Q4 2019 Earnings Call

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Greetings, ladies and gentlemen, and welcome to the alternate Therapeutics fourth quarter financial results Conference call.

That's time, all participants are any listen only mode. A question answer session will follow the formal presentation you make your question throughout the presentation by pressing star one on your telephone keypad, if any once you've acquire operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is not Mike.

Thank you to introduce your host Richard Vincent Chief Financial Officer. Thank you, Sir you may begin.

Thank you operator go.

Good afternoon, everyone and thanks for joining us.

I'd like to walk me into our business update in 2019 fourth quarter and full year financial results conference call joining.

Joining me on the call. This afternoon, our president and CEO Dr., Jim Bright Meyer and our Chief Medical Officer Dr. Frank shoe.

Today's call includes a business update and discussion of our 2019 fourth quarter and full year results.

Well be followed by Q anyway.

Please note that today's press release is available on the Investor Relations section of on kernels website.

We plan to file our 10-K for the full year 2019 today.

A replay of todays earnings call will be available on the Investor section of our website for at least the next 30 days.

Please note that certain information discussed on the call today 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 product development strategies and future financial and operating performance.

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 our qualified by the cautionary statements contained in today's press release, and our SEC filings, including our form 10-K for the year ended December 31 2019.

This conference call contains time sensitive information that is accurate only as of the data is live broadcast March 16th 2020.

Obligation to revise or update any forward looking statements to reflect the events or circumstances occurring after the date of this conference call.

With that it's my pleasure to introduce our CEO, Jim Bright Meyer.

Thank you rich and good afternoon, everyone.

And I've turn all we're committed to developing novel cancer treatments for patients with cancer that have critical unmet medical need.

We're advancing a robust product pipeline with clinical and preclinical product candidates that target several such cancer indications.

Our development efforts focus on untapped biological pathways implicated in cancer, Genesis and or progression.

Throughout 2019 and into early 2020, we have made steady progress on all four of the cancer indications. We are studying with our clinical product candidates CIRM tusa Mab and Teekay to 16.

Mantle cell lymphoma, or mcl, ewing's sarcoma breast cancer, and chronic lymphocytic leukemia or CLL.

We are particularly enthusiastic about the 50% complete response rate, we recently reported for mcl patients treated with the combination of certain Tuzun Mabin ibrutinib.

And with a complete remission achieved with Teekay to 16 treatment of a young man with Ewing's sarcoma.

Preclinical work is also identifying additional clinical targets for our existing product candidates and for our ror one targeted car T program.

So let me turn this over to our Chief Medical Officer, Dr., Frank Shoe, who will provide more detail on these clinical results and our other programs.

Thanks, Jim I'll spend the next few minutes updating progress on our clinical programs.

And taking you through a more in depth to look at our diverse product candidates. Our most advanced clinical program involves some tusa that which is a monoclonal antibody designed to inhibit our war one or also known as for war one.

Which is also.

Known as the receptor tyrosine kinase like warfarin receptor. One this agent is currently under investigation and the phase one two clinical trial in combination with the prudent to for patients with seal low or mcl.

As Jim mentioned, we have some new data in mantle cell lymphoma that we'd like to highlight.

As you're probably aware a burden it has become the standard of care for patients with these diseases.

Although effective published data indicate that the ability of Singulation of group and due to induce complete remissions and relapse refractory Mcl is limited.

And patients previously treated with two or more prior restaurants have had complete response rates of only about 23%.

Thus there is substantial room for improvement for patients.

We believe that an agent that complements burdening the to increase the number of patients achieving a CR with little or no added toxicity.

Maybe may provide meaningful clinical benefit.

Yes, we presented interim results at the Ash meeting.

Annual meeting in December 2019, this complete response rate for CIRM twos and map a burden of combination for patients with Mcl has increased from 25% to 50% and now includes six ups 12, a valuable patients with relapsed refractory mcl one rule in the dose as.

Escalation portion of the study.

All six see ours are ongoing has the data cut off of March twenties March six 2020, including one patient who has remained NCR for over.

21 months on study.

For the six patients achieved.

Crs within four months while study. These responses are based on standard chessen criteria for value responses lymphoma, and one of the six was a complete metabolic response by pet scan with the bone marrow biopsy pending.

As of the same day to cut off the overall objective response rate for patients with them sale in the study has increased from 63%.

To 83% with 10 or 12 patients achieving a CR or partial response with the median follow up of 6.4 months.

It's particularly interesting to note that many of these patients had been heavily pretreated overall enroll patients had a meeting.

Two prior therapies before participating.

Including.

Chemotherapy.

I call because stem cell transplant.

Cogs stem trials transplant, followed by a car T therapy and talk a stencel transferred which was later followed by allogeneic stem cell transplant.

And patients who had received to prudently with her tux map followed by have perceive that consolidation chemotherapy.

The overall clinical benefit.

That is the complete.

The response.

Right, the PR rate or state and or stable disease rate stands at 100%.

As the data cut off.

This includes 60 ours for patients with Prs and two patients who had stable disease.

We believe that these are very encouraging early results that may indicate actively do serve to snap and mcl.

We're now enrolling additional patients with mcl into an expansion cohort, where we are further examining the safety and efficacy of the recommended dose regiment of CIRM to sum up plus ibrutinib.

At the Ash meeting in December 2019.

We also presented interim clinical data for.

Our patience with CLL from this phase one two clinical trial.

Most encouraging was that no patient had experienced disease progression.

While and study at a median follow up of 9.9 months as of the data cut off which was early November 2019.

29 of the 34 patients achieved.

Complete or partial response.

And the partial response included those patients with lymphocytosis.

For the objective response rate of 85% script.

One patient achieved a complete response and remained in remission for at least six months after completion of trial and discontinuation of all anti CLL therapy.

Every patient experience a reduction in measurable disease and the total clinical benefit rate was 100%.

Patients with CLL, our NOL enrolling in a randomized portion of study.

Comparing a prudent.

Plus served to sum up to a burden of alone.

In both mcl in CLL, the combination of certainties map plus a burden of has continued to be well tolerated and the study with adverse events consistent with those reported for burden of alone there have been no dose limiting toxicities, you know discontinuations and no serious adverse events attributed to CIRM Tusa Mab alone.

Interestingly.

Neutropenia, which is a clinically relevant side effect of brewed and it was only report and 13% of patients with CLL or mcl, receiving a burden it plus certainties of Evan study when has been reported at higher rates for routing of alone and studies described in the burden of prescribing information.

As Jim mentioned earlier seem to have is also being examined in a phase one investigator sponsored trial in combination with paclitaxel for the treatment to patients with hertwo negative metastatic or locally advanced unresectable breast cancer.

Early data from this study was presented at the San Antonio breast cancers Symposium in December 2019.

Seven valuable patients for achieved a partial response for an objective response rate of 57%.

Including one partial response that continued on searches mab alone for at least 30 weeks after discontinuing paclitaxel.

This is a higher rate of response and would be expected for this regimen weekly paclitaxel based on the published literature.

The combination of certain pizza map and Paclitaxel Hudson well tolerated in this trial with snow study discontinuation for toxicities and no dose limiting toxicity toxicities observed enrollment is on on into the studies ongoing.

We look forward to building on to some momentum in 2020 and hope to present additional clinical data for some reason met at scientific venues later this year.

Next I'd like to discuss our clinical program with the novel small molecule Teekay to 16.

This agent was designed to inhibit the biologic activity is E T S or.

The 26 transformation specific family transcription factor uncle proteins in a variety of tumor types. Our lead indication for his compound is relapsed refractory ewing's sarcoma, which is a rare pediatric bone cancer with the critical unmet medical need and no standard second line systemic therapy.

Ewing's sarcoma qualifies as an orphan indication and orphan designation and fast track status from the FDA has been received for this program.

At the connected tissue oncology society or see toss meeting in November.

2019.

One of our investigators presented interim phase one data on the T.K. to 16.

For.

The treatment of patients with relapsed refractory ewing's sarcoma.

In this phase one study Teekay to 16 was examined extensively at dose levels and for different lengths of time for safety and for Farmington, Connecticut parameters.

Based on these data.

Recommended dose regiment was chosen and in December of 2019, we announce the opening of patient expansion arm using this dose and schedule.

We have seen clinical responses, a deep and sustained clinical response was reported for patients who receive teekay to 16.

Dose regiment that was subsequently selected as the recommended phase two dose.

Following two cycles to K teekay to 16 therapy, given as a single agent. This heavily pretreated young patients achieved confirmed objective response, which include resolution of several pulmonary and lesions.

The response has continued.

At more than 10 months of treatment with the patient receiving teekay to 16, plus would kristen in subsequent treatment courses.

The final remaining two nodule, which was less than a centimeter in diameter was later its surgically removed.

Leading to a surgical complete remission.

Treatment with Teekay T 16 has been well tolerated by this patient.

The expansion arm is anticipated to enroll approximately 18 patients with relapsed refractory ewing's sarcoma.

We look forward to exploring the broad potential this novel targeted therapy and hope to provide additional updates in the second half of 2020.

Our third program.

As a war one targeted car T therapy, which is in preclinical development in collaboration with the University, California, San Diego.

For one is present on many different neoplasms, including both hematologic and solid malignancies and provides an opportunity to target new cancer indications.

There were one targeting component of the car T uses a fragment of our CIRM choose a map antibody.

That's designed to bind to cancer cells with high affinity, but not to recognize.

Normal human tissues.

In February 2020, we presented ror, one car T preclinical data at the ASCO sits see clinical immunology symposium.

We're one car T therapy cell therapy demonstrated expansion.

Persistence and anti tumor activity in an animal model of human leukemia.

And these preclinical studies antiwar one car T. We're able to prolong survival and clear leukemia cells from major tissue reservoirs, including bone marrow kidneys and swing.

This research is being conducted by our you see San Diego Kloppers under a grant from the California Institute regenerative medicine or CIRM.

We are pleased with the preclinical results of this for one car T.

Program and look forward to advancing it into the clinic.

I'd like to turn now back over to our CEO Jim Brockmeyer.

For further discussion.

Thank you Frank for that summary of our clinical and preclinical programs.

I'd now like to highlight the upcoming milestones that we expect to reach over the next several months.

We expect to present additional clinical data for patients with mcl treated with certain Susan map, plus ibrutinib, including 15 patients in the dose finding an expansion cohorts of the phase one two study in mid 2020.

We also expect to present additional clinical data for patients with CLL treated with certain to demand plus a burden deb, including at least 12 months a follow up for 34 patients in the dose finding an expansion cohorts of the phase one two study also in mid 2020.

We expect additional clinical data to be available from the phase one be investigator sponsored study of certain twos AMAP plus paclitaxel in patients with Hertwo negative breast cancer in the second half of 2020.

We expect to present clinical data for patient with Ewing's sarcoma, including seven to 12 patients treated with Teekay to 16, plus been Christine in the expansion cohort of the study in the second half of 2020.

We expect to treat the first patient with our ror one targeted car T. By the end of 2020 in a collaboration with Shanghai Pharma limited.

We expect to generate I N D, enabling preclinical data for additional EPS, driven cancers, Andean ror, one driven cancers, such as lung cancer.

I'll now turn it over to rich Vincent our Chief Financial Officer to review our financial results.

Thank you Jim.

In October 2017, CIRM awarded an 18.3 million grant to the researchers at the University of California, San Diego School of Medicine to advance our phase one two clinical trial evaluating some to some app in combination with ibrutinib for the treatment of patients with B cell lymphoma malignancies, including Mcl on.

Hello.

We are conducting that study in collaboration with you see San Diego and expect to receive approximately 14 million in development milestones under research sub awards throughout the award period.

In conjunction with this award our 2019 Grant revenue was point 7 million for the fourth quarter and 2.4 million for the full year.

Total 2019 operating expenses were 4.9 million for the fourth quarter and 35.5 million for the full year.

The full year total includes a onetime noncash charge for acquired in process richer research and development expenses of 18.1 million that was recorded in connection with the closing of our merger in June 2019.

Research and development costs for the fourth quarter totaled 2.6 million and for for the full year totaled 10.2 million.

General and administrative expenses for the fourth quarter totaled 2.3 million and for the full year totaled 7.3 million.

Net loss for the fourth quarter was 4.2 million or a loss of 27 cents per share basic and diluted.

Net loss for the full year 2019 was 34.2 million or a loss of 3.31 per share basic and diluted.

As for December 31, 2019, we had 20.1 million in cash cash equivalents.

We believe these funds will be sufficient to progress our product candidates and fund our operations into the third quarter of 2020.

In closing we have a well defined work plan ahead of us with multiple potential catalysts in 2020, and a clear priority of deploying our financial and operating resources to advance our product candidates in multiple indications.

We look forward to updating you during the remainder of 2020.

With that I'll turn things back to the operator for the Q and a portion of this afternoons call.

Thank you, ladies and gentlemen, do you will now be conducting the question and answer session. If he would like to ask a question. Please press star one on your telephone keypad confirmation trends indicate that your line is in the question Q. You May proceed start to each other they can move your question from the Q.

All participants do you think speaker Clinton engine, maybe necessary to pick up your handset if our president Mr. Keith.

Our first question comes on line of Hartaj Singh with Oppenheimer. Please proceed with your question.

Okay, great. Thank you everyone can you hear me line.

Yes perfectly higher Josh.

Great. Thank you also just a couple of questions a great data on Mcl immuno CLL seems to continue to progress. One question I wanted to ask you wise you know it seems that as time goes by you're seeing an increase in a year response rate complete response rate the alarm small straight from when we bought it actually presented data there.

Turn now four months later.

Is there something specific to the mechanism of action of Simtuzumab, but I believe that you're seeing that because I don't think I boots.

Had a similar effect right I mean, you get a good effect why booted up front there doesn't seem to increase overtime just correct me if I'm wrong there.

Hi, guys. This is Jim. Thank you. Thank you for the question. There is in in CLL. For example, there. Some continued accumulation of complete responses in CLL patients after a year of therapy.

But the but the mantle cell patients usually either get a response fairly early or they are they don't so we're up where we are also very encouraged by the fact that the clinical results strengthen over time every time, we do an interim.

Now this is let me let me, let Frank shoe speculate about the mechanism that might be in play here.

Sure. Thank you and thanks for the question.

Thanks, one one aspect, which doesn't need to be clarify does that.

Yes, we presented.

As valuable data on aided for our patients for them hadn't reached.

There their initial evaluation time point so.

Some of these two the complete remissions that we recorded.

Now the two additional ones those are fairly recent patients.

So that data just came at.

The other two had been PR is which converted.

And with those patients they just continuing to shrink contract.

Glow longer to get there and.

When they.

Did we recorded them of course immediately and so it's one of the things, which in some cases for whatever reason they.

Had a disease with this took a little bit longer to resolve.

But the first the other two were part of the.

For patients, which we did not initially record on that.

Yeah.

And.

You'll recoveries, you'll recall that.

Serum from patients with mantle cell and CLL do demonstrate elevated levels of when fivei. The lie Gan Farrar ones. So there is a they we we expect that the ability of CIRM twos, a map to block when fivei signals.

Saying, we'll continue overtime.

Right.

Well, that's a that's great.

Another question I, just had was I know that previously.

When you had spoken the combination seems to actually sort of down regulate some of the more you know obtrusive side effects.

No I know the patient numbers are still small, but you are getting a combination for longer and longer periods of time are you still seem that or is that trying to ameliorate a little bit meaning the.

Some of the hypertension and many others you got goodness I think seem to be.

Downplayed a little bit the combination.

Sure. So so we've.

We were trying to be careful about discussing this aspect of the program because reporting of side effects can be rather qualitative and may differ from one study to another and so for that reason we we.

Decided that the neutropenia that is a well described an important side effect with the burden of given alone was something that is perhaps less subject to reporting by us since the patients get a complete blood count every month, while they are on the stuff.

I'd and so when we saw.

A 13% overall rate of neutropenia on the study, which which Frank and his team a verified with a deep dive into the at the adverse event data. Just recently. So this is this is a fresh number.

That does compare favorably to substantial he a higher rates of neutropenia reported for Britain NIM for example in the Imbruvica.

Package insert so.

Some of these other side effects.

Can be.

Subject to it can be subjective and so we're going to be taking a hard look at adverse events.

Between the two arms in the randomized portion of the study, which is now enrolling patients and we'll have we'll have in our own study patients with ibrutinib alone and patients with Ibrutinib plus services a man.

Great. Thank you Jim.

Another question is one offs was almost feel all I know you going out the 12 month follow up on 34 patients mid 2020.

Are we going to see it kind of a also look at Shannon.

Various oh, I guess I'm breakdowns of CLL, Bob mutation status or anything like that that is critical patients are you going to be doing a deeper dive into the types of patients and the only reason I ask is is there probability that you know there's some patients in CLL you could see foster track to approval for example in certain sub.

Upsets doses others.

Frank would you like to address that question.

Sure we are looking at that Weve.

We have already discussed a record that we have looked at various.

Risk factors associated with see allows and include HM.

Verbal heavy chain region mutated and take it.

Status and then some other gene rearrangements.

The people three and Dell.

Team as well when you looked at all those factors.

Portion of our CLL patients that into higher risk category. So this is something which we hope to for more detail.

At or for meetings, where we hope to have yelled at present, all the data lawns.

Great. Thank you Bye and then last question and thank you for for letting you have all these questions. Just last one is Jim and everyone. I mean, if you want to handicap sort of you know mantle cell lymphoma versus CLL, you know, even teekay to run fixed data that you are occurring.

But I see it any having the regulatory interactions that you already having them going forward is there any want to be that you think is more amenable to an accelerated for breakthrough therapy designation than the other I know that those are very difficult.

Just to kind of like one in 12 or something or 12% actually got them I'm, just any thoughts there mcl versus CLL versus Teekay 206 in terms on small any potential quick summary approval on BTD.

Sure.

Hi, guys I'll respond.

The.

I, we believe that.

Ewing's sarcoma is an indication that is a particularly.

<unk> likely to enjoy expedited registration treatment from the it from the FDA and there's a there's a there's a great example.

For that in the recent approval of a drug from Epizyme.

As a matter of stat.

They're experimental agent.

Was approved for the treatment of EPA Feely OID sarcoma.

On the basis of a single a study with with a with a single arm open label treatment with 62 patients.

And over an objective response rate of 15% and one complete response out of 62.

And so.

The desperate.

Condition in and Ewing's sarcoma after failure of frontline therapy.

Is it similar.

To.

At the feel you always sarcoma has a high unmet medical need and this.

Devastating pediatric cancer is particularly.

Likely we believe to be treated in an expedited fashion by F.D.A. between mantle cell lymphoma, and CLL, we believe that mcl is more likely to be approvable.

With an expedited approval based on recent read a regulatory history and several agents have been approved for the treatment of mantle cell by accelerated approval.

And and so we do believe that that is a.

Potential pathway.

That appears we <unk> to our to our view appears a little bit more likely than a small single arm study for accelerated approval would be for patients with CLL.

Yes, good times it thank you Paul the questions.

Sure.

Thank you.

Thank you. Our next question comes from the line as Matt Kaplan with Ladenburg. Please proceed with your question.

Hi, guys. Thanks for taking my question I apologize its disconnects on that so it's my question was asked already so I just wanted to dig in a little bit more to the mcl data and I'm thinking about the well the randomized a cohort now that you're not open and what we should.

I'd be.

Looking for that given the strong themselves that you've seen so far in terms of though hi, CR rate, what what what should be what do you. What are you looking for from from the combination versus <unk>.

Alone.

[noise] Frank go ahead.

Just to.

Sorry, I had to get off speaker.

Just to clarify.

Your question, you're talking about Mcl correct not no yes the alone.

Okay. So the the randomize portion of the study is only for CLL and so currently the mcl patients are in an expansion cohort, where we're just adding more patients at the recommended.

Dose regiment.

And so that's expanding our experience and getting more data at that dose regimen level.

Okay. So no no intention to do a randomized oh there yet.

I'm not at this moment.

And just help us understand the regulatory possible loading and mcl are we thinking at this point.

Well, we were looking at all options right now and I think that.

Our plan is.

To have discussions with FDA.

Which will help direct our ability to.

Make a registration strategy.

At this point I don't think that can comment exactly what our successful plan might be.

Great.

Thanks for taking the questions.

Thank you ma'am.

Thank you. Our next question comes in a line of Carl Burns with Northland Securities. Please proceed with your question.

Great. Thanks for the question congratulations on the compelling mcl the interim data.

Six a complete responses that you mentioned, obviously there were heavily pretreated do you believe that the 50% CR that you've seen it is heavily pretreated population, which potentially support frontline therapy, considering that the existing frontline therapy is 24% or so thanks.

I'm sorry.

Okay. That's it that's a question which.

We don't have the data in the treatment naive group or.

Moving it up for it as of yet so you know is speculative.

But data from other.

Drugs would suggest that of course as you move it up you're much more sensitive.

Two.

To the treatment effects and your rate of response does go up.

So speculating it would be or hope that one could do that but I think that.

We are doing quite successfully right now in a difficult to treat and unmet need population.

Where patients who have received two or more prior therapies.

Have a much lower response rate and yet we are fortunately seeing.

Initially in early responses.

A good response and we are hopeful that that will continue when we do additional expansion on or patients.

Great. Thank you.

Thank you. It appears we have no additional questions at this time, so I'd like to Josh look back over to management for any additional concluding comments.

So operator, thank you very much and.

Callers. Thank you very much for listening in on a terminals fourth quarter 2019 early earnings call. We appreciate your interest. We appreciate the callers questions and look forward to updating you want a corridor from now and I. Thank you and goodbye.

Ladies and gentlemen, this does conclude today's till the time strangely. Thank you for your participation and you may disconnect. Your lines at this time [noise].

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