Calithera Biosciences' (CALA) CEO Susan Molineaux on Q4 2017 Results - Earnings Call Transcript

Calithera Biosciences, Inc. (OTC:CALA) Q4 2017 Earnings Conference Call March 8, 2018 4:30 PM ET

Executives

Jennifer McNealey - VP, IR & Strategy

Susan Molineaux - Co-Founder, CEO, President & Director

Keith Orford - SVP, Clinical Development

Stephanie Wong - VP, Finance and Secretary

Analysts

Michael King - JMP Securities LLC

Matthew Phipps - William Blair & Company

Yanan Zhu - Wells Fargo Securities

Operator

Good day, ladies and gentlemen and welcome to the Q4, 2017 Calithera Biosciences Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Ms. Jennifer McNealey, Vice President of Investor Relations. Ma'am, you may begin.

Jennifer McNealey

Thank you, Chelsea. Good afternoon, everyone. Welcome to our fourth quarter and year-end 2017 conference call. Joining me today are Susan Molineaux, our Founder, President and CEO; Stephanie Wong, Senior Vice President of Finance; and Keith Orford, Senior Vice President of Clinical Development. We have issued a press release and it could be accessed through our website at calithera.com.

Before we begin, I would like to remind you that today's discussion will include statements about our future expectations, plans and prospects that constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those in the risk factors discussed in the Risk Factors section of our annual report on 10-K to be filed with the SEC.

In addition, any forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Please note that this call is being recorded.

And with that, I'll turn this call over to Susan.

Susan Molineaux

Thank you, Jennifer. Good afternoon, everyone, and thank you for joining us today on our fourth quarter and year-end 2017 conference call. At Calithera, we are building an integrated biotechnology company that develops novel small molecule drugs, targeting tumor and immune cell metabolism pathways for the treatment of cancer and other diseases with unmet needs. By building a pipeline of novel therapeutic product candidate, we believe we are creating multiple opportunities to positively impact clinical outcomes for patients and drive the development of each of our clinical candidate toward commercialization.

2017 was a transformative year for us, as we advanced two of our internally discovered first-in-class small molecule onco-metabolism clinical candidate into broad clinical program and announced a partnership with Incyte. In parallel with advancing our glutaminase inhibitor, CB-839 into later-stage randomized trial, we've grown our management team and expanded key departments of the organization to meet our development timelines and operational goals.

Our talented management team has grown in the past year through the promotions of Frank Parlati to Vice President of Research, Susan Demo to Vice President of Medical Affairs and with the addition of Sumita Ray as General Counsel. We also are delighted to welcome Blake Wise, Chief Executive Officer of Achaogen to our Board of Directors. Blake's extensive oncology, therapeutic, marketing and commercialization experience will be valuable as we advance our development program towards potential commercialization.

In 2018, we will be enrolling two randomized placebo-controlled trials of our oral glutaminase inhibitor's CB-839 with the treatment of patients with renal cell carcinoma. One in combination with cabozantinib and the other in combination with everolimus, and the Phase II trials for the treatment of triple-negative breast cancer patients with the combination of CB-839 and paclitaxel. INCB001158 or 1158, an inhibitor of Arginase, will be evaluated in three broad clinical trials for the treatment of patients with solid tumors in combination with a PD-1 inhibitor, chemotherapy and epacadostat for PD-1 inhibitor respectively. Recent highlights for the fourth quarter and this year include the presentation of clinical trial results of CB-839, our first-in-class small molecule glutaminase inhibitor at the ASCO GU meeting in February. The planned initiation of a randomized placebo-controlled trial of CB-839 in combination with cabozantinib in the second quarter of 2018 and the presentation of CB-839 in combination with nivolumab at the SITC meeting, as well as the presentation of CB-839 in combination with paclitaxel at the San Antonio Breast Cancer Symposium. Both of those last quarter.

Key goals for 2018 include the following. First, we plan to present additional preclinical data highlighting the rationale and potential of CB-839 in combination with novel classes of anticancer agents. At the American Association for Cancer Research in April, we anticipate presenting data, highlighting the potential of CB-839 with PARP inhibitor as well as with CDK4/6 inhibitors.

Second, we plan to enroll our two randomized double-blind placebo-controlled trials of CB-839 in combination with everolimus and cabozantinib in patients with renal cell carcinoma, which has been named ENTRATA and CANTATA, respectively. We expect to complete enrollment of the ENTRATA trial by the end of 2018 and open the CANTATA trial in the second quarter of 2018.

Third, we plan to have multiple clinical updates on CB-839 development program beyond renal cell carcinoma. An abstract has been submitted by our academic collaborators who have medical meeting in the second quarter of 2018. It reports early data on PIK3CA colorectal cancer patients treated with CB-839 in combination with capecitabine the dose escalation of that combination. We also intend to update you by year-end on our clinical trial of CB-839 in combination with paclitaxel for triple-negative breast cancer.

Finally, we have continued to build our pipeline of pioneering small molecule drugs and we plan to announce a new pipeline candidate by the end of 2018.

And with that, I will turn the call over to Keith for an update on the pipeline.

Keith Orford

Thank you, Susan. Let's begin with a more detailed update on CB-839, our most advanced product candidate. We are currently focused on forging a clinical commercial path for CB-839 in renal cell carcinoma. In February 2018, we presented the Phase Ib renal cell carcinoma data of CB-839 in combination with everolimus and cabozantinib, which support the development of CB-839 in 2 randomized Phase II trials.

In an updated presentation of CB-839 in combination with everolimus, 24 RCC patients with the median of 3 prior therapies were treated and evaluable for response. Patients who were administrated CB-839 in oral doses ranging from 400 to 800 milligrams twice a day in combination with a fixed oral dose of everolimus at 10 milligrams once a day. The addition of CB-839 to full dosed everolimus has been well tolerated with a similar safety profile to the known profile of everolimus alone. 92% of patients experienced control of their disease including one patient with a partial response and 21 patients with stable disease.

The median progression-free survival was 5.8 months, which compares favorably to historical data in this patient population. We also presented data -- initial data on 12 evaluable RCC patients treated with CB-839 in combination with cabozantinib including 10 clear cell patients and two papillary patients. Patients enrolled in the trial had advanced to metastatic disease and had received a median of 3 prior treatments, which included tyrosine kinase inhibitors M2 inhibitors and checkpoint inhibitors.

Patients who were administered CB-839 in oral doses that range from 600 to 800 milligrams twice a day in combination with a fixed oral dose of cabozantinib at 60 milligrams once a day. 100% of evaluable patients experienced tumors shrinkage and disease control. This includes four patients who experienced tumor shrinkage and disease control -- no, who had a partial response and eight patients who had stable disease. So just to repeat that, this includes four patients who had a partial response and eight patients who had stable disease. In the clear cell patient population, the disease control rate was 100% and the response rate was 40%.

This response rate compares favorably to the response rate in the Phase III approval trial for cabozantinib alone in the second line RCC setting. On the basis of the efficacy and safety data presented, we are conducting two Phase II randomized clinical trials of CB-839 for the treatment of renal cell carcinoma. The Phase II ENTRATA trial of CB-839 in combination with everolimus in late stage patients was initiated in August 2017.

The randomized double-blind placebo-controlled trial is designed to evaluate the safety and efficacy of CB-839 in combination with everolimus versus placebo plus everolimus in approximately 65 patients with metastatic clear cell renal cell carcinoma who had been treated with at least 2 prior lines of systemic therapy including a VEGF receptor targeting tyrosine kinase inhibitor and at least one of either cabozantinib or a PD-1, PD-L1 inhibitor. Patients will be randomized in a 2:1 ratio. The primary endpoint is progression-free survival, overall survival will be assessed as a secondary endpoint.

The multicenter study will be conducted at multiple sites in the United States and is expected to be fully enrolled in 2018 with the primary endpoint analysis in 2019. We plan to initiate the CANTATA trial of Phase II randomized placebo-controlled trial comparing CB-839 in combination with cabozantinib versus placebo plus cabozantinib in approximately 300 clear cell RCC patients who have previously received 1 or 2 prior lines of therapy, including at least 1 prior anti-angiogenic agent or the ipilimumab-nivolumab combination.

Patients will be randomized in a one-to-one ratio. The primary endpoint is progression-free survival by independent review. Overall survival will be assessed as a secondary endpoint. Patients will be stratified by IMDC risk category and prior treatment with anti- PD-1, PD-L1 therapy. The study has 80% power to show a 35% improvement in progression-free survival. In support of the CANTATA trial, ask Exelixis has entered into a material supply agreement with us for cabozantinib.

The CANTATA trial is planned to initiate in the second quarter of 2018 and is expected to take approximately 2 years to reach the primary endpoint analysis. In December, at the San Antonio Breast Cancer Symposium, we presented data on 49 triple-negative breast cancer patients, 44 of whom were evaluable for a response. Patients were heavily pretreated having received a median of three prior therapies for advanced metastatic disease.

A majority of patients had received prior taxane therapy in either the neoadjuvant setting, which comprised 37% of evaluable patients or the metastatic setting, which comprised 51% of evaluable patients. The combination of CB-839 and paclitaxel has been well tolerated to date with adverse events that have been primarily low grade and reversible. Among all the valuable patients treated with CB-839 doses of at least 600 milligrams b.i.d. 37 -- and equals 37. They were 8 partial responses for an objective response rate of 22% and disease control, which is defined as patients achieving an objective response or stable disease in 22 patients or 59% of the evaluable population.

Among African Americans there was a 36% response rate in patients who had received the prior taxanes in the metastatic setting, all responders were refractory to prior taxane. Exploratory biomarker analysis shows a trend for the strongest clinical benefit occurring in patients irrespective of race with the desmoplastic stromal genic expression signature. We are currently enrolling a Phase II, open label trial in both frontline and later-stage metastatic TNBC patients. We plan to present an update on this trial in the fourth quarter of 2018.

In November, at the SITC meeting, we presented initial data from the ongoing study of CB-839 in combination with nivolumab. Specifically, I would like to highlight the melanoma data, among 16 evaluable melanoma patients all of whom were progressing on a checkpoint inhibitor at study entry, three patients achieved an objective response, including 1 complete response and two partial responses. The overall response rate in this cohort was 19% and the overall disease control rate was 44%.

In order to demonstrate the efficacy of CB-839, this trial was designed with a high hurdle, enrolling patients actively progressing on a checkpoint inhibitor at study entry. In addition, the majority of patients had no response to their prior checkpoint inhibitor therapy. We have expanded the melanoma cohort with Bristol-Myers and continue to enroll the trial, which is also evaluating CB-839 in combination with non-small cell lung cancer patients and renal cell carcinoma patients.

Next, the Arginase program. 1158 is a first-in-class immuno oncology metabolic checkpoint inhibitor targeting Arginase and immunosuppressive enzyme in myeloid-derived suppressor cells or MDSCs responsible for T-cell suppression. 1158 is being codeveloped with Incyte in a co-development, cocommercialization collaboration we announced in January of 2017. By mid-2018, we plan to have 3, 1158 trials enrolling. The first well is evaluating 1158 as a monotherapy and in combination with pembrolizumab, the recommended Phase II monotherapy dose has been selected and several pembrolizumab combination cohorts of additional tumor types have been added to the trial design. Combination expansion cohorts are expected to enroll patients diagnosed with non-small cell lung cancer, melanoma, urothelial cell carcinoma, colorectal cancer, Gastroesophageal cancer, squamous cell carcinoma of the head and neck and Mesothelioma.

A second clinical trial designed to evaluate 1158 in combination with chemotherapy, opened for enrollment in November 2017. The Phase I/II trial will enroll patients with solid tumors, including metastatic microsatellite stable, colorectal cancer, biliary tract cancer, gastroesophageal cancer, endometrial cancer and ovarian cancer and will evaluate 1158 administered orally twice daily with either FOLFOX, gemcitabine, cisplatin or paclitaxel. Primary endpoints include safety and objective response rate. A third clinical trial is designed to evaluate the safety and antitumor activity of 1158 plus epacadostat with or without pembrolizumab in patients with advanced or metastatic solid tumors. The trial is expected to begin in the first half of 2018. We plan to accumulate a great deal of patient experience with 1158 this year and look forward to future updates on this program.

And with that, I'll pass it over to Stephanie for an update on our financials.

Stephanie Wong

Thank you, Keith, and good afternoon, everyone. Keith told financial results for the fourth quarter and full year 2017 were included in today's press release. I will briefly review our results on this call. Calithera ended the year well capitalized, which will enable us to drive our clinical programs to meaningful value inflection points. Cash, cash equivalents and investments were $186.2 million at December 31, 2017. Collaboration revenue for the year was $26 million and represents deferred revenue recognized from our Incyte collaboration and license agreement.

Collaboration revenue for the fourth quarter of 2017 was $7.3 million. Research and development expenses for the year were $43.1 million compared with $27.7 million in the prior year. The increase was due to our CB-839 program as well as investment in our early stage research programs, offset by a decrease in the 1158 program, primarily due to Incyte's co-funding of development costs. Research and development expenses for the fourth quarter of 2017 were $15.5 million.

General and administrative expenses for the year, which were $12.5 million compared with $10.6 million in the prior year. The increase was primarily due to professional services and higher personnel-related cost. General and administered of expenses for the fourth quarter of 2017 were $3.3 million.

Our net loss from operations were $27.8 million for the year. For our 2018 financial guidance, we expect cash, cash equivalents and investments will be between $105 million and $115 million at the end of 2018. And will be sufficient to make our operating plans through 2020, exclusive of any new collaborations or partnerships, milestone payments, additional equity financings or other new sources. And with that, I will now turn the call back over to Susan.

Susan Molineaux

Thank you, Stephanie. And with that, operator, we're happy to open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first question comes from the line of Mike King with JMP Securities.

Michael King

A couple of quick questions. First, can you just talk about 839? Just wondering, how you guys think about the continued development at the program under your own hospices. Obviously, you partner Arginase thoroughly with Incyte. I'm just wondering as sort of the database activity, combinability, safety, tolerability, all that good stuff develops for 839, would you eventually see yourselves entering into sort of a similar collaboration as you have done on 1158?

Susan Molineaux

That depends on the outcome of some trials that were still running or may start in the future. Right now, we're fully funded and capable of finishing the development in renal cell carcinoma and triple-negative breast cancer. But if we went more broadly into other tumor types with other combination therapies and there are data, adjusting to that would be an excellent thing to do. Then we would consider getting a partner in order to have a broader program. But again, in order to get the drug through approval trials and RCC and TNBC, we felt comfortable being able to do that without a partner and would seek a partner either to broaden the program or to help us commercialize outside the U.S.

Michael King

Okay. That's helpful. Also, just switching gears for a second to the pipeline. You mentioned that you're expecting to introduce another metabolic program towards the end of the year. I'm just wondering, would that come from some of the steps that you've taken previously? I remember you guys have had a hexokinase program for a while, I don't know if that's still an active program, but did that come from something that's kind of been in the Calithera portfolio for a while? Or would that -- should we look outside of those targets for your next program?

Susan Molineaux

We are no longer focused on the hexokinase program. It is -- we have a set of projects in our pipeline and one of them is nearing maturity, and it is a program also focused on tumor and immune cell metabolism, and it's a still small-molecule focused program. So we expect to have a small molecule clinical candidate in the program in metabolism. So it will be similar in terms of fear to what we're doing already with CB-839 and 1158. And it is a program that we're developing on our own internally.

Operator

And our next question comes from the line of Matt Phipps with William Blair.

Matthew Phipps

If we can talk a little bit about the CANTATA powering. You guys mentioned 80% power to show, a 35% improvement in PFS. I believe, a 35% improvement in PFS is what you saw with the CB-839 plus everolimus combo compared to historical data but I guess what gives you confidence in kind of extrapolating the PFS benefit from the everolimus combo to the Cabometyx combo?

Keith Orford

So we are impressed by the data that we've seen to date for the combination with cabozantinib. I think, as you may have seen at ASCO GU, it's response data at this point, so long-term outcomes are not available there, but the similarity in terms of mechanism gives us a lot of confidence in comparing data between our everolimus combination in cabozantinib data. And so for that reason, we're confident in the ability to achieve that 35% improvement.

Matthew Phipps

Got you. And then, when you look -- when you really dig into the median data and I realize this is getting into postdoc analysis of subsets but prior therapies made a big difference, such as patients who got sutent and versus who got votrient. Maybe some ex U.S. vs U.S. differences as well. How are you stratifying this trial as far as -- are you really trying to control prior therapies? And also, geographic distribution?

Keith Orford

Yes, so the primary -- the two stratification factors are the IMDC prognostic status of the patient's as well as prior immuno oncology, specifically PD-1 or PD-L1 therapy. So those are the two stratification factors that we're including. I think that the median data were -- I think postdoc analysis have to be interpreted with the grain of salt in terms of prior different TKIs and the impact of those TKIs. So that's not been our highest concern in terms of the potential to enroll in a way that wasn't equal between arms and that's also been the opinion of our -- the experts that we're working with. So there has been some question about the impact of prior immuno oncology therapy on subsequent TKI activity and that's the reason why we wanted to ensure equal enrollment of prior PD-1 therapies.

Matthew Phipps

Got it. And then if I can just turn to the triple negative for a sec. So the desmoplastic signature data is obviously pretty intriguing. Are you currently working on kind of a true diagnostic and true cutoff levels? Or are you kind of waiting to see additional data from the Phase II trial before you really decide if this is something you can move forward with?

Keith Orford

I think we're doing both in parallel. So we have data that we've regenerated and we can work on that biomarker, do additional work on that. Previously published gene expression profile to look for aspects of that profile that we think are most correlated with that activity. But at the same time, we are certainly further enrolling patients on our Phase II-07 study and then we'll apply those -- that algorithm to those new data. So we're not really just waiting until we get more data. We can do both of those really in parallel.

Matthew Phipps

Got it. Do you think this could be an IST stain? Or will it need to be some kind of an array?

Keith Orford

Yes. It's early part of the discussion that's ongoing now and as you may know the desmoplastic signature is associated with the fibrotic sort of collagen expressing phenotype. So it's certainly possible that either IHC or other stains that already exist could be useful. So we're exploring both of those options.

Operator

And our question comes from the line of Robyn Karnauskas with Citigroup.

Unidentified Analyst

This [indiscernible] for Robyn. So sticking with TNBC, I was wondering if you can give a little bit of an update on how enrollment is going. You have 4 different cohorts. Frontline and major line, and also, African American cohorts. So are they all enrolling equally well? And also, what's the dating factor in terms of going into a randomized trial? When can we learn about this strategy for randomized trial?

Keith Orford

Yes. So in terms of enrollment, as you said, we have 4 different cohorts and we've been very pleased with the enrollment today in across all cohorts. So we are able to enroll all of these cohorts. In terms of outcomes that will decide randomized studies, our expectation is, by the end of the year, to be in a place to be able to discuss next steps for the TNBC program.

Unidentified Analyst

And also, just a quick question on data readout. When will we see the next Arginase combo data?

Keith Orford

The Arginase program, as I mentioned, is very aggressively enrolling patients across three studies. So we'll enroll a lot of patients this year in combination with pembro, in combination with chemotherapy and in combination with epacadostat. that plus pembro. So we'll be generating a lot of data this year. We haven't guided to when the next presentation of data will be. So we'll let you know when we're ready to give that guidance but we see this as a year of generating quite a bit of data for that program.

Operator

And our next question comes from the line of Jim Birchenough with Wells Fargo Securities.

Yanan Zhu

This is Yanan Zhu for Jim. Just first couple of questions on 839 and cabo combo in RCC. So you have in the Phase I study, if the median prior treatment is 3 lines. So there are patients who might have less sidelines patients who have really, really many lines prior lines. And the Phase III -- sorry, the CANTATA study is limited to patients with 1 to 2 prior lines of treatment. So just wondering, could you talk about the way you look at the Phase I, recognizing it's a small sample size, could you notice any pattern in terms of the patient with less prior lines versus patients with more prior lines? And also secondarily, in terms of enrollments for the CANTATA study, could you talk about the sequencing of the multiple different agents you've seen in RCC? And how your enrollment criteria went through prior lines might fit into the current treatment being in a sense trying to get it whether it's easy or hard to enroll patients in that middle of, kind of, the prior line setting?

Keith Orford

Great. So let me know if I don't answer any of your questions. But in terms of the number of lines of prior therapy, as you say, either the median study, most patients had 1 prior line -- most of the patients I met are about 2/3 had 1 prior line of therapy and the 1/3 of patients had 2. Our patients that have been enrolled are somewhat more heavily pretreated, including patients with 4, 5, 6 lines of therapy. I think one of the most intriguing aspects of our data has been that we've seen responses in patients with multiple prior lines of therapies, 5, 6 prior lines of therapy. We've actually seen responses in these patients. So we see this population as representing a higher bar than a less pretreated population and therefore, we find that to be encouraging. In terms of the sequencing of RCC agents, in the current landscape, patients are generally receiving a TKI in the front line followed by like Sutent or Votrient followed by a PD-1 therapy in second line or cabozantinib in second line and then followed by the other agent in third line. That's a fairly standard current sequence.

In the not-too-distant future, and in fact, in the present in the U.S. to some extent, patients are receiving the ipilimumab and nivolumab combination in the frontline setting followed by cabozantinib. So what we see happening is increasingly immunotherapy moving into the frontline space in combination with either other immunotherapies or with TKIs. And cabozantinib taking a fairly dominant position in the second line, at least that's how we see things working out and it's consistent with interactions that we had at ASCO GU. So enrolling second line patients with cabozantinib, following either a TKI like student or following the nivolumab, ipilimumab combination, we don't seem to be challenged at all and that's [indiscernible] very attractive from the perspective of enrollment as seen that we're really using cabo right in the sweet spot in terms of its approval.

Yanan Zhu

As a follow-up, would it be fair to say that in the 1 to 2 prior line settings, you're expecting to see higher response rate than the three, in a multiple prior line setting as seen in the Phase I, which is 40% ORR?

Keith Orford

That's hard to say, just given that we're talking about a relatively small data set but historically, one would expect that less pretreated patients will do as well better than more heavily pretreated patients.

Yanan Zhu

Great. And then a question on 839 in melanoma. So what is the duration of RECIST response in a PD-1 refractory patients population that is considered meaningful? How long is the response meaningful? And when might we have update data follow-up that is of that kind of the duration?

Keith Orford

Yes. I think that's an interesting question that because there is very little data out there right now with agents that can reverse resistance or refractoriness to PD-1 agents. I don't think there is clarity around what the expectation should be in that line of therapy or in that setting. So I think that's an ongoing discussion that we'll have internally and with external experts to assess what the right -- or what the expectation should be? What would be clinically meaningful? So -- but in terms of updates, we will certainly provide guidance in terms of when we'll update these data in the future. You can -- we continue to enroll the melanoma patients, so stay tuned on that front.

Operator

And I'm showing no further questions at this time. I would now like to turn the call back to Ms. Jennifer McNealey for any closing remarks.

Jennifer McNealey

Thank you, Chelsea, and thank you all for joining us today. We welcome your follow-up calls with any additional questions you may have that we weren't able to address on today's call. Thanks.

Operator

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