Ambit Biosciences' (AMBI) CEO Mike Martino on Q2 2014 Results - Earnings Call Transcript

| About: Ambit Biosciences (AMBI)

Ambit Biosciences Corporation (NASDAQ:AMBI)

Q2 2014 Earnings Conference Call

August 12, 2014 17:00 ET

Executives

Marcy Graham - Executive Director, Investor Relations

Mike Martino - Chief Executive Officer

Alan Fuhrman - Chief Financial Officer

Athena Countouriotis - Chief Medical Officer

Bob Armstrong - Vice President, Discovery and Pre-Clinical Development

Analysts

Howard Liang - Leerink

Laura Chico - Robert Baird

Operator

Welcome to the Second 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 conference is being recorded.

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

Marcy Graham - Executive Director, Investor Relations

Thank you, Bekiva. Good afternoon and welcome to the Ambit Biosciences conference call to discuss financial and operating results for the second quarter of 2014. Joining me today on the call are Mike Martino, CEO; Alan Fuhrman, CFO; our Chief Medical Officer, Athena Countouriotis; and Bob Armstrong, our Vice President of Discovery and Pre-Clinical Development.

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 Securities and Exchange Commission. All forward-looking statements made during this call speak only as of the time they are made. We undertake no obligation to update these statements.

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

Mike Martino - Chief Executive Officer

Thank you, Marcy. Hi, everyone. Thank you for joining us today. I will lead off our prepared comments with a brief recap of our developments in the second quarter of 2014 and update our strategic vision. Then I will turn the call over to Alan for a financial update. Then we will open the line for questions and Athena and Bob will join the mix.

The primary operational focus in the first half of this year was to initiate patient dosing in our QUANTUM-R Phase 3 trial. We were pleased to achieve that objective. As of today, the trial was progressing with site activations and patient enrollment. And this will remain an area of primary operational focus for the balance of the year. Our estimates on the timing for this trial are based on the assumption that we will initiate approximately 110 sites by the end of 2014 and complete enrollment in the second half of 2015. As of today, there are 25 sites open for enrollment in the U.S., Spain and Australia. Based on our progress with component authority approvals, IRB and Ethics Committee approvals and site contracts, we believe we are on track to meet that year end goal of initiating 110 sites with a bolus of sites in Europe slated to come online in September, October and November.

With execution of QUANTUM-R underway, I would like to take a moment to outline an expanded vision for creating broader clinical value for Quizartinib as an essential building block drug in the treatment of patients with AML. We will continue to elaborate on this vision throughout the balance of this year and into 2015, but for now, I will summarize four primary headlines. Headline one. We initiated f QUANTUM-R as our initial registrational study based on data in over 400 patients from two Phase 2 trials that support Quizartinib as the best-in-class FLT3 inhibitor in late-stage clinical development. We believe this enthusiasm is shared by the clinical community and we continue to believe that QUANTUM-R will confirm the clinical benefits observed in the Phase 2 trials.

Headline two. Approximately 42,000 patients per year in the U.S., Europe and Japan are newly diagnosed with AML. Expanding Quizartinib’s utility and frontline therapy for these patients in combination with the existing standard of care, i.e., chemotherapy is an essential next step in expanding the clinical value of Quizartinib. Four studies will continue to inform our views on the appropriate trial to demonstrate the utility of Quizartinib in this treatment setting. The first as a company sponsored Phase 1 study in newly diagnosed patients over the age of 18 were administered Quizartinib in combination was seven plus three chemotherapy. Preliminary data from this study was presented at ASH 2013. The second trial is the investigator sponsored AML 18 study in which patients over the age of 60 are administered Quizartinib in combination with chemotherapy. Data from the pilot phase of this study was also presented at ASH 2013 and we expect the Phase 3 follow-on study to initiate this year.

The third trial is the investigator sponsored LI-1 study in which untreated patients over the age of 60 are administered Quizartinib in combination with low dose chemotherapy. We anticipate the interim analysis from the first 50 patients to occur in early 2015. The fourth trial is the investigator sponsored study in MD Anderson utilizing Quizartinib in combination with either Vidaza or low dose cytarabine in both younger and older patients. This study has recently entered Phase 2 and we anticipate an update later this year. Taken together, we believe these studies will continue to demonstrate that Quizartinib can be administered in the range of 40 milligrams to 60 milligrams per day in combination with chemotherapy without changing the dosing algorithm for chemotherapy and the initial observed impacts on response rates are encouraging compared to the historical experience with chemotherapy alone.

Now, we will continue to learn from these studies and look forward to sharing data at appropriate scientific conferences as it becomes available. And in parallel we have been in discussions with investigators and advisors aimed at designing the appropriate registrational trial in the newly diagnosed FLT3-ITD positive setting. We will share this design with you as we finalize it.

Headline three. The best hope for a cure in younger patients with AML continues to remain a stem cell transplant, unfortunately patients with the FLT3-ITD mutation tend to relapse at a higher rate and more quickly found transplant than patients without the mutation. And when those relapse they do so with the form of the disease that is highly addicted to FLT3-ITD oncogene and very aggressive. We believe there is an important role for Quizartinib as a maintenance therapy following transplant in these patients for long remissions by managing the reemergence of the FLT3-ITD mutation as the dominant driver of the disease. Now you know post transplant maintenance is an important component of the QUANTUM-R design for those patients in the Quizartinib arm who breaks the transplant. In the middle of the last year, we completed enrollment in a company sponsored Phase 1 study in which Quizartinib was administered for up to two years the patient’s post transplant as a maintenance therapy. We look forward to sharing this data with you at an appropriate scientific conference later this year

Fourth and finally many of us share the view that combinations of drugs targeted to complementary pathways will present compelling treatment options for patients with AML. We believe that FLT3 will be an important target in the pursuit of a cure for AML and that Quizartinib place as the most selective potent and well studied FLT3 inhibitor in late stage clinical development positions us well to participate in discussions and studies on smart combinations of targeted drugs.

Shifting gears Alan will give you the financial and cash flow details shortly, but essentially the headline is that we are on track with the plans in spending on the QUANTUM-R to have sufficient cash going into Q4 2015. Of course an expanded vision for the development of Quizartinib requires capital, we continue with discussions aimed at establishing a partner for Quizartinib outside of the U.S. as a way to expand and accelerate its development with non-dilutive capital. Our focus remains on doing the right deal with partners who are strategically aligned with this expanded vision for Quizartinib that I have just shared with you. In parallel there was also a high interest from an investigators and cooperative groups in conducting trials to expand the clinical experience with Quizartinib as well as companies with other targeted drugs interested in pursuing combination trials.

Finally, I do want to say a few words about pipeline. Some of you may have noted recent data further supporting the clinical utility of both JAK inhibitors and CSF1R inhibitors in oncology and other diseases. And I think it’s fair to say interest in these targets has increased. With that as a backdrop, we continue to believe our lead candidates AC410 and AC708 represent potentially valuable assets for Ambit. I want to emphasize that we remain committed to identifying ways to move these assets forward without diluting our efforts on Quizartinib. So, I think it’s fair to say there is a lot going on. We will keep you posted on these developments as appropriate.

And with that, I will now turn the call over to Alan Fuhrman, our CFO to discuss financial results. Alan?

Alan Fuhrman - Chief Financial Officer

Thank you, Mike. Revenues were $26,000 and $11.5 million for the quarters ended June 30, 2014 and 2013 respectively. The decrease of $11.5 million is due to the termination of the company’s collaboration with Astellas Pharma, which was effective in September 2013. Research and development expenses were $7.1 million and $6.7 million for the quarters ended June 30, 2014 and 2013. The increase was due to expenses incurred with the commencement of the QUANTUM-R Phase 3 clinical trial in April of this year offset by lower Phase 2 and Phase 2bx clinical trial expenses last year.

General and administrative expenses were $3.5 million and $2.2 million for the quarters ended June 30, 2014 and 2013 respectively. The increase of $1.3 million was primarily due to increased personnel-related expenses, increased stock-based compensation expenses and increased legal costs. Other income was $2.3 million and $2.5 million for the quarters ended June 30, 2014 and 2013.

For the first half of the year, revenues were $58,000 in 2014 and $18.1 million in 2013. This decrease is also a result of the termination of the company’s collaboration with Astellas. Research and development expenses were $13.3 million and $15.7 million for the six months ended June 30, 2014 and June 30, 2013. The decrease of $2.4 million was primarily due to lower Quizartinib research and development expenses resulting from a reduction in the number of patients being treated and followed in our Phase 2 clinical trials last year offset by an increase in expenses resulting from the initiation of the QUANTUM-R Phase 3 trial in April of this year. We expect research and development expenses to increase throughout 2014 as site initiation and enrollment in the QUANTUM-R Phase 3 clinical trial continues.

General and administrative expenses were $6.8 million in the first half of 2014 and $4 million for the first half of 2013. The increase of $2.9 million was primarily due to increased personnel-related expenses, increased legal expenses, and increased stock-based compensation expenses. We had other income of $2.8 million for the six months ended June 30, 2014 and other expenses of $1.6 million for the six months ended June 30, 2013. The decrease of $4.4 million was due to the change in fair value for the company’s stock warrant liabilities, which is driven by the change in fair value of our common stock.

At June 30, 2014, the company had cash and cash equivalents of $52.8 million compared to $71.2 million at December 31, 2013. The decrease of $18.4 million in the first half of 2014 was primarily due to the use of cash to fund operations. This cash burn rate is consistent with our guidance of between $9 million and $11 million per quarter. We currently have 18 million shares outstanding.

This afternoon, the company filed a universal shelf-registration statement on Form S-3 with the Securities and Exchange Commission. Under this shelf-registration, Ambit may offer a variety of securities, which may consist of common stock, preferred stock, debt securities, warrants or units consisting of any of the foregoing. We currently do not have plans to issue securities under the registration statement. We were shelf eligible earlier in the second quarter and decided to file this shelf in conjunction with our Q2 reporting.

Now, I will turn the call back to Mike for his closing comments.

Mike Martino - Chief Executive Officer

Thank you, Alan. So, in summary, as we wrap our prepared comments, I’d like to leave you with two points. First, our primary operational focus in 2014 has been and will continue to be executing on our plan for QUANTUM-R. The trial is progressing and sites continue to be activated on plan. Second, we are also pleased with the progress in multiple investigator and company-sponsored studies that continue to suggest that Quizartinib maybe a workhorse in the broader fight against AML, including in newly diagnosed patients and as a maintenance therapy in patients after transplant. With QUANTUM-R underway, we are taking the next steps to execute this broader vision for Quizartinib and we look forward to expanding on our plans in future presentations and discussions with you.

That concludes our prepared comments. Bekiva, please open the line for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And our first question is going to come from Howard Liang at Leerink. Please go ahead. Your line is open.

Howard Liang - Leerink

Hi, good afternoon. Thanks very much for taking the call. I just have a question in terms of seeking a partner outside the U.S. Can you talk about how important that is from your perspective to I guess get a deal done before Phase 3 data or would the priority be primarily on getting the right partner?

Mike Martino

Howard, the priority is on getting the right partner and the right deal. We truly have a vision that Quizartinib is a workhorse drug, a potential workhorse drug in the treatment of AML across multiple settings in both monotherapy and in combination therapy. We have a very clear mind map on the latter. And having the right partner who is both strategically and financially committed to that vision is essential.

Howard Liang - Leerink

Okay. On the data later this year, I guess at ASH on transplant – in transplant patients, can you talk about how big the cohort will we likely to see at the presentation?

Mike Martino

Well, of course, I have to clarify that we have made no representation that we will be presenting anything at ASH. I think as you and others probably know the deadline for submission of abstracts was a couple of weeks ago. And so we would want to wait to officially be informed by ASH before announcing of course that we are presenting data there. Specifically, the post-transplant maintenance trial was a small end. I believe we have communicated previously that that was 13 patients in total. We believe that in the fullness of time, the results will be very interesting. And in advance of data, I need to leave it at that.

Howard Liang - Leerink

Okay. Can you say whether we will see data on most of these 13 patients or is that pretty good – it’s hard to say it?

Mike Martino

Well, it’s – I don’t want to give any guidance on that, Howard.

Howard Liang - Leerink

Okay.

Mike Martino

We – as I said in the script, we did conclude enrollment a little over a year ago. The trial was initiated about a year or just under a year prior to that. So, one can anticipate and the protocol called for dosing in these patients up to two years. And that’s all we can say at this point.

Howard Liang - Leerink

Great, that’s helpful. Then just lastly on spending R&D, well I think you talked about $9 million to $11 million a quarter, would that be the same under your broader vision of the development for the compound or is that – or could that increase?

Mike Martino

Yes, the short answer is no. That guidance of $9 million to $11 million per quarter comprises essentially the QUANTUM-R trial, general and administrative expenses and some ongoing R&D expenses, as well as support for the ongoing investigator-sponsored studies.

Howard Liang - Leerink

Thank you very much.

Operator

Thank you, Howard. And then our next question is going to come from Chris Raymond at Robert Baird. Please go ahead. Your line is open.

Laura Chico - Robert Baird

Good afternoon. This is Laura Chico in for Chris today. I guess, I won’t circle back with you on ASH yet, but perhaps I would ask on the MD Anderson trial that you mentioned the combo study with Vidaza. Do you happen to know in what forum that we might be looking at some data coming out from that trial?

Mike Martino

Well, thank you Laura for the question. We can’t speculate on the forum. It might be helpful for Athena just to take a couple of seconds to elaborate on the design of that trial.

Athena Countouriotis

Yes, sure. So, Laura as you know this trial essentially had two parts. We started the Phase 2 portion of the trial approximately April and then essentially in the first portion patients were enrolled irrespective of ICD status and we are again in later relapsed setting and we are given Quizartinib either in combination with Vidaza or low-dose Ara-C and it’s exciting that this is the first trial that we have used Quizartinib in combination with hypoventilator. The second portion which we started recently is it allows only ICD-positive patients to come on to the study and those can be either elderly newly diagnosed, so they have not previously been treated with therapy or in first relapse and again they are given the same combination options either in combination with Vidaza or low-dose Ara-C.

Laura Chico - Robert Baird

Okay, that’s very helpful. And I guess one last question, Mike, you mentioned the – you are still in discussions with advisors in terms of a registrational study in the frontline setting, could you talk a little bit more about the gating factors there? I know you have a number of ongoing trials. So, is the data from those studies is the primary gating factor to form the study design?

Mike Martino

Laura, I think the short answer is yes, it will. I mean, as you can well imagine, one likes to initiate studies that you believe you can win. And so I think that as we continue to contemplate the data from ongoing studies and discussions with advisors will circle around a view of the design of this trial and keep you informed.

Athena Countouriotis

Laura, I maybe just expand for just a second, because I think it is important just to say that again what Mike has mentioned previously in this opening statement. And clearly, we have developed Quizartinib in over 400 patients in the relapsed refractory ICD-positive setting and negative setting from the Phase 2, but we also have multiple ongoing studies in the newly diagnosed setting. So, obviously, we presented the information from the company sponsored trial last year at ASH. We presented over 50 patients worth of data from Alan Burnett, investigator-sponsored trial at ASH last year. We have the ongoing LI-1 trial that’s also in newly diagnosed elderly patients. The AML-18 Phase 3 trial is about to start, which is also in newly diagnosed patients. So, there is quite a bit of database that we can pull from to design the next newly diagnosed company-sponsored trial.

Laura Chico - Robert Baird

Thanks very much guys.

Mike Martino

Thank you, Laura.

Operator

Thank you. We have no additional questions at this time. So, I would like to turn the call back over to Marcy Graham. Please go ahead.

Marcy Graham - Executive Director, Investor Relations

Well, thank you everyone for joining us today on the call and for your interest in Ambit. We look forward to speaking with you again soon and meeting with you in New York or on East Coast on many of the investor conferences and road shows coming up. Meanwhile, if you have further questions, you need additional information, please feel free to call my number directly at 858-334-2125. Thanks.

Operator

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

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