Oncternal Therapeutics, Inc. (ONCT) CEO James Breitmeyer on Q1 2022 Results - Earnings Call Transcript

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Oncternal Therapeutics, Inc (NASDAQ:ONCT) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET

Company Participants

James Breitmeyer – President & Chief Executive Officer

Richard Vincent – Chief Financial Officer

Salim Yazji – Chief Medical Officer

Conference Call Participants

Hartaj Singh – Oppenheimer

Carl Byrnes – Northland Capital Markets

Brian Petitt – BTIG Investment Banking

Shubhendu Sen Roy – Brookline Capital Markets

Operator

Greetings and welcome to Oncternal Therapeutics, Inc Third Quarter 2022 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce your host, Richard Vincent, Chief Financial Officer. Thank you. You may begin.

Richard Vincent

Thank you, Doug. Good afternoon, everyone, and thank you for joining us today as we cover our First Quarter 2022 earnings. Joining me on the call this afternoon are our President and CEO, Dr. James Breitmeyer, and our CMO, Dr. Salim Yazji. Today's call includes a business update and discussion of our 2022 first quarter financial results, which will be followed by Q&A. Today's press release and a replay of today's call will be available on the Investor Relations section of Oncternal website for at least the next 30 days. We filed our 10-Q for the first quarter 2022 earlier today as well. Please note that certain information discussed on today's call is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act.

We will be making forward-looking statements during this call about future events such as our business and this and product development strategies, the timing of initiation of our preclinical and clinical studies, the potential for our ZILO-301 study to support a BLA submission, the timing of planned interim data updates, and the timing of our regulatory filings and submissions. Our actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with our business. These forward-looking statements should be considered in conjunction with, and are qualified by the cautionary statements contained in today's press release and our SEC filings including our Form 10-K for the full year ended December 31, 2021. This call contains time-sensitive information that is accurate only as of the date of this live broadcast, May 5th, 2022. We undertake no obligation to revise or update any forward-looking statements to reflect the events or circumstances occurring after the date of this call. With that, it is my pleasure to hand the call over to our CEO, Dr. Jim Breitmeyer.

James Breitmeyer

Thank you, Rich, and good afternoon, everyone. At Oncternal, we are advancing a focused and robust product pipeline with clinical and pre -clinical product candidates that target cancers for patients with unmet medical needs. During the first quarter of 2022, we further sharpened our focus on the achievement of key pipeline catalyst in immunologic malignancies in prostate cancer as we navigated an unprecedented challenging macro environment, which is obviously continuing in the second quarter, including today's stock market you got. We made significant progress toward the initiation of our global Phase III Registrational Study ZILO-301 for zilovertamab in patients with mantle cell lymphoma, which is planned to be initiated in the third quarter of 2022. Zilovertamab is our investigational, potentially first-in-class humanized monoclonal antibody that inhibits receptor tyrosine kinase, like Orphan Receptor 1, or ROR-1 function by binding with high affinity to a biologically important epitope on the receptor. We continue to evaluate additional countries in study sites for the Phase III Study to ensure robust enrollment as we mitigate disruptions caused by the situation in Ukraine. As a reminder, we reached consensus with the FDA on the design and major details of the ZILO-301 study plan, which is supported by encouraging data from our ongoing Phase 1, 2 clinical trial of zilovertamab in combination with ibrutinib, the ceryl study.

We look forward to providing a data update on that study at this year's American Society of Clinical Oncology Meeting in Chicago in June 2022. Our autologous CAR-T cell pro book CAR-T program targeting ROR-1, 808 also continues to advance and is on track for an IND filing in mid-2022. In our initial Phase 1 study, we plan to enroll patients with relapsed or refractory hematologic malignancies, including those who have failed CD-19, CAR-T cell therapy. We established a clinical manufacturing agreement with the Dana-Farber Cancer Institute to conduct collaborative CGMP process development and manufacturing activities for use in our upcoming first-in-human studies.

Our partners at the Dana-Farber have some of the best cell manufacturing facility in the world, and proved to be a perfect fit with the cell processing technology we selected for our ROR-1 CAR-T program. Research collaborations with Cellularity and with the Karolinska Institute continue to generate encouraging data for our other next generation off-the-shelf ROR1 -based cell therapy program. Next, ONCT-534, the lead candidate of our dual action androgen receptor inhibitor or DAARI program, continues to advance towards IND - enabling studies. ONCT-534, may be a highly differentiated and novel treatment alternative for patients with advanced prostate cancer.

As we believe it interacts with both the end terminal and the ligand binding domains of the androgen receptor, inhibiting its function and inducing its degradation. Pre -clinical data have shown that ONCT-534 exerts anti-tumor activity in clinically relevant prostate cancer models, including those with AR amplification, enzalutamide resistance, or tumors expressing androgen receptor splice variants, such as AR - V7, all of which represent significant unmet medical needs for patients with prostate cancer. Finally, we announced the deep prioritization of development of our E26 transformation-specific or ETS inhibitor ONCT-216 along with the discontinuation of enrollment in the Phase 1, 2 study, evaluating ONCT-216 in patients with relapsed or refractory Ewing sarcoma. This resource reallocation will allow us to further focus on hematologic malignancies and prostate cancer while deploying our capital towards meaningful catalysts, especially those related to our lead asset, zilovertamab. Let me now turn the call back to Oncternal CFO, Rich Vincent.

Richard Vincent

Thank you, Jim. Our grant revenue is derived from a California Institute for Regenerative Medicine or CIRM grant sub award and two research and development grants from the National Institutes of Health or NIH. In October 2017, CIRM awarded an $18.3 million grant to researchers at the UC San Diego School of Medicine to advance [Indiscernible] study. We are conducting this study in collaboration with UC San Diego and expect to receive approximately $14.4 million in development milestones under research sub awards throughout the award period that was substantially completed from a revenue perspective in the first quarter of 2022.

In the third quarter of 2021, the NIH awarded the company two research and development grants for up to $2.2 million to support preclinical activities for the company's ONCT-534 and ONCT-216 programs, including $700, 000 that is payable to sub awardies. Our grant revenue was $700,00 for the first quarter ended March 31, 2022. Our total operating expenses for the first quarter ending March 31, 2022 were $10.7 million, including $2 million in non-cash stock-based compensation expense. Research and development expenses totaled $7 million and general and administrative expenses totaled $3.7 million. Net loss for the first quarter was $9.9 million for a loss of $0.20 per share basic and diluted. As of March 31, 2022, we had $82.2 million in cash and cash equivalents and no debt. We believe these funds will be sufficient to support our operations well into the third quarter of 2023. We have and will continue to manage expenses deliberately and will explore all potential sources of capital to enable us to reach our milestones.

As of March 31,2022, we had 49.4 million shares of common stock outstanding. With respect to upcoming milestones for our Zilovertamab program, we expect to initiate the global Registrational Phase 3 study ZILO-301 in the third quarter of 2022. We expect to report an interim clinical data update for patients with MCL and CLL treated with zilovertamab plus ibrutinib from our ongoing ZILO study at the June 22 ASCO meeting. We also expect to have a Phase 1b investigator sponsored trial of zilovertamab plus docetaxel, enrolling patients with metastatic castration resistant prostate cancer in mid-2022. On the cell therapy front, we are on track to submit our first IND for ONCT-808, our autologous ROR-1 CAR-T cell candidate in mid-2022. For ONCT-534, our lead DAARI product candidate, we are on track to initiate IND-enabling GLP toxicology studies and GMP manufacturing in the second quarter of 2022. Now, I will turn the call back over to Jim.

James Breitmeyer

Thank you, Rich. We look forward to multiple catalysts in 2022, especially the initiation of our global Phase 3 zilovertamab study and submitting our ROR-1 CAR-T IND application, and advancing our DAARI program toward the clinic. Our sharp focus on resource allocation, prudent cash management, and the strong balance sheet are enabling us to navigate this historically challenging macro environment. We plan to continue to focus our resources on areas of the highest unmet patient need, where we believe our product candidates can make the greatest difference for patients. Thank you for joining us today and we look forward to updating you during upcoming medical and banking conferences. With that, I will turn things back to Doug for the Q&A portion of this afternoon's call and remind you that CMO Salim Yazji is also on with us for the Q&A.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer section. [Operator Instructions] Our first question comes from the line of Hartaj Singh with Oppenheimer. Please proceed with your question.

Hartaj Singh

Great. Thank you. Thanks for the update, Jim and team. And just a couple of quick questions. Jim, I note that when you presented [Indiscernible], and everyone had presented the Phase III design for Zilovertamab -301 a couple of months ago, you'd also talked about a ZILO-302 aspect to that. How are you thinking about that? That's the -- I guess that's beyond for the patients that have progressive disease, the [Indiscernible] patients are [Indiscernible] So just what do you thinking about that? And I just got a couple of quick follow-up questions after that.

James Breitmeyer

Sure. I'll I'll start. And Salim can comment as well. The [Indiscernible] study you're referring to is one of the really novel aspects of our registration study design because during the 4 month running or enrichment portion of the study, where patients receive single agent ibrutinib, a percentage of those patients will progress on ibrutinib. And so they're already in our study. They're already well documented with disease parameters and medical history and everything. And so to give them the opportunity to see if their disease can be re-sensitized to ibrutinib with zilovertamab therapy it's a very convenient and incrementally in expensive way to test for impact of zilovertamab in this resistant disease. So we're still planning to conduct that part of the study as well and since it's open label, that would also give us an opportunity to talk about the results in real time our medical conferences that having to wait for the blind would be broken and the main three on one study, Salim. Do you want to add anything to that?

Salim Yazji

No, I think you summarized it very well, Jim. That's good.

Hartaj Singh

Great. And then the other question I would have is just on ONCT-808, the CAR-T therapy, Jim and Salim, if you can just kind of describe once you file the IND in mid-2022, what's the sort of clinical program setups that we can look forward to? I mean, basket study, certain tumor types, hematology versus solid tumor. Just what are your thoughts on that could look like in the second half of this year?

James Breitmeyer

Go ahead, Salim.

Salim Yazji

Yeah. So Hartaj, this just will be mainly in hematologic malignancies as a first in human study. And specifically, we're going to do a dose escalation in lymphoma, B-cell lymphoma patients. Once we reach our recommended Phase 2 portion, then we can expand to other cohorts as well.

Hartaj Singh

Got it, Salim. So I mean, just so I'm clear, it'll be hematologic malignancies but cohorts, meaning you just -- you have a basket of patients with different types of tumor types and then picked along, do you want to dose expand into Optune, get into your recommended Phase 2 dose?

Salim Yazji

In the dose escalation, we will have only B-cell lymphoma, including Diffuse Large B-Cell Lymphoma, MCL, and maybe -- as, I guess, of lymphomas. That's in the dose escalation. Now in the expansion cohorts, we will expand in those patient population for sure, but also we may open as of indication in hematological malignancies, like maybe example multiple myeloma, or others.

Hartaj Singh

And is there any sort of pathway that you see with the CAR-T program whereby there's some tumor type you're looking at where the unmet need is high enough that if you see a good signal in dose escalation, and you get into dose expansion, that that could actually form the basis for potential accelerated approval type scenario? I know that's low probability, but just any thoughts there?

Salim Yazji

Absolutely. I think we -- as you know, since this is going to be dose escalation, open-label, we're going to be looking into signal as we go. And if we see that something could be possibility to get a quick approval, or escalated approval, we will go after that for sure.

Hartaj Singh

And these will be patients that are later lined in general therapy than what the ROR-1 antibody would have seen, right? Zilovertamab would have seen?

Salim Yazji

Yes, absolutely and as Jim mentioned, this will be in relapsed refractory hematological malignancy, which is probably a little bit later line of therapy, including patients who have failed CD19 CAR-T, where there is a huge unmet medical needs there as well.

Hartaj Singh

And then last question is just, when you see filing the IND for ONCT-534?

James Breitmeyer

So we haven't guided to the timing of that IND yet Hartaj. And the reason is that like other people, we're experiencing some supply chain uncertainty, including things such as slots for manufacturing activities and availability of animals and equipment for toxicology studies. So this is an area where there's still some continuing impact from COVID. So we just haven't been specific yet. And when we have greater clarity around timing of the IND enabling work, then we will lay that out.

Hartaj Singh

Great. That makes sense, Jim. Thank you all for the update. Really appreciate it.

James Breitmeyer

Thank you.

Operator

Our next question comes from the line of Carl Byrnes from Northland Capital please proceed with your question.

Carl Byrnes

Thanks for the question and congratulations on your progress. With respect to ZILO-301. 300 to studies how many sites do you anticipate recruiting are participating in those studies? I think before you were looking at around 50 and I guess my question is, has that changed given what's going on in Eastern Europe? Thanks.

James Breitmeyer

Go ahead, Salim.

Salim Yazji

Yes, I think we monitoring situation where closely and the short answer we are trying to look into additional sites and especially Eastern Europe now it's kind of a little bit difficult to recruit there.so yes, we make go little bit beyond that too.

Carl Byrnes

Great. Thanks. That's helpful.

James Breitmeyer

Thank you, Carl.

Operator

Our next question comes from the line of Kaveri Pohlman with BTIG, please proceed with your question.

Brian Petitt

Hi. Thanks. Good afternoon. This is Brian for Kaveri and thanks for the update and thanks for taking our questions. Just one from me regarding the use of Zilovertamab in CRPC is the [Indiscernible] signaling pathway providing main biology and rationale for I own. And it's a really ROR-1 driven understanding is that ROR-2 to and also our receptor for [Indiscernible]. Thank you,

James Breitmeyer

Hi Brian and thank you for standing in for Kaveri today, so the ROR-1 and ROR-2 can actually form a Hetero dimer, which can act as a receptor for [Indiscernible] and so the ROR-2 to is for us kind of in the background, we're not targeting it because first of all, our antibody doesn't target ROR-2 and it's also harder to target ROR-2 selectively on tumors because it has a broader distribution on normal tissues. So the ROR-1 is highly expressed on prostate cancer, that's part of the rationale. The other is some very interesting data out of [Indiscernible] San Diego that shows that in the bone tumor micro environment, the prostate cancer bone metastasis. The [Indiscernible] is one of these absolutely most highly over expressed proteins. And so we see the receptor for [Indiscernible]. We see it [Indiscernible] by the -- and that forms a nice rationale for prostate cancer.

Brian Petitt

Excellent. Thank you so much for the very thorough answer and thanks for the question.

James Breitmeyer

You're welcome, Brian.

Operator

Our next question comes from the line of Kumar Raja with Brookline Capital Markets. Please proceed with your question.

Shubhendu Sen Roy

Hi, I'm Shubhendu Sen Kumar thanks for the update. Could you provide some color to the 216 program? What is the strategy there to take it further? I mean, are you exploring collaboration so partnerships? And also, there were two patients that demonstrated CR, how are they doing now? And are there any other patients that are showing a similar response? Thank you.

James Breitmeyer

I'll let Salim comment on the patients first.

Salim Yazji

Yes. So we still have two patients are still in CR. One has been off treatment and continues to be in CR after eight months of therapy. And the other patient is still on CR on therapy. And we're going to continue giving the drug to these patients and maybe a compassionate use program since the CR is still durable.

James Breitmeyer

Yes. And so as far as the program is concerned, we have, as we've announced, we're focusing our clinical programs particularly on the zilovertamab Phase III Study. However, we do have an NIH grant with which we're collaborating with some academic investigators, including the discover of this form of ETS inhibition [Indiscernible] to do further work on the mechanism. The puzzle for us is that we are inducing these dramatic responses, but only in a very small percentage of cases. And so we feel that it's necessary to know more about the mechanism. And so we have a non - dilutive source of funding for that research. There is an open IND to continue to study TK216 ONCT-216 in China through our collaborator, Shanghai Pharma, and we expect that study to -- in Ewing sarcoma to get -- to open soon and we expect they'd be doing some additional biomarker work and such to try to understand mechanistically what's occurring.

Shubhendu Sen Roy

Thank you. That is useful. And also, what's the cutoff date going to be for the Phase 1-2 ASCO be carried out, and how many patients do you expect to include in that? And what are the expectations in terms of point to points, like progression for survival and so on. Thank you.

James Breitmeyer

Were you asking the cutoff date?

Shubhendu Sen Roy

Yes.

James Breitmeyer

So as you can imagine, the posters are due to ASCO on May 16th. And so we've tried to go as late as we can and still process the information. The contents of what we're going to present are still embargoed by ASCO. But there would be updated information compared to the ASH Meeting for both CLL and mantle cell, including a more mature look at progression-free survival and also further look at interesting subset analyses.

Shubhendu Sen Roy

Okay. Thanks And finally, just regards to the Dana-Farber collaboration, could you please provide some color to the kind of agreement this is? And other details with regards to the kind of capacity they have and the timelines of manufacturing. And when do you think you'll have the first batch ready? Thank you.

James Breitmeyer

Thank you. So it is - it's a collaboration and manufacturing agreement. And you may recall that we're using a benchtop processing system called the Miltenyi Prodigy, and that's technology that the group at the Dana-Farber have quite a bit of experience with, and they own their own Prodigy equipment. And so we expect that by the times that we submit our IND, that several performance-characterizing runs will have been performed at the Dana-Farber and that they will be ready to manufacture as soon as sites are open and able to enroll patients. There will be -- they have indicated that they can handle capacity both from sites in the Harvard system and sites outside of Massachusetts. And so we're very happy with their apparent capacity here for our Phase I program.

Shubhendu Sen Roy

Thank you so much for taking my questions.

James Breitmeyer

Thank you for your questions. We appreciate your call today.

Operator

There are no further questions in the queue. I would like to hand the call back to management for closing remarks.

James Breitmeyer

Thank you, everybody. This is Jim Breitmeyer and so on behalf of Rich Vincent Salim Yazji and everyone in Oncternal, I thank you for your interest and participation today. Have a good day and we look forward to catching up with you in the future.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

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