Cerulean Pharma's (CERU) CEO Chris Guiffre on Q2 2016 Results - Earnings Call Transcript

| About: Cerulean Pharma (CERU)

Cerulean Pharma Inc. (NASDAQ:CERU)

Q2 2016 Earnings Conference Call

August 4, 2016 4:30 PM ET

Executives

Alejandra Carvajal - GC

Chris Guiffre - CEO

Adrian Senderowicz - CMO

Gregg Beloff - CFO

Analysts

Joe Pantginis - Roth Capital Partner

Varun Kumar - Leerink Partners

John Newman - Canaccord

Debjit Chattopadhyay - Janney

Operator

Welcome to the Cerulean's Second Quarter 2016 Conference Call. This call is being recorded. My name is Tesney and I will be your operator today. With us today from the company are Chris Guiffre, CEO, Gregg Beloff, CFO, Adrian Senderowicz, CMO, Alejandra Carvajal, GC.

Mr. Guiffre, please proceed.

Chris Guiffre

Good afternoon, everybody. And thank you for joining us this afternoon. Let's start with a comment from Alejandra on forward-looking statements that may be made during the call.

Alejandra Carvajal

Certain remarks that we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC and can be accessed on our website.

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. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent today August 4, 2016.

Chris Guiffre

Thanks, Alejandra. The Cerulean team has made strong progress since our last quarterly call advancing both of our clinical candidates CRLX101 and CRLX301. I'll start today's call with two topics that are probably on most of your minds. First, we look forward to the readout of our randomized RCC trial this quarter. Our CRO has notified us that we reached 70 events which is the pre-specified number of events in the protocol require to trigger a readout. Therefore, we expect to receive tables listing and figures shortly and we expect to provide top line results soon thereafter. I want to be clear that we do not have data inhouse yet but we will begin a quite period of this call and continue to quite period until such time as we announced the top line data.

Second, we are proud of the Fast Track designation in platinum resistant ovarian cancer that we received last month based on data from just nine patients in our trial with the GOG Foundation. We presented these compelling data in an oral presentation at the Experts Meeting on Gynecologic Oncology 2016. Adrian will go into a bit more detail on these findings in just a few minutes.

So today's 101 update will focus on 101 to lead indications RCC ovarian as well as our collaboration with AstraZeneca and the NCI. As we wait the RCC readout in the coming week, it's important to understand the attractive market opportunity. Since our last earnings call, lenvatinib was approved for second line RCC treatment joining Nivolumab and Cabozantinib as approved second line agents, all in the last nine months. We predicted all three second line approvals and we are glad to see better options in first and second line RCC. With NEVO being used in first line and the two new TKIs being used in second line, we anticipate significantly better outcomes for first and second line RCC patients. Leading to more patients in need of treatment in third and fourth line. Thereby increasing our addressable market which currently is 10,000 to 15,000 patients per year in the US alone.

WE chose to go into third and fourth line because we anticipated how crowded first and second line would become. And we were not aware of anyone else actively developing in third and fourth line RCC. We also chose to go into third and fourth line because the seven agents that are used in that setting provide little treatment benefit. Finally, we chose to go into third and fourth line because late stage patients need better tolerated treatment options. Our strategy appear sound and we hope the data from the current trial will support moving into Phase 3 so we can seek approval to address the significant unmet need in third and fourth line RCC.

On the heels of our RCC, we are developing 101 in a second important indication platinum-resistant ovarian cancer. First, we generated impressive monotherapy data in late stage platinum-resistant ovarian cancer. Then we studied 101 in combination with Avastin and saw even greater benefit than with 101 alone. Next, we began the current trial of 101 in combination with weekly paclitaxel and we did this in collaboration with the GOG Foundation. In May Adrian gave an oral presentation of the results from the Phase 1b portion of that trial at the Experts Meeting on Gynecologic Oncology 2016.

At this point, I'll turn the call over to Adrian to walk you through those results.

Adrian Senderowicz

Thank you, Chris. In my oral presentation I spoke about the Phase 1b portion of the ongoing study. 101 at this recommended Phase 2 dose was active and well tolerated with weekly paclitaxel at this recommended Phase 2 dose. We believe 101 will be the best in class Topo 1 inhibitor in ovarian cancer and in other indications were Topo 1 inhibitors like topotecan and irinotecan are commonly used. This exciting because others have attempted to combine topotecan with paclitaxel but had not been successful due to severe toxicity. There is profound need for a better tolerated Topo paclitaxel combination to treat ovarian cancer. In the nine Phase 1b patients we saw a synergistic anti-tumor effect for the combination with five patients achieving a partial response. In general, we give paclitaxel has 20% to 25% response rate in platinum-resistant ovarian cancer patients. 56% of our Phase 1b patients achieved a partial response, which is particularly striking given that they were 2nd through 5th line patients with a median of three prior therapies. Their treating physicians were excited about these results and so were we.

I'd like to draw your attention to two finding I think are important. First, one of the Phase 1b patients has complete disappearance of tumor mass. She had previously been treated with paclitaxel, carboplatin and Doxil. Then she tried our combination and experienced 100% tumor shrinkage by the end of cycle four. Due to her detectable CA125 levels, her results did not constitute a complete response under the gynecological cancer inter group criteria.

Second, five of the Phase 1b patients previously progressed on Avastin and three of these patients achieved partial response on our combination. Patients who fail Avastin represent an area of particularly high unmet medical need in platinum-resistant ovarian cancer. So seeing roughly 60% response rate in either old comers or in patients with prior Avastin is very encouraging to me.

All these early data suggest that this combination is very active. This profound tumor shrinkage was associated with significant decrease in CA125 levels in approximately 33% of patients validating the tumor responses. And these results were achieved with an impressive safety profile. [Gregg] opinion was also setting on one patient. These outstanding data led us to mend the protocol to enroll additional patients who have failed Avastin treatment. We'd like to enroll a total of about 30 patients in the study and enrollment under amended protocol open in late July.

To date, we have enrolled 18 patients. We expect to provide data from the second group of patients at ASCO in October. Based on what we have seen so far in this trial, we have decided that the 101 paclitaxel combination is our preferred combination in platinum-resistant ovarian cancer. And we have scheduled an end of Phase 2 meeting with FDA this fall to discuss our chart design for a proposed pivotal study. As you know, based on the data from the first nine patients the study we were awarded Fast Track designation. We appreciate FDA's acknowledgment of 101 potential in an area of significant unmet medical need and we look forward to working closely with FDA to bring a new treatment option to women living with this disease.

With that I'll turn the call back over to Chris.

Chris Guiffre

Thank you, Adrian. Before I turn to 301, here is a quick update on the collaboration with AZ and NCI. Dr. Anish Thomas, the PI at NCI has dosed the first patient with 101 and LYNPARZA, he did that in May. He is also enrolled the first cohort and he seen no DLTs so far. It is important to note that we are early in the dose escalation at this point. And we will continue to update you as we progress in dose escalation.

Now let's turn to 301. In June, we announced that 301 had advanced interface 2A using an every three weeks dosing schedule. Now both of our platform generated NDCs are in Phase 2 clinical development. In parallel, we continue to explore dose escalation of 301 given weekly in the Phase 1 portion of the trial. We've successfully dosed three patients at 25 mgs per meter squared which represents the cumulative dose of 75 mgs per meter squared given in the every three weeks dosing schedule. This dose level was generally well tolerated by all three patients and all patients received at least eight weekly doses without the need of dose interruption. We are currently dosing patients at 35 mgs per metered squared weekly. This is more drug in a given three week period than the 90 mgs per metered squared in the every three weeks schedule which was discontinued due to DLTs. So far we've seen no DLTs at the 35 mgs per meter squared weekly schedule. And we will continue to dose escalate 301 with the weekly schedule until an MTD is declared.

Before I ask Gregg to provide a financial update, I'll quickly share some developments with our platform technology. Our platform has put two NDCs into Phase 2 clinical development so far. And now our technology is being expanded into two new frontiers which we recently presented at the AACR Engineering and Physical Sciences in Oncology Special Conference. The AACR presentation highlighted our work with multi drug NDCs. These MNDCs allows us to combine two different payloads in one NDC to vary drug ratios, to empirically determine maximum therapeutic benefit. This is similar to what Celator did so successfully with their nano technology before they required by Jazz. We also presented data on antibody NDCs. These ANDCs provide improvements over traditional ADCs by controlling the release of both drug and antibody using our NDC linker technology and also by attaching 300 to 400 payload molecules for antibody instead of the 3 to 5 payload molecules that can be attached to an average antibody using ADC technology. We believe these new applications of our technology represent potential long-term value drivers for our company not just for developing new proprietary programs but in forging partnerships with larger organization interested in accessing this cutting edge technology.

With that I'll turn the call over to Gregg.

Gregg Beloff

Thanks, Chris. I'll now highlight our financial results for the second quarter of 2016 which are included in the Form 10-Q that was filed after market closed today. For the second quarter, we had a net $10.9 million compared to a net loss of $9.9 million for the second quarter of 2015. We had $47.2 million in cash and cash equivalent at June 30, 2016 and we believe that this cash is sufficient to fund our planned operations into the second quarter of 2017 and if necessary we can reduce or defer operating expenses to fund our operations into the third quarter of 2017. Obviously, we need to raise additional capital to continue to fund our long-term operations and we expect to do that at some in the next 12 months.

In the first half of 2016, we have achieved four previously stated milestones. We reported top line data from the ongoing ovarian trial with GOG Foundation of 101 plus weekly paclitaxel. We dosed the first patient in the Phase 1/2 trial of 101 and LYNPARZA. We presented 301 clinical data at AACR and ASCO and we dosed the first patient in the Phase 2a portion of the 301 trial. We are focusing our guidance on the key milestones in the second half of 2016 and we expect to report the following events between now and year end. We will report top line data both PFS and ORR from a randomized Phase 2 trial of 101 in combination with Avastin in 3rd and 4th line metastatic RCC. We will present data at ESMO from the second group of patients from the Phase 1b/2 trial of 101 in combination with weekly paclitaxel in platinum-resistant ovarian cancer. And finally, we will present at ESMO data from an ongoing Phase 1 trial evaluating weekly dosing of 101.

With that let's open up the call for Chris, Adrian and me to take your questions. Tesney, please prepare the queue.

Question-and-Answer Session

Operator

[Operator Instructions]

And our first question comes from Joe Pantginis of Roth Capital Partner. Your line is open.

Joe Pantginis

Hey, guys, good afternoon. Thanks for taking the question. I want to ask this question somewhat preciously and ask am I missing something with regard to the RCC indication. There is bare case out there right now that asks in some of our discussions and we've talked about it before about there is no market for 3rd and 4th line but I don't understand why that's the case especially with your comments today regarding the new drugs for 1st and 2nd line. Patients living longer, eventually patients would relap and therefore provide you with more patients. So I guess the question what I am missing on that bare case?

Chris Guiffre

Joe, I wish I could answer it for you. I've asked the same question by myself. I think that we have been very clear since the time we did test the water road show meeting before we went public. That we think 3rd and 4th line is a very attractive opportunity because it is a meaningful market opportunity to begin with where there is very little competition. And that market opportunity was likely to grow because of the anticipated approval that we saw coming down the line. All three of those approvals have happened in the last nine months and I happened to view that as very good news for kidney cancer patients. I also happened to view it is very good news for us and our drug. But I will acknowledge for you, I think you said the bare case, I will acknowledge for you that I do think that some folks on Wall Street have viewed our CC is basically taken care of as a result of these three approvals. I happened to disagree with that but only time will tell. And I wondered if Adrian would like to add anything because I don't know what else I can say other than what I've said many times before on this topic.

Adrian Senderowicz

So thank you for the question. And I have the same feeling. I can tell you that what we are observing now -- we will observe RCC having many more patients in 3rd and 4th line has happened over the years for multiple solid tumors. And even in malignancies such as multiple myeloma, colon cancer, breast cancer where patients are living longer because they are better 1st and 2nd line therapies. So the market has grown and we believe that RCC that's going to be exactly the case. So thank you.

Joe Pantginis

No, that's really helpful. And if could just follow up a little separately here. I mean obviously one of the potential advantages of this NDCs here are the safety profile and you have starting to accumulate data to show that. So I guess what are the real advantages here obviously beside efficacy especially when you are looking to combined with PARP inhibitors to be able to show additional safety or safety benefits?

Adrian Senderowicz

So great when take the safety consideration for RCC first and then we can discuss about the part. So another issue that is important for RCC as you know the majority of treatments are TKIs including lenvatinib and caboz TKI. So one of the mechanism for resistance is they have regulation HIF-1α and it makes a lot of sense that for patients who does progress because of HIF-1α over expression that become 3rd and 4th line with this our combination that actually get through HIF-1α and HIF-2α so that's one of the biological reasons why it makes a lot of sense. Regarding the safety, I mean we have more than 400 patients and as you know we believe this we have the best Topo 1 inhibitor in the clinic particular regarding safety profile. And we have minimal lower toxicity and minimal GI safety that allows us to do combinations studies not only will in PARP but we are planning to do other combination therapies with multiple chemo regiments. And we believe that if that's the case we will able to be the best and replace actually all other Topo one inhibitors in the clinic.

Operator

Thank you. And our next question comes from Michael Schmidt of Leerink Partners. Your line is open.

Varun Kumar

Hi, guys. This is Varun Kumar on behalf of Michael Schmidt. So my first question is on regarding potential pivotal study for CRLX101 combo with paclitaxel. Can you provide more color on the current thinking on end point and on patient enrollment criteria? For example, what percentage of patient you guys are thinking to enroll who have failed to prior vaccine therapy?

Chris Guiffre

Okay. Of course we will be glad to provide that. I am going to turn it over to Adrian. I just want to start though by underscoring that nothing is finalized and so we launch the study and certainly nothing is finalized until we have our end of Phase 2 meeting with the agency which we are not going to have until this fall. So what we can tell you right now is our current thinking. But that is subject to change. So with that loyally disclaimer and my apologies for doing so. I'll turn it over to Adrian to give you the answer you are looking for.

Adrian Senderowicz

So thanks for the question, very important question. So in general when we do pivotal studies we try to meaning what kind of clinical studies you have in Phase 1 or Phase 2. So you can imagine that we are going to try to not deviate significantly from what the patient population we've been treating. And certainly one of the highest unmet medical need is for Avastin, however as Chris stated very clearly we will be exploring different potential populations and design in a Phase 2 trial and to meeting -- however there are few things that are clear, this rumor is that the control arm will be most likely a weekly paclitaxel and very accepted end point four approval and give us study PFS. So those are the two things that are very clear. And hope I was able to address your question.

Varun Kumar

Yes, sure. That was very helpful. And my second and last question. With after recent this positive top line data we saw from TESARO PARP inhibitor in their NOVA study, I was wondering if it changes the current strategy and priorities for you guys specifically related to what indication to pursue with 101 and LYNPARZA combo? Thank you.

Chris Guiffre

Sure. So it's great question. And I just wanted to start off by congratulating our friends at TESARO, that's outstanding data. And it's more evidenced that PARP inhibitors are an important new treatment option for patients. We've been saying that for a while and we are glad that other companies are generating the data that support our views in this space and our claims. Adrian, do you want to make any specific comments?

Adrian Senderowicz

Well, I mean again we congratulate again TESARO folks because they have a very interesting opportunity and maintenance for patients who have ORC blood sensitivity, so certainly our space is mostly in blood receive system patients. But more importantly that combination can be used not only in ovarian cancer patients with other tumor type such tumor negative breast cancer, we can consider in cancer that has a blood deficient patients. And many other tumor types that we can expand the ovarian indication another tumor type. So we believe that we can enhance the potential this all opportunities in ovarian and many other indications. Thank you.

Chris Guiffre

Sure. And I think the key point there just is to be very clear. Those data were generated in platinum sensitive patients. We are focusing platinum-resistant.

Adrian Senderowicz

At least initially, yes.

Operator

Thank you. And our next question comes from John Newman of Canaccord Genuity. Your line is open.

John Newman

Hi, guys. Thanks for taking the question. Looking forward to the upcoming data. I just had two questions. The first question is Chris I just wondered if you could remind people given all the attention that the PARPs are getting with Medivation being in M&A process and PARPs already approved, could you remind us some of the properties for 101 that are different and allow combination where a lot of other agents are not able to be combined? And the second question is just relating back to one of the first questions on the call which is there has been a lot of discussion about 3rd line positioning to 101 and how that's the small market opportunity but is there anything that would prevent you from testing in combination with PD1 is going forward? I think you are already looking at that but I am just -- I just wanted to touch on that little bit. I know you talked about this but just though I would ask so.

Chris Guiffre

So are we. Sure. All right. So let's take one at a time. First, you want to talk about PARP. And I am glad to do it. I think we should all thank AstraZeneca, TESARO and Medivation for drawing attention to this new important class of drugs. Just even a couple of years ago you don't hear much about PARP when you heard a loud course of PD1, PDL1 maybe some CAR T but PARP has certainly gained a lot of momentum with the approval of LYNPARZA which is the first approved PARP inhibitor and then with TESARO terrific data and with Medivation doing a wonderful job of I think of shining a light on just how valuable their PARP inhibitor could be if it were owned by some other company. So with all that said, remember that PARP inhibitors present DNA damage repair. That is a very important mechanism and that's why they are such an interesting class of drugs. But just imagine how obviously synergistic it would be to combine a PARP inhibitor with a drug that actually damages the DNA. So if your PARP inhibitors can prevent the DNA damage repair, an ideal logical combination is a Topo one inhibitor which is damages the DNA. So you don't have to take my word for that because I am not the only person who believes that make sense and we are truly not the only people who believe that make sense. Many people have tried combining Topo 1inhibitors with PARP inhibitors because of the obvious potential synergy there. And there have been some successes pre-clinically but there have been nothing but failures clinically because of the synergistic tox that occurs. And I am not going to too deeply into this but I wanted to just walk you through it in a couple steps to show you why prior attempt have failed and why we and the NCI and AstraZeneca are bullish about our current attempt. So whenever you combine a Topo 1 inhibitor with a PARP inhibitor, you get synergistic cell killing, that's a fact. You get it any place that you have the combination of the two agents. What you would like is the synergistic cell killing in the tumors. What you don't want is synergistic cell killing in the bone marrow. So when you try combining any PARP inhibitor that you like with any of the other Topo 1 inhibitors what you get unfortunately is synergistic bone marrow tox that is what has plagued these combination. Okay, when you combined a PARP inhibitor and we have combined with more than one PARP inhibitor pre-clinically. When you combine a PARP inhibitor with 101 you can avoid that bone marrow tox because essential 101 spares the bone marrow by clearing the bone marrow in about 24 hours. So when you dose with 101 and then wait to dose with the PARP inhibitor, by the time you dose with PARP inhibitor there is no 101 left in the bone marrow but there is 101 still in the tumor and then voila, you get the synergistic cell kill where you wanted in the tumors and not in the bone marrow where you don't. That's why we believe that what we are working on right now could be very important not just for us but the entire PARP class and the entire class of patients who would benefit from the first clinically relevant PARP Topo combo. So before I answer your second question, does that cover or maybe does that go into more detail than even you wanted.

John Newman

No, that makes a lot of sense. Thank you.

Chris Guiffre

Okay. So then you mentioned PD1. Is there any reason why we couldn't test with PD1? The answer of course is no. One of the things we do with our NDCs is we design these NDCs to basically target tumor, spare healthy tissue and enable combinations. And to date, we've tried a number of combinations and we haven't yet found one that doesn't work. It's not tolerable. So that doesn't mean that we will go 100% and all combinations will work. But we see no reason why you couldn't combine with PD1 or PDL1. Just like we see know reason why we couldn't do other chemo combinations or other DNA damage repair combinations. But since you asked about immunoncology I'll just remind you that at AACR we presented a poster for the very first time showing that we were actually working in the lab in this space prior to that we only talked about NGO genesis combination, chemo combinations and DNA damage repair combinations. Our fourth pillar is immunoncology combinations. We are excited about the data we presented. We got a lot of attention at AACR because of it. That was all good but it is just our very first step into a new frontier. So it's premature to say where we will in the clinic in combining with IO agents. But I can tell you we continue to work in the lab to understand the pros and cons of combining with a number of different agents including a variety of IOAs.

Operator

[Operator Instructions]

And our next question comes from Debjit Chattopadhyay. Your line is open.

Debjit Chattopadhyay

Hi, good afternoon, gentleman. Apologies for playing the day, there was advocate here. But could you talked to the contingency plan assuming you hit your hazard ratio 0.3 as opposed to 0.4? Will that in your mind justify a move to Phase 3?

Chris Guiffre

Sure. So I think it's a good question Debjit. Honestly at this point for me all I can really say on that point is that we have been excited to see this data for a while now. And we continue to be excited. And we expect that data will support us going into Phase 3. If does then I think the question that you raised is mute, if it doesn’t then I think you are welcome back with question once I see the data and I'll tell you why or why not we think it's important going into Phase 3.

Debjit Chattopadhyay

And more thing then the combo -- sorry not the combo but the control cohort is got range of different physician choice treatment right. Could you just layout the potential scenario in terms of the expected CFS or the five or six different agents that could be potentially used in the setting?

Chris Guiffre

Sure. So in the Phase 2 study that you are asking about. There was dealer's choice and a total of seven agents were eligible. So there are four TKIs that are used in the setting. There are two MTORs and there are is Avastin. So those are the seven agents. So again there are seven agents. If you look at the data that's available to us. Randomized data, single arm data, retrospective analysis, you see a fairly clear picture that regardless of what you use in 3rd and 4th line RCC, you are going to see about 3.5 to 4 months of PFS and you are going to see about 2% to 4% response rate. We will find out very soon what the control arm does in our study but we design the study under the assumption it would deliver about 3.5 months of PFS. And we have not seen any literature since the design of the study to date that would contradict that assumption.

Operator

Thank you. And at this time I am showing no further questions. And I'd like to turn the call back over to Mr. Guiffre for closing remarks.

Chris Guiffre

Okay. Thanks everybody for joining us today. We look forward to reporting on continued progress in November. Have a good night.

Operator

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

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