Earnings Call Transcript - KURA Q3 2022

Operator, Operator

Ladies and gentlemen, please stand by. Good day and welcome to the Kara Oncology Third Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. Now I would like to turn the conference over to your host, Pete De Spain, Senior Vice President of Investor Relations. Please go ahead.

Pete De Spain, Senior Vice President of Investor Relations

Thank you, Jake. Good morning and welcome to Kura Oncology's third quarter 2022 conference call. Joining me on the call are Dr. Troy Wilson, our President and CEO, and Tom Doyle, our Senior Vice President of Finance and Accounting. Before I turn the call over to Dr. Wilson, I'd like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Kura’s filings with the SEC, which are available from the SEC or on the Kura Oncology website for information concerning risk factors that could affect the company. With that, I'll now turn the call over to Troy.

Troy Wilson, President and CEO

Thank you, Pete. And thank you all for joining us this morning. Today we announced a $25 million equity investment from Bristol Myers Squibb priced at $18.25 per share. As part of the transaction, BMS will appoint a member to our global steering committee and provide valuable strategic input into our global development strategy. Notably, we will maintain full ownership and control of our programs and operations. We have greatly appreciated our engagement with and feedback from our BMS colleagues, who are leaders in the discovery and development of transformational cancer treatments. This equity investment strengthens the relationship between our organizations and provides us with key insights and expertise. We're pleased to have the confidence of the BMS team. We look forward to working with them to deliver innovative science with the potential to benefit patients. This morning, we also announced a term loan facility from Hercules Capital, providing loan proceeds of up to $125 million, of which $10 million will be drawn immediately after closing. Hercules has a long history of investing in innovative biotechnology companies, and we are grateful for their support. With the $25 million equity investment from BMS and the $10 million initial draw from the Hercules term loan, we now have $462.8 million in cash, pro forma for September 30, 2022. Furthermore, if the term loan is fully drawn, proceeds from these two transactions, together with our existing cash, are expected to fund our current operating plan into 2026. These transactions augment our already strong balance sheet and give us significant flexibility as we prepare to advance into the registration enabling portion of KOMET-001 for ziftomenib, initiate multiple combination studies for ziftomenib in earlier lines of acute myeloid leukemia, and continue to expand and invest in our farnesyltransferase inhibitor programs. We are also proud to announce this morning that our abstract reporting updated data from KOMET-001 has been accepted for an oral presentation at the upcoming American Society of Hematology annual meeting in New Orleans. The abstract, which will be published on the ASH website a bit later this morning, highlights the encouraging safety profile and clinical activity of ziftomenib in patients with relapsed and refractory AML. The abstract includes 30 all-comer AML patients from the Phase 1a dose escalation portion of KOMET-001 and 24 NPM1 mutant or KMT2A rearranged AML patients from the Phase 1b portion, with 12 patients dosed at 200 milligrams and 12 patients dosed at 600 milligrams. We also enrolled an additional 18 patients in a Phase 1b extension of the 600-milligram dose. Note these patients are not included in the abstract, which was submitted back on August 2, using an early summer data cut-off. We look forward to sharing a more mature data set including preliminary data from the additional 18 patients in the Phase 1b extension during our oral presentation at ASH. We'll also be hosting an in-person investor event featuring two of the trial's investigators immediately following the oral session on December 10. Please stay tuned for more details. Meanwhile, we await feedback from the FDA on the recommended Phase 2 dose for ziftomenib as well as the protocol for the Phase 2 registration directed portion of KOMET-001. We also intend to initiate studies of ziftomenib in combination with standards of care in earlier lines of therapy in AML patients. We have designed these Phase 1 studies to assess the safety, tolerability, and therapeutic activity of ziftomenib in combination with various regimens including venetoclax and azacitidine FLT3 inhibitors, and the combination of 7+3. We're very excited about the potential for these combination studies to further unlock the value of ziftomenib for patients with acute myeloid leukemia. We anticipate initiating the Phase 2 registration directed portion of KOMET-001 and the first in a series of Phase 1 combination studies in frontline and relapsed refractory AML in the first half of 2023, pending FDA review of our recommended Phase 2 dose protocols. We continue to have strong conviction in ziftomenib and its potential to be a best-in-class menin inhibitor. Our confidence is supported by a growing body of clinical data, and we look forward to sharing an update on the program with you at ASH. Now let's turn our attention to our farnesyltransferase inhibitor programs. We continue to view farnesyltransferase inhibition as a potentially valuable therapeutic and commercial franchise, one with potential to deliver multiple opportunities in oncology. Our initial therapeutic application of tipifarnib, our first-generation FTI as a targeted therapy was via direct inhibition of the HRAS oncogenic protein. These pioneering efforts ultimately led to a breakthrough therapy designation award for tipifarnib as a monotherapy in recurrent and metastatic HRAS mutant head and neck squamous cell carcinoma. More recently, we've been building upon the encouraging monotherapy activity of tipifarnib with a focus on overcoming drug resistance. Late last year, we initiated the current head and neck study, which was designed to evaluate the combination of tipifarnib and alpelisib, an inhibitor of PI3 Kinase alpha in selected HNSCC patient cohorts. We believe that HRAS and PI3 Kinase alpha are codependent oncogenes in HNSCC. The combination of the two inhibitors has potential to provide improved anti-tumor activity relative to inhibition of either target alone. The initial cohort of the head and neck study is comprised of patients with PIK3CA dependent HNSCC. In August, we announced the first patient dose in a second cohort comprised of patients with HRAS overexpression. Last week at the EORTC, NCI, ACR molecular targets and cancer therapeutics symposium in Barcelona, we reported the first demonstration that the combination of tipifarnib and alpelisib can induce a durable clinical response in PIK3CA dependent HNSCC. A patient with stage three squamous cell carcinoma of the tonsil with a PIK3CA mutation and HRAS overexpression has achieved a durable partial remission in current HN. The 35-year-old patient enrolled in the study after failing two prior treatments and experienced an 81% reduction in target lesions after just one cycle of tipifarnib and alpelisib, followed by an 84% reduction after three cycles. The patient continues on study for more than 27 weeks as of last week's presentation. Treatment-related adverse events and current HN have been consistent with the known safety profiles of each drug and are manageable with no dose-limiting toxicities reported to date. Our team is now working to identify a recommended Phase 2 dose and schedule for the combination with a goal of determining the optimum biologically active dose for the PIK3CA cohort in mid-2023. Meanwhile, we've continued our efforts to demonstrate the potential for tipifarnib to drive durable responses as a monotherapy in recurrent and metastatic HRAS mutant HNSCC through our AIM-HN registration directed trial. Although we continue to observe evidence of meaningful clinical activity in patients enrolled with AIM-HN, we've elected to close the trial to further enrollment due to significant feasibility challenges. We're currently evaluating the best way to harvest and use the clinical data from RUN-HN which forms the basis of our breakthrough therapy designation, along with the data from AIM-HN to inform future development of the program. We'd like to take this opportunity to thank the patients, investigators, and study teams who have participated in the AIM-HN study. It's important to note that given the significant overlap between patients with HRAS overexpression and HRAS mutation, HRAS mutant HNSCC patients in the United States may be eligible to enroll in the ongoing current HM study. Beyond HNSCC, we continue to elucidate the roles of FTIs in preventing or delaying the emergence of resistance for certain classes of targeted therapy with potential to drive deeper and more durable responses in large solid tumor indications. One of these emerging combination opportunities was unveiled earlier this year at the American Association for Cancer Research, annual meeting. The preclinical data generated through a collaboration with INSERM support the potential of tipifarnib to prevent emergence of resistance to osimertinib and other potent EGFR inhibitors. Motivated by this significant opportunity, we've initiated a Phase 1 study of tipifarnib in combination with osimertinib in EGFR mutant non-small cell lung cancer and expect to dose the first patient later this quarter. We intend to perform initial clinical evaluation of tipifarnib and osimertinib to gather valuable experience and data while in parallel advancing KO-2806, the lead development candidate in our next-generation FTI program through IND enabling studies. Last week at the Triple meeting, our collaborators at INSERM presented a follow-up poster, which extended their findings from EGFR to other oncogenic drivers. A copy of the poster is available on the Kura website. Based on these recent findings, as well as our own internal translational research efforts, we continue to investigate combinations of FTIs with other potent targeted therapies in preclinical studies. We intend to evaluate KO-2806 in several of these combinations, and we remain on track to submit an investigational new drug application for KO-2806 later this quarter. With that, I'll now turn the call over to Tom Doyle for a discussion of our financial results.

Tom Doyle, Senior Vice President of Finance and Accounting

Thank you, Troy, and good morning, everyone. I'm happy to provide a brief overview of our financial results for the third quarter of 2022. Research & Development expenses for the third quarter of 2022 were $25 million compared to $22.4 million for the third quarter of 2021. The increase in R&D expenses was primarily due to the increases in personnel cost and discovery stage programs. General and Administrative expenses for the third quarter of 2022 were $11.6 million, compared to $11.3 million for the third quarter of 2021. The increase in G&A expenses was primarily due to increases in personnel costs. Net loss for the third quarter of 2022 was $35.5 million, compared to a net loss of $33.4 million for the third quarter of 2021. As of September 30, 2022, we had cash, cash equivalents, and short-term investments of $427.8 million, compared to $518 million as of December 31, 2021. As adjusted for the $25 million equity investment from Bristol Myers Squibb and the $10 million initial draw from the Hercules loan facility, Kura had on a pro forma basis $462.8 million in cash, cash equivalents, and short-term investments as of September 30, 2022. We believe that our cash, cash equivalents, and short-term investments plus cash from our term facility from Hercules, if fully drawn, will be sufficient to fund our current operating plan into 2026, placing us in a position to deliver meaningful value inflection from each of our three programs. With that, I now turn the call back over to Troy.

Troy Wilson, President and CEO

Thank you, Tom. Before we jump into the question-and-answer session, let me lay out our anticipated milestones for the remainder of 2022 and the first half of 2023. For ziftomenib, we expect to have an oral presentation of the Phase 1 data from KOMET-001 at ASH in December, and to initiate the Phase 2 registration directed portion of KOMET-001 and a Phase 1 combination study in frontline and relapsed refractory AML in the first half of 2023, pending FDA review of the recommended Phase 2 dose and protocol. For tipifarnib, we anticipate the first patient dose in the Phase 1 current lung study in combination with ziftomenib in the fourth quarter of 2022 and determination of the optimum, biologically active dose or OBAD for the PIK3CA cohort in the Phase 1 current head and neck study in combination with alpelisib in mid-2023. And for KO-2806, we expect to submit the IND application later this quarter. With that, operator, we're now ready for questions.

Operator, Operator

And we will begin first with Jonathan Chang from SVB Securities.

Jonathan Chang, Analyst

Hi guys. Good morning and thanks for taking my questions. First question on ziftomenib, can you provide any color on the latest status of your regulatory interactions and then the next steps here?

Troy Wilson, President and CEO

Sure, Jonathan. Good morning and thank you. So, at this point the agency has everything that it needs from us. We're awaiting alignment with them on, as I've indicated in the prepared remarks, the recommended Phase 2 dose and the forward plan and protocol for the registration enabling portion of the study, we're on track. We're just in the holding period before the formal Type C meeting, we have not yet had our Type C meeting. It's upcoming, we're not giving specific guidance on the date of the meeting. But from our perspective, we're well prepared and everything's on track.

Jonathan Chang, Analyst

Got it. And second question, can you give us any color on how we should be thinking about data in the full ASH presentation versus data coming up in the abstract this morning? I guess the decision to include the preliminary data on the 18 additional patients in the ASH presentation?

Troy Wilson, President and CEO

Sure. So take those two questions. They're related, but let's take them separately. So the data that you'll see in the abstract, as I indicated in the prepared remarks, is data from the Phase 1a dose escalation portion, which was in all comers, and the initial 24 patients in the dose optimization portion of the Phase 1b. That's what's in the abstract, and that data is relatively immature, as of an early summer cut-off. It will show you clearly, as we've indicated, we continued dosing at 600 milligrams. I think you'll see clear activity, clear definition around the only safety and tolerability is going to be differentiation syndrome. For the ASH presentation, Jonathan, that's going to be a much more comprehensive update. By then, we will have rolled those initial patients on and included an additional 18 patients from the Phase 1b extension. What that gives us is the initial 12 patients plus an additional 18, at the dose that we believe is going to be the recommended Phase 2 dose for the Phase 2 monotherapy registrational study. Our ability to use ziftomenib, both from an ability to drive clinical activity and to manage differentiation syndrome, which is the only particularly concerning adverse event we see, has improved as the trial has gone on. So you may not see that in full detail in the ASH abstract but that story will be much more fleshed out in the actual ASH presentation in December. We were delighted that the conference organizers gave us an oral spot to be able to tell that story along with the investor meeting that'll come immediately afterward.

Jonathan Chang, Analyst

Understood. Thank you. And just a third question, if I may. Can you discuss the rationale and considerations around the BMS purchase agreement and loan agreement that was announced this morning?

Troy Wilson, President and CEO

Sure, yes. We've been actively engaged in discussions with large pharma about our programs for quite some time now. There is a significant amount of interest in both programs. Obviously, we have an upcoming data inflection point with ziftomenib at ASH. We have been in discussions with our colleagues at BMS for some time now. They indicated a desire to draw closer, and as we fleshed out what that would look like, we didn't feel it was an appropriate time yet to potentially partner. But we did really like the idea of bringing, we've got really sophisticated expertise on the BMS side, in both solid tumors and liquid tumors. Bringing that into our global steering committee—it's not a governance body, but an advisory body—allows us to make better decisions. The BMS investment and loan facility are aimed at making investments across the portfolio in ziftomenib. We talked about it, the registrational study, we've got an extensive program planned in combinations, and we wanted to give ourselves the flexibility to make development decisions that we believe can create value for patients and ultimately shareholders. This gives us cash into 2026, allowing us to fully fund everything we've discussed across those three different pillars of the business. It was a good time to shore up the company's capital resources as we move into 2023.

Operator, Operator

We will now hear from Peter Lawson with Barclays. Please go ahead.

Peter Lawson, Analyst

Thanks for taking my call. Sure don't know how much you can say. But this Type C meeting with the FDA, is that a year-end event or a 2022 event? And then the Bristol financing, did they see all the menin data? So what we see at the ASH oral presentation, for instance?

Troy Wilson, President and CEO

Yes, Peter. Two good questions. While not being specific as to the date, I can tell you it is our goal to try to have all of this wrapped up by ASH. Part of the reason we've been guarded about the FDA engagement is that we're one of the first companies through Project Optimus. The FDA is going to make its own determination, but we think we're in a very strong position. If things go as we hope they will, we should have everything we need by ASH. I can't be more specific than that. But from a timing perspective, we're just literally waiting for the calendar. Regarding BMS, you can assume BMS saw a comprehensive dataset, including both the rationale for the recommended Phase 2 dose as well as the full data set, which will be profiled at ASH. Yes, you can assume that they saw that.

Operator, Operator

Next question will come from Roger Song with Jefferies.

Roger Song, Analyst

Great. Thank you for taking the question. Congrats on the update. So a couple from us, I understand you won't be able to talk about the real data. But just at a high level, given you have been guided this efficacy is as good, if not better than your competitor. And we also know think that you will have updated data at ASH as well. Just curious, your comments around this guidance for both the abstract and the presentation, and particularly how you indicate your competitor data at ASH as well?

Troy Wilson, President and CEO

Yes, Roger. I want to be careful, particularly like within an hour or so of abstracts dropping, not to comment too much on our competitors' data. Let's let their data speak for themselves. With regard to our data, I think the most important point will be the point that I made about at ASH. You'll see potentially N equals 30 patients at the recommended Phase 2 dose. As the trial has gone on, initially we started with a higher percentage of KMT2A patients in the trial versus NPM1 relative to the epidemiology that we would have expected. As the trial has gone on, that has tilted such that we've seen an enrichment in NPM1. I'll reiterate again, the goal for registration is a 20% to 30% complete response rate and four to six months median duration of response; transfusion independence is a key secondary endpoint. What we'll show you is a comprehensive data set at what we believe our recommended Phase 2 dose. You'll see a full safety package, and you will have a very clear idea on how that's going to read through into not only the monotherapy registrational studies but also the combinations. So as soon as the abstracts are available, we'll be able to answer questions about ours. That's going to be data as of an early summer data cut-off.

Roger Song, Analyst

That's great. Thanks for the comment. I think you've raised a point regarding the genotype, specifically NPM1 and KMT2A. The question is whether you observe consistent efficacy between those two genotypes. How does that compare to the type of therapy given and the potential for different complete response or complete response with incomplete hematologic recovery rates? Additionally, would the FDA require distinct hypotheses for those two genotypes in the registration trial?

Troy Wilson, President and CEO

Yes. It's a good question. To the best of our understanding, the FDA, you can use, perhaps not identical, but a very similar null hypothesis in the two genotypes. We've provided a range of 10% to 15% for the complete response rates, which is generous, as there is currently no effective therapy for relapsed refractory settings. So looking for a 20% to 30% CR, CRH rate gives adequate power to distinguish between the sample population and the null hypothesis. In a monotherapy study, we wouldn't expect those designs to look substantially different. The doses are the same for both populations, where we see a difference is the higher incidence and severity of differentiation syndrome in patients with KMT2A rearranged leukemia. In our experience, this genotype is much more aggressive. We've developed strategies to detect and mitigate these conditions and we'll discuss that at Ash.

Operator, Operator

We will now hear from Li Watsek with Cantor Fitzgerald.

Li Watsek, Analyst

Hey, good morning. Thank you for taking my questions, Troy. Just first on ASH data update. Can you give us a sense of maybe the median follow-up for the 24 patients and those 18 additional patients? And then, in terms of the combination trials, can you talk about how quickly you may be able to move into the clinic in the first half of next year in both the refractory and the frontline setting? How should we think about the timeline here relative to your competitors?

Troy Wilson, President and CEO

Yes. Okay, three good questions, Li. So again, I don't want to get ahead of the abstract, we're right on the eve of the abstract. Remember that the patients in the abstract were completed in the Phase 1b dose optimization, which we announced on our May earnings call. This abstract is as of an early summer data cut. For the additional 18 patients, those patients were dosed between May and August. We have been monitoring responses, you could roll it forward. We're still at a point; I mean, we have a significant Phase 1 study here, when you look at the 1a, the 1b optimization and the 1b extension. But that being said, it's still a Phase 1 study. So I think the duration of responses is still coming into view. What I can tell you is we have confidence that the four to six months median duration of responses is achievable with ziftomenib, as we're not seeing any signs that patients are rolling off. In terms of starting the trials, that was your second question—with approval from the agency here in the fourth quarter, we're looking at three to four months before we dose the first patient as this necessitates getting IRB approval and protocol reviews. It's not as simple as just flipping the switch because this is a substantive change from Phase 1 into a registration enabling Phase 2. You can imagine our team is doing everything they can to be prepared, but just to set expectations, that's why we are guiding toward the first half of 2023. Regarding competition, I think there isn't any doubt that we’re behind Sindax. That said, ziftomenib represents one of the most potent, cleanest, and combinable menin inhibitors we have seen clinical data for. We will do everything we can to catch up. Our data will ultimately determine the pace at which we progress.

Tiago Fauth, Analyst

Just a quick follow-up from you on ziftomenib. As you look at the mix of patients between NPM1 mutant or KMT2A rearranged, there's still some skepticism of the feasibility or the number of patients in the NPM1 bucket, which would potentially be a little bigger. But it sounds like you're actually seeing a relatively healthy mix. What are the implications for that on building registration cohorts? It sounds like you are seeing a healthy number of NPM1 patients there?

Troy Wilson, President and CEO

Yes, Tiago. It's a good question. As the trial has progressed, we've seen the balance tilt in favor of more NPM1 patients. I'll note this shift has been driven by clinical activity, the feasibility of enrolling in NPM1 mutant cohort is encouraging. You will see more data in the abstract, and especially at ASH.

Phil Nadeau, Analyst

Good morning. Congrats on the progress. Thanks for taking our questions. We have two on ziftomenib and one follow-up on AIM-HN. First on ziftomenib, we're curious about the Type C meeting. What do you feel, Type C meeting is necessary? Have you always expected to have one? It seems like to sign off on a Phase 2 dose and a protocol, maybe a meeting wouldn't have been necessary. And then, second on the differentiation syndrome; it seems like you're suggesting that the DS will look better at ASH than what we've seen in the abstract. You’ve given two reasons, one is better management and the other is the different patient mix with more NPM1 patients. What would be the relative contribution of improving DS rates that you're observing over time?

Troy Wilson, President and CEO

Yes, Phil. Thanks for the two questions. On the differentiation syndrome (DS), it is a non-mechanism adverse event. Our ability to detect and predict it has significantly improved as we have sensitized our measures to identify the signals. Regarding your inquiry about the FDA meeting, we had a meeting with the agency to discuss the Phase 1b dose optimization, which was a Type B meeting, thus if we request another meeting, it would be Type C. We felt a Type C meeting was vital to ensure our inquiry covers both the recommended Phase 2 dose and the overall protocol in a timely manner. This meeting serves a dual purpose to finalize the Project Optimus phase while aligning our execution plan with all involved agencies, which will be valuable for our future developments.

Reni Benjamin, Analyst

Hey, good morning, guys. Thanks for taking the questions and congrats on the progress. Troy, I thought that the confirmatory trial design was largely agreed upon with the FDA in the past. Am I remembering that right? Has there been any changes to those parameters that you had originally outlined?

Troy Wilson, President and CEO

I'm sorry, Reni, which study are we talking about? For ziftomenib? If I left you with that impression, that was an error on my part. What we did agree upon in the earlier meeting was that the proposed endpoints in the Phase 1b dose optimization align with those planned for the registration enabling study, and that's the important detail to note. We are still pursuing clarity on specific aspects, including managing differentiation syndrome and overall alignment with the agency.

Reni Benjamin, Analyst

Got it. Just switching gears to current HN, can you talk a little more about this patient with a durable response? Have you evaluated or is there a way to evaluate the relative contribution of tipifarnib versus alpelisib? Just any additional data?

Troy Wilson, President and CEO

Yes, it's a good question, Reni. The short answer is no; it is anecdotal at this point. What encourages us most is we are able to combine tipifarnib and alpelisib in a heavily pretreated population without overlapping toxicities, which is significant given prior attempts to combine inhibitors of the MAP kinase pathway with PI3 kinase inhibitors showed challenges due to the toxicities involved. We are seeing evidence of clinical activity, and we are working on optimizing the dose. Appropriate studies to determine relative contributions will follow a successful dose optimization. Currently, we are still assessing the dosage to ensure it is well tolerated and effectively delivers responses in patients. We will conduct a biomarker selected population for KO-2806 consistent with Project Optimus. When we determine the dose that allows us to effectively hit farnesyltransferase, we will roll it into biomarker-selected cohorts. We will evaluate its efficacy in patient populations we know well and move from initial monotherapy trials into combination studies. Great. Thank you, operator. And thank you all once again for joining our call today. We'll be participating in the Credit Suisse healthcare conference next week and we look forward to seeing many of you there. In the meantime, if you have any additional questions, please feel free to contact Pete, Troy or me. Have a good day everyone. Thank you.

Operator, Operator

And ladies and gentlemen, this does conclude your conference for today. We do thank you for your participation and you may now disconnect.