Aileron Therapeutics Inc

NASDAQ:ALRN

Earnings Call Analysis

Earnings Call Transcript 2019-Q3

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the Aileron Therapeutics Third Quarter 2019 Financial and Operational update. At this time, all participants are in a listen only mode. There will be a presentation by the Aileron management team, followed by a question-and-answer session. I must advice you all, that the conference today is being recorded.

I'd like to turn the call over to Rick Wanstall, Head of Finances at Aileron Therapeutics. Please go ahead, sir.

[Rick Wanstall, Head of Finances]

Thank you, operator, and thank you everyone for joining us for the Aileron Therapeutics third quarter 2019 update call today.

Before turning the call over to our President and CEO, Manuel Aivado, I would like to take a minute to remind you that this conference call and webcast will contain forward-looking statements that represent the company's intentions expectations or beliefs concerning future events.

These forward-looking statements are qualified by important factors set forth in today's press release and the company's filings with the SEC, which could cause actual results to differ materially from those in such forward-looking statements. Information discussed on today's call is accurate as of today and we do not necessarily intend to update this specific information in the future.

I will now turn the call over to Dr. Manuel Aivado, President and Chief Executive Officer.

[Manuel Aivado, President & Chief Executive Officer]

Thank you, Rick, and thank you everyone for joining today's call. In the next few minutes, we will provide a review of our operations and R&D strategy. But since this is Aileron's inaugural earnings call, let me take a few minutes to explain what has previously happened, so that it is easier to understand where we are going.

When I took on the CEO role of Aileron a year ago, one of the first things we did was to complete an in-depth assessment of the company. We took prompt action to make significant changes to our corporate strategy and subsequently refocused our R&D strategy.

I knew at the time that I wanted to add depths and more strength to the executive team and as such we brought Dr. Vukovic onto the team as Chief Medical Officer, we elevated Allen Annis to Head of Research and we appointed Kathryn Gregory as Chief Business Officer, while later Rick Wanstall took over as our Head of Finance. This group is the executive team of the company and they're all with me on this call today.

Jointly, we created a new R&D strategy that is focused on two clinical programs for our lead asset ALRN-6924, a first-in-class dual MDM2/MDMX inhibitor which we will refer to as 6924 during this call. Our first program is our program where we combine 6924 with Pfizer's IBRANCE, or palbociclib, against MDM2-amplified cancers.

There is our second program, testing 6924 as a myelopreservation agent against chemotherapeutic toxicities in patients with p53 mutant cancers. Previously published Phase 1 data had shown us that 6924 is different than all other MDM2 inhibitors and that it was substantially less toxic to bone marrow cells and other MDM2 inhibitors were in their Phase 1 trials.

This created the opportunity to combine our MDM2 inhibitor 6924 with other anti-cancer drugs that have bone marrow toxicities and this facilitated the clinical development collaboration between us and Pfizer to test a combination of 6924 in Pfizer's palbociclib in MDM2-amplified cancers.

Earlier this year we initiated a Phase 2a expansion cohort to evaluate 6924 in combination with palbociclib and we were pleased to present positive interim results from this trial at ESMO in September of this year, which included data from 26 patients.

In this interim analysis, we focused our efficacy assessments on our largest patient subgroup, 17 patients with advanced MDM2-amplified liposarcoma, virtually all of these liposarcoma patients having previously treated with about half of them having received two or more prior lines of therapy. Nearly all of them had metastatic disease and about half had been diagnosed with dedifferentiated liposarcoma, a subtype associated with a poor prognosis.

In this interim analysis, we showed a median progression-free survival of 4.4 months for our liposarcoma patients. This was a very encouraging result for us and for our patients considering the high unmet medical need for these patients which is evidenced by the fact that the median progression-free survival reported is only three months or less for currently approved second and third line chemotherapies in liposarcoma.

Although, we have not observed any partial or complete responses we did achieve a progression-free survival rate at 12 weeks of 73% for our combination therapy, which as a result we are proud of because previously published data has shown a progression-free survival rate for palbociclib alone of only 57% and those palbociclib monotherapy patients were substantially less pretreated than our patients.

These results have helped to fuel interest among our clinical investigators and accelerate the rate of enrollment for this trial. We've expanded enrollment in this cohort to 35 patients in order to evaluate the combination therapy in other and MDM2-amplified cancers. And even with this increased enrollment we continue to be on track to announce final data from this Phase 2a trial in the second quarter of 2020.

Now, let's turn to our second clinical development program. The study of 6924 is a myelopreservation agent against chemotherapy related toxicities in patients with p53 mutant cancers. Chemotherapies can cause severe and sometimes fatal toxicities such as neutropenia and thrombocytopenia.

Unfortunately the management of chemotherapeutic toxicity is currently inadequate and finding better ways to prevent or manage chemotherapeutic toxicities has been a huge challenge. An important advancement was recently made when another biotech company G1 Therapeutics announced that their drug candidate called paused cell cycle arrest in healthy normal bone marrow cells and thereby reduced chemotherapeutic toxicities in patients with small cell lung cancer.

Since then G1 Therapeutics has also reported a regulatory pathway for the indication of myelopreservation based on meetings with regulatory authorities. These events were important for us because our non-clinical data shows that 6924 has excellent cell cycle arrest in using properties. All these factors encouraged us to commence our myelopreservation program and the cornerstone of our program with the creation of a strong non-clinical data set that informs and supports our clinical trials in myelopreservation.

As presented at the EORTC Triple conference on October 29 this year, we showed that low doses of 6924 triggered reversible cell cycle rest in human bone marrow cells ex vivo and in mouse bone marrow cells in vivo to limit toxicities caused by chemotherapy. We believe that our findings can translate to the clinic as an improvement in neurological side effects of chemotherapy. And as a result, we have advanced our program into a Phase 1b/2 clinical trial evaluating 6924 as a myelopreservating agent in patients with p53 mutant small cell lung cancers.

The ongoing Phase 1b portion of this trial will enroll up to 40 patients and is designed to identify a recommended Phase 2 dose for 6924. This trial and future myelopreservation trials will use existing standard gene tests to select patients with p53 mutant cancers.

We're very excited about the possibility to optimize the effects of our drug by applying a precision medicine approach. And this biomarker-based selection of our patients sets 6924 apart from the approach that G1 Therapeutics taking.

Based on our compelling non-clinical data we recently decided to reallocate capital from our early drug discovery program to our myelopreservation program, adding plans for two additional cohorts without shortening our cash runway.

We added an expansion cohort of approximately 20 randomized patients with small cell lung cancer. This new cohort would use the recommended Phase 2 dose from our ongoing dose optimization Phase 1b trial and treat patients in alternating cycles with chemotherapy alone and with chemotherapy plus 6924 with the intent to create a more definitive proof of concept.

Secondly, adding an expansion cohort of approximately 20 patients with non-small cell lung cancer. This new cohort is designed to evaluate the breadth of the approach we are taking with 6924 as a myelopreservation agent.

Our current plan is to start enrolling patients into these two additional cohorts in the second quarter of 2020, after we have identified a recommended Phase 2 dose. And contingent on resource availability, we expect to start enrolling patients into the Phase 2 portion of the Phase 1b/2 trial in mid-2020.

Before I hand over to Rick, let me tell you how excited we are about the potential of 6924. Given the results we have shared to date, we're fully committed to bringing 6924 forward as efficiently and expeditiously as possible. We anticipate several milestones in just the next six to seven months from our two ongoing clinical development programs, including the final data presentation from our combination therapy with palbociclib in the second quarter of 2020 as well as the dose optimization data for 6924 as myelopreservation agent also in the second quarter of 2020.

With this overview of our operations and R&D strategy, I'll now turn the call over to Rick to provide an overview of our financials for the quarter. Rick, the floor is yours.

[Rick Wanstall, Head of Finances]

Thank you, Manuel, and thank you everyone for joining us today. For the third quarter of 2019, we reported R&D expense of $4.5 million compared to $4.3 million in the third quarter of 2018. The increase in R&D expense primarily reflects higher clinical development costs of 6924 that are partially offset by lower employee costs.

Clinical development of 6924 during the third quarter of 2019 primarily reflects cost associated with the Phase 2a expansion cohort of the combination of 6924 and palbociclib and cost incurred in the preparation of our myelopreservation trial. Clinical development of 6924, during the third quarter of 2018, primarily reflected costs incurred in connection with our PTCL trial, which we completed in our AML/MDS trial, which we discontinued in early 2019.

For the third quarter of 2019, the company reported general and administrative expense of $3.4 million compared to $3.2 million for the third quarter of 2018. Net loss was $7.7 million or $0.28 per share for the three months ended September 30 2019, compared to a net loss of $7.4 million or $0.50 per share for the same period in 2018.

As of September 30 2019, there were 27.8 million shares of common stock outstanding. Cash, cash equivalents and investments as of September 30, 2019, were $24.6 million compared to $20.7 million as of December 31, 2018. The company believes that its cash, cash equivalents and investments as of September 30, 2019 will enable it to fund operations into the fourth quarter of 2020.

And with that, I'll now turn the call over for your questions. Operator?

[Operator]

[Operator Instructions] We'll take a question from Matt Phipps of William Blair. Your line is open.

[Rob Andrew, William Blair]

Good morning, guys. This is Rob Andrew on for Matt Phipps. Thanks for taking the questions. So thinking about the myelopreservation study, what are the sort of time lines looking like now moving forward for an FDA approach in that indication, particularly in light of the recent updates from G1 Therapeutics' myelopreservation agent?

And then secondly, how do you think about the potential survival benefit that you guys showed in the preclinical models at the Triple meeting? I think that this was kind of the more notable data shown by competitors at the recent ESMO meeting? Thanks.

[Manuel Aivado, President & Chief Executive Officer]

Thank you very much. I will ask our Chief Medical Officer Dr. Vukovic to take this question.

[Vojislav Vukovic, Chief Medical Officer]

All right. Thanks Manuel, and thanks for the question. The survival benefit that we potentially can see in the clinic can be derived in our opinion by two different means. One, by optimizing and minimizing toxicity of chemotherapy we will be able to achieve a optimized delivery at full dose, at full-length of chemotherapy, which can translate into a survival benefit. When you look at G1 Therapeutics' data presented at ESMO, they were able to deliver approximately twice as many cycles of the chemotherapy in patients who were receiving the drug. So that's one mechanism.

The other mechanism, which is probably therapeutically more intriguing, is the known effect that activation of p53 exhibits on the immune system. This effect is very well-known and very well described in the literature. And with our collaborators and with our internal data, we are able to show pre-clinically a clear effect of our drug 6924 on the immune system.

And we have also limited amount of translational data from patients with Tech2 biopsies that clearly show the effect of the drug in terms of increased secretion of cytokines in setting and treated for example the CD4 CD8 T-cell ratio. So, there's clearly two potential effects. One is optimizing chemotherapy. And the other is the effect on the immune system.

[Manuel Aivado, President & Chief Executive Officer]

Does that answer your question Rob? And maybe one final comment -- maybe one more comment on the regulatory strategy that you have mentioned. I mean, like you, we know only so much as to the regulatory strategy that is being pursued by G1 Therapeutics based on what is publicly available out there. But based on what is publicly available out there, we think that it's a regulatory pathway that is a great precedent for us that we intend to follow.

[Rob Andrew, William Blair]

Okay, great. Thanks a lot. And just maybe one more, as the company looks forward --move forward in liposarcoma, I know you mentioned there's a clinical collaboration there with Pfizer. Are there any plans for kind of partnership in that program particularly given that combination with Ibrance? Thanks very much.

[Manuel Aivado, President & Chief Executive Officer]

Yeah. Rob, we are obviously working closely together with Pfizer, they are together with us on a joint development committee and they are as excited as we are about this combination. But at this point in time, we haven't disclosed further steps as it relates to the form of this collaboration and its future.

[Rob Andrew, William Blair]

Okay, great. Thanks very much.

[Operator]

[Operator Instructions] We'll move next to John Newman of Canaccord. Your line is open. Mr. Newman, your line is open. Please check your mute switch.

[Justin Zelin, Canaccord]

Hi. Good morning. Sorry about that. This is Justin Zelin on John Newman. First, I just had a question if you could talk about just how 6924 is differentiated versus other competitor MDM2 agents? And I have some follow-ups

[Manuel Aivado, President & Chief Executive Officer]

I'm going to ask my Head of Research, Allen Annis to take this question. Allen please?

[Allen Annis, Head of Research]

Thanks, Manuel. Justin thanks for joining the call this morning, and thank you for your question. So, I've got few very important differentiating features for ALRN-6924 compared to the other MDM2 inhibitors. First of all, ALRN-6924 is the only peptide drug that is addressing p53 reactivation. All the other MDM2 inhibitors are small molecules. And probably as a consequence of using a peptide approach, our drug recapitulates the binding properties of p53 to both MDM2 and MDMX.

So, very different biochemical profile for binding of our drug to the natural inhibitors of p53, and what that allows us to do and what we've seen very robustly in the clinic is we have a much improved safety profile for ALRN-6924 at doses that give meaningful anticancer activity specifically we see far less thrombocytopenia for our drug in all commerce Phase 1 trial that have been reported for us and for other MDM2 inhibitors a much better thrombocytopenia profile, which is an important differentiating factor for our drug not only for combining with palbociclib for example, and having a better safety profile there but also important for our myelopreservation study. So this is a very important differentiating features for our drug.

[Justin Zelin, Canaccord]

Great. I’m sorry.

[Manuel Aivado, President & Chief Executive Officer]

Next question please.

[Justin Zelin, Canaccord]

Just a few follow-ups. Is the strategy to continue the ibrance combination trial in liposarcoma or will you also be looking at other cancer types for the trial?

[Manuel Aivado, President & Chief Executive Officer]

At this point in time, we haven't disclosed plans for additional combination therapies. Certainly the rationale behind such a combination is very obvious as we all know there are plenty of anticancer drugs that require downstream the effectiveness of p53 signaling pathway.

And we in the past have disclosed preclinical data that serves as evidence for that to be a promising proposition. But at this current point in time, we're focusing on these two programs the palbociclib as well as the myelopreservation program. And as such there are currently no other imminent combination therapy programs.

[Justin Zelin, Canaccord]

Great. Got it. And then on the myelopreservation trial, aside from the primary endpoints being the reduction in nutropin and anemias are there any other kind of exploratory endpoints such as some biomarkers that you look at to kind of increase your confidence of the efficacy of mechanism of action? Thanks.

[Vojislav Vukovic, Chief Medical Officer]

Yes absolutely. Thanks for the question. We are deploying a biomarker-driven strategy in our myelo-protection program. Not only we use biomarkers to select patients which I think is a key differentiating feature, but we also will be collecting data to explore two biomarkers that are directly related to the pharmacodynamic effect of the drug.

So we'll be looking and proteins that are activated by p53 description and that will be collected multiple times in patients, so we'll be having a very clear understanding between the pharmacokinetic and the pharmacodynamic effects of our drug in every single patient.

[Justin Zelin, Canaccord]

Excellent. Thanks for taking my question there. Appreciate it. And congrats all.

[Operator]

[Operator Instructions] We'll move next to Jacques Villefranc of LifeSci Capital.

[Jacques Villefranc, LifeSci Capital]

Yes, thank you for taking my questions and congrats on the progress this quarter. One on my end, could you walk us through the rationale for going after myelopreservation and what the mechanism is there with 6924?

[Vojislav Vukovic, Chief Medical Officer]

Sure. Happy to take that question, p53 release is known to induce cell cycle arrest. And that can happen itself with a p53 protein and it's signaling pathways in tact which is the case in all normal healthy cells.

As you know in tumors approximately half of cancers have mutations in p53 and there's probably also other deficits and problems in the p53 signing pathway. So tumor is really -- most of the time, don't have a functioning p53 pathway. And that's the key difference that we're trying to exploit with this rational strategy.

We want our drug to work in normal cells in the new cell cycle arrest and not touch the cancer cells. So chemotherapy can do its job. And so for that reason, we're selecting patients upfront with a genetic profile which corresponds to p53 mutations in the cancer. And we're expecting that our approach will result in a selective sell cycle arrest and selective protection of normal tissues against chemotherapy-induced toxicities.

[Jacques Villefranc, LifeSci Capital]

Got it. And then just a follow-up on -- so as you mentioned G1 Therapeutics has a program myelopreservation and has probably set the bar in your first in your first setting SCLC, can you help us put their data into context? And what would be a win for you in the Phase I portion of your study?

[Vojislav Vukovic, Chief Medical Officer]

Sure. Would I'd be happy to do that. Thanks for the question. Obviously we can compare our data that will emerge from our small cell lung cancer trial to that presented by G1 Therapeutics, but we don't have to. And the reason is simply because the two drugs theirs and ours, they're exploiting different pathways to achieve the same objective; cell cycle arrest.

And that's quite different -- different molecules, different pathways so the results will be not always directly comparable. But we are looking at the small cell lung cancer trial simply as a proof of concept trial.

And as Manuel has alluded previously and Allen mentioned also, we can really go after almost half of all cancers, irrespective of the tumor type and irrespective of the chemotherapy, they're receiving. And that will basically set us apart in a differentiating factor against the G1 Therapeutics. I hope that answers your question.

[Jacques Villefranc, LifeSci Capital]

Yes, yes. Thanks. And one more on my end here, could you give us more color on the synergies between the CDK4/6 inhibition and MDM2 inhibition in your combo study?

[Allen Annis, Head of Research]

As this is Allen Annis. Again, happy to take that question. Thanks again for joining the call this morning. Yes. So this is very well-known that a CDK4/6 and the CDK4 pathway through RB1 and the p53 pathway Converge on cell cycle arrest and anticancer activity in cell, so very well-established signal transduction pathways for that.

So we've shown non-clinically as well as many other folks that there is good synergy in non-clinical models for combining MDM2 inhibitors our p53 d reactors 6924 with palbociclib and other CDK4/6 inhibitors. So, very well established in non-clinical studies.

And one other feature is important it's not often recognized that CDK4 and MDM2 those two oncogenes happen to exist very close by in space on chromosome 12. And in fact in over 90% of cases where MDM2 is amplified and that's the population we're addressing in our trial over 90% of those have a CDK4 co-amplification.

And so in fact when we're addressing patients with MDM2 amplification and bringing palbociclib along as a CDK4 inhibitor just makes it -- it makes a lot of sense because of that frequent co-amplification.

[Jacques Villefranc, LifeSci Capital]

Got it. Got it. Thanks for that and – yeah. Thanks guys. Thanks for answering my question and congrats on the quarter.

[Operator]

[Operator Instructions] At this time I'd be happy to return the call to Dr. Aivado for closing remarks.

[Manuel Aivado, President & Chief Executive Officer]

Thank you very much. So to summarize, as we look ahead we are very excited about the opportunities that lay before us. 6924 is a unique agent with important milestones coming up in the first half of 2020. And in the second quarter of next year we plan to release the final data from our Phase II combo study of 6924 with palbociclib in MDM2 amplified cancers.

And in the same quarter we look forward to delivering the results from the first part of our ongoing myelopreservation program. Once we have identified a recommended Phase II dose for our myelopreservation program, we plan to commence enrollment of both aforementioned lung cancer expansion cohorts and we're working diligently to ensure that these studies are successful and we look forward to keeping you apprised of our progress. Thank you for your time. And this concludes today's call.

[Operator]

Thank you. This does conclude today's, Aileron Therapeutics Third Quarter 2019 financial and operational update. You may now disconnect your lines. Everyone have a great day.