GTx Incorporated (NASDAQ:GTXI)
Q3 2012 Earnings Conference Call
November 8, 2012, 9:00 am ET
Mitchell Steiner – CEO
Biren Amin – Jefferies
Ryan Martin – Lazard Capital Markets
(Emron Babar) – Cohen & Co
Good day, ladies and gentlemen, and welcome to the third quarter 2012 GTx Incorporated earnings conference call. My name is (Janay) and I will be your operator for today.
At this time, all participants are on listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Dr. Mitchell Steiner, CEO of GTx Incorporated. Please proceed, sir.
Thank you, operator. I will be making forward-looking comments during today's call and I direct you to the press release of our financial results we filed today and the quarterly report on Form 10-Q we filed August 8, 2012 with the SEC where we discussed the risks and uncertainties that affect our business.
GTx has made good progress in advancing our two late stage clinical programs: Enobosarm for the prevention and treatment of muscle wasting in patients that have advanced non-small cell lung cancer and Capesaris, a secondary hormonal therapy in men with castration resistant prostate cancer.
As for Enobosarm, we are on schedule to complete this quarter enrollment of subjects into our two international pivotal Phase III clinical trials, POWER 1 and POWER 2 in over 80 clinical sites located in the United States, Europe and South America.
Each clinical trial is expected to enroll 300 subjectst who have either Stage 3 or Stage 4 non-small cell lung cancer. The objective of these studies is to determine the potential of three milligrams of Enobosarm versus placebo to prevent and treat muscle wasting in advanced non-small cell lung cancer patients.
When given at the same time, they initiate standard first-line chemotherapy consisting of a platinum doublet. More specifically, in POWER 1, subjects are receiving a platinum, which is (inaudible) platinum or (carbo) platinum, plus (ataxine), which is (Dositaxle) or (Paclataxle).
And in POWER 2, subjects are receiving a platinum plus a non-(ataxine), which is either (gymsidabine), (benerelobine), (apemotrexid). The primary endpoint for each of these studies is actually a co-primary endpoint consisting of a responder's analysis of clinical benefit.
Clinical benefit is defined as maintaining or improving total lean body mass or muscle assessed by (Dexa) and improving physical function assessed by the stair climb test. Durability of the drug is being evaluated as a secondary endpoint as five months of treatment in those patients who are determined to have responded at three months.
In accordance with the study's design, an independent data safety monitoring board, DSMB, meets every six months to review safety data from the two clinical studies.
On October 26, 2012, the DSMB met for the second time since the trials were initiated and recommended that GTx continue clinical development of enobosarm as planned. GTx has established a steering committee consisting of key opinion leaders in medical oncology, geriatric oncology, palliative care, quality of life, nutrition and body composition, pharmacoeconomics and patient advocacy to help us maximize the full value of enobosarm.
These experts will also assist GTx in analyzing clinical trial data following the conclusion of the POWER 1 and POWER 2 clinical trials and provided expert advice as we prepare our new drug application to submit to FDA and commence commercial preparations to market enobosarm assuming marketing approval is granted by FDA.
The American Society of Clinical Oncology, or ASCO, published a provisional clinical opinion regarding the need to integrate palliative care early into standard oncology care in patients with non-small cell lung cancer.
Early palliative care for the treatment of lung cancer patients is recognized as a critical component of effective cancer comprehensive care. Patient issues and concerns, such as quality of life, muscle wasting resulting in a decline of physical function, fatigue, loss of independence and increased healthcare services utilization, are important aspects in the care of patients undergoing cancer treatment.
GTx has designed its POWER 1 and POWER 2 Phase III clinical studies to assess many of these same outcomes suggested by ASCO as key endpoints in these studies, including quality of life, healthcare resource utilization, ability to receive planned chemotherapy, dose intensity and overall survival.
Over the past several years, we have seen the development of new cytotoxic chemotherapies to treat advanced non-small cell lung cancer. However, these chemotherapy agents have offered little and no certain survival advantages over standard therapy.
If these new therapies cannot make meaningful improvements on survival for non-small cell lung cancer patients when treating their tumor, we believe enobosarm, by treating the host, the patient, can at least improve their quality of life, such as physical function while they fight their cancer and potentially better equip them to tolerate their chemotherapy treatments for longer periods of time and delay their need for specialized nursing services and hospice care.
With enrollment completing for both the POWER 1 and POWER 2 clinical trials in this quarter, we expect to release top line data from both these studies during the second quarter of 2013.
As for our second late stage clinical program, Capesaris, an oral selective estrogen receptor alpha agonist, for the treatment of advanced prostate cancer, is also making good progress.
Capesaris has the ability to reduce free or unbound testosterone lower than can be typically achieved by LH, RH agents or surgical castration. Capesaris accomplishes this by causing the liver to increase the production of a protein called sex hormone binding globulin, or SHBG, which binds to the unbound of free testosterone circulating in the blood and further reduces the levels of serum free testosterone in a castrate environment.
Treatment of prostate cancer with androgen deprivation therapy, or ADT, improves prostate cancer symptoms but patients eventually develop castration resistant prostate cancer as their cancer adapts and uses the available free testosterone in the blood stream.
FDA established less than 50 nanograms per deciliter of total testosterone as the requirement for achieving effective medical castration based on the lower limit of detection in older assays.
Data has shown, however, that up to 14% of men with prostate cancer treated with ADT fail to achieve this level of castration and currently with more accurate assays available to measure total testosterone levels, several prostate cancer consensus groups have suggested that a total testosterone level less than or equal to 20 nanograms per deciliter should be adopted for the new level for medical castration, which equates more closely with levels that can be achieved by surgical castration.
Unforutnately, up to 50% of patients on ADT do not achieve this level of medical castration. Data from our terminated Phase II clinical study comparing ADT achieved by Capesaris to (Lupon) indicate that Capesaris in (Lupon) subjects showed similar reductions in PSA initially as over the first 30 to 40 day period. But thereafter, PSA reductions among patients receiving Capesaris were consistently greater than (Lupon).
When we plotted reductions in free testosterone over time from the same data pool, we found that PSA reductions were closely correlated with reductions in free testosterone, not total testosterone.
We believe these data further validate our hypothesis that increasing SHBG with Capesaris will result in a greater decrease in free T and a corresponding reduction in PSA to levels that are not typically achievable by ADT alone.
It is this unique mechanism of action that forms the basis of our belief that Capesaris can be effectively developed both as a secondary hormonal treatment for castration resistant prostate cancer and as a primary hormonal treatment for men with advanced prostate cancer to be used in combination with LH, RH agonists or antagonists.
We must first demonstrate, however, in our current Phase II clinical trial in men with castration resistant prostate cancer that Capesaris is effective at the lower dosage being studied and is also safe.
The safety signal we will be primarily monitoring is the rate of venous thrumbobolic events, or VTEs, a safety risk that has been previously reported to be higher in the estrogen class of drugs as well as in other hormonal therapies.
We believe that a more acceptable rate of VTEs will be observed in this new study than what we had seen in our earlier Phase II clinical studies of Capesaris for the following reasons.
One, we will be evaluating lower doses of Capesaris. Two, the study is designed to exclude patients with a history of VTEs or who screen positive for blood clotting factors, mutations and deficiencies.
Three, we will provide a daily 81 milligram Aspirin to subjects who are not already taking Aspirin. And four, we plan to monitor patients through the development of new VTE risk factors while on study and where appropriate consider the administration of VTE prophylaxis.
With these additional criteria and the protocol of our ongoing Phase II clinical study of Capesaris, we believe the rate of VTEs will be shown to be similar to what has been reported in men with prostate cancer who are being treated with primary ADT achieved by LH, RH agonists, LH, RH antagonists or surgical (inaudible).
We have initiated and are enrolling this Phase II clinical study of lower doses of Capesaris in patients who have metastatic castration resistant prostate cancer. More specifically, approximately 25 clinical sites in the US and 10 clinical sites in Europe will participate in our study.
75 men with metastatic castration resistant prostate cancer will be randomized into one of three cohorts of 125 milligram, 250 milligram and 500 milligram daily oral dose of Capesaris. Each arm will have 25 patients and the enrollment will be conducted sequentially such that the 125 milligram group will be enrolled first followed by the 250 milligram group and then the 500 milligram group of Capesaris.
The enrollment into the next higher dose cohort of Capesaris will occur if an acceptable incidence of VTEs is observed for 30 days following the enrollment of the last patient in the previous cohort.
The primary endpoint is the proportion of men who achieve a serum PSA response by 90 days. In addition, we will be evaluating serum PSA progression, time to progression and progression-free survival.
If we can show that Capesaris is effective and safe at these lower doses as a secondary hormonal therapy, we believe it will be equally effective and safe when used in combination with ADT as a primary hormonal therapy.
In this indication, Capesaris should not only be able to reduce free T and PSA to levels below those attainable by ADT alone. But also as a selective estrogen-based therapy, Capesaris should improve the estrogen deficiency side effects associated with ADT such as hot flashes, bone loss and insulin resistance.
We will learn much from our ongoing Phase II clinical study and subject to enrollment we expect to be able to share with you efficacy and safety data from this study during the summer of 2013.
At the end of September, GTx completed a sale to (Prostrican) of our marketed product FARESTON for the treatment of advanced metastatic breast cancer in post menopausal women in US raising approximately $19 million in net proceeds.
We are pleased that (Prostrican) will continue to make this important drug available to women who rely on it for the treatment of their advanced metastatic disease. The proceeds from the sale enhances our balance sheet and gives us comfort that we should have sufficient cash available to us to see data from both our enobosarm and Capesaris clinical studies.
This morning, we also released our financial results for the third quarter of 2012. While I will not review the financial results in detail, let me point out that we reported $47.3 million in cash at the en dof the quarter and, following the sale of FARESTON, we had approximately $66 million in cash and short-term investments.
Marc and I will be happy to answer any questions you may have about our financial results during the Q&A. Operator, we're now ready for our first question.
(Operator Instruction) Your first question comes from the line of Biren Amin – Jefferies.
Biren Amin – Jefferies
So a couple of questions on the enobosarm POWER 1, POWER 2 studies. I just want to get a sense of the dropout rate assumptions for both trials and if you could maybe just go over what the definition for dropouts for both trials.
Sure, so I'm going to answer the second question first and then tell you the percent dropout. So the definition of a dropout literally is anybody who doesn't come in for a (dex) assessment or the physical function test.
So somebody dies, if somebody is too sick to come to the assessment, then that person is considered a non-responder. If the patient does not maintain or gain lean body mass for the (dexa) or is unable to increase his physical function on stair climb power by 10%, they're considered a non-responder.
With that said, the dropout rate, again, is specifically deaths and too sick to come in for a evaluation or they drop out for some other reason, withdraw consent – there's numerous other ones.
With that said, we projected about a 30% dropout for each study and right now we're tracking well below that.
Biren Amin - Jefferies
And how about patients who are unable to get to stair eight which I think there's eight steps that they have to climb for the study. Would they be considered a drop out or would they be considered a non-responder in that situation?
They come in for the assessment and they can't go up the eight steps, then that's a non-responder and they're not a dropout.
Biren Amin - Jefferies
And then I just want to get a sense on you're enrolling chemo-naïve patients. So I wanted to get a sense of the amount of lean body mass loss that one experiences typically in these types of patients.
So if you go back to our Phase IIb what you'll find is the patients who are in chemotherapy lose about, roughly in that same period of time, lose about a kilogram of lean body mass, so that's a pretty big number.
Patients that were on enobosarm in the Phase IIb actually gained almost a kilogram, so the delta was about two kilograms. So if you look at that as the median change, all we have to do for (dexa) is to maintain or approve, so if your median placebo group had lost, then your median placebo group should be mostly non-responders.
Your next question comes from the line of Ryan Martin – Lazard Capital Markets.
Ryan Martin – Lazard Capital Markets
I was wondering could you confirm that the (dexa) on the stair climb test is done on the same day and patients have to come in for one visit for both tests?
Yes, I don't believe – again, the question is do they come in for the same day. The answer is probably not because usually the (dexa) facility is a separate facility than the medical oncologist's office. So they typically would come into the medical oncology's office to have the physical assessment and they're sent somewhere else to do the (dexa).
The (dexa), as you know, all they have to do is lie in the machine and the machine does all the work. So the more important thing for us, from the standpoint of visits, is that they come in and have their physical function test done on the same stairs, same time, by the same professionals.
The people that administer the stair climb test actually have to go through certification and training and includes a DVD video and all that stuff. So we spent a lot of time making sure that we assess that.
The other thing that happens to the patient is the patient has two tries at the stair climb and we average those two tries. And so they go up the eight steps, they come back, they sit down for up to 15 minutes, they go back up the eight steps again.
And as you know, there is a computer that's taking into account the speed for them to go up those eight steps and that's how we measure power.
The test has – even though we did not have to provide a validated endpoint for FDA, there is great literature around stair climb in terms of the validity and the intra and inter test concordance.
Ryan Martin – Lazard Capital Markets
In terms of broadening development, let's say you have positive data here, how are you thinking about enobosarm in terms of broadening development outside of just lung cancer?
Let me tell you something. We thought about this a lot. Again, we're excited. Let me tell you why. We're excited because we're using a muscle drug, an anabolic agent that works with the androgen receptor to build muscle and that same mechanism has been a – that mechanism and pathway has been used and established for eons.
And what makes our drug different is that you don't see the same side effects that women can take it and not worry about (inaudible) and some of the other things that they could not take, for example, some of the anabolic steroids that were very effective but the side effects were just unacceptable.
So it actually puts us – we're doing exactly what we hope we would do and that is we start out with our first indication, which is a large indication – in this case, non-small cell lung cancer – and our thinking is that this will be the study that we do in cancer.
But the blue ocean for us is going into all of the other muscle wasting diseases with a muscle wasting drug. So for example, we would imagine that we would do numerous Phase IIs if this trial is successful and go into other areas such as end-stage renal disease muscle wasting, cardiac (kikexia), COPD muscle wasting, rehab medicine which would include patients that are getting knee replacements and hip replacements, for example, ICU burns where patients lose tremendous amount of lean body mass and they don't have enough protein to heal their burns and so on.
So our thinking is that's important because for every one of those indications that we get, that's another year of exclusivity, regulatory exclusivity that we get for enobosarm. But more importantly what it does is it grows our market exponentially and then in cancer we would continue to do additional studies but the focus would be primarily, primarily, primarily the blue ocean which is all of these other muscle wasting diseases that are unmet at this point.
Ryan Martin – Lazard Capital Markets
Then one final one just on the competitive side there's a drug for (inaudible), an antibody that's being tested for (inaudible) in Stage 4 lung cancer and pancreatic. I couldn't tell if this was a (inaudible) diagnosed patient or not. I was wondering if you could …
Yes, so make sure I understand, so in terms of competition, the company that I know closest to GTx but really not – and I'll tell you why in a second – is a company called (Helfson) and they have a product that's a (gorellan) agent, which an oral (gorellan), which as you know is a hormone agent.
And they're – we're positioning ourselves very much in a very deliberate way to be part of the fight with lung cancer. So our thinking is don't wait until the patient develops cancer (inaudible), which means they've lost greater than 5% of their weight and they're really at the tail end of the disease.
Be part of the fight. So that's why, for example, we made sure that every patient on our study gets enobosarm or the placebo right when they get first align therapy. So we want to be part of the fight and not have to "wait for a patient to get into trouble."
So our study from a commercial standpoint targets patients with Stage III, Stage IV lung cancer, non-small cell lung cancer that start chemo. That's an easy group to pick out and it's the biggest group.
Other studies have really focused on this concept. Other agents in this space, whether it's (gorellan) or others, have taken a different approach. Their approach is let's define this space as cancer (inaudible), which means you've got to wait for the patient to lose 5% of their weight and then you have to go through all these hoops to figure out who is at 5% and how long ago did they lose it and, more importantly, was it the last six months or now, was the patient telling you this? Is it really recorded as such?
So it ends up becoming very cloudy. And usually those patients are also sometimes too sick to rescue. And so that's the competition right now. They're really focusing on a different commercial population. They're focusing on primarily what you would have given (megaze) or (marenol), whereas GTx has moved ourselves up to a cancer-related symptom and we're working ahead.
So from a competition standpoint, I would say a common thread is they're really focusing on this later (inaudible) population, whereas GTx is in the prevention treatment of muscle wasting, complete different approach.
Weight is not important to us. What's important to us is the functional quality tissue, which is muscle.
(Operator Instructions) Your next question comes from the line of (Emron Babar) – Cohen & Co.
(Emron Babar) – Cohen & Co
I've got a question about screening for your Capesaris study. If I remember correctly in the past you mentioned certain mutations as Factor 5 lead in and I'm just curious are there any other mutations you guys are screening for? In particular, what percent of patients who had developed VTEs in the past had these particular imitations of the Factor 5 lead in?
So what we're doing is we're measuring – and it sounds like a lot but I promise you these are really small numbers of patients. But let me answer the question backwards. So the first question you asked – the second question you asked is in patients who get into trouble with VTEs what percent of these patients would have had one of these alterations that we're measuring or we're screening for?
So the only group that we can go into, it's very similar to our patient population, would be post menopausal women. So if you look at post menopausal women on hormone replacement therapy, and as you know, hormone replacement therapy and estrogen therapy in post menopausal women does increase the VTE risk of their venothrombolic event rate.
If you look at those women and asked a question – how many of them have one of these mutations or deficiencies that we're measuring – it's 85%. So if you get into trouble, 85% of these women could have been screened out of the study ahead of time if this screening was done.
So using that same logic, our thought was let's go back into the male castrate population, which again is not going to be much different than the post menopausal women from the standpoint of what's going on in the blood and the liver, and ask the question can we screen.
So the screening that's being done is we are looking for Factor 5 (inaudible) mutation. We're looking or a prothrombin mutation. We're looking at functional deficiencies in protein C and protein S. We're doing some even esoteric stuff like looking at (cardiolipan) and some of the anti phospholipid antibodies, very rare. But we're doing it anyway so we can get a good assessment of what our patient population has.
Now with that said, we know these are going to be rare instances because we know what's in the Caucasian population and the other races as well and so this is still going to be less than 5% of the population.
But it's this percent of the population that gets into trouble. And so we're going to monitor that.
The only thing I could point to you in the male population is there was a study done by (Bruce Montgomery) in same patient population, which is castration resistant prostate cancer patients and in this study he treated the patients with a combination of (dositaxal) and DES, which you know is a very potent estrogen and, in fact, a very non-specific estrogen.
But nonetheless, he treated them with DES. He had a VTE rate – I don't know the rate – but he had five patients that developed a blood clot. And of the five patients, I think I'm right, four of the five were found to have subsequently effective (inaudible) mutation.
So these are real mutations that we can screen out. I look at it the same way that (Metavation) went after their patient population where they realized early on that high doses they were going to get seizures.
And so when they went into their following studies, they said, well, we're going to – the patient has a history of seizures. We're going to make sure they're not on our study. And it went into Phase III with that design and, as you can see from a commercial standpoint, it really shouldn't impact their market.
And so I think the FDA and GTx takes absolutely the same position and that is our job is to make sure the drug is given to patients that will be safe and it will be effective. And the cliff side of it is that it should be avoided in patients where we're going to provide harm.
(Emron Babar) – Cohen & Co
I'm curious, if you're having any discussions or updates on partnering discussions for (inaudible), potential interest in other geographies, if there's any updates on that.
Yes, so we have been – I'll say it a different way. Several large global pharmaceutical companies have been in discussions with GTx and have been in discussions with GTx due diligence and the whole bit.
GTx is a little faster than you would imagine in the sense that we enrolled the study so quickly that the position that we're taking, GTx, is that right now we've taken this program all the way through eight clinical trials, Phase IIs where we've shown in three separate Phase IIs that we have activity, proof of concept activity and now in a Phase III where we're almost done enrolling the Phase III.
So our position is let's wait for the data because when we have the data then it's going to give GTx a lot more options with the global pharmaceutical partners that we're in discussions with now and quite frankly it will help us understand what we want to do as a company from a commercial standpoint.
The good news is it's completely unpartnered to date and, secondly, we really own 98% plus of this asset. We pay a small royalty to the University of Tennessee where the original technology originated.
So and it's such a near-term thing. You're really talking about a few months. I think it's very much worth GTx's position from a standpoint of maximizing shareholder value to do that.
Another thing I need to point out is the time that we look at the data, we're going to have $30 million plus still in the bank we think. And not providing guidance but our position is we've got enough money to see it through and not live on fumes. And if that's the case, then I think we're in a great position to take advantage of an opportunity that we spent a lot of time understanding the efficacy and the safety.
And at this time we have no further questions. I would now like to turn the call back over to Dr. Mitchell Steiner for any closing remarks.
Thank you, operator. I want to thank everybody for their interest in GTx and we look forward to updating you in the future. Bye.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.
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