ArQule's (ARQL) CEO Paolo Pucci on Q2 2016 Results - Earnings Call Transcript

| About: ArQule, Inc. (ARQL)

ArQule, Inc. (NASDAQ:ARQL)

Q2 2016 Earnings Conference Call

August 03, 2016 09:00 AM ET

Executives

Dawn Schottlandt - Sr. Director, IR and Corporate Communications

Paolo Pucci - CEO

Rob Weiskopf - CFO

Analysts

Michael Schmidt - Leerink Partners

Adnan Butt - RBC Capital Markets

Chad Messer - Needham & Company

George Zavoico - Jones Trading

Operator

Good day, ladies and gentlemen. And welcome to Second Quarter ArQule Inc. Earnings 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 follow at that time. [Operator Instructions] As a reminder, this call may be recorded.

I would now like to introduce your host for today’s conference Dawn Schottlandt, Director of Investor Relations. Please go ahead.

Dawn Schottlandt

Good morning, everyone. Welcome to the ArQule investor conference call reviewing operational and financial results for the second quarter of 2016. This is Dawn Schottlandt, Senior Director of Investor Relations and Corporate Communications at ArQule.

This morning we issued a press release that reported for the fiscal quarter ended June 30, 2016. This release is available on our website at www.arqule.com.

Leading the call today will be Paolo Pucci, Chief Executive Officer of ArQule. Also present for the company are Peter Lawrence, President and Chief Operating Officer; and Rob Weiskopf, Chief Financial Officer. Dr. Brian Schwartz, Head of Research and Development will not be joining us on the call today, as he is out of the country for family matter. Dr. Giovanni Abbadessa, Vice President of Translational Medicine is here to assist on the Q&A.

Before we begin, please note that we will be making forward-looking statements as defined in the Private Securities Litigation Act of 1995. Actual results may differ materially from those projected in the forward-looking statements due to numerous risks and uncertainties that exist in ArQule’s operations, development efforts and the business environment, including those factors discussed in our press release announcing this call and posted on our website as well as in our Financial Forms 10-Q and 10-K, and subsequent documents filed with the Securities and Exchange Commission.

The forward-looking statements contained in this call represent the judgment of ArQule as of today. ArQule disclaims any intent or obligation to update any forward-looking statement, except to the extent required by law. We will provide an opportunity for questions-and-answers at the end of this call.

I would now like to introduce the CEO of ArQule, Paolo Pucci.

Paolo Pucci

Thank you, Dawn. Good morning, everyone, and thank you for joining us this morning. On today’s call, we will provide our usual update for the company and that will include and actually focus on our proprietary pipeline, which is where most of our effort is going these days.

We are thus far satisfied with the progress we have made overall and we remain on track to achieve our goals for the year 2016 and we are doing so importantly maintaining strict financial discipline. We have our hands full really because we have a number of projects in the clinic. One is partnered as you know and several are proprietary and a lot of our effort is being directed toward those proprietary programs. And more recently as we discussed in the last two calls we have our hands full also on preclinical setting where we are working on our ArQule 531 towards an IND.

But before we go into greater detail of the overall picture, I would like to focus on two highlights that I have for you on this call. The first highlight is ARQ 087 our FGFR inhibitor that continues to demonstrate efficacy in the Phase II portion of the intrahepatic cholangiocarcinoma and we have now begun the next -- to plan for the next stage of clinical development for this trial for this drug in this indication. And I’ll go over during the call on some of the clinical evidence that has led us to that point.

The second highlight I have for you is ARQ 531, which is our proprietary BTK inhibitor that has been selected out of the BTK program that we’ve been conducting since 2011 as an IND candidate. And here as well I will have some data to discuss with you. In fact we have our first public presentation for this compound and I would like to demonstrate that we have made this going to IND decision of the basis of wide range of successful late preclinical experiment. And that we believe on that basis, that we have here a product that could be not only differentiated from the competitors, but it could also benefit from a faster to market and to registration strategy.

I’m beginning my remarks today with a review of some of the data that we have presented since Q1 specifically for ARQ 087 and ARQ 531. So let me start with ARQ 087. For those of you that are new on our call a little bit of history. ARQ 087 is multi kinase inhibitor, which is designed to preferentially inhibit the fibroblast growth factor receptor or FGFR family. It is also at this point in time our most advanced clinical proprietary asset. We began this clinical program with a Phase I trial. You’ll recall that early on we observe activity in intrahepatic cholangiocarcinoma patients, who held the FGFR2 genetic alterations.

Subsequently, we modified that trial to add a Phase II cohort with a specific aim of recruiting approximately 20 patients that responded to those characteristics. We recently presented preliminary data on ARQ 087 in this indication iCCA at ASMO GI in Barcelona. Of the 14 iCCA patients with FGFR2 genetic alterations, 12 were available at the time of that presentation. Among those available patients the objective response rate was nicely at 25% and that has underpinned by three partial responses.

Interestingly as well controlled disease rate was 75% and that is composed by three partial responses and six stable disease. All the patients were strictly evaluated by using the RECIST standard. Importantly also ARQ 087 demonstrated manageable safety profile. And we feel that this is an important differentiating feature for this drug because as we hear from opinion that are engaged in our trial as well as competitive trials, the number of cycles that the patients can be kept on, which is highly dependent on the side effects, it’s important and not all the product that are currently being studied can be utilized for an extended number of cycles. We seem to have a little bit of an edge based on this anecdotal evidence that we have heard of so for.

So what I am -- the fresh news for you today is that since ASMO we have been on form of an additional partial response in this trial. This comes from evidently the six people that were on stable disease. And so with this fourth response we have a total of 14 available patients with FGFR2 genetic alterations in iCCA and with four responses now we have a 30% -- approximately 30% response rate.

So currently of the 12 iCCA patients with FGFR2 genetic alterations on the trial, we have seen also a meantime on drug of 112 days, so we’re seeing good duration of therapy. And this includes 12 patients ongoing and 8 patients who have discontinued therapy. So the data gets better all the time with this drug in this very specific indication of intrahepatic cholangiocarcinoma. And we will continue to provide updates on this data either at Congress [ph] or conference calls like this one.

We believe that this data strongly indicates the existence of our clinical benefit in those patients specifically with FGFR genetic alterations in iCCA. And we expect that that this cohort will be completed by the end of the third quarter. In the meantime, while we wait to complete and the data to the cohort and the data to mature further in the meantime, we feel that we have enough signs of efficacy and we also feel that the totality of the data gives us confidence to begin exploring next steps with regulatory authorities.

We will therefore be meeting with the FDA in the near future to discuss the possibility of a pivotal trial in iCCA patients with FGFR2 genetic alterations, who have failed chemotherapy already as a frontline therapy. And we are currently hypothesizing and costing small trial that will take place -- will recruit in the U.S. and in Europe and as you know, our current Phase II trial is already recruiting in the U.S. and Europe and we feel that that might give us a very good backbone to start with.

Now there has been plenty discussion about the relevance of this indication and some investors have begun to make calculations about that. So let me try to offer our perspective about what the commercial opportunity might be in iCCA. So worldwide incidence in iCCA based on our analysis varies regionally, with Asia having the highest rate of incidence, ranging between 2 to 4 cases in 100,000 people. In the West it’s less and is approximately 1 case in 100,000 people.

We then considered the treatment algorithm by Bridgewater and all and by that algorithm approximately 70% of intrahepatic cholangiocarcinoma patients progresses to be treated with chemotherapy. Assuming further that 20% to 30% of those patients who progressed to second line therapy will test positive for FGFR2 genetic alterations. The total number of patients eligible potentially for treatment in the U.S. and Europe would range for our drug in that indication if we were ever to be approved in that specific indication and that specific population between 1,000 and 2,000 patients.

So let me repeat, we believe based on the analysis we have conducted so far that 1,000 to 2,000 patients might be available for ARQ 087 in iCCA with a companion diagnostics that test for FGFR genetic alterations in this specific patient population. So obviously, it’s not a very large patient population, but it’s a fair size patient population, and small enough to have allowed us to achieve orphan disease designation.

I should also remind you that this patient population is in desperate need of treatment. You will also see that we don’t hold much hope for patients who don’t have FGFR alternations. And in fact, you will have seen in our poster at ESMO GI that in those patients, where no alteration of FGFR was present, the disease progressed relatively quickly, even when we administered ARQ 087. So this concludes the 087 analysis. And then we can discuss further in the Q&A session.

ARQ 531, so we are starting to offer to the investment community more of a profile for ARQ 531. And we believe that this will be an asset of interest to our current and perspective investors for the future. We began here again a little bit of history, which we haven’t offered until now. So we began our BTK discovery effort in 2011.

And on that timeframe, BTK emerge as a target of great, potentially great therapeutic value. And in fact, it was subsequently validated in 2013 with a spectacularly validated with the approval of ibrutinib. Given ibrutinib success, at that time, our BTK program was somewhat redirected to discover a drug candidate that would not only inhibit wild type BTK, but also C481S-mutant BTK. And obviously, we are all cognizant of the tremendous success of ibrutinib, and he’s fantastic efficacy profile. So we try to take an approach that would [indiscernible] at least immediately to ibrutinib, but rather allow us to potentially address a therapeutic need that we weren’t visiting would emerge.

Obviously, if you go back to 2013, we made an educated bet and some of our staff made that bet based on the biology understanding we had achieved of our program and the time at the time. We believe that initially focusing on second line setting of patients with C481S mutation would allow us to pursue a more focus and expedited path to regulatory approval and to the market.

And the first data that we present for ARQ 531 has come out at the Pan Pacific Lymphoma Conference in July. There is a poster that has been up on our website for some time to which I would refer you to. This data in our opinion demonstrates that ARQ 531 inhibits potently both the wild type and the C481S-mutant BTK. The C481S mutation is known by now, it wasn’t in 2013, but is by now is a known resistant mechanist for ibrutinib.

And currently, it is estimated by different source -- triangulated different sources, that about 10% of patients treated with ibrutinib develop resistance. And that approximately 80% of those patients harbored C481S mutation. So we are hitting a relevant target here.

Now let me take a few moments to how we came to select out of the BTK program that started in 2011, ARQ 531 as the lead candidate to go to IND. In preclinical testing, ARQ 531 has demonstrated biochemical inhibition of both wild type and C481S-mutant BTK and has done so at sub-nanomolar levels. And it also demonstrated potent cellular inhibition of the same mutant BTK cells that are resistant to ibrutinib.

So these molecules in our opinion although the lot of molecules we assess exhibited the best preclinical profile. It also exhibited the most interesting kinase selectivity profile demonstrating inhibitory activity against several key oncogenic drivers related to ibrutinib resistance. Obviously there is more work that needs to be done there, but that was a very interesting profile to us and also to some of our collaborators. And our collaborators have been working with us for now probably a couple of years and we have several some of whom were already quoted in the poster that we presented at the Lymphoma Conference.

I would also say that additionally 531 potently suppresses self-proliferation in hematological malignancies in-vitro with D-cell receptor signal inhibition specifically. And going to in-vivo now we have including one in-vivo experiment already in the poster more is to come. But already what we have shared with investors community demonstrates strong in-vivo target and pathway inhibition for [indiscernible] BTK and demonstrate potent and durable growth suppression.

Obviously as every preclinical compound and remember we are working to IND there are still associated risk with the filing an IND I would single out among those risk as the final GLP toxicology studies are being the more relevant one.

Now this concludes the two highlight. I wanted to offer the first one ARQ 087 where we are starting the planting phase for pivotal trial in intrahepatic cholangiocarcinoma. And the second one ARQ 531 where for the first time we have published data that begins to profile the compound with the intent of bringing to IND early next year.

As I said at the onset we have our hands full and so I will cover quickly the rest of our program. For Proteus disease, which is where we have -- we are engaged with our collaborators at the NIH test ARQ 092. I will skip through the definition of the disease most of you are familiar with it. And it’s clearly detailed in our website as well. But I would say a few words about the trial, the first cohort comprise of three adults begin dosing December 15 and February 16. Since then two additional patients both of the ages of 12 and 18 have been so far dosed in the second cohort. All patients in this trials so far have been dosed at the lowest initial dose.

Now four of the first cohort we are approaching the first assessment of possible clinical benefit for those patients. Our collaborators are planning in fact to administer imaging and blot [ph] work which will complement the results that has been already observed and disclosed to you in a call at 15 and 75 days. And I remind you that those results demonstrated a decrease in AKT signaling of greater than 50% for each of those first three patients of the first cohort.

We are obviously as I said before these are the most severe patients. This is a chronic disease and dosing has been going on for a relatively short time and has been at a lowest dose and so we are now really expecting to see meaningfully measurable therapeutic impact at this very first time measurement. But the measurement will occur and we will update as we hear from our collaborators.

The word has spread that we have a drug candidate that could be useful in Proteus disease and it could be therefore useful in other over growth disease kind of other Proteus family. And the significant the interest that has emerged for an additional disease called PROS and in addition to that we have begun to entertain request for single patient compassionate use and we have under this single agent compassionate use protocol, one patient in Europe it was those actually just this past week. And we will keep an eye on how those patients develop and we’ll update on our plan for PROS as well as any feedback we get from compassionate use as we receive it our self.

Now let me go to ARQ 092 and 751 in oncology, they both are AKT inhibitor first generation second generation AKT inhibitor. All the bureaucracy around starting the trial for 751 second generation AKT has been completed. A number of patients have been screened. But unfortunately we haven’t been able to dose a patient yet. We have to do so in the very near future.

We have two trial, two sites up and running, those are academic sites and should give us a very good chance of recruiting. But let’s not forget that this trial it’s being informed by the results we’ve seen for 092 our first generation AKT inhibitor already in the clinic. It takes a very narrow population. So we really need to be rigorous with our screening. We continue to implement the Phase I trial for 092 and we really look forward to develop in parallel 751 and 092 databases for further decision making. And therefore that is at some point in the future.

Finally Tivantinib, last but not least for Tivantinib there is still quite a bit of work on going. We have two clinical trial actives and they require constant attentions. But we are now in the phase of waiting for events making sure that the data gets cleaned, making sure that we count the events appropriately, making sure that we are going to have all the events that we need as per protocol. So that is what I would call more of maintenance work rather than building work that we are doing for the proprietary pipeline.

So at the moment we expect that the METIV-HCC trials in partnership with Daiichi Sankyo in the Western part of the world will conclude by year end ‘16 or early ‘17. And the top-line data is expected according to that timeline and now we also expect based on what we have been told last by our partner Kyowa Hakko Kirin that the JET-HCC trial that Kyowa Hakko Kirin is conducting independently from us in its territory in Asia will proceed along pretty much the same timeline as the METIV-HCC trial. And here as well we’ll provide updates as they are available to us. But as I said we are entirely dependent on all the flow of events and without any meaningful development there we don’t have meaningful updates.

Now this concludes my review. I have tried to focus upfront on the highlights, not easy with how much we have going through exhaust leak over everything because we have a number of projects in the clinic. So we need to kind of pick and choose there where we have had significant developments to bring them to your attention. This none and talking about financial discipline continued financial discipline let me turn to the person that enforces that financial discipline. Our Chief Financial Officer Rob Weiskopf.

Rob Weiskopf

Thank you, Paolo. The company reported a net loss of $5,100,000 or $0.07 per share for the quarter ended June 30, 2016 compared with a net loss of $4,017,000 or $0.06 per share for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the company reported a net loss of $10,081,000 or $0.15 per share compared with a net loss of $8,568,000 or $0.14 per share for the six months ended June 30, 2015.

At June 30, 2016, the company had a total of approximately $43,115,000 in cash, equivalents and marketable securities.

For the quarter ended June 30, 2016 revenues were $1,072,000 compared with revenues of $3,004,000 for the quarter ended June 30, 2015. For the six months ended June 30, 2016, revenues were $2,299,000 compared with revenues of $5,789,000 for the six months ended June 30, 2015.

Research and development revenue in the three and six months ended June 30, 2016 and 2015 is comprised of revenue from our Daiichi Sankyo Tivantinib development agreement and our Kyowa Hakko Kirin exclusive license agreement.

The revenue decreases in the quarter ended June 30, 2016 of $1.0 million from our Daiichi Sankyo METIV-HCC trial and $0.9 million from our Kyowa Hakko Kirin JET-HCC trial were principally due to the Q1 ‘16 extension of the development period through December 31, 2016 for both programs.

The revenue decreases in the six months ended June 30, 2016 of $1.6 million from our Daiichi Sankyo METIV-HCC trial and $1.9 million from our Kyowa Hakko Kirin JET-HCC trial were also due to the extension of the development period for both programs.

Second quarter 2016 research and development expenses were $4,337,000, compared with $4,327,000 for the second quarter of 2015. Research and development expense remain constant for the quarters ended June 30, 2016 and ‘15. The increase in outsourced clinical and product development costs of $0.4 million was offset by lower labor and related costs of $0.3 million and facility costs reductions of $0.1 million.

Research and development expenses for the six months ended June 30, 2016 were $8,535,000 compared with $8,740,000 for the six months ended June 30, 2015. Research and development expense decreased by $0.2 million in the six months periods primarily due to lower labor and related costs of $0.5 million, and facility cost reductions of $0.5 million, these costs were partially offset by increased outsourced clinical and product development costs of $0.8 million.

Second quarter 2016, general and administrative expenses were $1,887,000 compared with $2,776,000 for the second quarter 2015. General and administrative expense decreased by $0.9 million, principally due to lower facility expenses of $0.7 million and lower professional fees of $0.2 million.

General and administrative cost for the six months ended June 30, 2016 were $3,931,000 compared with $5,963,000 for the six months ended June 30, 2015. General and administrative expense decreased by $2.0 million, principally due to lower facility costs of $1.6 million, labor related costs of $0.2 million and professional fees of $0.2 million.

Let me now turn to financial guidance for 2016. For 2016, our guidance remains unchanged. ArQule expects net use of cash to range between $23 million and $25 million. Revenues are expected to range between $4 million and $5 million. Net loss is expected to range between $24 million and $27 million, and net loss per share to range between $0.34 and $0.39 for the year. ArQule expects to end 2016 with between $29 million and $31 million in cash and marketable securities.

With that, I’d like to hand the call back to Paolo.

Paolo Pucci

And if you may operator, could we open it up for the Q&A session. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question is from the line of Michael Schmidt of Leerink Partners. Your line is open.

Michael Schmidt

Hey, good morning. Thanks for taking my question.

Paolo Pucci

Sure good morning.

Michael Schmidt

I have one on 087 can you talk about potential -- I know it’s early and you’re still assessing this for the potential Phase II, III design path to approval sort of what number of patients do you think would be necessary in the trial for that purpose? And then I had a follow up on that.

Paolo Pucci

Sure, Michael. I think we are thinking -- we have gone through some detail trying to illustrate the potential patient population is obviously we’re providing a briefing book to get the final answers from the regulators. There are potentially two strategies that could emerge from those discussion one strategy is a two phase trial, based on response rate that could target something between few tens and a little bit more than 100 patients theoretically. But with the opportunities to already being a response rate trial to already being able to judge on the first kind of running phase, Phase III if the drug could be developed -- could be approved right, because that’s the response rate trial.

Second strategy could be to just go out with defined number of patient trial in that case, I think it’s round about 100 I would think given the population that is available, so 100 of a 1,000 patients is already a lot of in percent of the total patient population.

And then bring it to the end on a response rate basis and possibly put some interim analysis there, there will be no comparator and so that wouldn’t be a rate limiting factor. There would be a rate limiting factor in that you have to carry companion diagnostic because the evidence we have achieved so far from our studies says that where you see the FGFR translocation or alterations there you see the efficacy. And I would further add that you see this efficacy in a range of ways because you see early on in treatment, but you also see like in the last patients after a number of cycles and that’s a very nice sign in our opinion. And also in the opinion of the experts that we have convene to assess their interest for participating in a Phase III trial.

So those are the two standard approaches that we could take, we need to see what the agency is going to tell us. Then if in the meantime that these discussions occur we want to dream and we want to believe that this efficacy will continue to come.

Then we will see what kind of efficacy we have at the time we meet with them and we have an active Phase II trial recruiting. And we will leave no stone unturned to see if that is something that could be stretched into the next stage given that it’s already there.

I mean we would not be able to recruit the patients we need timely just with the sites we have open, but if we were to be allowed to use that as a backbone or a spring board -- doable into a Phase III we would certainly like that best. But that is also probably the least likely possibility, not a stone we leave unturned otherwise. I hope this answers.

Michael Schmidt

Yeah definitely. And then I guess how comfortable are you with your dose selection the 300 milligrams once a day it’s another question I had. And then secondly you mentioned the incidence of FGFR2 translocation or alterations in iCCA of 20% to 30% and I was wondering how comfortable you are over with that percentage and whether that is higher in later line patients as oppose to frontline patients?

Paolo Pucci

So as far as the dose at this point in time with this drug we are comfortable with the dose because we have seen a profile that is well tolerated enough although it has the hallmarks of the class. But for what we understood with our meeting with prospective Phase III investigators it seems to be definitely more benign than others. It’s difficult for us to make comparison with public data so I have to refer to the anecdotal discussions we have had there. And these people are involved in all of the trial. As you know there are several FGFR inhibitors in development and the core opinion leaders are about the same for everybody.

So as far as the dose we are -- we think that is a good dose for the trial and overall I would say for the drug. The reason why we haven’t explored that dose further and you could argue why you haven’t explored that in trans located population in other tumors like gastric and bladder where there are also responses we ourselves have evidence of efficacy. Michael the answer is simple, we are limited by the capital we have.

As far as the incidence, we have done a lot of work with the sources and we are quite confident and I mentioned one of those sources and I’m glad to take it on the side if you like because we have a dedicated deck that we can go through with epidemiology. We are pretty confident about the 1,000 to 2,000 patients. We think we actually on the conservative side. I don’t have however an answer for you whether incidence or FGFR alterations is greater growth from front line to second line. That is something we have not really studied.

Michael Schmidt

Okay thank you very much. And then last question on the BTK inhibitor just wondering how you think about that strategic do you see that taking forward in-house near-term or would you consider partnering that out longer term. And talk about the development plans there little bit more.

Paolo Pucci

Yeah. So I’ll say -- so the presentation we put out at the Congress in lymphoma steered interest in the drug unquestionably. And there is further data planned before the end of the year that based on the trends we are observing should steer further interest. On that basis, I tell you what I told one investor that asked me the same question after the presentation in Hawaii. We like all of our drugs, we love all of our children. This one I particularly love because it has a profile that is very unique also for its class. It is -- it puts us in the forefront in dealing with ibrutinib resistance with only one company ahead of us, which is already in Phase I.

And it provides for a large market. I have seen assessment we all benefit I guess by reading our competitors analyst reports. And the analyst reports I have seen for the competitor that is ahead of us already in Phase I, early Phase I, been the market opportunity in between $800 million and $1.2 billion just in the one core CLL -- on the core indications of ibrutinib making certain conservative assumptions of resistance.

So it’s a very unique drug. And finally Michael this is the one drug that is potentially if it passes the docs and the IND goes well and if we pass the hurdle of showing similar activity in men that we have shown in-vitro and in-vivo. This is a one drug that is aimed at a target that is not questionable. As you know CMAT is a target where people have grown somewhat skeptical because there has been so many failures. FGFR is a target that people are warming to because a number of companies working on it consistently are seeing efficacy. And once you look at that consistency across different companies different FGFR compounds you start to believe in the targets.

AKT is a target that is still in the preliminary phase. Hold strongest but there is yet to be proven and NQ01 for our ARQ 087 is kind of I would say visionary target with the vision being held mostly in South Texas. But BTK there is no question about the target and there is no question that the mutation is there and it is going to be important. Is it going to be the poised mutation so critical or is there going to be other ancillary elements that add to that mechanism of resistance that we don’t know.

So this one candidate for its own intrinsic characteristics for the market potential it offers, for the fast to market potential strategy and for the fact that addresses a target that everybody unanimously will say very important target. It’s unique. So we will do what we can to keep it a proprietary asset as long as we can. But obviously when people call we entertain the calls as well.

Michael Schmidt

Alright, thank you very much.

Paolo Pucci

You are welcome.

Operator

Thank you. Our next question is from Adnan Butt of RBC Capital Markets. Your line is open.

Adnan Butt

Hey, good morning and thanks.

Paolo Pucci

Good morning, Adnan.

Adnan Butt

Let me ask first on 087, Paolo, do you plan to continue enrolling more patients with FGFR mutations before you go to the FDA or will you plan to go the FDA with the data in hand?

Paolo Pucci

We’re planning -- actually Brian is planning to go to the FDA with the data that he is going to have up to the day before he goes into the meeting. So as I say we have, I think 12 patients still ongoing. We have 12 patients still ongoing and those patients give data. Juan [ph] the last PR occurred cycle?

Unidentified Company Representative

Second scan, so it’s kind of done every eight months. But yes on clinicaltrials.gov it does show that trial is still enrolling. So if we find other patients in the mean time we’ll collect more data and bring it there.

Paolo Pucci

So the trial are we going to go much passed 20 patients. I don’t think that’s our intention unless as I was discussing with Michael that becomes a Phase III strategy. But that we will know after once Brian meets with the FDA. As you know I have to stay cautious because we don’t make large part those decisions, those decisions are very much contingent of what regulatory authorities will tell us. But what I can say is that we’ll find out soon enough.

Adnan Butt

Okay. So the current trials will continue enrolling and the prior target was to enroll roughly 20 plus patients with FGFR mutations. Is that correct?

Paolo Pucci

Yes, this is what the current trial is and then we’ll have to see what the feel of the trial will look like.

Adnan Butt

Okay. And then if I can ask a question on 092...

Paolo Pucci

Sure, please.

Adnan Butt

At this point is the decision made to go into the younger patient population already? Is that confirmed?

Paolo Pucci

At this point all the decision that is made is that the cohort 3, the cohort 1 will be tested and continues dosed and the specifics of the cohort 2 remain the same. We have an open discussion with our collaborators about what the characteristics of cohort 3 will be is that is dependent on a number of factors. On one hand the clinical factors that are under controlled NIH on the other hand additional preclinical work that we committed to do along the way of this trial.

Dawn Schottlandt

To add in a second cohort we’re enrolling patients and NIH is enrolling patients between ages 12 and 18 and two or three of those patients are enrolled.

Adnan Butt

Okay. And then the clinical analysis will be on the first cohort the three adults that were enrolled?

Paolo Pucci

That is exactly, as I said round about nine months of therapy or so nine to ten months of therapy for these patient and then there will be a first check, scan and blot again for the first three patient.

Adnan Butt

So Paolo, just the last question. What’s your next update for the 092 Proteus program what will you share and at what time?

Paolo Pucci

So if the -- it is possible that the NIH will show some data at the annual meeting that they have in the fall, in a genetics meetings, remember this is the meeting where they presented their first poster two years ago. So it’s possible that they will present some level of update from the ongoing trial. Otherwise I think for us we hope to hear from them sometimes in the fall about measurements for the first cohort and in that case we would report about that at the next call, I guess will be the November call. That’s the best assumption we can make at this point.

And obviously they will have administered lot to -- at least the first possibly for the first two patients so just -- and that would be a report similar to the one we had when they sub lot for the first three. So that’s what I would say, I would say that November call we should provide an update.

Operator

Thank you. Our next question is from the line of Chad Messer of Needham & Company. Your line is open.

Chad Messer

Great, thanks for taking my questions. Maybe a couple more on 087 what can you say about iCCA patients their kind of natural history what’s their prognosis after they fail chemotherapy?

Paolo Pucci

Maybe I’ll let Juan take.

Unidentified Company Representative

Yes well unfortunately cholangio is not one of those tumors you can easily treat. So there’s a standard first line chemo, but then people are trying a few chemo agent but of course the prognosis is not good there was a presentation recently at ASCO by the Houston Group showing differences in outcome based also maybe on FGFR alterations but there’s no -- it’s not a good prognosis after first line failure.

Chad Messer

What’s the average…

Paolo Pucci

You can see some of that in our poster as I mentioned because you see how quickly the patients that were treated, but did not have FGFR alterations progressed even on ARQ 087.

Unidentified Company Representative

And we’ve discussed with the leaders we’ve gathered asking what is the average response rate to second line treatment and they agree it’s probably around 10%.

Paolo Pucci

Is that.

Unidentified Company Representative

If that, yes.

Chad Messer

All right, great. Thank you. And then the solid tumor study with 087 I mean are there any updates there or anything from that that would help your discussion with the FDA?

Paolo Pucci

Well there is obviously the FDA has information on the FGFR trials that are ongoing. Although our study we have already provided in the recent past the updates we had what we had done now there would be the opportunity to follow-up on those updates and we have seen efficacy there as well. We had an additional partial response…

Unidentified Company Representative

Along with the [indiscernible], but of course those escalation study from which we’re responding the cholangio cohort and we’re doing the cholangio cohort because we’ve seen the best results in the FGFR alterations of cholangio patients. So that’s what we’re focusing on.

Paolo Pucci

So there will be some data that might help the discussion, but I think the discussion is going to focus on what we have for intrahepatic cholangio. I think to explore other tumor size, which are larger by the way much larger like gastric, like bladder we would have to do what we did for cholangio, we’ll have to open Phase II cohorts and test just the same way we’ve done with cholangio. It will make a lot of sense if we had the capital to do so. And in fact some of our competitors are doing so already. There are a number of Phase II ongoing and I think there is at least one in gastric. But at this point in time the data that we’re going to have is the one we have generated.

Chad Messer

Okay, great thanks.

Paolo Pucci

Sure.

Operator

Thank you. [Operator Instructions]. Our next question is from the line of George Zavoico of Jones Trading. Your line is open.

George Zavoico

Hi, and good morning everyone. Thanks for the update. Sticking with 087 for a while you just spoke about the prognosis and the fast progression. These patients are all -- correct me if I’m wrong all second line. And if so is there actually a problem in getting patients onto the trial in time once progression is noted or is it possible that it take such a long time that the patient just difficulty or the chance of them responding.

Unidentified Company Representative

Yeah that’s a good, this is Juan. A good point and we have of course done some work on that. So we are targeting since we need to select patients with genetic alterations and this is not a standard approved test. We have targeted so far and we are targeting sites who do screening of these patients upfront. So in most of the cases, the doctors already know the FGFR fusion or are ready to test it. And so that the time between tumor progression and coming on for a study is not too long.

Obviously if you have to run the test and start biopsy in patients only after their progression with the type of prognosis we’re talking about yes it would be late do all the minor study. But in this case given this is a generic and non-proline [ph] alteration and that they are already screening the patients we’re able to get the transition pretty quick.

George Zavoico

To that point, are you considering combining it with first line if they’re pre-screened and already have the alteration or is that further down the line in your plans.

Paolo Pucci

At this point in time for both ARQ 087 in iCCA and ARQ 531in -- for BTK resistance. We are looking at the patient population that would benefit the most and will provide us with the fastest and most cost effective path to market. Once we were to establish ourselves in those positions and proof of concept of use of the drugs than the game opens more broadly and that might be more patient that could take benefit. And then we will look at the studies that would prove that. But for now we are very focused.

George Zavoico

Okay, understood. With regard to the number of patients, total number of patients, the Phase I portion have 60 patients if I’m not mistaken. And then there were 20 that were the iCCA. And then for the Phase II portion are you planning to enroll another 20 of iCCAs so you’re going to have total of 40 iCCA or have the number mixed up?

Paolo Pucci

No, no you have the right numbers, but the interpretation needs to be a calibrated a bit. So we started this trial with a Phase Ia which was essentially few play dose escalation. Then we added the Phase Ib where we continue -- where we narrowed down the dose and the regimens, but we started to go aggressively after patients that were tested for alterations. Out of that test although that Phase Ib okay which was still somewhat a dose escalation study, but already biomarket driven, we saw the responses, we saw early responses in FGFR translocated iCCA. We were pointed there by one of our advisors.

So to give you the specific numbers I think we treated five patients, four or five patients that were intrahepatic cholangiocarcinoma and two out of the four, five were intrahepatic FGFR translocated. So those were the two responses. Then we say okay, this is small enough a patient population overall that two responses matter and that’s when the idea of a response rate strategy was born. In order to flush that out that strategy better we’ve decided to pull out of the Phase II cohort dedicated to intrahepatic cholangiocarcinoma and we declared that cohort to being attended to recruit approximately 20 patients.

Through the work we have been doing on that one specific cohort, we achieved two additional responses, okay also in intrahepatic cholangio translocated and we were also being able to differentiate the translocated population from the non-translocated population. And that is now leading us to the next step. So…

George Zavoico

And also…

Paolo Pucci

It’s about 20 patients that we’re going forward not 40. Now if we talk to the regulatory authorities and they tell us as we were discussing with Michael early you have a Phase II trial ongoing, you wouldn’t need a lot of more patients than X, you could use that as a backbone or stream board whatever you like to call that for a pivotal trial, then we will look at that opportunity as well. But that is in my experience not the most likely outcome, the most likely outcome is one of the first two that we discussed with Michael, 40 plus X more or just the trial X more. But we’ll see, soon enough we’ll see.

George Zavoico

Okay. My question about 531, you talked about the 341S [ph] mutation, being the most prevalent, are you talking just that mutation or are you going to target other BTK mutations? And is there difference in inhibitory potential or inhibitory efficacy against other mutations as it is 341S?

Paolo Pucci

So I would just preface before I let Jo Anne [ph] answer your question more specific, this is evolving science. There is enough, enough that there is maybe two three companies in the run to address this emerging medical need because it’s evolving. We have read and you have all read in the letter from particularly from the University of Ohio State, that this has emerged as the key mutations thus far with up to 80% relevance in the patients have become resistant. But having prophase that this is evolving science let’s go what the science is right now Joan?

Unidentified Company Representative

Yes exactly this is the key point. So clearly there are other mutations expected or possible on BTK or PLC2 gama. We have designed our drug to be a non-covalent drug so they doesn’t need the 481 as residue in order to bind. So theoretically it should bind even in case of other 481 type of mutations. However as Paulo said only at least two years after ibrutinib was widely used in CLL you start to seeing emergence of resistance at this point in 10% of the patients that could increase. And at this point we know that the vast majority of the mutations of the C481S where we work are seeing if you start to see reports other mutations in the range of 3% or less.

But again theoretically given the way the drug binds it doesn’t matter what type of mutation on 481S on 481 you have we should bind. In terms of PLC2 gama as we shown on the poster we hit hard the [indiscernible] family and that is upstream. Therefore theoretically again the drug should work also in that case, but because this mutation is so rare and there is no model at this moment to test it really we cannot speculate. But at this point we’re focusing on the widest one which is where we know we will work and as Paolo more data will come.

George Zavoico

And as you mentioned before just focusing on just that one is clearly a big enough markets -- clearly has big enough market potential.

Unidentified Company Representative

Yeah.

George Zavoico

Okay. Just one question on 092 as well, you mentioned you had over 50% from academic standpoint inhibition of AKT in the adult population, but as you mentioned these are fairly advanced disease, in terms of managing expectations with regard to benefit with these adult patients are you expecting to treat them -- to continue to treat them? And if so, how much of a quality of life benefit would you expect? And not only for that patient population but also for the 12 to 18 because although they are not as advanced they are still fairly advanced to continue with chronic dosing?

Paolo Pucci

Right now the plan is to dose these patients at least up to 12 months of therapy. So they have a few months of therapy ahead of them and as far as the data you refer to just for clarity for everybody else, I think what George is referring to is the data that the NIH our collaborators at the NIH provided to us that demonstrated for the first time ever in an in-vivo setting because there is no model, a mass model that administering ARQ 092 two patients with pro advance older patients administering to older patients the lower possible dose of 092 for this chronic disease and those in there was a target inhibition of greater than 50% consistently in all three of those patients.

Now we have been cautious in translating that observation to a clinical benefit. Let’s see what the first check that the NIH will administer or potential clinical benefit will be. At this point in time we have ascended the drug is well tolerated and I wouldn’t go into the anecdotes of people feeling one way or another. Of course we hear of anecdotes. But I don’t think anecdotes forum like the one we are having today. But we will see some of the anecdotes in the patients check room for sure.

George Zavoico

Alright. Thank you very much.

Paolo Pucci

You’re welcome.

George Zavoico

Continue the good work and progress going forward.

Paolo Pucci

Thank you.

Operator

Thank you and that does conclude our Q&A session for today. I would now like to turn the call back over to Dawn Schottlandt for any further remarks.

Dawn Schottlandt

Thank you for joining us on the call today. We appreciate your interest and we hope everyone have a nice day.

Operator

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

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!