Cascadian Therapeutics (CASC)

[lady glueck]

figs not better than expected but maybe we get more Info about gamechangers ONT-380 and L-BLP25 at next weeks wedbush conference
http://www.4-traders.com/ONCOTHYREON-INC-USA-430914/news/Oncothyreon-Inc-USA-Oncothyreon-to-Present-at-Wedbush-Securities-Life-Sciences-Management-Access-17168208/


from yesterdays conference call:
Julie M. Eastland

Thank you, Stephanie. As reported in our press release this afternoon, loss from operations increased in the second quarter of 2013 to $18 million from $8.1 million in the second quarter of 2012 and to $26 million for the 6 months ending June 30, 2013, compared with $13.8 million for the comparable period in 2012. The increase in loss from operations for the 3 and 6 months ended June 30, 2013, compared to prior-year period was primarily due to an upfront payment of $10 million to Array BioPharma in connection with the initiation of Oncothyreon's collaboration with Array. This was announced on May 30, 2013.

In addition, the increase in loss from operations for the 6 months ended June 30, 2013, was also the result of increased development activity for Oncothyreon's product candidates and increased general and administrative expenses.

The net loss for the 3 months ended June 30, 2013, was $16.4 million, or $0.28 loss per basic and diluted share, compared with the net loss of $8.7 million, or $0.15 loss per basic and diluted share, for the comparable period in 2012. Oncothyreon reported a net loss of $24.7 million or $0.43 loss per basic and diluted share for the 6 months ended June 30, 2013, compared with a net income of $1 million or $0.02 earnings per basic share and $0.28 loss per diluted share for the comparable period in 2012. The increase in net loss for the 3 months ended June 30, 2013, compared to the prior-year period was primarily attributable to the upfront payment of $10 million to Array and partially offset by $1.6 million of noncash income as a result of the change in the fair value of the warrant liability for the 3 months ended June 30, 2013, compared to a $0.3 million in noncash expense as a result of the change in fair value of warrant liability for the 3 months ended June 30, 2012.

The increase in net loss for the 6 months ended June 30, 2013, compared to the prior-year period net income was primarily attributable to the upfront payment of $10 million to Array and a $1.3 million in noncash income as a result in the change of the fair value of the warrant liability for the 6 months ended June 30, 2013, as compared to $15.3 million of noncash income as a result of the change in fair value of the warrant liability for the 6 months ended June 30, 2012.

In addition, the increase in net loss for the 6 months ended June 30, 2013, was also the result of increased development activity for Oncothyreon's product candidates and increased general and administrative expenses.

As of June 30, 2013, Oncothyreon's cash, cash equivalents and investments were $69.6 million compared to $83.8 million at December 31, 2012, a decrease of $14.2 million or 16.9%. The decrease was primarily attributable to $23.9 million cash used in operations during the 6 months ended June 30, 2013. This decrease was offset in part by net proceeds of approximately $9.9 million from the closing of a June registered direct offering of 5 million shares of Oncothyreon common stock and warrants to purchase 5 million shares of stock.

Before I turn the call over to Bob, I'd like to provide financial guidance for 2013. Please note that we believe this guidance to be correct as of today, but that circumstances may change, and we assume no obligation to update this guidance.

Exclusive of the one-time upfront payment to Array, Oncothyreon currently expects expenses in 2013 to be similar to 2012 and cash used in operations in 2013 to be approximately $29 million to $31 million. As a result, Oncothyreon estimates that its existing cash, cash equivalents and investments will be sufficient to fund operations for at least the next 12 months.

And this concludes the financial update. Let me now turn the presentation over to Oncothyreon's President and CEO, Bob Kirkman. Bob?

Robert L. Kirkman

Thanks, Julie, and thanks for joining our conference call today. As we seek to build value for our shareholders in Oncothyreon, we think the second quarter of 2013 has been especially important. In particular, I would today like to focus your attention on 2 events that we believe will shape our future: the collaboration we announced with Array BioPharma for an exciting new addition to our pipeline; and the data presentation at the American Society of Clinical Oncology for L-BLP25, formerly known as Stimuvax.


Let me begin with the Array collaboration. The subject of the collaboration as a small molecule inhibitor of HER2 discovered at Array, which they named ARRY-380, and which we now call ONT-380. HER2 is one of the most highly validated targets in oncology. It is a receptor tyrosine kinase that is overexpressed in breast cancer and other cancers, including gastric and ovarian cancer. Approved agents directed at HER2 include trastuzumab or tuzumab, T-DM1 and lapatinib. Despite these agents and their value in treating HER2-expressing cancers, especially breast cancer, we believe there remain significant unmet medical needs, which ONT-380 can potentially address. These unmet needs include improved tolerability, the treatment of metastatic disease in the central nervous system and the development of resistance to the existing agents. In addressing these unmet needs, ONT-380 has 2 characteristics that are particularly attractive. First, ONT-380 is very specific for HER2. To our knowledge, ONT-380 is the only clinical stage small molecule targeting HER2 which does not also target the EGFR receptor.

Targeting the EGFR receptor is not thought to contribute to efficacy in treating breast cancer, but it does lead to significant toxicity, particularly debilitating diarrhea and rash. If you could achieve the efficacy associated with targeting HER2 without the toxicity associated with hitting the EGFR receptor, that might significantly improve tolerability. It might also lead to improved efficacy by allowing for more intensive or prolonged dosing.

Secondly, preclinical data for ONT-380 suggest that it may be active in treating metastatic disease to the brain. ONT-380 crosses the blood brain barrier unlike antibodies. Moreover, in an intracranial HER2-positive breast cancer xenograft model, ONT-380 has demonstrated superior activity based on overall survival compared to both lapatinib and to the investigational drug, neratinib. Metastases[ph] to the brain eventually occurs in about 1/3 of all breast cancer patients with metastatic disease and is an unsolved problem with current agents.

Array previously completed a Phase I clinical trial of ARRY-380 in patients with heavily pretreated metastatic breast cancer, which demonstrated that the compound was well-tolerated and had anti-tumor activity. In this trial, treatment-related adverse events were primarily Grade 1 and there was a low incident in severity of treatment-related diarrhea and rash, consistent with the specificity of 380 for HER2 and not EGFR.

In this heavily pretreated patient population, there was a clinical benefit rate, defined as partial response plus stable disease for at least 6 months of 27%. Notably, 2 of the patients with partial responses during treatment with ONT-380 had confirmed progressions while on prior lapatinib and trastuzumab-containing regimens.

Under our collaboration agreement with Array, we are responsible for conducting an agreed set of trials through Phase II proof-of-concept. We intend to focus our development on both the treatment of CNS metastatic disease and more broadly on second or third line metastatic disease. We haven't yet made public the design of these trials, but we will be beginning with the set of Phase Ib trials to demonstrate that we can combine ONT-380 with other agents used in both of these settings. We expect these trials to start by the end of the year. We're working very hard to make this happen and are excited by this addition to our pipeline.

Let me now turn to L-BLP25. In doing so, I want to review certain aspects of the data from the L-BLP25 start trial that were presented at the American Society of Clinical Oncology Annual Meeting in early June. My goal in doing so is not only to consider the possible future of L-BLP25, but also to discuss the implications for our follow-on vaccine, ONT-10.

I suspect everyone listening to this call knows that the start trial was a randomized Phase III trial in patients with unresectable, locally advanced Stage III Non Small Cell Lung Cancer, conducted by Merck Serono, under a licensed agreement with Oncothyreon and that the primary endpoint of improving overall survival with L-BLP25 compared to placebo was not met. What was new with ASCO was the public presentation of the subgroup analysis from the start trial. This analysis demonstrated that in a pre-defined subgroup of patients receiving initial concurrent chemoradiotherapy, the median overall survival was 30.8 months in the L-BLP25 group versus 20.6 months in the placebo group, a clinically relevant improvement of over 10 months and with a hazard ratio of 0.78.

I recognize that when a BioPharma CEO starts talking about a subgroup analysis of a trial that didn't meet its endpoint, there is usually a lot of skepticism. I understand this. But in evaluating these data, I would ask you to consider these points. First, this was a predefined group based on one of the randomization strata for this trial. This means that the randomization of the subgroup should be valid. It's always possible that there are some relevant factor which is not equally distributed between the groups, but at present, one has not been identified.

Secondly, the group was very large. There were 806 patients on this subgroup, which represents about 2/3 of all the patients in the trial. As the investigator pointed out in presenting these data at ASCO, this makes the subgroup analysis alone larger than any other trial ever conducted in Stage III lung cancer.

And third, the result was statistically significant, with a p-value of 0.016. Of course, none of these point to guarantee that the result can be replicated in another trial, but we think there is a compelling reason to conduct such a trial focused on this group of patients. We also believe that the results strongly suggest that MUC1 is a valid vaccine target. At present, we do not yet know if our partner for L-BLP25, Merck Serono, will proceed with additional trials. We do know that they are in the process of discussing the data with regulatory authorities and key opinion leaders to make the determination. We also know that other trials of L-BLP25 are continuing. The INSPIRE trial of Phase III trial in Asia, similar in design to START, has been modified to only include patients receiving concurrent chemoradiotherapy and is ongoing.

A Phase II trial in Japan is now completely enrolled with about 170 patients, almost all of whom receive concurrent chemoradiotherapy. That trial should read out late next year. Several investigator-sponsored trials in indications other than the lung cancer, including colon, prostate and breast cancer, are also continuing. We think it likely that Merck Serono will reach a decision about next steps sometime this fall.

In the meantime, we believe the START trial data provide strong validation of MUC1 as a vaccine target and that they support the ongoing development of ONT-10, our fully owned follow-on vaccine directed against the same target. We believe that ONT-10 has the potential to be a more potent vaccine. Based on our presented preclinical data, ONT-10 induces a MUC1-specific antibody response not seen with the L-BLP25. It also contains a novel adjuvant, our proprietary fully synthetic TLR4 antagonist, which is more potent than the adjuvant contained in L-BLP25 based on in-vitro assays.

Our Phase I dose escalation study of ONT-10 is ongoing in patients with tumor types that expressed MUC1. We've essentially completed enrollment on our originally planned dose escalation portion of this trial. Based on the absence of any safety issue so far, we are likely to expand this trial to explore some additional and higher doses. We've submitted an abstract about this trial to the Society for the Immunotherapy of Cancer meeting, which is in early November in Baltimore. Assuming acceptance of the abstract, we would expect to share data from this trial with you at that time.

As we look forward to the rest of the year, we will have a number of upcoming milestones. We expect to begin our initial trials of ONT-380, our exciting new pipeline compound directed at HER2. We expect our partner to announce its plans for L-BLP25. We expect to have the first clinical data for our follow-on vaccine, ONT-10. And although we didn't focus on it today, our 2 randomized trials of PX-866 for Squamous Cell Head and Neck are expected to read out by the end of the year.

Julie and I look forward to sharing our progress with you. Julie will be presenting at the Wedbush Securities Life Sciences Management Access Conference in New York next Tuesday. And both of us will be at the Rodman & Renshaw Global Investment Conference in New York, and the Stifel Healthcare Conference in Boston, the second week of September. We hope to see many of you at these events. As always, we're grateful for the support of our shareholders.

And this concludes my comments for today. Operator, we'd be now be happy to take questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Simos Simeonidis from Cowen.

Simos Simeonidis - Cowen and Company, LLC, Research Division

Bob, I had a question on, what happens in the scenario where Merck decides not to do additional trials? Do you get the rights to Stimuvax back? If that happens, do you have to pay anything? And when do they have to make that decision by?

Robert L. Kirkman

Well, it depends what they do with their other ongoing trials. As long as they are actively developing the drug with other trials, no, they would be under no obligation to return it to us. Should they stop all development and discontinue their existing trials, then yes, we do believe they would return the rights to us. There is a negotiation that would need to take place if we wanted to use the data that they've accumulated to-date and that negotiation would have to happen. But beyond that, we just have to wait for them to make up their mind what they're going to do.

Simos Simeonidis - Cowen and Company, LLC, Research Division

Okay. And then based on the timelines you've given us for the Array-Oncothyreon collaboration compound, when do you think we might see the first data from that program?

Robert L. Kirkman

Well, as I mentioned, we're going to be conducting a series of Phase Ib trials first to show that we can successfully combine 380 with other agents. I would anticipate having data from those trial sometime in the second part of 2014.

Simos Simeonidis - Cowen and Company, LLC, Research Division

Second half of '14. Okay. Great.

Operator

Our next question comes from the line of Joel Sendek from Stifel.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

So I want to follow on from Simos' question, I guess. So it's Phase Ib data, I'm wondering what that will set you up for after you get that, just because and the reason why I'm asking that, I just want to know if you'll go into a -- if the next step will be to prioritize the brain met potential, or would you just kind of go down the broader path similar to how Puma is developing neratinib?

Robert L. Kirkman

Well, if I have to answer the question today, the answer is yes and yes. Now we think that the characteristics of 380 are particularly attractive, with respect to the treatment of CNS disease. And obviously, if we could successfully demonstrate that 380 could do that, that's a relatively straightforward path to market and something we could hopefully do relatively quickly. On the other hand, we don't think that takes advantage of all of the characteristics of the molecule, in particular, its tolerability profile. And so we also think we should be looking at the treatment of metastatic disease. So the answer is, in broad terms, we're planning to do both. The details will become clear a little bit later on. We've not made public the precise details of the trials we are planning yet.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

Okay. And then if we go maybe to today as far as predicting the future, I'm wondering if -- I'm getting a lot of questions about how does the data we have so far in 380 compare to neratinib at the similar stage of development. Do you have any comments or any way we can get our hands around that question?

Robert L. Kirkman

Well, I think you have to compare the use of the 2 drugs as single agents, and there's a published data for neratinib in that setting and we've just reviewed the data for 380. I think from a clinical benefit rate perspective, the drugs are basically in the same ballpark. It's always difficult in Phase I for us because you'll never know that each trial has precisely the same kind of patients. But to the extent that both of those trials included heavily pretreated patients, the results are pretty similar. It's on the safety side where the differences become much more stark, where there is a fairly high incidence of Grade 3 diarrhea with neratinib we just don't see with 380. And we think that, that will prove to be a fairly key differentiating factor.

Operator

Our next question comes from the line of Adeyemi Ogunkoya from Cantor Fitzgerald.

Adeyemi Ogunkoya - Cantor Fitzgerald & Co., Research Division

I was wondering at this point, can you guys provide more color on why the patients with concurrent chemoradiation therapy did better? And whether or not this would apply to enrollment in the ONT-10 studies?

Robert L. Kirkman

Sure. I mean, the answer is we don't know for sure why the vaccine appeared to work better in this patient population. There are 2, so, explanations that makes the most sense. One is simply that concurrent chemoradiation therapy does a better job of controlling the primary disease in these patients and therefore, gives the chance -- the vaccine the chance to work on the micro metastatic disease and/or circulating tumor cells. I think that makes a lot of sense. We know from multiple prior studies that looked at concurrent versus sequential treatment that primary disease controls better when you give concurrent chemotherapy. I think the second potential explanation is a little more complex and really relates to the timing of the initiation of the vaccine to the conclusion of the chemotherapy that's much closer together in the concurrent and it may be simply that the vaccine is seeing a different set of immune cells at that time, and in particular, maybe acceptance to absence of certain regulatory cells. I have to confess, there's a certain amount of hand waving in that explanation in that we don't have the data to support it. Because frankly, those cell populations weren't collected in a way that lets us look at them. So we honestly don't know. Would these results carry over to ONT-10? We think the answer to that question is probably yes. But if you want to treat patients in this kind of maintenance setting with a vaccine, you'd be much better off doing that in a setting where you have better primary disease control.

Operator

Our next question comes from the line of Charles Duncan from Piper Jaffray.

Unknown Analyst

This is Roy, in for Charles. Bob, I believe there's differences in the MUC1 antigen between ONT-10 and the old Stimuvax, can you describe those in a little detail? Remind us.

Robert L. Kirkman

Sure. The antigen in ONT-10 is a little bit bigger. So it contains 2 of the 25 -- of the 20 amino acids, 10, I'm going to repeat [ph] that are -- that make up the extra cellular portion of the MUC1 protein, whereas Stimuvax has 1. The other difference is that the antigen is quite populated. It has some short-circuit chains added in ONT-10, which are not present in the L-BLP25 antigen, in which we think those sugars may contribute to the preclinical data, which shows that we had a strong antivirus response. That's the data we'll be looking forward to sharing with you from our clinical patients later this fall, when we present the Phase I data from ONT-10.

Operator

Thank you. This does conclude the question-and-answer session. I'd like to turn the program back to Dr. Kirkman for closing remarks.

Robert L. Kirkman

Well, thank you very much for joining us on this absolutely beautiful summer afternoon in Seattle. We appreciate your attention, and we appreciate your support of Oncothyreon, and we look forward to our meeting with many of you this fall as we share the milestones we've described today. Thank you very much.