Oncolytics Biotech Inc. (ONCY)

[onco_investor]

Dr. Thompson Needham Conference Transcript 4April2012

Neeedham Conference April 4th 2012
Webcast: http://wsw.com/webcast/needham51/oncy/

Thanks to inthno57 for the transcript from the Yahoo V2 group

[Brad:] Today I would like to talk about our product Reolysin, which is in clinical stage development and we would really like to draw people's attention to today and over the next couple of months, is our ongoing phase 3 study for second line head and neck cancer patients which has actually finished the first stage of a 2 stage study of the enrollment and we're expecting a preliminary data readout in the very near future and to also start bring people's attention to our other randomized studies that we're now enrolling in...we have a drug trialed ovarian study in the united states, an interesting first line study in pancreatic cancer where we're not using Gemcitabine, and one we just announced recently which is a recurrent castration resistant prostate cancer study in Canada that I'm waiting for Oncogenics who is 2 before me to finish enrolling in Canada so that I can start enrolling which should be in the next 6-8 weeks.(small planet)

1:49) I'd like to talk briefly about our ip portfolio and I'll talk very briefly about our manufacturing program which is moving parallel in pace with our phase 3 study. Outside of our randomized studies (which is the first 4 on the list of the slideshow) ongoing right now are a number of single arm studies which we're finishing up...we have 2 studies in small cell, we have adenocarcinoma lung study just finishing enrollment right now and a squamous cell lung study running in parallel with the same study design that is a little behind that and we'll actually be making a decision on which of these 2 studies to take into a randomized study this quarter....and so I think you should expect to see some form of announcement on Reolysin this quarter on which one will go into a randomized study.

2:41)..and talking about colorectal cancer similar thing in the works, either this week or next week finishing enrollment in the phase 1 for the colorectal and we'll be announcing a decision to go into a randomized phase 2 study on that sometime this quarter as well.....

3:00) What is Reolysin? It is somewhat different than most products you will encounter. It is based on a proprietary isolate of a very common environmental virus called the reovirus which is a double stranded RNA virus for those of you who are into that side of things....it's a fully replication competent virus and it's considered to be safe to humans or it was at least when we entered into clinical studies.

The natural infection cycle for Reo is oral-fecal so it's ingested, it replicates at very low levels in a sub cell population that lines your bowel and it's excreted in feces and then it contaminates your food and water supply which is far more regular than I should talk about before lunch and then you get the re-infection cycle....about half the children at age 5 have evidence of Reo infection and almost all adults. So it's a very common environmental virus.

Our clinical isolate is 11base pairs different than the wild type but it's functionally identical.

We went into our clinical program and just assumed that we would have to go back to the beginning because it's quite different than administering directly into different organs than systemically. So we've done a fairly extensive intravenous program, started out intratoumorally and ran 2 glio studies where we did direct injection into the brain....which is the most extreme safety challenge of all because if you see any signs of encephalitis you'll see it clinically and we did not of course which was reassuring.

4:40) The agent acts based on a differentiation between cells that have a constituous Ras pathway and cells that do not. The virus will enter every cell in your body, the most common binding site is sialic acid which is a sea of it covering every cell in your body....what happens inside the cell that differentiates this, in cells that do not have an activated Ras pathway...those cells will actually have an intact anti double stranded RNA anti-defense mechanism that's not immune, it's actually ancient lineage, it's conserved across all mammals so it's a very ancient event that is based upon the activity of a compound called PKR (protein kinase R) which actually binds the double stranded RNA in the cytoplasm and shuts down replication. So if you have a normal cell, Reo will go into the cell, un-coat, double stranded RNA is bound by PKR and that's the end of the story and that's an absolute on off switch.

In cells that have an activated Ras pathway, PKR is deactivated so the viral defense mechanism is gone and the cell is open to infection. So that's the basis for selectivity...Now that would be a curiosity at best if there wasn't disease states associated with Ras activation...the main side effect of Ras activation is uncontrolled cell growth which all cancer is and so you find a very high degree of Ras activation in oncology and in different indications. We think about 2/3 of solid tumours have a Ras pathway defect and over 90% of metastatic disease and varying levels in non solid tumours.

6:23) and so you have a nice marriage between a potential activity based on the selectivity and a disease state which has commercial interest which is for us....fortunately for us, most of this Ras activation is caused by two different mutations where over expressions EGFR, either a mutation over expression causes Ras pathway activation and mutation at the Ras protein itself which is mostly K-Ras also leads to that and those are now 2 commonly tested for various reasons...mutations and over expressions in oncology patients so it's already integrated into the standard of care mostly here in the united states, so it's a nice marriage between potential mechanism and an interesting indication.

Looking at this schematic, the virus enters all cells, the differentiation is not there, if it's a normal cell that the Ras pathway is not activated or a cancer cell that does not have a Ras pathway activation then nothing happens, the viral mechanisms are intact and in the cell that has an activated Ras pathway you get this replication cycle which leads you to an interesting fact or side product, that this drug if you want to think of it as a drug, actually replicates, so you get this large amplification of virus within tumours that it's actively growing in....

7:40) We've taken human samples from human tumours in patients and actually seen a many log amplification of virus within the tumours and actually most of the effect of the virus is due to the virus produced within the body, not the input virus which makes pharmacokinetics very awkward to do.

The selectivity is absolute, we've run actually 2 studies where we were looking at selectivity, an early T-2 prostate study and this particular slide which came from the new adjuvant study in patients with metastatic colorectal cancer which had metastasized to the liver. In this study we were treating patients with monotherapy Reo prior to surgical excision of the tumours and then looking at the histopathology and most people when they take a look at this slide think we were staining for tumour which is sort of correct, actually we're staining for replicating virus and with one exception in all of slides that we've every looked at absolutely centered all inside the tumour cell and tumour mass and you actually have dead and dying tumour butting up against healthy tissue, cell to cell contact without transfer of cellular death event into the healthy tissue. One exception is one apadocyte that we saw infected with Reo once and that`s just for disclosure purposes. It is very very selective.

9:03) With respect to looking at a potential market for Ras mediated cancers, a firm (not Needham) has given me an estimate that drug sales worldwide for oncology in 2011 was 77 billion dollars and when you relate that to the number of carcinomas that have ras-pathway incidence you come up with about 5 million patients in Western Europe and the united states and accessible markets in Asia that actively have a Ras pathway depending on incidence of cancer, it's a big potential market.

Our phase 3 study is looking at 2nd line head and neck cancer patients, head and neck is a little different, 2nd line can mean 3rd treatment,...first treatment is often radiation and or surgery which is actually curative in about half the cases...They then go on to first line treatment which refers to their first exposure to chemo...the most common first line therapy , increasingly with Erbitux involved is platinum 5fu. Occasionally people will substitute a taxane for the 5fu just because it's easier to administer although it doesn't actually give you any more benefit but it is easier on the patients and then they progress onto 2nd line about half those patients and those patients are very consistent which makes them a nice patient group. So our particular patient group is platinum refractory taxane naive patients in the 2nd line. The first country applied for was here in the U.S. under a spa and then we expanded it out internationally...we're now currently approved in 13 countries internationally and enrolling patients in 12 and currently have around 85 sites that are actually enrolling patients right now and on the way to 100.

10:55) it's a 2 arm study, double blinded, one to one weighting, so the control arm is carboplatin paclitaxel saline, there are getting blinded saline, and the test arm is carboplatin paclitaxel Reolysin and it's a 3 week cycle....after 8 cycles on the triplet, then the patients, if they are stable disease or better are eligible to go on maintenance therapy of Reolysin by itself or saline if that's the arm they're in.

The primary endpoint is over survival, the secondary endpoint and tracking endpoint which is important is progression free survival....there's certainly a lot of dialogue about whether PFS is predictive of OS in oncology....and it appears for some indications that it is very predictive and those are the ones that actually have a short time duration between progressing and death, and as a general rule of thumb, if that progression leads to death in 6 months or less, generally there's a good statistical correlation , if it's longer than 6 months, then it's a terrible statistical correlation, so one has to be careful when using PFS as a tracking endpoint, but certainly the differential in this patient population is about 10 weeks which falls comfortably in that 6 month time frame, so it's actually a very good tracking endpoint.

12:11) The study is structured as a pier (?), we run 80 patients in the first stage of the study which we announced last Friday that we had completed. We then do a statistical analysis to look for probability of success in the 2nd stage and that's based actually on looking at the relative PFS, the weighted PFS's of the population in the first stage which we're using as a surrogate for overall survival....based on that, you then decide whether to continue treating in the second stage or not. We have actually moved seamlessly into the 2nd stage already and we'll decide whether to continue that stage or not based on this predictive analysis which will be happening in the very near future. The second stage of the study is adaptive from 1 to 400 patients which will actually be largely sized by this predictive analysis...our best guestimate at the moment is around 200 patients in the 2nd stage which at our current rate of enrollment, we would be enrolled before the end of the year assuming we actually still treat patients in August in Europe or not which is always a big question in oncology.

13:22) One of the interesting things that come out of our phase 2's in head and neck was looking at some of the interesting oddball kind of things that are a positive... the first one I think was, that's why I show a scan of a metastatic lesion rather than a primary is that when you grade metastatic lesions on Reo and it doesn't really matter where the primary is, because if you look at lesions in the lung, liver, and lymph nodes , you get a true true response rate by RECIST somewhere between 40 and 50%, regardless of the drug combination, regardless of the study, and we see this in head and neck too and this is what the main cause of death is in head and neck is the metastatic lesions, so I think it's relevant ... and this is an example where you have a heavily pre-treated patient, which has actually seen everything pretty much with this nice dramatic response, and durable response. This is a post cycle 3 scan and the response was maintained through the entire duration of this particular study program and this is very typical when you see responses of Reo, there is aggressive, rapid and quick as I mentioned between a 40 and 50% true response rate in metastatic lesions and that is actually one of the reasons we are looking at metastatic head and neck cancer.

14:37) If you look at historical rates for this particular patient group, most studies give you response rates in the low single digits, and Vermorken who is the PI for the registration study for Erbitux in Europe and who is my PI in Europe estimates that for the control arm we should be looking at a 10% response rate to be conservative....In our phase 2 study in Europe we had a 42% response rate and actually if you merge our U.S. and European study, and look at the same patient group which is the taxane naive patients, the response rate is actually 50% which is gratifying when you're comparing it to historical....and everybody does this and it's not hugely relevant, if you plot your Kaplan Meir from single arm studies against historical, it's always vaguely reassuring, but the key thing for us is that we see a pretty long survival tail that is quite unusual especially for these head and neck patients and while we can't see the blinded study which arm the patients are in and again this, you start looking at your blinded data and try to imagine what it might look like, everybody does it, I don't know how useful it is, we're seeing a similar survival tail that you wouldn't expect to see but we'll see when we break the code if it pans out or not.

16:00) The other randomized studies that we are running are all phase 2's in different stages of enrollment....We're running a 110 patient drug trailed ovarian here in the United States in combination with paclitaxel, it's a one to one weighted arm and this is an odd merger sponsored by the NCI but we have a bunch of co- responsibilities underneath it which is not typical with an NCI study ... and it's being conducted by the gynecological oncology group. We anticipate full enrollment on this study late this year and so data will not be available on this until q2 or q3 of 2013....

We just announce a castration resistant prostate cancer study in Canada again a kinda fused one between us and the ncic in Canada and this will be an 80 patient exploratory study and this is based largely on a collection of very dramatic responses we saw in both patients in other studies and some special access patients that we had done in Canada....and again the combination with taxanes which you'll see very commonly with Reo is where we're looking at with this study ... enrollment should start later this quarter and we expect enrollment to be finished by the end of the year and my most fun and kind of interesting one that we focus on is pancreatic cancer....pancreatic cancer should be amenable to treatment by a lot of things and it's not and that's why it's been a question ... I think a lot of us who work on this think that it is more drug penetrability into the pancreatic head that's the issue rather than that the drugs work or not...I mean if you take Gemzar, it works great on tumours excised but not so great on tumours in vitro ... it's really getting the drug into it and so you see studies like taxane Gem combinations that try to do that because taxanes open up tumours quite nicely and we're the same....our thinking is that using an agent that helps the drug get into the tumour is a good thing, so we're actually running carboplatin paclitaxel in combination with Reo.

18:10) We're omitting Gemzar in that randomized study simply because I believe there's that increasing belief that you really have to beat Gemzar rather than matching Gemzar to have a chance of coming up with something new that will be approvable ... the primary endpoint in this particular study is PFS because we have a crossover arm so all the patients that fail on carbotax will then go onto carbotax Reolysin which will also give us valuable information on drug failed patients, again people are actually starting to talk about 2nd line pancreatic patients for the first time in my experience which is nice, it's actually nice to be developing a patient group that actually might live long enough to be 2nd line.

Again it's a odd one ... we're sponsoring some of the sites and the NCI is sponsoring some of the sites so it's an odd fusion and we expect to have data at least preliminary data on this study this year so we're quite looking forward to that.

19:05) We're also running a single arm Gem Reo study with the anticipation for a registration study, the fda will then buck up and decide that we have to have a Gemzar somewhere and so we want to have Gem Reo data prior to going into that discussion with the FDA ...

This is a partial response with Gem Reo in that single arm study and generally I show this because partial responses in panc studies are so rare but to also show that we actually get a nice response in the lymph node sitting on top of the pancreatic head and again, very characteristic of Reo is once a tumour is outside the primary, you have very high expectation of getting responses in the metastatic lesions.

This is a live agent, it's a virus so we continue to focus and talk about safety...We've now treated over 500 patients in our in house clinical program and the NCI is coming up on 200 patients in their program....most of which we treated intravenously and when you look at the monotherapy safety profile of Reo, it's very reproducible, it's basically pre-flu syndrome which causes a bit of an issue in blinding....if fever for example is predictive of clinical response, which it is in Reo, then you have to blind the fever which means we treat with ibuprofen in our phase 3 study to get rid of the fever. But the toxicities are basically clinically mild fever, mild joint and muscle pain and usually grade 1 or 2 fatigue.

When you look at the blood chemistry, it's just like you'd expect with an infection which is low grade neutropenia and lymphopenia which resolves quite quickly ... the only caution I would ever have to date about using Reo is when dosed with high dose Gem....the Gem doses that we use here in the United States are not an issue....the Gem doses in the U.K. are about 20-25% higher and then you start to see grade 3 and grade 4 neutropenia and lymphopenia ....I mean, Gem causes that at high doses and you push it a little further with Reo and those can be an issue and that's my only caution to date using this drug and the nice thing about these is that the symptoms only usually last less than 6 hours, they usually express on day 2 or day 3 of a 5 day cycle and that's it....so we're getting quite comfortable with the safety profile.

21:30) With respect to intellectual property, we were very aggressive very early and we actually have almost 300 patents issued worldwide now and another couple hundred filed worldwide after that...we do have composition of matter claims which expire in 2028 which is interesting for a virus that was discovered in 1958 or 1959, but pharmaceutical use, combination therapy and all manufacturing steps which were quite unique so I think we've done as good a job as one can be expected of this and of course we're now starting to see challenges and we've actually had a couple of challenges from our big Pharma colleagues which we've actually defended successfully, so we'll see in the end how it works out....we're comfortable to date with our IP portfolio and of course 10 years of work condensed to 2 data points on a slide....biologics are notorious for looking interesting in the clinic and not looking so interesting when you try to reduce the manufacturing in practice for filing and so we became a bit obsessive about this early on and we're actually have a very efficient process, very cost effective...now a manufacturing facility that fills half this room can produce 100 thousand dosages a week, iv standard dosages a week, we're just finishing off actually our last conformance run for the product dossier for our hopefully rolling BLA and we have a commercial manufacturing agreement with Sigma Aldrich with a facility that they purchased for our use in Carlsbatton California... and so the conformity runs will actually be stockpilable for launch so hopefully this is not going to be Oncolytics Achilles heel .. it's certainly something we paid a lot of attention to.

23:20) I skipped a bit about the labeling

Trade both on Toronto and NASDAQ ... approx 76 million shares and fully diluted about 85 million shares and with the cash we have on hand, we're fully funded for all our programs until the end of 2013...so out past the endpoint of our phase 3 study and out past the endpoints of the randomized phase 2 studies that we are currently running...

Summary ... phase 3 for head and neck stage one data rollouts happening very soon and a stage rollout for a predictive probability of success in stage 2 and then we'll get the PFS and OS data later this year and then the other randomized studies moving forward that you can expect to hear about in the next quarters and years.

The END

Q&A
Question 1 about whether you would see the same with wild Reo infection? (I skipped some of this) basically Reo doesn't cross the bowel barrier and that's the real issue and the dosage is low....It comes down to delivery and dosage....A wild infection you might ingest 100 viral particles, well below the therapeutic dosage in a human...we're administering 3x10 to the 10th daily of infectious and 3x 10 to the 12th total particles, so the route matters and the dosage matters a lot and for us it's just the numbers game, I mean you have about 10 the the 15th cells in your body and I'm putting 10 to the 12th particles in and I'm trying to get some of the tumour infected and then the infection will take over....

26:00) skipped a bit of talk about gastroenterology...etc..

Question 2 about people being naturally infected by 5 years old----basically people coming into the clinics have very low titers of neutralizing antibodies against the virus... and early on we thought that neutralizing antibodies might be a real problem but you put Reo in intravenously and you get a robust immune response and how does that affect things and honestly we spent a lot of time and energy and a lot of other companies have spent energy focusing on that and we found it was a complete red herring in the vernacular ....the virus actually binds to red blood cells which makes them almost instantly invisible to the immune system and the red blood cells when they're delivering oxygen to a tumour are also hitchhiking the virus and we just actually recently just found this out...here we are in the middle of a phase 3 study and we actually figured out how the virus gets to tumours, but those are the kind of surprises that you find, but the immunes system doesn't seem to be an issue at least from a therapeutic perspective, the virus fortunately is fairly benign so it clears out very quickly if you don't get an infection in a tumour...most of it's a filtration of the liver and lungs, it's a mechanical filtration so the body doesn't have time to mount an immune response and the virus is gone....it's an odd virus....

27:50)...Question 3) do we get resistance to Reo and why do patients and why do patients die....it's been a bug bear in the whole industry as you know, I mean you take a patient, get a complete response and they still die on schedule or almost on schedule and you scratch your head and go why ... We seem to have 3 distinct patient groups, there's about a quarter of the patients generally, that the tumours just grow like you're not even treating them, they just keep going ... about another 25, 30,35%, depending upon which study you're looking at, you get stabilization ... and as soon as you quit treating....BOOM...the tumours just explode again...

We did a metastatic sarcoma study a few years ago using Reo as a monotherapy and we had patients out on study between 2 and 3 years, quite a few of them and of course they start taking themselves off therapy, they thought they were fine and everyone of them as soon as they came off therapy within weeks was dying and were all dead within 8 weeks.... and one guy was just a month short of 3 years of therapy, I mean he comes in for a couple of days, comes home and he's fine , goes off therapy and you have that patient group...and you have the other patient group, the 40 odd percent that have aggressive fast robust responses that maintain for a long time and it seems like there's 3 groups, we're taking biopsies as often as prudent in the phase 3 to hopefully correlate backwards to find out...it would be nice to screen out non responders or screen in responders....my guess is that head and neck doesn't have much k-ras, but there will be strong correlation with some EGFR sub type mutation, because there is differences in the different EGFR's and in the other studies where we're looking more at k- ras, there seems to be a virtual absolute correlation with K-Ras and response....I mean, I can say it pretty confidently now that if you have a K-Ras mutation driven disease, I can almost guarantee you a stable disease or better on Reo....it doesn't matter what it is...panc...non small cell lung, colorectal, it's interesting to date...it's not statistical yet, but it's getting there....so why patients progress, we don't know...and I wish we did know...we don't seem to get immunity getting back to the original part of your question to Reo, I mean if there's a mechanism of action it doesn't lead to resistant populations of tumours, if it has a Ras pathway it will kill it, if you don't , it won't....

30:40) question 4) will Oncolytics wait for a broader based label or launch statistically on head and neck?

If we get the results we hope to get in the phase 3 we will launch specifically on head and neck and then broaden the label out on subsequent studies...

Question 5) ... Are you looking to sell out or partner?

We set ourselves up to partner originally....the question was whether we should partner or not....the standard however running joke at Oncolytics is that people are always wanting to see the next stage, so I'm sure some of my big Pharma colleagues will wait to see first quarter sales now before they get interested....but my expectation is that we'll still partner prior to actual first sales...of course recently in the last 18 months to 2 years we're seeing an increasingly and large different types of partnerships which is M&A which is normal for the rest of the universe, just not for biotech and it's becoming more normalized....when you look at the private company acquisitions by our big Pharma colleagues, they have been much more aggressive than I think people realize on the public side just because it's invisible...I mean Pfizer...look at how many companies Pfizer has bought over the last 5 years, it's a pretty remarkable path but private most of them, so that etiquette is just as likely today as partnering honestly...

32:25),...question on accrual rates

I'll comment on the accrual rates..I'm never happy with the accrual rates in the clinical studies and if I can find a biotech oncology CEO who says I am delighted with my accrual rates, I'd love to meet them ... at the moment however, I am delighted with my accrual rates on my head and neck study...I was not early on ... it's interesting, we based our accrual rates for our phase 3 study on historical accrual rates, not forecasted but historical accrual rates at the sites that we're running other head and neck studies, primarily falling out of the Erbitux head and neck studies ... so we thought we were rock solid going in and we found our accrual rates were actually less than half than anticipated, now you scratch your head and go away and you find that individual sites quite often broaden enrollment criteria beyond what the company thinks they're enrolling in, that's the accrual rate which of course that's disastrous for clinical studies, so once we found that out we said, we'll our guys are sticking to the enrollment criteria, that's good, so the way to combat that is to have more sites....so we had planned actually to have 40 sites entering the 2nd stage of the study and you'll notice I mentioned a number greater than 40, more than twice than 40, heading to 2 ½ times 40 and so we're actually at our peak enrollment rate that we had anticipated for for the second stage now and so I'm happy now....whether I'll be happy later is another issue...The one study that I'll have to say the accrual rate befuddles me is our squamous cell lung study. This is common with other squamous cell studies that I talk to people about too....I mean squamous cell is what, 25-30% of non small cell lung cancers....horrible outcomes, nothing works, nobody's working on it so you would expect that all of us would have no trouble at all recruiting patients....quite the opposite. Again, our response to that is to add more sites and so that's a commonality, so there are some areas that you just don't know why ... and another one that`s working better than expected is pancreatic cancer ... easy peasy...I hate to use that expression, but panc studies are really easy to enroll into ... I think we all know why, but it's indication specific....

End of Webcast