Galena Biopharma, Inc. (NASDAQ:GALE)
Interim Analysis of PRESENT study and Clinical Development Update Conference Call
July 08, 2016, 12:00 PM ET
Remy Bernarda - SVP, IR and Corporate Communications
Mark Schwartz - President and CEO
Jason McCarthy - Maxim Group
Kumar Raja - Noble Life Sciences Partners
Reni Benjamin - Raymond James
Vernon Bernardino - FBR & Company
Good day ladies and gentlemen, and welcome to the Galena Biopharma Update Call. At this time all participants are in a listen-only mode. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder today's conference maybe recorded.
I'd now like to introduce your host for today's conference, Remy Bernarda, Senior Vice President, Inventor Relations and Communications. Ma'am, please go ahead.
Good morning everyone and thank you for joining our call today. During today's discussion we will be making forward-looking statements about our results of operations, our future financial condition, the sufficiency of our cash resources, our ability to obtain additional equity or debt financing, possible partnering or other strategic opportunities for the development of our product and our clinical program, specifically around NeuVax, GALE-301, GALE-302, GALE-401. Such statements include, but are not limited to, the development and progress of our clinical product candidates, including patient enrollment, interim analysis, trial initiations and collaborations.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under Risk Factors in our annual report on Form 10-K and quarterly reports on Form 10-Q and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements.
With me on the call today are Dr. Mark Schwartz, our President and CEO; Dr. Bijan Nejadnik, Executive Vice President and Chief Medical Officer; and Mr. John Burns, our Controller and Principal Accounting Officer.
I would now like to introduce Dr. Schwartz who will lead our discussion today.
Good morning. This is a challenging time for Galena. Personally, I have been working on NeuVax for almost seven years and am heavily vested both personally and professionally in both NeuVax and Galena. Our news last week on the futility analysis recommendation by the IDMC for the PRESENT trial was surprising and disappointing. We received a number of questions since our announcement last week and we'll do our best today to address your inquiries.
As a reminder, the rationale behind performing an interim analysis is to verify safety and identify any futility issues that would warrant discontinuing the trial from this point forward. If this is the case, one would not want to continue providing vaccine to patients in a trial and incur the expense of the trial for its duration.
As you read in our press release last week, the IDMC's letter recommended that PRESENT study be stopped for futility unless it is determined that there's been a systematic reversal in study drug treatment in the two arms, in which case the IDMC should reevaluate the clinical evidence. As a result, we have notified the FDA and all of our trial sites that administration of the study drug in all procedures of the study are stopped and we are taking all precautions to ensure patient safety.
This recommendation from the IDMC suggests the NeuVax arm did not perform as expected in relation to the control arm. Therefore, we have launched an investigation in the evaluation of the procedures in the trial. This is a complex process to set up and includes working with an external team of experts to begin the operational elements of the trial. We are looking at a range of areas including database and data analysis, randomization, manufacturing, and packaging elements such as filling, labeling, and kit assembly.
As we progress through the investigation, the results will inform our path forward for the PRESENT trial. Our highest priority is to ensure that we preserve the quality of the data that we've accumulated to-date. Therefore our development remains blinded to the data thus far. This is important as we look for any potential issues that may have impacted the outcome of the futility analysis. This process is well under way at this point. However we anticipate a full investigation may take up to three months or possibly longer before we have additional information.
Our overall effort is focused on understanding and preserving the value of NeuVax. NeuVax has demonstrated a capability to generate tumor specific CD8 T-cells and remains our belief that this capability could be instrumental in preventing the recurrence of cancer. The PRESENT trial is the first fully randomized data of NeuVax plus GM-CSF versus GM-CSF alone, and will generate valuable information for other ongoing and potential future trials with NeuVax. Regardless of the outcome of the investigation, the data obtained from this trial will make a meaningful contribution to oncology research and cancer vaccines in particular, and to the future of prevention of breast cancer recurrence. In my view, finding the right setting and the right combination of therapy is the key to unlocking the potential of the drug.
The PRESENT study is not the company's only NeuVax trial. We have two other Phase III trials ongoing with NeuVax in combination with trastuzumab, and these trials are progressing well. These are investigator-sponsored trials, are run in conjunction with our collaborators with whom we are working closely to follow the progress of the trials. Importantly, these trials are single blinded, blind for the patient and treating physician, but unblinded to the company and principal investigator of the trial. And at this time, we have not had concerns on the performance of the drug from these trials to-date. In addition the DCIS trial is open for recruitment and we expect to have our first patient enrolled shortly.
In addition to NeuVax, we have two other clinical development programs. For our GALE-301, GALE-302 immunotherapy assets, we recently received two orphan drug designations from the FDA and have published positive data. These assets continue in their earlier stage trials and we're monitoring their progress and continue to evaluate the best path forward.
We also have a hematology asset with GALE-401, our controlled release version of anagrelide for the treatment of Myeloproliferative Neoplasms. The mostly widely used treatment options for MPN patients, hydroxyurea and anagrelide immediate release or IR, both come with a safety profile that can lead to premature discontinuation of the drug. Moreover, there are no attractive therapies for those patients who have failed these standard of care treatments. MPNs are chronic diseases and discontinuation of therapy as a result of intolerance or less than optimal response leaves a patient with limited options and represents an important unmet need.
Recently published data on GALE-401 has demonstrated a well-tolerated safety profile and potentially improved tolerability in MPN patients. As we discussed in our Q1 earnings call, we have currently completed an in-depth review of all aspects of GALE-401 including the market potential, the opportunity for shorter development pipeline, and the confirmation of the regulatory approval via 505(b)2 pathway. Following our analysis, we will announce our development plans for the product.
Switching to our financials, as described in the perspective supplement filed today, our cash position at the end of Q2 is $19.6 million. Subsequently, we paid our previously announced legal settlement of $2.3 million in cash on July 1. In May, we also announced the debt financing with JGB Capital which is not included in our current cash balance. As we described if the PRESENT trial did not receive a positive recommendation from the IDMC, JGB has the right to require prepayment of all or part of the debt and the warrants will be similarly terminated based on certain conditions. We are in discussions with JGB on the next steps around the loan.
If the terms or amount of the debt changes, this is a material event and will be disclosed via an SEC filing. We estimate the cost for PRESENT investigation to be between $250,000 and $500,000 over the next three months. At this point we expect to maintain our previous guidance of between $9 million to $11 million per quarter. Based on the progress of the investigation and our in-depth analysis of our clinical programs, we will give further guidance as we refine our plans.
As you can see with a cash balance of under $20 million, we needed to secure our balance sheet with the financing today to maintain our operations for the remainder of the year. We will be reporting our second quarter financials in early August, and we'll have a more detailed update at that time.
In summary, despite of the challenges of the PRESENT trial, Galena's clinical pipeline holds significant opportunity and value, including two investigator-sponsored Phase 2 studies in breast cancer involving NeuVax in combination with trastuzumab and the Phase 2 DCIS trials open for recruitment. Additionally, our GALE-301 and GALE-302 programs in gynecological cancer and our GALE-401 asset targeting MPN add pipeline depth and opportunity.
On behalf of our entire company I would like to thank all the courageous patients and their families, investigator study staff and independent committees who participated in the PRESENT trial. I'm also extremely grateful for our shareholders and recognize the impact these announcements have had. We plan to keep you informed as results develop on NeuVax, and with our plans for continued development of other clinical programs. We remain committed to our pipeline and to helping patients living with diseases in areas of unmet needs.
With that I would like to open the call to questions.
[Operator Instructions] Our first question comes from the line of Jason McCarthy with Maxim Group. You line is now open.
Hi, Mark. Sorry to hear about the PRESENT study. I know that the data would still make a meaningful contribution and we look forward to that. Can you give us a sense -- have you heard any feedback from partners like Dr. Reddy’s or the NCI for programs in gastric cancer or DCIS, which haven’t started yet and do they plan to continue to drive those programs forward?
The NCI and the DCIS trial has in fact met and they are going to continue with the DCIS trial. It is open for enrollment and we expect the first patient into that trial soon. Our corporate partners, we are in a process of reaching out to them. So I don’t have any information on those just yet. The other combination trials are expected to -- are continuing.
Okay, and just -- maybe I just missed this, can you just review with us the expected burn rate over the next 12 months or four quarters given that the cost from the PRESENT trial should be decreasing significantly enough?
Sure Jason, as I said our previous guidance has been $9 million to $11 million. At the moment that holds. However, obviously there is a lot going on. We are doing a full analysis and review of what the next steps are. We’ll provide updated guidance in August at our August earnings call.
Okay, great. Thank you very much.
Our next question comes from the line of Kumar Raja with Noble Financial. You line is now open.
Thank you for taking my question. So the PRESENT trial is a disappointment for the patients. So the review, what do you expect to learn from the review which is ongoing and what are the plans to expedite the rest of the pipeline?
So the review from the investigation, our goal is to ensure and do an in-depth review of all the operations of the trial to ensure that there were no mistakes or uncover any mistakes that may have been made, if there was one, and we don’t know that there was one. And Phase 3 trial this was a 758 patients in somewhat over 135 plus sites in 13 countries, a lot of moving parts and a lot of complexities in terms of managing data and randomization, manufacturing, shipping, filling, et cetera. And so it’s our goal to go back and ensure that all those were done exactly right and there were no mistakes made and that all of the quality and steps were done appropriately.
Clearly if there was a mistake made our goal is to find it and see what kind of impact that had on the outcome of the trial and the futility analysis. At this point in time, we have no information as to if there were any mistakes. The investigation is up and running, but it’s in the very early stages and so there is really nothing to be said until we get further into it.
Regarding acceleration of the pipeline, we are doing that full analysis now and on the earnings call in August we’ll have more information about any changes in priority, but certainly we have two combination studies ongoing with NeuVax. And I think the NeuVax Plus Herceptin trial in the 1+/2+ patients is the larger of the two trials and further along, so that remains a priority and the other trials will continue to move along as well.
If there are other prioritization changes in the pipeline, we will have that on our August earnings call.
Okay, great, and thanks for taking my questions.
Our next question comes from the line of Reni Benjamin with Raymond James. Your line is now open.
Hey, good afternoon guys, and sorry for the bad news as well. Can you talk Mark, a little about the -- why would you have a reason to doubt, essentially the only people who have looked at this data in an unblinded fashion? And I guess this is the first time I'm kind of seeing that a recommendation we stop unless a systematic reversal in administration sort of language being included and I don't really understand why they would even say that. So can you give us maybe just a little bit more color as to why you think something could have gone wrong and we can't trust this data?
So the IDMC has been very fastidious about adhering to their charter and their communications with us. So the letter that we attached to our filing when we announced the stoppage of the trial is what we've received from the IDMC, and the communications that we had with the IDMC and the Chairman who is tasked with communicating with us. So we've read that and interpreted that and I think in our view the wording of that communication with the unless there is a systemic reversal, implies to us that whatever the IDMC saw may imply to them that there is a potential for something other than the inactivity of the compound or less than suitable activity of the compound.
Let me just say that the IDMC did not do a full efficacy analysis. They did a prospectively defined interim analysis that was a very limited bio-statistical review looking at futility. They did not do a full efficacy analysis. So their futility analysis, based on what they said obviously failed. However, they appeared to indicate that there may have been a reversal of the course. That's all that we know and I think it's incumbent upon us to do as extensive an investigation to find out if there is a reason for that or that is in fact the true performance of the drug. At this time we don't know. But it is our intent to do as much work as we can to verify that all the operations were correct or uncover the problem if there was one.
Okay. Is there an independently assigned team that will be doing this? I don't want to say in a blinded fashion, but independent of the company or is this completely company-sponsored analysis?
Very good question, Ren. So we have brought in some outside people that are sharing the operation, the investigation. Within that team, there are some non-company personnel that are unblinded to the data and they will be doing a deep dive. So we are creating a firewall between parts of the team that have to do certain parts of the investigation and the rest of the company that will be maintained in a blinded manner. But we have brought in considerable outside expertise in a number of areas, including somebody who has extensive experience in these type situations.
Okay. And then just going forward, if a chance the results hold up, they are negative, can you talk to us a little bit about the impact that may have on the rest of the NeuVax programs and does it make sense for the combination studies to continue to move forward?
So I think that if those results hold up, one of the areas that we are looking at besides just the operations is the biological data. So in the trial we also collect DTH data, delayed type hypersensitivity responses, injection site reactions, those kinds of things and so besides simply looking at the operation in the appropriate time it is being done now by the third party unblinded person. But at some point if we do not find any operation issues we will cross the blinded line, we'll look at the data and try to understand what it all mean scientifically.
Is there a correlation between T-cell levels and recurrences? Is there a relationship between DTH responses? Is it possible that maybe we are dosing patients at a regimen that's causing T-cell deletion for example? And so the 301/302 strategy of using an attenuated peptide to boost the immune system and then boost it with maybe a less immunogenic peptide might be the answer.
Now all this is speculation but in answer to your question, Ren, the next step as we go forward is digging into the science and understanding what happened, because clearly there is absolutely no data whatsoever in all of the NeuVax work leading up to this point that would indicate that the vaccine should give a response for us than placebo.
Got it. Thanks for taking the questions and good luck moving forward.
And our final question comes from the line of Vernon Bernardino with FBR & Company. Your line is now open.
Hi, thanks for taking my question. And some of them were already asked. Regarding the language of systematic reversal, in the analysis and confirm again that you say that it will take three months to complete, will you be looking for a systemic error? I know you have mentioned things like manufacturing and so on, but dose administration. And what sense have you gotten that some of the things you're looking for, that are in the data themselves maybe borne out from the analysis you'll be doing in the next three months?
So Vernon, as I had indicated that the company is still, including myself, is still blinded to the data. Our goal is to maintain as much value in the data as possible regardless of what the outcome is. The external folks, some of the external folks, and some of the key folks on the investigation team are unblinded to the data. So they will use that data to help guide them in the investigation.
We are in the investigation looking for any kind of error or any kind of process that may not have worked, as it was supposed to have, whether it is systemic or not. I think it's all important and valuable to know. So the goal is to again look for anything that may have not run as it should, any mistakes, problems, errors, whether they are systematic or not. And then once we -- if we identify one, is to then look at the impact that, that would have on the futility analysis and the data. And I apologize, I think there was a second part to your question that I forgot what it was?
Yeah. I think you'd answered it. But also in the sense that the data that will be analyzed and yes, there is a firewall and you'll be blinded to it, as well as the body of the PRESENT data be remained not blinded to all, can you confirm that what the IDMC have looked at was this 71 events data only?
The IDMC did the futility analysis -- prospective of futility analysis on 71 events. They've looked at the safety of the whole trial. Of course as they at least do and that's an ongoing review that they’ve done on their normal regularly scheduled meetings. And they did a futility analysis which was a conditional power analysis on the 71 events that have taken place up till that point in time.
And then therefore the members of the independent assigned team will only be unblinded to those 71 events?
No, the members of the team will be unblinded to whatever data they feel is necessary to help keep them move forward. So they will certainly look at the 71 patients, they'll have access to the database.
Okay. And then can you remind us again how, where the scans were done, centrally or otherwise?
Yeah, so the scans were done locally, but the scans were sent to an independent third party group of scan readers in the United States. There were three physicians and they were adjudicated between two physicians. And if those two physicians disagreed there was a third reader who adjudicated the results. So the scans were read independently. And also as well the recurrences were called by a separate independent committee that reviewed all the patient files and independent of us, determined whether the event -- whether an event had occurred, whether it was really an event, whether it was a recurrence of cancer or a new cancer.
Okay thanks for taking my questions. Looking forward to more data then, thanks.
And that concludes today's question-and-answer session. I'd like to turn the call back to Dr. Schwartz for closing remarks.
Again I appreciate everybody's support; all the contributors to the trial as well as our dedicated shareholders. And we look forward to keeping you informed as we learn more both in the PRESENT trial. And we continue to move forward with our other trials that are ongoing. Thank you very much.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone have a great day.
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