DelMar Pharmaceuticals' (DMPI) CEO Jeffrey Bacha on Q2 2016 Results - Earnings Call Transcript

| About: DelMar Pharmaceuticals, (DMPI)
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DelMar Pharmaceuticals, Inc. (NASDAQ:DMPI) Q2 2016 Earnings Conference Call February 17, 2016 5:00 PM ET


Jeffrey Bacha – Chairman and Chief Executive Officer

Scott Praill – Chief Financial Officer

Dennis Brown – Chief Scientific Officer


Jason McCarthy – Maxim Group

Joe Pantginis – ROTH Capital

Steve Kanaval –

Sherry Grisewood – Dawson James

Grant Zeng – Zack Research


Good day and thank you, all for joining us this afternoon for DelMar Pharma’s business update Conference Call and Webcast, to discuss the Company’s finance results for the Second Quarter of the 2016 Fiscal Year Ending December 31, 2015 and business outlook for 2016. [Operator Instructions] Today’s webcast will be company’s slide presentation, that can be found under the IRR calendar in the Investor section of the company’s website at The company is also posted it on its home page.

At this time, I would like to remind our listeners that remarks made during this call may state management’s intentions, post release expectations or predictions of the future. These are forward-looking statements that involve risks and uncertainties.

Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements are based on DelMar’s current expectations and actual results could differ materially. And as a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic report DelMar Pharma filed with the Securities and Exchange Commission. These documents are available in the Investor Section of the Company’s website and on the Securities and Exchange Commission website. We encourage you to review these documents carefully.

Joining me on the call today from the DelMar Management team are Mr. Jeffrey Bacha, Chairman and CEO; Mr. Scott Praill, Chief Financial Officer; and Dr. Dennis Brown, Chief Scientific Officer. Following the Company’s prepared remarks, the call will be open up for a question-and-answer session.

It is now my pleasure to turn the call over to Jeff Bacha. Please go ahead.

Jeffrey Bacha

Good afternoon everybody and thank you for taking the time to spend with us this afternoon to hear the update on the Company and our plans going forward.

I’m going to direct you initially to Slide 3 on the presentation which is the agenda for the call. We're going to be try to be brief in our review of the results and accomplishments during 2015, because while we are very excited about all of the good things that have happened in the past year, what we want to really concentrate on is how we really believe that we are positioned for 2016 to be a very important and transformational year ahead.

Just on Slide 4, briefly the financial snapshot of the company as you all know from our financials that the burn rate has remained consistent at about $1 million give or take quarter-over-quarter for the past several quarters. And that we have operating funds in the Q3, 2016. I think it's fair to say that it’s obvious that we are always looking at opportunities to strengthen the balance sheet to ensure that we do have the capital to implement our business plan and move our programs forward.

We certainly have been blessed with some very supportive shareholders who have continued to invest directly in the company alongside of management and we are confident that we will be able to access the capital necessary to continue to move forward with the business as we go into this transformational year in 2016.

In terms of the details of the financials I’m going to turn it over to Scott will walk through Slide Number 5.

Scott Praill

Thank you, Jeff. And thank you everyone for attending this call today. In particular, I just want to focus on the bottom table on Slide 5, which is our statement of operations data. Maybe I complete the statement of loss before periods. As you can see the research and development $789,000 this year and $612,000 in the prior period; general and administration expenses were $890,000 this period, $656,000 in the prior period. So I’m drawing your attention that in all those numbers we also have non-cash items such as stock option expense, shares issued for services and warrants issued for services.

We have a table in our nDNA which shows the G&A and R&D net of those non-cash items. So to draw your attention to that when you have a chance take a look at it. But just in summary so for research and development our sort of cash portion was $747,000 in 2015 and $627,000 in 2014 for the three months ended December 31. The increase was predominantly due to the faster than expected enrollment of the 14-patient expansion portion of our clinical trial, as a result of having more patients being treated at the same time compared to the prior year with more monitoring costs, more data management costs. Overall it was a good thing obviously driven a little quicker but that doesn’t apply higher cost in the short term.

Respective general and administrative expenses excluding the effect of non-cash items total of $602,000 during the quarter $26,000 in the prior year. A portion of the increase was due to undertaking essentially a full review of all our financial instruments and share and equity based compensation arrangements to ensure that what we have is been appropriately recognize and accounted for.

Then the third line on the table is change in derivative liability through cooperation of dividend warrant holders we’ve been able to make substantial improvement on increasing our the equity portion leading to those warrants compared to the prior year. However, we’re still exposed to significant fluctuation loss due to change in valuation. As you can see it was quite dramatic this year, $680,000 loss in 2015, compared to $892,000 gain in the prior year. We have greatly reduced our explosion for that fluctuation, however, it still exists in the short term basis at least.

The balance of this is the statement of operations may well [indiscernible]for theQ&A Session if you have any specific questions, I’m happy to answer at that time. And also draw your attention to our mDNA which is a lot more expanded detail and the fluctuation year-over-year.

So Jeff back to you.

Jeffrey Bacha

Thank you. Just moving on to Slide 6. Just in a nutshell summarizing things that as we went to the end of last year and we really provide us with some strong momentum as we move into this new year in 2016. As many of you are aware we have completed last year the dose-escalation and termination of maximum tolerated dose and the post-Avastin GBM trial with VAL-083. And we were also pleased to report during the end of the third quarter into fourth quarter that we had continued enrollment in the Phase II expansion cohort much more rapidly than expected. And that enabled us to present some, what we believe is very promising interim data at the Society for Neuro-Oncology meeting at the – towards the end of the year in November.

Not only positions us to move into a registration-directed study, as we go through 2016. Just as important is the benefit of the research that we have been doing into the mechanism of action and doors that that best beginning to open to us into other solid tumor types, what we believe we can address unmet medical needs in additional major markets. And in a few minutes, I will have Dennis Brown talk through some of that new information and the implications there.

On Slide 7, just really getting into the wrap-up of the year and how we’re positioned to go through the following that into 2016. As you know where we started was with a small molecule drug candidate that had some promise to it – based on historical NCI, National Cancer Institute sponsored research. But one of things that is a key feature of the compounds that we are interested in as we build our company is first-in-class chemistry and that first-in-class chemistry that novel molecular structure often leads to unique mechanisms of action and that’s where we’re really seeing the benefit in terms of moving into specific, well-circumscribed, biomarker-directed, subset of indications.

Slide 8, our business model as you all know is to take that prior clinical validation of wrapping new IP around it, develop that modern understanding of the biology and then move into indications where that understanding of the mechanism directs us to be able to address significant unmet medical needs.

Slide 9, one of the things in that whole process of building value that sometimes gets overlooked is the size of the patent portfolio that we have been building around this compound. Obviously VAL-083 was studied historically at NCI but we have been able to begin developing very robust patent portfolio around say eight separate patent families with multiple patents that are under claims including manufacturing analytical mechanism, as well as composition claims.

To date, we’re very pleased that we have five U.S. patents and four international patents that have issued so far, which gives pattern protection in United States into 2033. The benefit there of certainly trumping the seven-year to 10-year market exclusivity available to us from orphan drug protection, as well. But the value of the portfolio and the size of it has grown underneath those eight separate patents families.

So we now have 90 patents moving through the system internationally and four provisional patents pending that were filed in the last 12 months. So you can see that this pattern portfolio is becoming very robust and we expect to bear some very solid fruit that goes along side of the orphan drug protection that we have been granted from the FDA.

In terms of moving in to the understanding of the biology and the directions that points us in slides 10 and 11, I'm going to slightly turn it over to Dennis Brown briefly to describe some of the excitement regarding the mechanism and things that we’ve learned in 2015 and will walk through the plans for the remainder of the 2016. Dennis?

Dennis Brown

Yes, great. Thanks, Jeff. So if you’ve been keeping up with the company we had really tremendous year last year, specifically in the latter half through the AACR and ASCO meetings. We’ve been able to broaden the understanding of this molecule to other indications besides GBM both on mechanism of action studies which is really significant investigators at MD Anderson, at UCSF, and up with UBC in British Columbia and Vancouver. And the learning curve, it just continues to broaden as you’re well aware that we’re developing this compound in GBM post Temodar failure, Temodar is a mono-functional alkaline it’s just tax one standard DNA. And our compound is a bi-functional alkylator that attacks this N7 position of guanine. And we've been talking about that for a number of years, what we’ve been really digging down is understand more about the details of the unique attack to the DNA reflects on just on the cancer cell.

And during the latter half of 2015 we started to report on really the value of this unique molecule and how it really damaged the cells so significantly that you have a very difficult time to repair themselves. And what we learned in reports was research out of M.D. Anderson is that ours that we cause an inter-strand cross link, it’s different from the platinum that’s used in most lung cancer and ovarian cancer patients. And this has a potential for a more than additive effect.

The damage that we caused to DNA is so persistent that it holds up cells after they synthesize their new strands of DNA and they can’t go forward into cell division. So this is called S/G2 arrest. And the recent research that we’ve started to talk about, so that the cell tries very significantly, try to repair this it can’t proceed and the ultimate damage turns into double strand DNA breaks which are lethal.

And the other very exciting thing we started to talk about, I think mid-year last year was in many types of cancers that are depended on this gene called p53, that agents like platinum have variable activity against p53 based on a wild type of mutation. That turns out that VAL-083 seems to be independent of the p53 status. It’s almost similar to what we are learning about for MGMT, for brain tumors.

So these types of insights that we’ve been gaining have allowed us to start to look at other indications out side of GBM, including lung cancer, post platinum failure, lung cancer for patients who are taking EGFR tyrosine kinase inhibitors like Tarceva and afatinib, that might have a mutation like the T790M, we’ve been able to show cell lines that we have a very active cell showing effects against those mutated cells.

But we continue to look at not only GBM lung cancer, I think, you can go to Slide 11 now. But other indications, in ovarian cancer we have studies going on with UCSF looking at the opportunities in pediatric brain tumors and there is going to be continued presentations at scientific meetings in 2016, expanding this type of research. And even I think it is suggesting that we have a very unique molecule that can be useful alone in refractory saying that we’re describing but in combination with many other agents like platinums and tyrosine kinase inhibitors. Jeff?

Jeffrey Bacha

Very good. Thank you, Dennis. I think those of you who had followed the company will recognize that the promise of the basic science work that we've been doing to support our clinical activity in GBM started to really blossom into the other areas at AACR in 2015. And I would say, that it would be worthwhile paying attention to the presentations that you will be giving beyond our clinical story at AACR in 2016, because the things that we have learned and the doors that it points us into well-circumscribed, biomarker-driven, highly valuable subsets of major solid tumor areas are something that we find very, very exciting.

And that research of course as we get into Slide 11 has really let us begin to build a pipeline around VAL-083 into multiple indications that are driven by solid biological support from the mechanism and understanding of tumor biology. So this is not just an exercise of saying, hey, there was a publication from the NCI that showed activity in lung cancer, it’s really where's that matter today and do we have data to support going into very valuable and under-served areas such as patients with the T790M mutation.

Of course Slide 12, our first indication that we've chosen to go after based on the mechanism and the profile. The compound effectively across the blood-brain barrier has been glioblastoma. This is an indication with well-known to us on the phone to the industry as well as to the average person on the street because it’s been in the news with Beau Biden passing away from this, fairly recently. And of course this has led to the President of the United States saying, let's set reinitiate the war on cancer as we go forward.

So VAL-083 and GBM, yes there’s historical clinical activity in the indication, but the real driver of our excitement here is the fact that the mechanism is different and distinct from those other chemotherapy agents that have shown promise and have been approved in the treatment of the disease. And specifically VAL-083 gets around the activity of a repair enzyme called MGMT, which is correlated with poor patient outcomes in the disease.

We have presented a lot of data in this area, which is well described in the posters on our website. And we’ll be happy to answer questions on that further. But the important thing is that we can use that enzyme, the expression of MGMT as a biomarker to drive patients to our drug as we go forward. And as you see on Slide 13, really implement a new paradigm for the treatment of this horrible disease, where we believe for the first time in decades we'll have an opportunity to change the median survival overall in the disease.

Of course there are some promising immunotherapies and other approaches tracking to a system. And we watch those with hopeful enthusiasm, but at the end of the day an active chemotherapy is very important in this disease, and the challenges that two thirds of the patients that are out there who are diagnosed with GBM today, do not have the benefit of an active chemotherapy. And we believe that VAL-083 solves that issue for the patients who are high expressers of MGMT.

Slide 14, of course we've initiated work at the beginning in the refractory setting in the post Temodar, post Avastin setting. This is the study that we have been enrolling and reporting on over the last couple of years. Of courses this was at five clinical sites UCSF, Mayo Clinic in Rochester, as well as three Sarah Cannon sties.

Slide 15, just to review the data, the Phase II expansion cohort was initiated last summer and was enrolled very rapidly in comparison to the Phase I dose escalation. We now have 20 patients on the drug at therapeutic dose. Of course the overall goal of the study the Phase I/II dose escalation was to determine a dose to move forward into registration-directed trials. We believe we have done that, we’ve confirmed that the 40 milligram dose is a well-tolerated dose suitable for the advancement I would plan for the end of this year. And it subs our goal was to assess patient outcomes. Of course the post-Avastin GBM population is a very difficult-to-treat population. And we've been very pleased to see not only evidence of a dose correlated response in terms of the overall survival, but a meaningful one with a well-tolerated therapeutic regimen that as we reported both at ASCO last year and in the interim data from the Phase II expansion at the Society for NeuroOncology Meeting, last November.

Slide 16, really shows how dramatic this is, unfortunately patients that fail Avastin, many just go straight to hospice and their median survival is only about two months from the time of Avastin failure. If a patient is a little bit stronger and they're willing to keep fighting and try anything, that's almost available, they may generate a few more months of survival but the median is certainly well under six months.

And frankly that's what we look like at a sub-therapeutic dose, doses that are definitely too low to be considered active. We look just like any other salvage chemotherapy. However as we got into the therapeutic range, as you know we've been able to observe and report median survival of nine months in the dose escalation phase which was the tracking through at least at the interim data that we have presented so far at the Society for NeuroOncology Meeting. And we will anticipate having the final data from that Phase II expansion cohort this Spring certainly in time that we hope to present at ASCO this year.

On Slide 17, it’s really the pathway toward approval and commercialization in refractory GBM. As I said, we anticipate having the topline data for overall survival this Spring. We have planned an FDA guidance meeting. That meeting requesting documentation is being vetted by our advisors and will be submitted to FDA shortly with the goal of having feedback on our proposed registration-directed trial design from FDA in advance of ASCO, so that we can basically have a complete story to discuss with the medical community, as well as the financial community at that time where we’ll be able to say the median survival that we've observed in the expansion cohort is X. And here is the plan and the study design to move into registration-directed trials. And be on a position to initiate those in the second half of the year.

The goal here is of course on one hand to get this drug VAL-083 into the hands of clinicians as an approved product for the refractory GBM patients as quickly as possible. There is nothing available for these patients. But the real story and the real goal for the company is not to treat patients that are – has failed Avastin, but it’s really to provide an alternative to temozolomide in the newly diagnosed glioblastoma population in the high expressing MGMT population.

And you’ll see on Slide 18 that we have planned two clinical studies to be initiated in the first half of 2016 to heading that direction to really create the opportunity for that paradigm shift in the treatment of GBM. The first study will be a newly diagnosed temozolomide naïve study, where we will be combining VAL-083 plus radiotherapy to be followed by maintenance therapy with VAL-083. This is exactly the way that temozolomide is used in front-line therapy. And our plan is to go into the patients where the expressive MGMT suggests that they will not be responsive to temozolomide and give them VAL-083 is that viable, alternative and survival benefiting alternative.

There is a Phase II study that was published by Mayo Clinic back in the original NCI research days from clinical trials that demonstrates radiation versus radiation plus VAL-083 held with that an 8.8 months survival benefit in the median compared to radiation alone. And that certainly is superior to what has been published around temozolomide. So to be able to go to a population where temozolomide is unlikely to be active and have that type of a benefit is certainly exciting, we believe.

In parallel with that in the United States we will initiate a study with patients that are first failures of temozolomide who are also on unmethylated, this is more of a requirement in terms of moving forward within the context of the U.S. system, where we don’t want to be in a position with whole standard of care even though we know standard care is likely to fail, the patients will have to tell that standard care and then immediately come on to the VAL-083.

We believe that in aggregate those two studies will provide very strong evidence, moving this drug into front line for the treatment of newly-diagnosed GBM and position us to maintain that paradigm shift.

On Slide 19 there’s a little bit more data about those two study designs, but really Slide 20, is the message that we are very excited to be delivering. Number one, the mechanism, the distinct mechanism of the VAL-083 unlocks the potential to overcome known chemo-resistance and surpass the standard of care, in the treatment of GBM today. We believe that this will create a new survival paradigm in the treatment of this horrible disease for the first time in decades and certainly our success in achieving that paradigm shift lays the foundation to address a great than $1 billion market in the treatment of the GBM globally.

Of course as Dennis mentioned, as we go on the Slide 21, our story is not just about GBM, based on the mechanism being able to move into subsets of solid tumors, where we believe the mechanism masked with the historical clinical activity gives us strong promise to treat unmet medical needs is very exciting to us.

Our initial focus will be in lung cancer, non-small cell lung cancer to be specific and we will be looking at very directed biomarker-driven patient selection in refractory disease initially. We have a study that has been planned to be initiated in Shanghai, in collaboration with our manufacturing partner who will fund this work and we anticipate that this study will initiate in the first half of 2016. The goals of the study will be to be provide biomarker-driven guidance to treating physicians under the existing approval in China. But importantly, this will show Phase II proof-of-concept to support global development in biomarker circumscribed subsets of non-small cell lung cancer, where there are significant unmet medical needs.

And being able to leverage the mechanism data that we have developed in a straight benchtop to bedside manner and take advantage of the existing approval of the drug in China, to give it to patients that can benefit from it in a streamline manner is something that’s very exciting to us.

And we plan, as you can see on Page 22, to begin building that type of a model into other indications as well and based on our data we believe that there is strong promise in ovarian cancer as well as in pediatric brain tumors as well.

So Slide 23, you can see how our year should unroll for us and why we believe it will be a transformational year. Whereas we enter the year with a single Phase II program which would be considered early stage clinical trials in anybody’s book. But as we go through 2016 transitioning to be a late stage clinical company, it – with a lead program in refractory glioblastoma with multiple early stage clinical programs coming behind that have truly unlocked the promising value of this compound for patients as well as for our shareholders is something that we believe is very exciting and we’re certainly very enthusiastic as we move into 2016.

So Slide 24, why do we think this is transformational year? Again a number of actionable milestones in front of us where we can basically almost block, and tackle and move things forward based on the foundation that was laid in 2015 with the promise of the preclinical work that we’ve done.

In addition being able to move the company hopefully from where we currently trade on the OTC to a national exchange listing we believe will also unlock value and expand our access to capital as we go forward. And of course we’re doing all of this work in collaboration with leading centers at UCSF set up [ph], at Mayo and MD Anderson and we believe that this not only open doors for us in terms of respect in partnering and access to capital, but make sure that the drug has the highest chance of success as we go forward into later stage clinical trials.

Slide 25 is just a snapshot of – from our valuation today where we hope we will be as we move into later stage clinical trials and obviously the numbers speak for themselves here.

So Slide 26, is the final slide before we go to Q&A. The summary is the investment opportunity. As we've said VAL-083 is the first-in-class, small molecule chemotherapy. That first-in-class feature is what drives the opportunities for unique mechanisms and what we’ve shown is that that those mechanisms that we have understood and continue to research are opening some very interesting and valuable doors. And of course we already know that there is clinical activity from the compound from the investments made previously by the National Cancer Institutes in the United States.

The data we've shown to date has been promising and we’re excited to continue forward, the pipeline is growing we've got a very strong IP portfolio being built around this and of course we've been granted orphan drug protection as well. And the beauty of all this is our team has done this before. As many of you know the history of the company originally was a firm called ChemGenex which is essentially the same business model which was acquired in 2011 for just side of a quarter of a billion dollars.

We believe that VAL-083 is a much bigger opportunity. And we're very excited to be able to move this forward toward commercialization, initially in refractory GBM and eventually into other indications. That combined with moving the company toward national exchange listing to unlock value and decrease access to capital driven by near-term catalysts is why we believe that 2016 is a very important and transformational year.

So thank you very much for your attentiveness and we would be happy to entertain any questions.

Question-and-Answer Session


[Operator Instructions] We can take our first question from Jason McCarthy with Maxim Group.

Jason McCarthy

Hi, guys. How’s everything going? It sounds like you guys are definitely heading in the right direction in multiple indications. Now I just want to go back to the recurrent GBM. And Jeff, when you're thinking about a registration study, how many patients are you thinking about and kind of at what cost? And the reason that I'm asking is that, the VAL-083 being independent of MGMT expression to me would suggest that maybe you can do a trial, a pivotal study with fewer patients because you know that it’s acting completely independent of the pathway that Temodar is using which is a standard of care.

Jeffrey Bacha

Yes, I think that’s a very good observation. So when we set out in the recurrent GBM study, I mean, the initial and primary goal was to define a dosing regimen suitable for advancement into later stage clinical trials not just in refractory GBM but in newly diagnose potentially, as well as in other indications. So the fact that we've seen a nice test response evidence is something that’s very exciting to us and certainly very, very promising for patients.

So as we think about registration trial design there are couple of – in terms of its size based on the data that we have in hand and looking at a randomized study, for example, if you refer to Slide Number 17, that’s sort of general parameters on what that study would look like at an 80% power and 95% confidence interval. And you can see that it’s not a large study. But the other thing that we have in front of us is the evidence of other companies that have gone into refractory disease indications, particularly in GBM where the agency has accepted studies that were designed to compare against historical versus an active prospective comparator arm and that was certainly, even potentially be a smaller study.

So if you look at the original temozolomide approval that was based on an open-label study in refractory astrocytoma that was a 56-patient study. If you look at the Avastin data from 2009, it’s an 85-patient study.

So we certainly anticipate moving forward with the trial design that is manageable and not something that’s going to require tremendous, tremendous numbers of patients, of course in a disease that is characterized by relatively few patients diagnosed a year.

So that’s what we anticipate obviously, it’s going to depend on where we land in terms of median survival and the expansion cohort, as well as discussions with the FDA, but as we said all along, we anticipate being able to move into a relatively manageable in terms of size, registration-directed trial, and of course that also ties to manageable cost.

Jason McCarthy

And I just want to – I’m glad that you brought up immuno-oncology before, because chemotherapy it’s never going in wane [ph]. I think you’re going to end up seeing, it’s going to be chemotherapy and some sort of immune base therapeutic in combination. I’m interested if you ever thought about partnering, where partnering opportunities with the immuno-oncology space, because if you have a drug like VAL-083, that really been forgive the crude phrasing, that blows up glioblastoma cells. I feel like you would potentially generate more of an inflammatory environment in the brain that might be, or lend itself to immuno-oncology approaches to come in and clean it up. Is that something that you guys think about internally?

Jeffrey Bacha

We think about it constantly and we also think about it with other people outside of the company. So, and I may ask Dennis to jump in with more color on this in terms of mechanism and why this is important. But certainly if you look at the literature, there is a sort of hand and glove between immunotherapy and chemotherapy where you can say that the chemotherapy increases the concentration of the antigen of choice in the tumor micro environment, which excites the dendritic cells that have been revved up in the immunotherapy process.

But what we’ve observed in GBM, if you take a look at the historical work from a company like ImmunoCellular where they had a – they missed their endpoint in their original registration trial. And from our perspective that’s largely due to the fact that the majority of patients in that trial did not respond to the chemotherapy, alongside of their ICT-107. The new study that they have designed takes advantage of the look back and observation that’s indeed where Temodar was active in that low expression of MGMT population. They had a very attractive survival benefit and they have now properly focused in that area.

We believe we have the answer for the other two-thirds of the patients in combination with immunotherapy. And there are certainly a handful of immunotherapy programs that are working their way through the pipeline, whether it’s Celldex or Immunocellular. And we watch all of them with hopeful enthusiasm from the perspective of a patient, but also to look at which of those course or courses is going to get across the goal line, because we believe that there is going to be a strong opportunity for synergy there.

Of course developing two experimental medicines and taking them side by side through the FDA is full of its own challenges. So, we’re like I said watching a number of programs and we certainly know the players well in those context to see who is ultimately successful.

Dennis you want to comments any little more detail on the mechanism of how the hand in glove of immunotherapy and VAL-083 may go together?

Dennis Brown

Yes, I think you’re right, Jason, the opportunity to create more episodic induced [ph] very drastic and I think the efficient new antigens by breaking down cell. Having more things to present to immune cells is going to be as a potential for some nice, I’d say whether synergistic or not but certainly utility for immunotherapy. There’s been studies with in bladder cancer with platinum. And it’s not quite as clear that should be maybe that their voice should potentiate that. But those types of studies and the utility of alkylation agent with immuno-oncology was very, very real.

Jeffrey Bacha

Right, and this is not necessarily a new observations you can search back in the literature quite some time. And not only note that the hope for immunotherapy has been sort of bubbling through people’s dreams for decades. But that the synergy with chemotherapy not only in the preclinical models, but clinically has been observed for some time.

So we believe we’re very well-positioned to be a chemotherapy [ph] of choice especially in GBM for any of the immuno therapies that maybe successful.

Jason McCarthy

Great, thank you guys. Looking forward to data.

Jeffrey Bacha

Thank you.


[Operator Instructions] We can go next to Joe Pantginis with ROTH Capital. Please go ahead.

Joe Pantginis

Hey, guys thanks for taking the call. Two questions, so first Jeff you obviously made what I think is a very important comment that this is a big transition year. You are going from hypothesis driven science to hypothesis driven clinical studies, to now going to pivotal stage. Think to the extent that you, can talk about your regulatory and discussion and how the [indiscernible]?

Jeffrey Bacha

You got look up there a little bit Joe, you are talking about regulatory discussions that we’ve had and we plan to have. I think those the discussions are important from two-fold. And hopefully I’ll answer your question correctly because like I said you broke up a little bit.

On the one hand it’s the important discussions around the prospective design of the study and whether or not there is a room from the agency’s perspective to continue the tradition and its indication of being able to design something versus historical control which will certainly be more capital efficient and a smaller study design.

But also in terms of perspective we are looking at adapted designs and interim looks and that would potentially involve. And those are in discussions that we will have in detail with the agency as we get into the meeting, and we’re certainly speaking in detail with our advisors and internally about them now.

The other side of the registration directed pathway as you know is the continued non-clinical work in toxicology and pharmacology and add new studies that are really important as part of the approval package. And one of the big advantages that we have in a drug like VAL-083 that has so much history is that so much of that work has been put forth in front us from the NCI research. And so another point of clarification for FDA –between FDA and ourselves is to the extent that historical data is acceptable as part of the registration package and assure the precedence that’s much of it should be which again should streamline our development process.

So hopefully that got your question, but I know you had a second part.


And we can take our next question from Steve Kanaval with

Steve Kanaval

Hey guys I’m sorry I try to optimize myself out there the question was already asked, but I like what you guys are doing is very interesting. So I’m going to pass there.

Jeffrey Bacha

Thank you, Steve.


[Operator Instructions] We can go next to Sherry Grisewood with Dawson James.

Sherry Grisewood

Hi, Jeff and Dennis thanks for the detailed update. I have two questions. I wanted to follow first up a little bit on the patient enrollment actually either looking at this group and there is maybe 20 or 25 companies that are in Phase II stage. Either looking to finish up and move to Phase III or in your situation in an extension phase. What are you anticipating to be the timeline for enrollment and are you anticipating having competition for these patients?

Jeffrey Bacha

So that's a great question, Sherry, because obviously we have some control over starting the study but patients showing up and enrolling in the study is sometimes a little bit of black box and hard. So what we can say is based on our experience. Obviously GBM is a hot topic area because it is such a horrible disease and the standards of care and survival have not evolved like they have in many others tumor types. So there's certainly a lot of interest in the area.

In newly diagnosed or even temozolomide initial failures there’s certainly is a lot of competition for patients ahead of Avastin. In general, that post Avastin population is not as crowded. In fact to a specific program that is only target toward those patients like we are with our post Avastin VAL-083 program, we're pretty much yet, as far as we know in terms of a very specific focus on that population. And therefore once somebody does fail Avastin the opportunity for them to come on to our study as long as that center where they are being treated as a part of the trial is pretty much a straight line.

We did experience in the Phase 2 expansion cohort, we enrolled between the 40 milligram dose in the sicor is 45. We enrolled 17 patients at five centers in about three months. So you can sort of extrapolate that imagine a 100 patient Phase II/III clinical – registration-directed clinical trial at 20 centers at one patient per month per center that’s study is going to – should enroll pretty quickly. And so based on our experience with the Phase 2 expansion cohort, based on the lack of available options for treatment or trials in the post Avastin population, we’re certainly hopeful that that trend can continue and we’ll be able to enroll relatively quickly.

Sherry Grisewood

Great. And my second question actually I want to go back to the lung cancer indication because I would be interested in knowing what percentage of that population you think would be identified by that biomarker subset that you are looking to use as a patient stratifier.

Jeffrey Bacha

I think there a couple of different ways to answer that. None of which are necessarily fully answered. If you start looking at p-53 mutations and platinum resistance it’s quite a high percentage. If you start looking at more sort of elegantly circumscribed subsets like the T790M population that Dennis mentioned, which is where Clovis had originally been focusing with their program which unfortunately didn't go the way they wanted. There you get into smaller subsets of the disease, however as we know being able to treat a very directed subset of a disease even if it's a relatively small 10%, 15%, 20% of the population. If you can make a difference there it's extremely valuable for the patients and obviously in terms of the value of program.

So I’d say stay tuned for some of the data that we will present at AACR which, I think will give us a little bit more or share a little bit more of the types of directions that we're thinking. And so obviously being able to identify patients that look just like the non-clinical data that we've developed in a market where our drug is already proved through our relationship and China is going to be very exciting for us.

Sherry Grisewood

Okay. I look forward to that. Thank you.

Jeffrey Bacha

Thank you.


Our next question comes from Grant Zeng with Zack Research. Please go ahead.

Grant Zeng

Thanks for taking my question. Congratulations, let’s talk there would be a lot of work kind of. How could MD Anderson specifically of a trial because this is the second line treatment and what has been criteria for enrollment. I was wondering how that this will impact the upcoming registration of Phase III trial?

Jeffrey Bacha

I’ll go from the end of your question backwards. It should not impact the registration directed trial at all. You can assume that MD Anderson would be likely to be a site and not but really this work at MD Anderson is really geared towards the front-line. And the idea here is in the United States, with holding standard of care from a patient is very difficult now. If you look at GBM is treated outside of the U.S. and if you look at some of the publications from [indiscernible] for example, basically asking the question why do we use temozolomide in the unmethylated population. It’s expensive and doesn’t do much. And that’s really the way an ex-U.S. of things the treatment paradigm is heading. In the U.S. NCCN guidelines say temozolomide is to be used in combination with radiation following diagnosis and so it is.

And it’s not worth we think getting into a battle over whether that’s appropriate, because we know we can identify the patients that are going to fail that regimen relatively quickly and catch them the benefit of VAL-083. So, that’s the design that we’ve gone into. So it’s really the next best thing to do front line. And in the study, we will be randomizing versus CCNU and as you’re aware CCNU was a nitrosourea and it’s also targets the O6 position of guanine like temozolomide does, and it’s known to be subject to MGMT resistance as well.

So we anticipate that the mechanism of VAL-083 will be certainly superior to that in the unmethylated population. And will be looking at overall survival as well as progression free survival as the primary endpoints in that study. I don’t believe that the detail design has been presented on clinical trials, that cover [ph] yet, but it should be relatively shortly be added to our IND as it has been submitted to FDA.


Thank you. And we have time for one more question, and we’ll take that from [indiscernible]. Please go ahead.

Unidentified Analyst

Hi, Jeff thanks for taking my call. Just a question to clarify something that I believe you said. I was thinking not to go hear it clearly. Did you say that at this time you have 20 patients on the therapeutic dose?

Jeffrey Bacha

There have been 20 patients enrolled in the therapeutic dose, that’s correct.

Unidentified Analyst

That’s all I needed to hear. Thank you very much.

Jeffrey Bacha

You’re welcome, thank you for the question.


And this does conclude our Q&A session for today. I will return the program to our speakers for any closing remarks.

Jeffrey Bacha

Thank you very much everybody for taking a time this afternoon. We’re always available to answer specific questions should they come up. But certainly all of the information including our SEC filings, risk factors as well as our data from scientific presentations and publications is always available on our website.

Again thank you very much and we are very pleased that many of you share the enthusiasm that we have for 2016 as a very important and transformational year as we go forward to benefit patients with VAL-083 and really unlock value to build our company. Thank you.


And this does conclude today’s program. Thanks for your participation. You may now disconnect and have a great day. Speaker’s stand-by for brief post conference.

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