U.S. Markets closed

Edited Transcript of ONTX earnings conference call or presentation 8-Mar-18 2:00pm GMT

Thomson Reuters StreetEvents

Q4 2017 Onconova Therapeutics Inc Earnings Call

Newtown Mar 9, 2018 (Thomson StreetEvents) -- Edited Transcript of Onconova Therapeutics Inc earnings conference call or presentation Thursday, March 8, 2018 at 2:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Ramesh Kumar

Onconova Therapeutics, Inc - CEO

* Mark Guerin

Onconova Therapeutics, Inc - CFO

================================================================================

Conference Call Participants

================================================================================

* Joe Pantginis

H.C. Wainwright - Analyst

* Yale Jen

Laidlaw & Company - Analyst

* Jason McCarthy

Maxim Group - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, and welcome to Onconova's Full Year 2017 Earnings Call and Webcast. At this time, all participants have been placed on listen-only mode. At the end of the prepared statements, participants will have the opportunity to ask questions.

(Operator Instructions)

Please note that the remarks today will include forward-looking statements and that actual results could differ materially from those projected or implied in our forward-looking statements. For a description of important factors that could cause actual results to differ, we refer you to the forward-looking statements in today's press release and the note on forward-looking statements in the company's SEC filings.

It is now my pleasure to turn the call over to Onconova's CEO and President, Dr. Ramesh Kumar. Dr. Kumar, please proceed.

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [2]

--------------------------------------------------------------------------------

Thank you, Caja. Good morning and welcome to our full year 2017 results call. Joining me from Onconova's management team is our CFO, Mark Guerin.

2017 and the first few months of this year marked a turning point in the clinical development of our lead Phase 3 clinical candidate rigosertib culminating in the announcement of promising interim results and the continuation of the INSPIRE pivotal trial. We are proud to be at the frontline of this indication as we seek to address the unmet medical needs of patients with higher risk MDS.

We have also made significant advances across the rest of our pipeline and met several strategic business development objectives. We have now secured regional licensing agreements for our pipeline candidates. Early this week, we announced an agreement with Pint Pharma to commercialize rigosertib in Latin America. Pint has an existing hematology/oncology portfolio and a wide footprint in the region. We view this agreement as further validation of rigosertib for the treatment of MDS.

Back in December, we also signed a China regional license and collaboration agreement with HanX Biopharmaceuticals for ON 123300, a first-in-class dual inhibitor of CDK4/6 + ARK5. Importantly, this collaboration places ON 123300 on an IND track and towards clinical data in 2019.

As we foreshadowed in our third quarter results call, we entered into a CRADA, Cooperative Research and Development Agreement with the National Cancer Institute. NCI will conduct research including preclinical laboratory studies and clinical trial on rigosertib in pediatric cancer associated RASopathies. The execution of these three transactions combined with recent capital raises underscores our ability to leverage the late-stage program pipeline assets to finance multiple programs.

In addition to the promising interim analysis of INSPIRE trial, we also reported positive results across our MDS pipeline in recent months. We delivered two presentations highlighting drug activity and the mechanism action of rigosertib in MDS at the ASH annual meeting in December. We also published results from the Phase 1/2 study of IV rigosertib in patients with MDS showing that patients with response or stable disease lived a median of one year longer than non-responders.

Based on the continued progress in our oral rigosertib/azacitidine combination Phase 2 program in frontline MDS, we expect to develop additional regional collaborations and creative partnerships to help advance to a pivotal Phase 3 trial for oral rigosertib.

Looking ahead, we plan to present clinical data at the Bone Marrow Failure Disease Scientific Symposium in Maryland. We're also scheduled to present two abstracts at the American Chemical Society National meeting in New Orleans. All-in-all, I'm delighted with the progress in recent months and we are well positioned to continue to execute on our strategy in 2018.

I will now highlight the outcome of the interim analysis of our Phase 3 INSPIRE trial which is studying IV rigosertib in patients with higher risk MDS who have progressed on, failed to respond to or relapsed after prior hypomethylating agents or HMA therapy. This is our most advanced program and the key area of focus.

In January, we announced that we are now moving forward with the Phase 3 INSPIRE pivotal trial following the recommendation of the Data Monitoring Committee and unanimous approval by the Executive Committee overseeing the trial.

The DMC recommended a one-time expansion in enrollment using a pre-planned sample size re-estimation, which is consistent with our Statistical Analysis Plan previously discussed with the FDA and EMA.

There are few choices for higher risk MDS patients after failure of HMA therapy and no second-line therapy has ever been approved by the health authorities for these patients. These patients have a very short lifespan and there is tremendous unmet medical need. We believe that this trial is the most advanced study for new therapeutic agents for MDS patients after failure of frontline HMAs.

The expanded INSPIRE study will enroll eligible patients based on the current trial design with enrollment target of 360 patients, with the aim of increasing the power of the trial.

As mentioned in the past, the SAP for the INSPIRE trial featured an adaptive trial design permitting several options following the interim analysis which included discontinuation of the trial for futility, continuation of the trial as planned, trial expansion using pre-planned sample size re-estimation, and trial continuation but limited only for the pre-defined treatment subgroup of patients classified as very high risk based on the Revised IPSS system.

After interim, the third option was elected based on the review of the data by the DMC.

Accordingly, the INSPIRE trial will analyze both ITT and very high risk population for the primary endpoint of overall survival. In the INSPIRE trial enrollment so far, the pre-defined subgroup for very high risk patients constitute greater than 70% of the patients enrolled, a much higher proportion than that was observed in the ONTIME study.

It's important to note that we remain blinded through the interim analysis results. INSPIRE study is active in more than 170 sites in 22 countries across four continents, and more than half of the patients required in the expanded study have been enrolled. We're planning to add sites in Europe and new territories including Latin America in conjunction with our partner, Pint.

We look forward to completing enrollment and for the opportunity to analyze overall survival in the MDS patients who have failed prior HMA therapy. We believe that full enrollment can be achieved in the first half of 2019.

Our second advanced program is an oral rigosertib plus azacitidine combination as a potential first-in-line therapy for patients with higher risk MDS.

A Phase 2 expansion trial of the combination is expected to be fully enrolled this month with the addition of more than 40 patients.

Once the expansion trial is evaluated, we plan to submit the pivotal Phase 3 protocol to the FDA under the SPA process, Special Protocol Assessment. The initiation of the Phase 3 trial which is planned to be conducted globally requires additional financing and/or business development transactions.

Earlier this month, we presented data relating to the mechanism of action of rigosertib in combination with azacitidine at the AACR Special Conference. The results suggested potential novel clinical strategies to improve outcomes in patients with higher risk MDS and reversal of resistance to treatment with epigenetic therapies.

Previously presented data demonstrates that the combination therapy may overcome HMA resistance and also indicates that further study of rigosertib in AML is warranted. Given that as many as 30% of MDS patients go on to develop AML, it is our intention to study AML in the future.

We also plan to present initial data from this expanded study at scientific conferences throughout 2018 highlighting the result of dose selection and optimization of the combination regimen, and the potential for combination therapy in MDS and AML.

Our plan is to couple the advancement of our programs with strategic transactions and collaborations. The most recent deal announced was with Pint Pharma, a European-based pharmaceutical company focused on the development, registration and commercialization of treatments in Latin America and our deal is for commercialization of rigosertib in Latin America.

This agreement adds to our existing partnership with SymBio in Japan and Korea. In exchange for these Latin American rights, Pint will make investment totaling up to $2.5 million by purchasing shares at a premium to market. In addition, regulatory, development and sales-based milestone payments to Onconova of up to $42.75 million and double digit tiered royalties on net sales are included in the agreement.

We will supply the finished product for sale in the licensed territories while Pint will support our clinical trial initiatives in their region. We look forward to working with the clinicians and experts at Pint Pharma to advance clinical trials for IV and oral rigosertib in important centers in their territory.

In December, we also signed a license and collaboration agreement with HanX Biopharmaceuticals which has strong expertise in drug development and commercialization for the further development, registration and commercialization of ON 123300 in China.

ON 123300 is a first-in-class dual inhibitor of CDK4/6 + ARK5, which is currently in advanced pre-clinical development. We believe the compound has the potential to overcome some of the limitations of the current generation CDK 4/6 inhibitors.

Under the terms of the agreement with HanX, we are due to receive an upfront payment, potential regulatory and commercial milestone payments, as well as royalties on Chinese sales. The key feature of the collaboration is that HanX will provide funding required for IND enabling studies. Both companies will oversee the IND enabling studies and we will maintain global rights outside of China.

We have initiated a pre-IND process for ON 123300 with the FDA and expect to announce the timeline for the IND and plan a clinical exploration in the coming months. Our next generation CDK compound has the potential to overcome some of the limitations of the current generation compounds that require a combination treatment for therapeutic use. As such, we're excited to advance 123300 towards an IND.

Since our last earnings call, we delivered two presentations highlighting drug activity and the mechanism of action of rigosertib in MDS during the 59th ASH Annual Meeting in Atlanta. The highlight of the presentation include oral rigosertib as a second agent demonstrating activity in a Phase 2 trial for lower risk MDS; 32% of 62 evaluable patients, and 44% of patients receiving optimal dosing, achieved transfusion independence which could be an approval endpoint.

And we also presented new data on the molecular basis of the combination therapy with rigosertib and azacitidine. Notably, this data was in lower risk MDS where the incidence is very high and the potential duration of treatment is quite long. We also announced a publication of results from phase 1/2 study of rigosertib in patients with MDS and MDS progressing to AML in a journal Leukemia Research.

In the study, rigosertib reduced or stabilized bone marrow blasts and improved peripheral blood counts, and patients with response or stable disease had one year longer survival than non-responders. So a lot going on with rigosertib in MDS. We are encouraged by the progress in our late-stage program and the exciting developments underway in our earlier stage programs and partnerships.

I will now turn the call over to Mark Guerin, our CFO, for a discussion of our financial results in the full year. Mark?

--------------------------------------------------------------------------------

Mark Guerin, Onconova Therapeutics, Inc - CFO [3]

--------------------------------------------------------------------------------

Thanks, Ramesh.

Net loss was $24.1 million for the year ended December 31, 2017, compared to $19.7 million for the prior year, primarily due to the lack of collaboration cost sharing revenue in the 2017 period and a smaller change in the fair value of warrant liability in the 2017 period.

Research and development expenses were $19.1 million for the full year 2017 compared to $20.1 million for 2016. General and administrative expenses were $7.4 million for 2017 compared to 9.2 million in 2016. At the end of the year, cash and cash equivalents totaled $4 million compared to $21.4 million at December 31, 2016.

Subsequent to year-end on February 12, 2018, we announced the closing of a $10 million underwritten public offering of 9,947,500 shares and warrants to purchase an aggregate of 994,750 shares of Onconova's Series A convertible preferred stock.

This included the exercise in full of the underwriter's option to purchase additional securities. Prior to year-end on November 10, 2017, we announced an offering of common stock for gross proceeds of approximately $1.38 million.

I will now hand the call back to Ramesh for his closing remarks.

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [4]

--------------------------------------------------------------------------------

Thanks, Mark.

Looking ahead, we plan to present additional data highlighting the progress of our clinical development in the coming months. Later this month, the company's scientists, and collaborators from the Mount Sinai School of Medicine, will present two abstracts at the American Chemical Society National Meeting.

The first abstract relates to the analysis of stability of the clinical product during storage. The second abstract describes new chemical entity ON 150030, which is a type 1 novel pre-clinical stage inhibitor of FLT3 and Src pathways, believed to be important for targeted therapy of relapsed and refractory AML.

Thereafter, we will present an abstract at the Bone Marrow Failure Disease Scientific Symposium on the results of a dose exploration study in higher risk MDS patients focusing on the impact of risk-mitigation strategies in minimizing incidence of urinary events, including hematuria.

I am encouraged by the promising progress across our preclinical and late-stage trials, which is setting the stage for additional catalysts in 2018. We remain committed to serving the unmet medical needs in MDS.

I would now like to open the call to questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you. (Operator Instructions).

Our first question comes from the line of Joe Pantginis from H.C. Wainwright. Your line is now open.

--------------------------------------------------------------------------------

Joe Pantginis, H.C. Wainwright - Analyst [2]

--------------------------------------------------------------------------------

Hi, guys. Good morning. Thanks for taking the question. Ramesh, I wanted to talk about the interim a little bit but specifically from a [BD] standpoint. How much has the visibility from the interim analysis impacted or not impacted your BD discussions?

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [3]

--------------------------------------------------------------------------------

Thank you, Joe. A very good question. It has made all the difference as they say in the movies. A lot of people have been talking to us, I would say kind of flirting with us, but the interim analysis was the inflexion point for them.

Obviously none of the companies would make a deal and see the interim analysis hit the wall. So a positive interim analysis and interim analysis that informs that the trial is a go and that there is a promising signal made all the difference. Without giving you details which I'm not allowed to, we are having very, very meaningful dialogue for regional collaboration, including some substantially large territories.

And of course the proof is in the pudding and we were relieved and we were delighted to announce the Pint collaboration on Monday and for Latin America.

Many people are not aware of the medical need in Latin America, but we were really surprised by the forecast that potential partners including Pint provided to us. It's a large market. It's a thriving market in second and third line drugs, for example, ponatinib have been launched in Latin America successfully.

So, Joe, interim analysis in my mind was a turning point for us.

--------------------------------------------------------------------------------

Joe Pantginis, H.C. Wainwright - Analyst [4]

--------------------------------------------------------------------------------

That's very helpful. Thank you.

And if I could just follow up with one quick logistical question. I just want to make sure with regard to the Pint collaboration and/or others beyond potential milestones and royalties, do you also get a supply fee for rigosertib?

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [5]

--------------------------------------------------------------------------------

Yes.

As you know, our existing collaboration with SymBio, which we were fortunate to sign in 2011, has a manufacturing and supply agreement with them. We sell the drug to them. So if you look at our financials over the period of time, a lot of the revenues we reported was selling clinical drug product to our partner and they have done numerous Phase 1 studies and they are now participating in the INSPIRE trial in Japan.

So even before commercialization, supply agreements can be quite helpful to us. And then once the drug is commercialized, our ability to supply the drug to them at a profit is going to be small but significant part of the future.

--------------------------------------------------------------------------------

Joe Pantginis, H.C. Wainwright - Analyst [6]

--------------------------------------------------------------------------------

Great. Thanks for the clarification.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Our next question comes from the line of Yale Jen from Laidlaw & Company. Your line is now open.

--------------------------------------------------------------------------------

Yale Jen, Laidlaw & Company - Analyst [8]

--------------------------------------------------------------------------------

Good morning and thanks for taking the questions. In terms of the rigosertib plus aza, the oral drug in the first-line MDS reporting, could you give a little more color or maybe just reiterate what the study design and what going forward are we sort of looking for?

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [9]

--------------------------------------------------------------------------------

Thank you, Yale. I think the frontline indication is really the money indication for us. That's a big market opportunity and we want to be very, very careful that we go in there knowing that the duration of treatment is going to be long. Hopefully, patients will be on the drug for multiple years. So we need to be really, really sure of the dose and the schedule before we start the trial. The trial design has already been discussed with the FDA. They're fine with the design. EMA has also approved the design.

So there are three features of the design. One and the most important is that survival is not the endpoint. The endpoint is overall response. Big difference. So if we have to do survival in patients who normally live multiple years, the survival-based trial is going to take many, many years. So when you use overall response, you can get data pretty much concurrently as patients are being enrolled and you can get top line data within a year of completing the trial. So that's a big difference.

Number two, FDA and EMA have agreed that we can do a placebo-controlled, randomized study in which we are comparing standard of care azacitidine plus placebo with standard of care azacitidine with oral rigosertib. So the design has been confirmed by the agencies.

The third and most important factor is that the study population will be patients who are eligible for frontline therapy. So in a way if our trial is successful and if you're approved, our label is going to be very similar to the label for azacitidine which is a pretty expansive label which is a large number of patients who are going to be on the drug for multiple years. So based on these factors and based on the trial designed and approved by the FDA, we believe that if we have an SPA and we have the trial ready to go, the trial is going to enroll very, very quickly, because all the patients in the trial, unlike in the INSPIRE trial, will get an active drug.

In INSPIRE, the control patients get physician's choice and best supportive care, not an active approved drug. So in the new combo trial, all the patients will get an active drug, number one. And number two, we can do the trial everywhere in the world where azacitidine is available. For example, we can do the trial in U.S. and Europe and Japan like we are doing the INSPIRE trial but we can also go to Latin America and China and many other Eastern European countries because it's an oral drug and azacitidine is already standard of care in those markets.

So the combination of short response as the top line analysis, a one-to-one randomization with all patients getting an active and finally a bigger geographic footprint makes this trial go much faster than other trials can go. So we would be looking forward to announcing the SPA process, approval of the CTA and the start of this trial. As I mentioned to you, we think that this trial will progress in concert with our ability to make additional collaboration and additional licensing agreements.

--------------------------------------------------------------------------------

Yale Jen, Laidlaw & Company - Analyst [10]

--------------------------------------------------------------------------------

So should we anticipate a possible announcement for SPA process maybe in the second half or later part of this year or that could be something of next year?

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [11]

--------------------------------------------------------------------------------

I think the SPA process and the announcement of results will happen as early as this month because we're starting to show data from the expanded trial. And the SPA process doesn't require the funding that the start of the trial requires. So you're right. The data release and then SPA process will be the third quarter and second half. And as you know, SPA takes several months to [learn]. And once we have that, hopefully in sync with that process is our business development activity which allows us to finance and then start the trial.

--------------------------------------------------------------------------------

Yale Jen, Laidlaw & Company - Analyst [12]

--------------------------------------------------------------------------------

Okay, great. Thanks a lot. That's helpful. And maybe just a one housekeeping question for Mark. Just based on the recent financing and your reported cash as well as the upfront payment from BD, my estimate is that in the pro forma base that you have cash probably a little bit around 17 million. Would that be a reasonable guess?

--------------------------------------------------------------------------------

Mark Guerin, Onconova Therapeutics, Inc - CFO [13]

--------------------------------------------------------------------------------

So we ended the year with four and we announced the financing and then the Pint deal. And I think if you -- in our press release we said that based on our burn from 2017 and our current cash balances, we expect we have cash to get into the third quarter of 2018.

--------------------------------------------------------------------------------

Yale Jen, Laidlaw & Company - Analyst [14]

--------------------------------------------------------------------------------

Okay, great. That's very helpful. Again, thanks a lot. I appreciate it.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

(Operator Instructions). Our next question comes from the line of Jason McCarthy from Maxim Group. Sir, your line is now open.

--------------------------------------------------------------------------------

Jason McCarthy, Maxim Group - Analyst [16]

--------------------------------------------------------------------------------

Hi, guys. I think one of my questions has been somewhat answered. But I was hoping that you can give me a little bit more granularity on the expected burn rate going forward? I know there is some discussion about some cost saving measures to reduce the burn down from historical levels of around $7 million.

Maybe you can just give me a little bit more color on what steps you're taking to do that to extend the runway? And what the potential is for additional regional partnerships, kind of piggybacking Joe's earlier question, and what those upfront payments might look like that could extend the runway?

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [17]

--------------------------------------------------------------------------------

Jason, thank you so much.

That's every morning we wake up asking the same question, so that's paramount.

As you know, we've had some variation in quarterly burn that we report but over longer period of times since the start of INSPIRE in the first quarter of 2016, we are expending about 5.5 million per quarter. And what we decided is that unless we can make a really nice deal with big upfront, we have to really cut back on expenditures. So what we're guiding is that we are working very hard to get our expenses below $5 million a quarter.

And certainly it's easier to spend more money if more money comes in, but we have to be very disciplined. So that's goal number one. Number two, what can -- can we do more regional deals? My personal answer is absolutely. That's really my job number one is how can we offset our expenses by getting non-dilutive funding to the company. And non-dilutive funding could come in two ways. One, it could be just upfront money or it could be that the partner shares in the cost of development offsetting the burn rate. And then these are really important things.

Another way we think that the burn rate can be trended downwards is remember last year we were doing two important late-stage trials; the INSPIRE trial, the Phase 3 trial which is running globally. And just to remind everybody, our partner SymBio is paying for their share of the patients -- 15% of the patients that they've undertaken to enroll in Japan. So they buy the drug, they pay for it. So that's an offset. And for the rest of the world, we are responsible. So we are expending money on that important Phase 3 trial but we were also doing advanced Phase 2 expansion trial of the combination. And we had decided for the sake of controlling costs to do the trial only in the U.S. Initially, we were going to do the trial in U.S. and Europe. So that was another cost containment measure.

So this year, as I announced, we are going to be done with the expansion trial. No Phase 2 enrollment beyond this month. That combined with the fact that we are not going to be doing any more clinical work on the oral rigosertib until we have SPA and the Phase 3 trial will trend the burn rate further down. So again, we are a very advanced stage company, very close to top line data and very close to startup of another Phase 3 trial.

In spite of all of that, if we do the three things; one, mind our budget; number two, focus on INSPIRE; and number three, try to get as quickly as big a deal as we can to offset our financing needs will be our goal. So, Jason, thank you for that question and the proof is in the pudding. As we meet with you repeatedly and on quarterly basis, we would like to prove to you that these are the things that we can implement and execute in our plan.

--------------------------------------------------------------------------------

Jason McCarthy, Maxim Group - Analyst [18]

--------------------------------------------------------------------------------

Thank you very much.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

I am currently seeing no further questions. I would now like to turn the call back to Dr. Ramesh Kumar for any further remarks.

--------------------------------------------------------------------------------

Ramesh Kumar, Onconova Therapeutics, Inc - CEO [20]

--------------------------------------------------------------------------------

Thank you.

Thank you for the questions and your attention for this longish presentation. Just a reflection of how many things we are trying to juggle and how many things we are trying to advance. And we are available to meet with you and answer any questions you may have which are not addressed in the call today.

Thank you and enjoy the rest of your day.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

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