th we have a $3.5 million fee due to Nerviano as part of the upfront related to the in-licensing of both 103 and 104.

Beyond that, given that they are preclinical assets, one of the real advantages of in-licensing something on the preclinical stage, is that the incremental R&D spend, call it over the next 12 to 18 months is pretty marginal.

So, programs like 103 and 104 allow us - because they are preclinical stage, to keep our primary focus of our retention and balance sheet on continuing to advance 101 to lead asset, while also obviously enabling us to invest behind multiple shots on goal behind 101 a judicious manner.

Kevin DeGeeter - Ladenburg Thalmann & Co. Inc.

Terrific, thanks so much.


Thank you. Our next question comes from Gena Wang of Leerink Partners. Your line is open.

Gena Wang - Leerink Partners

Thank you very much for taking my questions, and congrats on the progress. So, I have two questions, [Audio Gap] you often try to use like single diagnostic kits testing TrkA, TrkB, TrkC and also ROS and ALK for the Phase I clinical trial?

Jonathan Lim

Yeah, so their goal is to use a single assay for all of the driver oncogenes of interest. And so that would be an explicit part of the Phase IIa portion of the study. And then for Phase I we're accepting local testing.

Gena Wang - Leerink Partners

I see. Okay. And then, I don’t know if you can share with us, what would be the first dose you would be using?

Jonathan Lim

So, we’re starting at continuous daily dose of 100 mix, per meter square.

Gena Wang - Leerink Partners

Okay. Thank you. Lastly, can I follow Kevin's question, the housekeeping question? So, just want to confirm, I think if I remember correctly, last time the guidance for cash to support operation into 2016, are we still expecting a similar cash fund through - cash report into 2016?

Jacob Chacko

Yeah Gena, this is Jacob. So, as of the end of Q2, our cash, cash equivalents and marketable securities balance was $95.1 million. And you'll recall as of end of Q1 that was $100.4 million.

So, we've stated previously and continue to believe that our cash, cash equivalents and marketable securities, as of the end of Q2 will be sufficient based on the current operating plan. And that includes now the new plan that has 103 and 104 as well to fund operations for multiple years and for multiple value inflection points and across our development programs.

Gena Wang - Leerink Partners

Okay. Sounds good. Thank you.

Jonathan Lim

Thanks Gena.

Jacob Chacko

Thank you.


Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Jonathan Lim.

Jonathan Lim

Thank you all for joining us this afternoon. As always, we appreciate your continued support and interest in our company. If anyone has any further questions, please don’t hesitate to contact the corporate or IR team at Ignyta. That concludes our call today and we thank you for your attention. Take care and bye.


Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.

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