ChemoCentryx Inc. (NASDAQ:CCXI)
Q2 2016 Earnings Conference Call
August 8, 2016 5:00 PM ET
Susan Kanaya – Senior Vice President and Chief Financial Officer
Thomas Schall – President and Chief Executive Officer
Eric Schmidt – JPMorgan
Good afternoon and welcome to the ChemoCentryx Second Quarter 2016 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer. As a reminder, this conference call is being recorded. I would now like to turn the call over to Ms. Susan Kanaya, Senior Vice President and Chief Financial Officer at ChemoCentryx. Ms. Kanaya, please go ahead.
Thank you. Good afternoon and welcome to the ChemoCentryx second quarter 2016 financial results conference call. This afternoon we issued a press release providing an overview of financial results and corporate highlight for the quarter ended June 30, 2016. This press release is available on our website at www.chemocentryx.com.
Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer of ChemoCentryx, who will provide a corporate update and review our anticipated milestones. Following his comments, I will provide an overview of the financial highlights for the second quarter before turning the call back over to Tom for closing remarks.
During today’s call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.
These risks are described in our filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on March 14, 2016. You are cautioned not to place undue reliance on these forward-looking statements, and ChemoCentryx disclaims any obligation to update such statements.
In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 08, 2016. ChemoCentryx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.
I will now turn the call over to Tom.
Thank you, Susan. And thank you to everyone for joining us this afternoon on our second quarter financial results and corporate update conference call. We are proud of the significant accomplishments we have achieved to date in 2016. These include important clinical, regulatory, and business development milestones.
Consider for a movement that during the current year we have reported positive clinical results with our complement inhibitor CCX168 in a Anca- Vasculitis from two Phase II trials. That is both CLEAR and the CLASSIC trial. We have also received important validation for our Anca Vasculitis program from regulatory authorities including the new PRIME designation by the European Medical Agency for accelerated assessment.
And we have consummated a very attractive regional marketing licensing deal with Vifor Pharma a world leader in delivering quality care for patients with kidney disease and this is just a highlight of achieved milestones in our orphaned and rare disease programs with CCX168 and AAV. We believe that these are accomplishments are emblematic as are others that I will discuss during today’s call. A further validation of our approach to treating rare autoimmune diseases, inflammatory disorders and cancer and will further enhance shareholder value.
We expect several more important milestones during 2016 and I will recap these today as well. Lets first discuss our lead drug candidate at orphan and rare disease CCX168. As a remainder CCX168 is potent orally administered highly specific small molecule inhibitor of the Complement C5a receptor which drives inflammatory cells and their damaging effects in a number of autoimmune diseases.
We are evaluating CCX168 in multiple orphan and rare diseases including our lead indication anti-neutrophil cytoplasmic auto antibody or ANCA-associated vasculitis also called ANCA disease or AAV. Our goal in treating patients with AAV is to provide highly effective control of this disease, while providing the advantages of markedly reducing or eliminating the high doses of glucocorticosteroids and their often dangerous side effects that are currently standard of care in this disease.
We now intend to advance CCX168 into Phase III development based on the high dose steroid substitution strategy. This is an approach that AAV patients, our clinical advisors and we at CCXI believe address the real unmet clinical needs, as well as a commercial opportunity in the treatment of this disease. Our Phase II development program comprise two clinical trials, the CLEAR and the CLASSIC trials, both of which have been successfully completed this year with positive results, put most simply CLEAR was the steroid substitution trial and CLASSIC was an add-on to standard therapy trial.
Specifically, the most recently completed CLASSIC trial was designed to assess the safety profile of CCX168, when added to the full high dose steroid-containing standard of care. The goal of this approach was to address important regulatory and potential labeling questions in the event CCX168 is approved for the treatment of AAV. The CLASSIC trial met it’s objectives. The safety data obtained show that adding CCX168 to the full high dose steroid-containing standard of care regimen, did not contribute additional safety concerns beyond those seen with the standard of care therapy alone.
The incidence of adverse events were similar across all treatment groups in the study, and the results of the Phase II CLASSIC trial, were consistent and additive to the data obtained from the previous reported Phase II CLEAR trial. The previous completed Phase II CLEAR trial was different from CLASSIC, CLEAR was designed to assess whether high dose chronic steroids, such as prednisone or methylprednisone, which are currently used in the AAV standard of care regimen, could be sharply reduced or eliminated and replaced with CCX168, while providing high levels of efficacy in the control of signs and symptoms of vasculitis.
You’ll recall that the CLEAR trial also successfully met its objectives treatment with CCX168 demonstrated numerical superiority and statistical non-inferiority in the Birmingham Vasculitis Activity Score, or BVAS response relative to the steroid-containing standard of care, essentially demonstrating that CCX168 could replace high dose chronic corticosteroids, while inducing a rapid and marked clinical benefit.
Results from the CLEAR trial are recently reported in an oral presentation at the 53rd European Renal Association – European Dialysis and Transplant Association or ERA-EDTA Conference in Europe. These positive data from both the CLEAR and CLASSIC trials marked the culmination of our Phase II development program in AAV.
We believe that the data from Phase II CLEAR and CLASSIC trials support advancing CCX168 in to Phase III clinical development. Accordingly, we’ve been in the process of conducting our end of Phase II and scientific advice meetings with regulators in the U.S. and Europe respectively. In deed, we very recently conducted three key regulatory meetings to discuss our proposed Phase III development plans. We met with the European Medicines Agency, EMA. We also conducted our PRIME kickoff meeting in Europe and have met with the FDA.
Our briefing documents for all of the above meetings included a comprehensive dataset of all clinical and non-clinical data, along with a proceed design for our Phase III development program. While still subject to formal regulatory feedback, our proposed Phase III plans are largely based on the design of the successful Phase II CLEAR study. That is the design for our Phase III trial, will focus on a primary efficacy objective of reducing or eliminating chronic high doses of steroids.
We look forward to providing an update regarding the outcome of these regulatory meetings, following receipt of our formal feedback from the regulators, which we anticipate will be sometime during the third quarter. We are optimistic that we will be launching our Phase III development program by the end of this year. In May at our R&D Day, key opinion leaders from the United States and the United Kingdom outlined the medical necessity of improving treatment options for AAV patients.
The frequent use of high dose steroids in patients with AAV creates many issues that are clinically very difficult to manage, I’ll outline just a couple. First there are well known morbidities associated with high dose steroids such as osteoporosis, incipient diabetes, cataracts, to name a few. Second premature death. The most recent independent published literature shows that at least 11% of patients die within one year of diagnosis of AAV. And in fact, the main cause of premature death in year one is driven by infections resulting from chronic high dose steroid use, not the disease itself.
And beyond premature death in the aforementioned co-morbidities, clinicians are also focused on improving remission and rates of relapse in AAV. About a third of the patients relapse between 6 months to 18 months from initial diagnosis, and about half relapse within three to five years. Relapsed is troubling because each relapse contains an additional risk of irreversible organ damage leading in cases of kidney damage to dialysis and in deed in some cases death.
Many experts view early remission evidence for which emerged in our Phase II trials when using CCX168 versus the standard of care as the critical factor to overall patient survival, a study by the European vasculitis study group demonstrated at patients, who had a BVAS equal to zero at three months and who are by definition and remission had statistically significantly improved overall survival compared to patients who are not in remission every month.
In the clear and classic trial, a higher proportion of patients receiving CCX168 were in early clinical remission as early as four weeks compared to patients not receiving CCX168. In other words, we believe that the rapid onset of action of CCX168 may one day support of valuable survivable benefit in AAV. We see real value in the potential of CCX168 to shift the current treatment paradigm in AAV to a regimen that does not include chronic high doses of glucocorticosteroids.
And so does our new partner Vifor Pharma, who licensed the rights to commercialize CCX168 for orphan and rare renal diseases in certain geographies outside of the United States. We are pleased that the additional strength of the $85 million upfront payment added to our balance sheet. But more important, we are honored to have this support and validation from a recognized leader in delivering quality care for patients for kidney disease.
The terms of this agreement also includes attractive potential future milestone payments and tiered double digit royalties on net sales. We have received notable regulatory validation for our CCX168 AAV program as well. ChemoCentryx is one of the first biotech companies to be granted the PRIority MEdicines or PRIME designation by the EMA. PRIME is a program launched by the EMA, which offers early and proactive support to medicine developers to enable accelerated assessment of medicine applications that target an unmet medical need. To be accepted for PRIME, our medicine has to show its potential to benefit patients with an unmet medical need based on early clinical data.
Of note, the EMA stated its view that based on non-clinical and clinical data; CCX168 provides a new mechanism of action for the treatment of the two main forms of AAV and the potential of CCX168 to significantly address the unmet medical need in these two forms of AAV. Also we were awarded a $500,000 FDA Orphan Products Development grant to support the clinical development of CCX168 for the treatment of AAV and we have received orphan drug designation for CCX168 and AAV in both the European Union and the United States.
We believe that the current regulatory landscape is favorable towards treatments such as CCX168 that could achieve more rapid disease control and prevent permanent organ damage while allowing for a reduction in chronic high-dose steroids and their related toxicities. Another opportunity within our orphan and rare disease program, includes CCX168 and patients suffering from atypical hemolytic uremic syndrome, or aHUS. aHUS is a rare disease wherein the absence of appropriate therapy up to half of all patients progressed to end stage renal disease with 25% dying in the acute phase of the disease.
Patients with aHUS who have end stage renal disease are generally consigned to life long dialysis, which carries a five-year survival rate of just under 40%, and with infections accounting for almost 15% of death. aHUS is currently treated with eculizumab, the treatment is not accessible to all patients and not all eculizumab patients derive benefit. We continue to enroll aHUS patients who are on dialysis into our ongoing single center Phase II proof-of-concept study. This trial site will enroll up to ten aHUS patients in the study and we – expect to provide data from this program at a major medical meeting this fall.
Now, I would like to turn to our immuno-oncology program. As many of you know, we currently have an ongoing Phase Ib study with CCX872, an inhibitor of the chemokine receptor known as CCR2, for the treatment of advanced pancreatic cancer. Pancreatic cancer is the 15th most common cancer worldwide, but the 4th highest cause of cancer-related death. Even with the most recent advances in the treatment of pancreatic cancer, median overall survival is about six months to eight months. Human pancreatic tumors are characterized by a highly immunosuppressive microenvironment.
In the tumor cellular microenvironment, CCR2, the target of our drug CCX872 are on sales thought largely to be of an immunosuppressive behavior. These are the so called myeloid-derived suppressor cells or MDSCs. These cells effectively help tumors hide from the body’s cytotoxic immune response to tumor cells. There are correlative data showing that high levels of MDSCs are associated with shorter survival in pancreatic cancer and that MDSC levels rise as the disease advances, inhibiting CCR2, with CCX872 and thus the MDSC is controlled by CCR2, may lead to the liberation of the cytotoxic immune response against tumor cells, reduce tumor burden and potentially lead to improved patient survival. This mechanistic rationale has recently been validated to the publication of positive clinical data, generated in the field, which demonstrated that CCR2 inhibition decreases immunosuppressive cells, and cytokines and increases cytotoxic T cells and antitumor cytokines in the tumor micro environment. As a reminder, we have previously presented pharmacokinetic data from Part A of our ongoing Phase Ib study with CCX872 in patients with pancreatic cancer.
We showed that a single 150-mg dose of CCX872 that the pharmakinetic profile was excellent and consistent with that seen in healthy volunteers. This is specifically we saw excellent receptor coverage after 12 hours and since the ongoing portion of our study involves twice-daily dosing of CCX872, we expect to see greater than 90% coverage of the receptor throughout the day, which will support an excellent therapeutic index.
In our ongoing multi-center clinical trial with CCX872, we have enrolled 50 patients with non-resectable pancreatic cancer. In this trial, patients received CCX872 in combination with FOLFIRINOX, one of the current standards of care in the treatment of pancreatic cancer. FOLFIRINOX, on its own, has an historical objective response rate of about 30%. In the next few weeks we plan to report initial overall response rates, primarily based on imaging data, following 12 weeks of treatment with CCX872. Later this year we plan to report on progression-free survival or PFS, following completion of at least 24 weeks of treatment.
As we and the scientific and medical community build upon the knowledge-base of inhibiting certain chemo-attractive receptors and their role in the tumor micro environment, we look forward to broadening the efforts within our immuno oncology program.
Before I turn the call back over to Suzan, who will review our second quarter financial results, I am very pleased to introduce Dr. Rajinder Singh, as our new Senior Vice President of Research. Raj has extensive pharmaceutical industry experience, most recently served as the Vice President of Chemistry at Rigel Pharmaceuticals, where over a 10-year period he oversaw the progress of several drug candidates bench to clinical trials, including supporting numerous IND filings in immunology and oncology. We are delighted to have Raj join our executive team.
Dr. Israel Charo has recently retired from his full-time Senior Vice President of Research role, to one of a key ongoing and active advisor to ChemoCentryx. I’m thankful for the scientific leadership and expertise that Ise dedicated to ChemoCentryx. And Raj and I are both thrilled that Ise will be available to us in an advisory capacity going forward.
With that, I’ll turn the call back over to Susan.
Thank you, Tom. As I mentioned earlier, our second quarter 2016 financial results were included in our press release provided this afternoon.
Revenue was $2.8 million for this three months ended June 30, 2016, compared to no revenue in 2015. The increase in revenue was due to amortization that the upfront payment from Vifor Pharma and funding from the FDA’s Orphan Products Development grant to support the clinical development of CCX168 for the treatment of patients with AAV.
Research and development expenses were $9.1 million for the three months ended June 30, 2016, compared to $8.6 million in 2015. This increase was primarily attributable to higher expenses associated with our ongoing clinical trial of CCX872 in patients with advanced pancreatic cancer. This increase was partially offset by lower expenses associated with CCX168 due to the completion of the Phase II CLEAR trial in Europe and the completion of the treatment period of a Phase II CLASSIC trial North America, in 2016.
General and administrative expenses were $3.9 million for the three months ended June 30, 2016, compared to $3.6 million in 2015. The increase from 2015 to 2016 was primarily due to increases in intellectual property related expenses, and travel and professional fees associated with our business development efforts.
Total shares outstanding at June 30, 2016 were approximately 47.8 million shares. Cash, cash equivalents and investments, totaled $139.9 million at June 30, 2016, which included the $85.0 million upfront payment in connection with the Vifor Pharma partnership that we announced earlier in May.
With that, I will now turn the call back over to you Tom.
Thank you, Susan. With the support of our clinical trial sites our collaborators worldwide and also with the essential support of the patients involved, we have built and maintained a good deal of momentum across our clinical trials. We have a goal of offering the medial and patient community first in class and best in class highly potent specific new medicines that target chemo attractive receptors in order to offer safer and more efficacious treatment options. We have achieved significant milestone so far in 2016. And with the fears to termination, the continued progress across our programs, we believed that our overarching goal is ever more closely within our reach.
With that I will now turn the call back over the operator so that we may take your questions. Operator?
Thank you. [Operator Instructions] We have a question from Anupam Rama of JPMorgan. Your line is open.
Hi, guys. It’s Eric in for Anupam this afternoon. Congrats on the progress and thanks for taking our questions. Maybe just a follow-up on your regulatory comments. I am just wondering what sort of initial feedback you’re getting from the EMA around the size and duration of the potential Phase III in AAV with 168. How that’s tracked with – what we saw in the RAVE study with rituximab?
Thank you, Eric, great question. So, as you know, naturally we need to complete the entire regulatory process with both EMA and FDAV before we can really talk in any detail on these meetings and the potential plan moving forward. As soon as that process is complete, we will provide a comprehensive overview.
However, as we stated before there is really only one Phase III design that provides us any precedent in the literature and that is the so called RAVE study, where rituximab was offered as an alternative to cyclophosphamide and where he and others will remember that the standard of care in ANCA vasculitis is really a two part standard of care, who have an immunosuppressant, historically cyclophosphamide, and then that immunosuppressant is given with chronic high doses of glucocorticosteroids, high-dose pulsed steroids, for short usually methylprednisolone or prednisone. And so that two part standard of care has been pretty traditional.
So the RAVE study said can we get ride of cyclophosphamide and they performed the Phase III trial to offer rituximab as an alternative. And that’s the only Phase III registration trial that’s ever been done. So that study, which had nothing to do with the steroids by the way, so we’re looking at the other side and some might argue the more noxious site of the standard of care, which is the high doses of chronic glucocorticosteroids.
But RAVE offers really, as I said, the only published precedent. It has enrolled 197 patients. They looked at the ability to induce a BVAS, Birmingham Vasculitis Activity Score remission essentially at 26 weeks. And they were able to show that when they gave rituximab instead of cyclophosphamide in a randomized blinded control trial. They could do at least as well as cyclophosphamide in terms of any devascularization at 26 weeks.
So we've always believed that that study of size and scope essentially tells us kind of what's precedented obviously but also what's manageable. We remind the community this is an orphan trial and so the rituximab trial was looking at certainly a no hypothesis of statistical non-inferiority and that's what they hit. So that's what they were registered on.
We believe that the BVAS end-point is valuable. Although it's not the only way to regard efficacy in this disease but we think that will be a key part of the end-point. And as you may recall we had some experts including Dr. David Jayne from Cambridge at our R&D Day in May.
And he actually said something very interesting from a recent meta-analysis from the European Vasculitis Society which showed that hitting a early BVAS remission they looked at three months, which is earlier than has ever been reported as a endpoint in a clinical trial but the BVAS remission at three months based on the meta-analysis was really a dramatic positive predictor of survival over the course of three to five years.
So you'll recall that in our CLEAR study and even in CLASSIC, CLASSIC although wasn't designed – CLASSIC wasn't designed look at it specifically but we had BVAS zero really quite a bit earlier as early as week four relative to standard of care. So all that's by way of saying those information went in to our briefing documents. Those were the discussions we had with EMA at the so called Scientific Advice Meeting and the FDA end of Phase II meeting.
And I think we had a great discussion and we're waiting for the feedback. I'll stress finally to that PRIME is the new element in the mix the regulatory mix. PRIME's whole mission is to provide accelerated assessment to get drugs to patients as quickly as possible and we were one of the first four companies in the world that had that new designation awarded just over a month and a half ago and we've already had our kickoff meeting with them. So all of that feedback is just sort of coming in and doing and as soon as we have the formal feedback we will appraise the community of that.
We are optimistic of our plan of launching our Phase III development sometime later this year and we've been saying all along that the Rave study provides them important precedent. But there will be other things to bring to the party as well including potentially rapid remission including potentially a quality of life outcomes as reported by patients using validated instruments and possibly other features again, a consequence of reducing and eliminating steroids in the standard of care. So, more on that as we have the feedback.
Great, that’s very helpful. And maybe just a follow-up question on aHUS, if I could. Maybe you could just remind us how many patients worth of data you are anticipating with the fall update? And what you’d be looking for in terms of proof-of-concept? I know it's a short duration on drug in the study, but what endpoints are sort of interest here? Are all endpoints like LDH reduction and TMA response applicable in this trial? Thanks.
In this pilot study we might get some hint at some of those in disease. Probably the better hint we’ll get is such things as platelet numbers, but we – this is an important study for a couple of reasons. The primary biology we're looking at in this study Eric is what happens to the thrombogenic potential in the blood or sera of people with aHUS after we have dosed them in the clinic for two weeks with CCX168.
And we have shown previously, very interestingly, and you might remember some of this data, which we've discussed in the international meeting. Previously we've shown when you take the sera of a person with diagnosed aHUS, and you put that essentially in a test tube in the laboratory and you run it over a layer of cells that are very much like the cells that line circulatory vessels, you'll induce big clots even in the test tube. And we showed that we could inhibit those clots by adding either the standard of care eculizumab or by adding CCX168.
So that was the first biochemical proof-of-concept that C5a receptor was likely to be involved or at least it was a very meaningful hypothesis, in the thrombogenic potential in vivo is these patients in aHUS. After all, aHUS is really just forming clots within the blood vessels mostly affecting the kidneys and causing kidney failure.
So the next logical step was to ask the question. Well, if that's true and we spike the drug into the test tube. What happens if we actually give the drug to the patient? And so we're – we enrolled or intending to enroll up to 10 patients at a single site. We are really making great progress on that enrollment and we're going to publish, as we’ve discussed the data that we have, we hope at the major kidney conference here in the U.S. I say hope, because abstracts – we haven't had the disposition yet and all the abstracts for the meeting, but we're going to show the data that we have and essentially we're just taking that next logical step where we ask the question what is the thrombogenic potential now of the patients sera now that they have been dosed for two weeks.
Having said that there are a couple of other clinically relevant and interesting things that we can look at, including platelet count, Fibrin split products, complement consumption and the rest. And we will be presenting some of that data as well. As we’ve said before, if those line up in a favorable fashion or anything like what we saw in the completely ex vivo study, we believe there will be sufficient evidence to look very energetically at starting a clinical end point study in aHUS with our drug.
And we think that there is a lot of reasons to believe that would be a very amenable clinical path, even with the entrenched incumbent.
Great, thanks very much.
Thank you, no further questions at this time, I’d like to turn the call over to management for any closing remarks.
Well I wish to thank all of our listeners and attendees for the meeting today, and I appreciate the interest in our program and we very much look forward to updating you next quarter on the progress that we are making across the pipeline. So thanks again to everyone and I wish everyone a pleasant afternoon.
Ladies and gentlemen, thank for your participation on today’s conference, this concludes the program. You may now disconnect. Have a wonderful day.
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