Allos Therapeutics, Inc. (ALTH
Q3 2007 Earnings Call
November 5, 2007 8:30 am ET
Executives
Derek Cole - Vice President, Investor Relations
Paul Berns - President and Chief Executive Officer
Pablo Cagnoni - Senior Vice President and Chief MedicalOfficer
Jim Caruso - Executive Vice President and Chief CommercialOfficer
Analysts
Mark Monane - Needham & Company
Charles Duncan - JMP Securities
Operator
Ladies and gentlemen, thank you for standing by, and welcometo the Allos Therapeutics 2007 Third Quarter Results Conference Call. At thistime, all participants are in a listen-only mode. Later, we'll conduct aquestion-and-answer session, and instructions will be given at that time.(Operator Instructions) As a reminder, this call is being recorded today,Monday, November 5, 2007.
And I would now like to turn the conference over to Mr.Derek Cole. Please go ahead, sir.
Derek Cole
Good morning and thank you for joining us on today's call.With me this morning are Paul Berns, President and CEO; Dr. Pablo Cagnoni,Chief Medical Officer; Jim Caruso, Chief Commercial Officer; and David Clark,Vice President of Finance.
Following this introduction, Paul will provide a summary ofthird quarter activities. Pablo will then provide an update on the company'sproduct development program. Jim will provide a brief commercial planningupdate. And David will review the company's financial results for the thirdquarter of 2007. We welcome your questions, following David's remarks.
As a reminder, this conference call is being recorded andwebcast. The call may be accessed live on our website and will be available inour event archives for the next several weeks.
Before we begin, please be advised that during the course ofthis call we may make forward-looking statements concerning our company thatare not historical facts. These forward-looking statements may include, but arenot limited to, statements concerning our future financial performance, ourfuture product development plans, timelines relating to our clinical trials,timelines for regulatory actions, and the potential safety and efficacy of ourproduct candidates. Such forward-looking statements are not guarantees offuture performance and are subject to risks and uncertainties that may causeactual results to differ materially from those anticipated by theforward-looking statements. Additional information concerning these risks anduncertainties is contained in the "Risk Factors" section of the company'sAnnual Report on Form 10-K for the year ended December 31, 2006 and in thecompany's other periodic reports and filings with the Securities and ExchangeCommission. The company cautions investors not to place undue reliance on theseforward-looking statements. All forward-looking statements are based oninformation currently available to the company on the date hereof, and thecompany undertakes no obligation to revise or update these forward-lookingstatements to reflect events or circumstances after the date hereof, except asrequired by law.
I will now turn the call over to Paul.
Paul Berns
Thank you, Derek, and good morning. It is a pleasure toupdate you this morning on the events of the past quarter and share our outlookfor the balance of the year. We have continued to make important progress onthe development of PDX across multiple indications, including hematologicmalignancies and solid tumors.
Our clinical development organization, led by Dr. PabloCagnoni, is doing a notable job of executing the pivotal Phase II PROPEL trialof PDX in patients with peripheral T-cell lymphoma. We recently announced thatpatient enrollment in the trial is ahead of schedule with completion ofenrollment now expected in the second quarter of 2008.
In addition to PROPEL, we have four other PDX studiesunderway in multiple indications with two additional solid tumors studiesscheduled to begin in the near future. We believe we have established a productdevelopment and commercialization plan to effectively evaluate the therapeuticpotential of PDX across multiple indications.
Let me now turn the call over to Pablo to provide moredetails on these development programs.
Pablo Cagnoni
Thank you, Paul, and good morning. Allow me to begin myhighlighting recent progress with PROPEL, our pivotal Phase 2 trial of PDX withconcurrent vitamin B12 and folic acid supplementation in patients with relapsedor refractory peripheral T-cell lymphoma, or PTCL.
In September, we announced the outcome of pre-plannedinterim analysis of patient response and safety data from the PROPEL trial. Thesource of the interim analysis of patient response data exceeded thepre-specified threshold for a continuation of the trial, which required aminimum of four responses, either complete or partial, out of the first 35evaluable patients, as determined by Independent Oncology Review.
In addition, an independent Data Monitoring Committeecompleted an interim analysis of the safety data from the first 35 evaluablepatients and recommended that the trial continue per the protocol.
In accordance with the PROPEL protocol, the Data MonitoringCommittee will conduct another interim analysis of safety data from the first65 evaluable patients. We expect to report the outcome of the 65-patient safetyanalysis by the end of 2007.
We are pleased with the execution of this study and theprogress achieved to date. Thanks to support from our PROPEL investigators andleading patient advocacy groups, enrollment in the study is ahead of scheduleand expected to be completed in the second quarter of 2008.
Importantly, this trial is being conducted under a specialprotocol assessment, which indicates that the protocol design, includingendpoints and statistical analysis, are acceptable to the FDA to support aregulatory submission, if warranted by the results of the study.
As Paul mentioned, we are implementing a multifacetedclinical development plan for PDX. Earlier this year, we initiated patientenrollment in a Phase 1/2a, open-label, multi-center study of sequential PDXand gemcitabine with vitamin B12 and folic acid supplementation in patientswith relapsed or refractory non-Hodgkin's lymphoma and Hodgkin's disease.
Up to 54 evaluable patients will be enrolled in the Phase 1portion of the study with the objective of determining the maximum tolerateddose, safety, tolerability and pharmacokinetic profile of sequentialadministration of PDX and gemcitabine. In the expanded Phase 2a portion of thetrial, up to 30 additional patients with relapsed or refractory PTCL will beenrolled with the established MTD to assess preliminary efficacy of PDX andgemcitabine.
In August of 2007, we announced initiation of patientenrollment in a Phase 1, open-label, multi-center study of PDX with vitamin B12and folic acid supplementation in patients with relapsed or refractorycutaneous T-cell lymphoma.
Up to 56 evaluable patients will be enrolled in the studywith the objective of determining the optimal dose and safety profile of PDX inthis population. A total of 20 of these patients will be enrolled to determineoptimal dosing schedule. The expansion of our development program is expectedto provide further insight into the clinical and commercial potential of PDX inhematologic malignancies.
Now, in addition to starting these new trials, we were alsopleased to announce the presentation of data from three PDX studies at the 2007AACR-NCI-EORTC conference in San Francisco, last month.
Data was presented from our Phase 1 dose ranging study ofPDX with vitamin B12 and folic acid supplementation in patients with previouslytreated advanced non-small cell lung cancer, in which a total of 22 patientswith relapsed or refractory non-small cell lung cancer were treated at doses of150 to 325 mg/m2 of PDX.
The maximum tolerated dose was determined to be 270 mg/m2,which is nearly twice that observed in a previous Phase 1 study, in which PDXwas administered without vitamin supplementation.
Clinically, significant radiologic responses were observed,and greater than 50% of the patients in the study received two or more priortreatment regimens. Based on our PDX clinical experience to date, we plan toinitiate a randomized Phase 2 study of PDX in patients with previously treatednon-small cell lung cancer in the near future.
Additional interim data from our ongoing Phase 1/2 study ofPDX in patients with non-Hodgkin's lymphoma and Hodgkin's disease were alsopresented at the conference. As you may remember, interim data from this studywas presented at ASH 2006. At that time, responses were observed in 10 out of22, or 45%, of evaluable patients with T-cell lymphoma.
According to the most recent interim data, responses wereobserved in 14 of 26, or 54%, of evaluable patients with T-cell lymphoma, withthe duration of response typically exceeding the previously administered lineof chemotherapy. No major safety concerns were identified in this heavilypre-treated population.
Also presented at the AACR conference were results from anAllos-sponsored pre-clinical study that investigated the mechanism of action ofPDX and its differences from other antifolates and compared the in vivoactivity of PDX, methotrexate and Alimta against two non-small cell lung cancermodels.
The results suggest that PDX is mechanistically different frommethotrexate and Alimta and that these differences may be due to enhanceduptake of PDX into the tumor cell and/or greater intracellular accumulation andpolyglutamylation, resulting in greater inhibition of dihydrofolate reductase.
In addition, in the study, PDX induced greater tumorregression compared with methotrexate or Alimta in two human non-small celllung cancer xenograft models, including the highly aggressive H460 model. Wecontinue to be encouraged by the progress in our PDX development program andthe results obtained, thus far.
To conclude our clinical development update, RH1 is a novelsmall molecule chemotherapeutic agent that was recently the subject of a Phase1, open-label, dose-escalation study in patients with advanced solid tumors. Weplan to initiate a company-sponsored Phase 1 trial in the fourth quarter of2007 under a US IND.
With that, I will now turn the call over to Jim.
Jim Caruso
Thank you, Pablo. As Paul mentioned at the start of thecall, we are focused on detailed product development and commercializationplanning and execution. Based on our understanding of the oncology marketplace,input from key oncology opinion leaders and feedback from varied segmentswithin the oncology community, we continue to develop and execute a detailedTD&C (ph) plan. This work, combined with PDX's differentiated clinicalprofile, gives us confidence that PDX has significant clinical and commercialpotential in multiple indications.
While the oncology space remains highly competitive, ourmarket research continues to indicate that patients with T-cell lymphoma areclearly in need of new treatment options. This is especially true for patientswith recurrent or refractory disease who typically have a limited response toexisting therapies and poor overall survival.
Based on PDX's biochemical features of efficient transportinto tumor cells and effective intracellular drug retention, along withclinical data observed to date, we believe PDX has the potential to play aclinically meaningful role in the treatment of these patients.
With that, overview, I will turn the call over to Dave Clarkfor a third quarter financial summary.
David Clark
Thanks, Jim. For the third quarter of 2007, we recorded anet loss of $9.3 million or $0.14 per share; this compares to a net loss of$8.1 million or $0.15 per share for the third quarter of 2006.
Our R&D expenses for the third quarter of 2007 were $4.4million as compared to $4.2 million for the same period last year. Increases inR&D expense for PDX, RH1 and general activities were partially offset by a$1.1 million decrease in cost for EFAPROXYN.
Our clinical manufacturing expenses for the third quarter of2007 were $1.5 million as compared to $0.5 million for the same period lastyear. This increase was driven by increases in third party manufacturing costsfor clinical trial material and pre-commercial scale-up activities for PDX andRH1. Our cash position at the end of September 2007 was $63.4 million. For thefirst nine months of 2007, our cash used in operations was $22.5 million. Weexpect that our cash use in operations for 2007 will be in the range of 34 to$35 million.
Now I will turn the call back to Paul.
Pablo Berns
Thank you, David. As I'm sure you can appreciate, we arevery excited about our recent progress and look forward to several importantnear-term milestones, including the 65 patient interim analysis for PROPEL andthe expansion of our clinical development efforts for PDX in solid tumors. Welook forward to keeping you apprised of our progress.
And now we'd like to turn the call over to the operator foryour questions.
Question-and-Answer Session
Operator
(Operator Instructions) And our first question comes fromthe line of Mark Monane from Needham & Company. Please go ahead.
Mark Monane - Needham & Company
Thank you. Good morning and thanks for taking my question.
David Clark
Good morning, Mark.
Pablo Cagnoni
Good morning.
Mark Monane - Needham & Company
Good morning. Good morning from New York City. Firstquestion has to do with the AACR abstract for Pablo, please. There was anincreased incidence in stomatitis in the expanded cohort. Are there any riskfactors, which lead patients to be more likely to get stomatitis or not getstomatitis?
And importantly, like -- I know you worked on Tarceva, isstomatitis potentially an indicator of who will get better on this therapy?
Pablo Cagnoni
Okay. So a couple of questions into one. First of all, theincidence of stomatitis was different in the first part of that cohort. Thecohort initially treated six patients at 270, only one of those patients hadgrade 3 stomatitis, when further patients were added to that expanded cohortthere were an additional four cases of stomatitis.
The second part of the cohort apparently had patients withmore extensive prior therapy, which could or could not have something to dowith the incidence of stomatitis. So we're reviewing the data in more detail totry to understand that. Regarding the second part of your question, I don'tthink we have sufficient data to speculate whether stomatitis is a predictor ofefficacy.
As you mentioned, Tarceva and the rash and just by Tarcevathat seems to be able to predict patients that will benefit from the drug. Idon't think the same is true with PDX, but certainly we don't have enough datato speculate either way.
Mark Monane - Needham & Company
Okay. Thank you. And one more question for Jim. It'srelatively rare to see a drug that has potential in both liquid tumors andsolid tumors. In doing a market research, are you investigating both? Youannounced some more solid tumors studies today. What are your insights so farfrom research and thinking about a drug for both types of tumors?
Jim Caruso
That’s a great question, Mark. We are obviously very excitedabout the potential clinical utility that PDX could have in both hemalignanciesas well as solid tumors and could be one of a hand full of compounds that havethe capacity to be effective and to help patients across a broad spectrum ofcancer types.
Our market research, as well as, primary market researchMark and secondary market research indicates that there’s clearly an appetitefor a cytotoxic agent of this nature. Obviously, there is targeted therapiesand there appears to be a transition back to cytotoxics as the backbone oftreatment for cancer.
Targeted therapies perhaps have not reached the full levelof expectation when they were originally entered into the market space. Sothere appears to be a very significant appetite for an agent of this type, ithas the capacity to be effective in both solid and hemalignancies. When youlook a little bit further down stream in hemalignancies in particular PTCL,right now there are no agents indicated in either a first or second linesetting.
When you look at treatment regimens, highly-respectedtreatment regimens such as the National Comprehensive Cancer Network or theNCCN, they recommend for PTCL and both a first line and second line settingclinical trials, as opposed to existing regimens on the market and those arebasically your chemotherapeutic suits, your CHOPs, your (inaudible).
Second line, it goes a little bit deeper into DHAP and ESHAPand then you have some single agent using a third or second line opportunity.Transitioning back over and obviously we believe based on some of thepreclinical data we’ve seen to-date that we have significant opportunity inB-cell as well.
Transferring or back to solid tumors, obviously, theoriginal pre-clinical data for solid tumors, for lung in particular, as well asthe clinical data out of MSK with a 10% response rate in a very highly treatedpatient population, which certainly is at a minimum equivalent to existingagents in that space such as Alimta and Taxotere, which I believe areapproximately 8%, 9% in that same range in terms of efficacy.
We really like the potential opportunity that PDX hascertainly in the near term in lung. As Pablo had mentioned, we will be initiatinga solid tumor lung study in the very near future. And as part of that TD&C(ph) planning, there appears to be, as I mentioned earlier, a significantappetite for other solid tumor programming as well based on the rich history,as an example, of MTX.
Mark Monane - Needham & Company
Thanks very much for the added information.
Jim Caruso
Okay, Mark. Thank you.
Operator
(Operators Instructions) Our next question comes from theline of Charles Duncan from JMP Securities. Please go ahead.
Charles Duncan - JMP Securities
Hey, good morning, folks. Congratulations on a good quarterof progress, and thank you for taking my question. I wanted to ask a questionregarding the special protocol assessment for PTCL.
I’m wondering if you can give us any additional insights asto the kind of efficacy hurdles that are either explicitly or kind ofimplicitly applied in that SPA, if you think that say, a 20, 25% response ratewould be enough to get over the hurdle?
Pablo Cagnoni
Good morning, Charles. This is Pablo. The response rate isnot explicitly established in the SPA. I think precedent suggests strongly thatin similar setting refractory or relapsed hemologic malignancies Phase 2 data,response rate in the range of high teens to mid-20’s are sufficient forapproval.
I think this will be a review issue from the agency and Ithink that that information that is going to be taken into consideration as theresponse rate itself, duration of response and the safety profile of the agenttogether with the fact that there are no good available therapies for thispopulation. I think putting all that together will determine the approvabilityof the drug.
Charles Duncan - JMP Securities
And then, Pablo, also you mentioned the statistical analysisplan being well outlined in that SPA. Can you give us some additional color asto not only the primary but more perhaps the secondary analysis that you thinkare going to be key to look at with this drug?
Pablo Cagnoni
I think actually in this case the statistics analysis planis not a critical document. We clearly have a very well explained plan in theprotocol and a separate SAP was filed with the agency. But there is no truestatistics here.
The response rate will be calculated and in addition to thatduration of response will be calculated, safety data will be reported. Yes, inaddition to that we have from pharmacokinetic data that will be part of thesubmission. But the key here is going to be the response rate, the duration ofresponse and the safety profile of the drug.
None of those require any sophisticated statistical analysisto be honest with you. I don’t think anything beyond that will have criticalimportance in the approvability of the agency.
Charles Duncan - JMP Securities
So it’s a pretty straightforward situation, its sounds like.
Pablo Cagnoni
Absolutely.
Charles Duncan - JMP Securities
One additional question, with regard to the enrollmentschedule, you say that it’s ahead of schedule. It’s moved quicker than weanticipated. I guess my question is how would you interpret that?
Is that a function of increasing awareness of PTCL andphysicians’ ability to deal with it? Is it because the protocol is relativelystraightforward? Or is it because physicians’ enthusiasm for the drug eitherbecause it’s available, it’s a drug something to use or early signs ofefficacy?
Pablo Cagnoni
So there’s a couple of things here. Enrollment has picked upbecause more sites came on board in the first half of this year as opposed towhen the study started at the end of last year.
I think in addition to that, it’s very likely that thereason why physicians are enrolling more patients over the last few months isbecause they’re seeing good signs of activity in the patients that they’retreating. Okay? Obviously, the fact that there is absolutely no good treatmentoptions in this disease, if it continues to be an unmet medical need has to bepart of the story as well.
So I think when you put those two things together thatprobably explains why sites that have experience with the drug are trying toput more patients in this study and that has accelerated our accrual.
Charles Duncan - JMP Securities
Okay. Thanks. That’s consistent with our diligence as well.Looking forward to seeing you at ASH, Pablo.
Pablo Cagnoni
Likewise.
Jim Caruso
Thank you, Charles.
Operator
(Operator Instructions) And I’m showing that we have nofurther questions at this time. Please continue with any closing remarks.
Derek Cole
Thank you, operator. And to conclude this morning’s call,I’d like to summarize our three key operating principles. First, focus onexcellence and innovation in the development and execution of our clinical programs.
Second, to proactively evaluate opportunities to grow ourbusiness through potential product acquisition, partnerships and othersstrategic initiatives. And third, lead with ethics and integrity to ensurequality business decisions that create value for our patients, employees andstockholders.
As always, we appreciate your participation and look forwardto keeping you apprised of our progress in the months ahead. Have a good day.
Operator
Ladies and gentlemen, that does conclude our conference fortoday. Thank you for your participation. You may now disconnect.
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!