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Onconova Therapeutics (NASDAQ:ONTX)

Q2 2014 Earnings Conference Call

August 13, 2014 04:30 PM ET

Executives

Ajay Bansal – Chief Financial Officer

Ramesh Kumar – President and Chief Executive Officer

Tom McKearn – President, Research and Development

Analysts

Kim Lee – Janney Capital

Jason Zhang – Edison Investment

Desh Govender – Cedar Lane

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 Ajay Bansal, Chief Financial Officer at Onconova. Please go ahead.

Ajay Bansal

Thank you, Karen. Good afternoon and welcome to our Second 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 President of Research and Development, Dr. Tom McKearn.

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 Ramesh, for his introductory remarks.

Ramesh Kumar

Good afternoon and thank you for joining us. At Onconova, are focused on the rapid and efficient development of rigosertib for patients with myelodysplastic syndromes or MDS. We've made significant progress on our quests. As previously disclosed, the Phase 3 ONTIME testing rigosertib and higher risk MDS, who had previously failed HMA or hypomethylating agent therapy did not meet its primary endpoint in the intent to treat ITT population.

However, these results suggested a treatment benefit in an important subset of patients referred to as primary HMA failures. The past few months, we've had discussion with key opinion leaders and regulatory authorities in order to define fast forward rigosertib and primary HMA failure MDS patients.

Based on our meeting with the FDA. We understand that an indication could be sought specifically for primary HMA failure patient population. We are now designing an approval track pivotal trial in this patient population. We expect to provide an update on our clinical development plan in this indication in the fourth quarter, 2014.

In addition to developing rigosertib IV in higher risk MDS, we continue to advance rigosertib oral with patients to lower risk MDS and for all MDS patients as a combination therapy with Azacitidine. Consistent with our focus on efficient development of rigosertib. We have undertaken measures towards reducing our burn [ph] rate.

We are reducing our workforce by approximately 15% and are making appropriate adjustments to overall expenditures. These cost reductions are primarily related to clinical programs beyond our current focus area of MDS in AML, additional CMC activities, non-clinical development and some earlier stage pipeline.

At this point, I'll turn the call to Tom McKern, our President of R&D for a more detail discussion of our rigosertib development programs.

Tom McKern

Thank you, Ramesh and good afternoon, everyone. As you're aware higher risk MDS a notorious [ph] disease with limited treatment option. Currently non-del (5q) higher risk MDS patient are largely treated with hypomethylating agents or HMA. About 40% of such higher risk MDS patients initially respond, but then relapse following HMA therapy.

Therefore, the majority of treated patients derive no clinical benefit from these HMA. The HMA patients are referred to as primary HMA failures. Primary HMA failures represent a significant unmet medical need with abysmal prognosis characterized by short life expectancy.

Our ONTIME trial, was the first ever randomized trial in post HMA higher risk MDS patients. This trial included both primary HMA failure patients and those who progress after initially responding to HMA therapy. As announced in February and as Ramesh previously described, the ONTIME trial failed to demonstrate a statistically significant difference in overall survival in the intent to treat population.

However, the top line results suggested a treatment benefit of rigosertib therapy in the primary HMA failure patient. In our second quarter, we met with the FDA to discuss the result from the ONTIME trial and to seek guidance for development of rigosertib IV in higher risk MDS patients.

Based on our meeting with the FDA, we understand that an indication could be sought specifically for the patients who had primary HMA failure. Following these discussions we are now designing an approval track pivotal trial in this patient population. We expect to provide an update regarding this trial in the next quarter.

In addition to our discussions with US Regulators together with our European partner Baxter. We've also had meetings with several European National Regulatory agency. These discussions have also affirmed the unmet medical need in primary HMA failure patients. So let me now provide an update on our clinical development programs with rigosertib oral.

Our first program was rigosertib oral is in patients with lower risk MDS. These patients are cytopenic and suffer the burden of frequent transfusions. For transfusion dependent lower risk patient treatment options are limited to Revlimid which is indicated only for the del (5q) patients, erythropoiesis-stimulating agents or ESAs and through transfusion as supportive care.

We are developing rigosertib oral as a transfusion sparing therapy in lower risk MDS patient. In December 2013, we presented encouraging data from our 0905 Phase 2 trial presenting these are the annual ASH meeting. The data reveals that the transfusion sparing activity of single agent oral rigosertib was found in transfusion dependent lower risk MDS patients.

We also described the potential of a prognostic genomic methylation as a, in selecting patients for future trials. To this end, we are enrolling a cohort of 20 lower risk MDS patients to expand our data on the utility of a prognostic genomic methylation marker. Recoupment is also continuing in a second Phase 2 trial 0907 to explore dose and scheduled optimization and to compare continuous dosing with interrupted that is dosing two out of three weeks.

In a three week treatment cycle, based on the anticipated timing of genomic methylation signature and dosing optimization data. We now believe that a pivotal trial of oral rigosertib in lower risk MDS would not commence before the first half of 2015. In our second program, with oral rigosertib, we are advancing rigosertib in combination with Azacitidine as a treatment for all MDS patients.

We have successfully completed the Phase 1 portion of Phase 1\2 clinical trial and are now enrolling patients in the Phase 2 portion at multiple sites in the United States and Europe. In the Phase 1 portion of that trial, the combination therapy was well tolerated in the study population.

The combination dosing schedule of oral rigosertib in the final cohort given as 560 mgs in AM and 280 mgs in the PM was a indicated dose of Azacitidine has been selected for the Phase 2 portion of the trial. We expect to present results of the Phase 1 portion of this combination at upcoming scientific meeting.

I would like now to turn the call back over to Ramesh for his concluding remarks.

Ramesh Kumar

Thank you, Tom. Rigosertib remains the primary focus of our R&D efforts and we are dedicated to rapid and efficient development of rigosertib for patients with MDS. We were encouraged by the feedback we have received from key opinion leaders globally and with discussions we've had with regulatory agencies. In the next quarter, following further discussions with the FDA, we expect to provide with an update with an update on approval track pivotal trial for rigosertib IV and primary HMA failure patients.

Another encouraging aspect of our program is the IP coverage, our intellectual property coverage for rigosertib. Which currently extends to 2026 for composition that obtains? We continue to work through expand and broaden this coverage. Looking forward, we expect to have a strong presence at the ASH annual meeting in December. We have submitted number of abstracts and hope to present data on all three of our MDS programs.

With these abstracts are accepted for presentation, we expect to provide number one; detailed results on the ONTIME trial for the higher risk MDS including additional analysis in primary HMA failure patient. Tom mentioned that this was the first randomized trial in this patient population.

Number two; data from genomic signature and dose optimization studies in lower risk MDS patient. Number three; results from the Phase 1 portion of the rigosertib-Azacitidine combination study in frontline MDS and number four; further clarification of rigosertib mechanism or action and biological possibility in its action in MDS.

And finally, we also expect to talk about other relevant areas in MDS and rigosertib. This concludes our prepared remarks and we will now open the call for your questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) our first question comes from the line of Kim Lee from Janney Capital

Kim Lee – Janney Capital

First off, can you give us some query on your discussions with the FDA as to what did they say and what kind of guidance did they provide to you to indicate that this subset population is an approvable data, is a way to get your job approved and also can you go into a little more details on your discussions with the EMA and we are being stand, what kind of trials will be needed for European approval and then I have some follow-up questions. thanks.

Ramesh Kumar

Thank you, Kim. The discussions are continuing as you know it's a pretty complicated process. We've had very good meetings as I mentioned both with the FDA and in Europe, but this is dialog that continues. So this time, we feel comfortable about making two disclosures. Number one; agencies have recognized that post HMA, the primary HMA failure indication was a very important unmet need and secondly that this is specific indication that could be pursued for regulatory approval offly [ph] decided.

So beyond that because of the nature of the discussions and the continuity of this dialog. We are not prepared to say more at this point.

Kim Lee – Janney Capital

Okay and also in Europe what kind of trials that you need, in Europe?

Ramesh Kumar

And again, beyond the two points I have made, which are consistent in our feedback both in US and Europe is not in this time in a position to give more specific details for the trial either from the US or the Europe perspective. As you know, we are committed to developing this program globally. So in addition to Europe trials are ongoing in Japan as well. So it will be consorted coordinated global effort and we expect to provide more color to that in the fourth quarter.

Kim Lee – Janney Capital

And what could you Phase 3 study design look like for US approval and when do you expect to start that study?

Ramesh Kumar

The trial design is the major topic of ongoing discussion. So at this point, probably not a good idea to give more clarity on that, but it's suffice to say that we want to find the most efficient and most coordinated day to take approval for rigosertib for MDS patient in US we are open, eventually Japan and we are pursuing every option possible in terms of trial design, in terms of the size and scope of the trial and various regulatory mechanisms that are available, but at this point we have to differ further details to over next communication.

Kim Lee – Janney Capital

Okay and one final question before I jump back into the queue. As far as the lower risk MDS program goes, do you still anticipate data from you Phase 2 portion of the study to be available second half of 2014?

Ramesh Kumar

As you know Kim, we announced pretty much the entire Phase 2 results last year, but two ongoing aspects of the trials. One to do with genomic methylation we expect to talk more about it and the other one is the dose optimization to get the maximal benefit without any noticeable adverse events. Those two specs are ongoing and we expect to present data maybe even publish data in the coming quarter.

Kim Lee – Janney Capital

Okay great and do you expect to use this genomic methylation marker to preselect patients for Phase 3 study, how do you intend to use this marker?

Ramesh Kumar

Tom?

Tom McKern

As you may recall, we presented some preliminary information at the ASH meeting last year. So that for those who may not remember that, this is and as they performed on bone marrow samples obtained at baseline and the data suggest that patients who ultimately respond to the oral rigosertib therapy have a unique signature upon specimen using a particular panel of genetic probe and then an identification methodology.

So we have expanded that somewhat further and will be reporting that update in the near future, but we are encouraged by that finding and it would serve, if confirmed as the basis for identifying responders prior to initiation of therapy.

Ramesh Kumar

Just to add to that, I think it's really highly desirable to select patients are our experience with high risk MDS shows and if you have a tool such as genomic methylation signature that would be really wonderful for the upgradation [ph] sent for trial. So we are committed to exploring that and we expect to show more results very shortly.

Operator

Thank you. Our next question comes from the line of Jason Zhang from Edison Investment

Jason Zhang – Edison Investment

Ramesh and Tom, I didn't hear you talking about the worth [ph] of ONTIME data and also the ongoing the Phase 2 trial, the single on study trial data will play in the future of regulatory approval of rigosertib high risk MDS, could you elaborate a little more on that?

Ramesh Kumar

First of all, we haven't said anything about the nature or the specific type of the trial, but we are certainly Tom will address the value of the randomized result that we already have. Tom?

Tom McKern

So the randomized studies that we have done, you're referring to the ONTIME trial, represent the first study done in this patient population and it appears that there is a clear distinction between two populations of patients which heretofore has been identified in a couple of discrete publication, but never with the implications that they might respond quite differently, the second line therapeutic intervention.

So this is a really very important finding and if team at first blush that is quite clear cut in terms of the degree of differentiation of the two populations of so called primary HMA failure patient and the so called secondary HMA failure patient. So this is part of the information that was discussed at some length with the regulatory authorities and was part of their agreements with us that the past forward seems very much to be centered on, identifying the primary HMA failure patients as the much more logical and responsive patient population to therapy with the IV rigosertib agent.

Jason Zhang – Edison Investment

Okay, that was very helpful, but I don't have to how much you can have us about your plan before you actually view that, can I assume that you may be in a future can still use the data to some degree in the overall approval strategy.

Tom McKern

Well, we must it was a registrational [ph] trial and it certainly will be part of the dossier submitted and from a safety point of view, of course it's critical in all of that information be reviewed, looked at carefully. We are happy to do that, it was a very well tolerated agent in this trial and it's the first control trial. So it's relative to a treatment arm for the first time of any size whatsoever and that comes up very favorably, we believe in terms of showing a continued very well tolerated response to the rigosertib therapy.

Ramesh Kumar

So Jason, in addition to the regulatory aspect an important aspect is the publication of the data. So you look forward to presenting the full data, which is the quite complex and eagerly awaited by the community at the conferences and in journals to show that we as Tom pointed out, the activity and the tolerability safety data from this trial, which was a global trial.

Jason Zhang – Edison Investment

Can you also update us about the status of the Phase 2 trials? Sometimes, you refer to I think there was a call on Phase 2 trial, the patient who have come off the ONTIME study that will kind of receive rigosertib IV combination.

Ramesh Kumar

Jason, you're referring to the 0424 trial, which is IV rigosertib trial and high risk MDS patient, Tom will give you an update on that?

Tom McKern

So that trial was designed and opened after the accrual to the pivotal trial was complete and it is meant to enroll those patients to progress and failed on the hypomethylating agents. So it is similar and overlapping, but not quite identical population of patients to the one that we've described for you, a moment ago that sub group of patients was a primary HMA failure. The trials open in both US and European sites and we will be providing information on this trial as we discuss the import of this and continue to have these discussions with the regulatory bodies in both US and in Europe.

Ramesh Kumar

And to clarify this trial, 0424 trial was stabbed a Phase 3b trial, not a Phase 2 trial.

Jason Zhang – Edison Investment

Okay, maybe just one more, before I get back. So this is the first time, we actually heard of the primary HMA failure definition between you and FDA is a very clear definition of this and could you share that with us, if it is well defined.

Ramesh Kumar

Tom, will start and I may have something further.

Tom McKern

So this population has been identified in the couple of different review articles, but looked at the outcome of the current therapies that's available for patients with higher risk MDS and so we in fact did not invent or come up to this independently, the papers were authored by both European and US investigators.

So I believe, one of the levels of adderall [ph] genuity that has been documented within the population of MDS patients as they progress through the various stages of their disease process. Ours now is the second line in prevention and in fact, one of the novel findings from the 0421 study is this apparent clear cut difference in the response of primary HMA failure patients as compared to secondary HMA failure patient.

Ramesh Kumar

So as Tom said, the concept of primary HMA failure did exist in the literature and among the specialist, but this was really the first time their therapeutic agent was able to basically see that difference in a trial setting and the question really is, what is fundamentally different, what makes the position, the primary failure different than one, who actually succeeds through the HMA treatment and this is a so called concept of plausibility by logical and oriented relationship and we are looking forward to talking more about in future conferences and publications.

So the primary HMA failure is significant part of the whole MDS problem. The majority of patients don't benefit from HMA and therefore, they're looking for the treatment directed to them and it looks like from our discussion and from our data that rigosertib is in a position to serve these patients and that's really our focus of development.

Operator

Thank you. Our next question comes from the line of Desh Govender from Cedar Lane

Desh Govender – Cedar Lane

I had a couple follow ups. On rigo and high risk and your discussions ongoing in respect to the ongoing nature of this discussions, but Ramesh maybe you can give a little clarity as to when those discussions will become more clearly defined as well as, I'm assuming that everything is on the table given the risk benefit profile the drug that even accelerated basis would be at some point discussed and warranted given as the data with the publication come to the community and my second question was on Baxter, where do they stand and what's the next trigger for them and also what trial specifically are they're going to be funding? And then I had one follow-up, but my mark is in kind of the optionality you have with the agency on both sides of the Europe as well as US.

Ramesh Kumar

Thank you Desh. For your first question, I think [indiscernible] will provide really potentially two sets of opportunities to provide more clarity, more updated information both from a regulatory point of view and from a science point of view because we are hoping to present the data that clarifies what level of activity and the nature of the data and the nature of the safety, profile.

So all of that will give the experts as soon as investors, a much clear view of their rigosertib stand in terms of activity and tolerability. Secondly, if the regulatory dialog as you know either continuum but we expect that in fourth quarter, we will have a significant information to add to what we said today of our development aspect.

So clearly, the coming months will be as important as the vis-à-vis months were in terms of seeking and consolidating the feedback into more concrete next step and the nature of the next step. So and we feel that information will provide a lot of what you're asking for and I'm going to turn over to my colleague, Ajay for your second question.

Ajay Bansal

Yes Desh with respect to Baxter. Of course, you know we've all came very closely together. They've been into hold in a number of European discussions that we have had with regulatory agencies. Collaboration with them is very strong, very collaborative relationship and as I said, we are very closely to advance rigosertib and both higher and lower MDS.

Desh Govender – Cedar Lane

And so, then the next milestone payment, when can we expect more clarity on that?

Ajay Bansal

Yes, so the milestone payments as we have disclosed in the Q [ph] and in previous occasions as well, the milestone payments that could come in the coming months. One was we talked about, when we decide together to advance the lower risk program to the next age. So there would be a milestone payment of $25 million, when together we make that decision. When there was a possibility of $50 million milestone payment upon agreement to file in Europe with the higher risk and I think, that milestone payment of course gets pushed off now for the time being.

So I think the most immediate one, would be the $25 million payment when together we will decide to advance lower risk and for the development.

Desh Govender – Cedar Lane

Okay and then one final on, can you give us an update on head and neck please?

Ramesh Kumar

Tom, please?

Tom McKern

So, we have three developments in the area of head and neck. We now have the chance to review the findings from the Phase 2 trial that was a monotherapy trial in head and neck in second and third line refractory patient and the response rate there was not sufficient to one, continuation of the trials in that patients population.

We have however, already initiated additional activities in head and neck cancer patient, who are undergoing for being evaluated for chemo radiation therapy and we are adding rigosertib to the platinum based chemo radiation therapy regimen based on studies that are our group has done, showing a synergy in activity between the platinum based radiosensitizer in rigosertib.

So we do remain therefore involved and active in the field of head and neck cancer, but now moving actually closer to front line in terms of doing this with chemo radiation therapy protocol.

Desh Govender – Cedar Lane

Thank you.

Operator

Kim Lee from Janney Capital is open again for any follow-up questions and it seems you have no follow-up.(Operator Instructions) and I see no further questions in the queue at this time. I would like to turn the conference back to Mr. Kumar for any closing comment.

Ramesh Kumar

Thank you very much for joining us today. please note that this will be our last quarterly earnings call for the foreseeable future. we have continued to communicate frequently with you. As I mentioned, if any disclosures in progress were [indiscernible] and what we've decided really is that, in the middle of earnings season, where everybody is so busy. It doesn't really make sense to just have a call for the sake of it.

So instead, as and when we have news. We will present full update to you and to the investors and I hope that we will start by doing something in the fourth quarter as we previously discussed. So thank you again and have a nice evening.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.

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