Good day, ladies and gentlemen. Welcome to the 2018 Kura Oncology second quarter financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions for how to participate will follow at that time. If anyone should require assistance during the conference, please press star, then the number zero on your touchtone telephone. As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's conference, Mr. Pete DeSpain, Vice President of Investor Relations. Sir, you may begin.
Thank you, operator. Good afternoon. Welcome to Kura Oncology's second quarter 2018 conference call. Joining me on the call from Kura are Dr. Troy Wilson, our President and Chief Executive Officer, and Dr. Antonio Gualberto, our Head of Development and Chief Medical Officer. Before I turn the call over to Dr. Wilson, I would 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 will now turn the call over to Dr. Troy Wilson, President and CEO of Kura Oncology.
Thank you, Pete. Thank you all for joining us this afternoon. I'd like to start by introducing the newest members of our leadership team, Dr. Marc Grasso and John Farnham. Marc comes to us after 20 years in healthcare investment banking, where he focused on strategic advisory services and capital raising for leading biotechnology and pharmaceutical companies, most recently as lead banker at Stifel for West Coast Biopharma. Marc earned a doctorate in medicine from the Johns Hopkins University School of Medicine and an undergraduate degree in molecular biology from Princeton University. With his deep knowledge of corporate finance, history of strategic transactions, and significant exposure in our space, Marc is the ideal person to step into this expanded role as Kura's Chief Financial Officer and Chief Business Officer. He'll start with us on August 21st.
John Farnham joined us last month in the newly created position of Chief Operating Officer. He spent the past three years as head of operations at Celgene Receptos, where his responsibilities included clinical operations, quality assurance, finance, facilities, and professional leadership development. Previously, he had a distinguished career as an officer in the Marine Corps, which included service as commanding officer of Miramar Air Station, where he oversaw operations of the installation and its 2,500 personnel. John's core strength in leadership, operations, personnel, and program management will help to ensure that all functions at Kura are working seamlessly together. Marc and John are valuable additions to our leadership team as we prepare for our first registration-directed trial, and I want to welcome both of them to Kura.
I also want to take this opportunity to thank Heidi Henson and to express my sincere appreciation for her hard work and dedication as Kura's CFO since the company's inception. On behalf of the entire board and leadership team, we wish her all the best. Let me give you a brief update on each of our development programs, beginning with our lead drug candidate, tipifarnib. We're currently evaluating tipifarnib in multiple solid tumor and hematologic indications. Our most advanced indication is in HRAS-mutant head and neck squamous cell carcinomas, or HNSCC. Last fall, we announced that our Phase II trial of tipifarnib in HRAS mutant HNSCC had achieved its primary efficacy endpoint prior to the completion of enrollment. We call this ongoing trial RUN-HN.
As of our last data update in February, we reported confirmed responses in five of six evaluable patients, or five of nine patients on an intent to treat basis, with a median duration of response of more than six months. As a reminder, response rates for the three approved second-line agents are in the range of 13%-16%. We plan to present the next update of this trial, including patients from our exploratory cohort in other HRAS mutant squamous cell carcinomas in an oral presentation at the European Society for Medical Oncology 2018 Congress in Munich in October. As we discussed on our last call, we continue to make significant strides in our ability to screen and identify patients with HRAS mutations among the overall population. We've signed an agreement with OncoDNA, an oncology-focused healthcare technology company based in Belgium, to support patient enrollment.
OncoDNA provides physicians internationally with next-generation sequencing for patients with HNSCC oncogenic mutations, including HRAS, for whom tipifarnib may be a potential treatment option. With the help of OncoDNA, we are also identifying patients with HRAS mutant HNSCC in the frontline treatment setting and tracking those patients for potential enrollment in our study. Indeed, we recently enrolled our first patient in this manner, identifying a newly diagnosed patient with HRAS mutant HNSCC, who later enrolled in RUN-HN after progressing on frontline treatment. We continue to open additional study locations worldwide, with approximately 25 clinical sites now open for enrollment. As a result of these efforts, we're now enrolling at a rate of approximately two patients per month in RUN-HN.
Based on the positive results observed to date in RUN-HN, as well as encouraging feedback from the FDA, we're now preparing for a registration-directed trial of tipifarnib in patients with HRAS mutant HNSCC. This global, multi-center trial has two cohorts, SEQ-HN, a non-interventional screening and outcomes cohort, and AIM-HN, the treatment cohort. SEQ-HN is designed as a case control study matching patients with recurrent or metastatic HNSCC with HRAS mutations against those who are HRAS wild type using factors such as age, line of therapy, and type of treatment. This should provide us with a better understanding of the natural history of patients with HRAS mutations, while helping us to identify these patients for potential enrollment into AIM-HN. SEEK-HN is also designed to support potential NDA and post-approval commitments, as well as commercial considerations.
AIM-HN is designed to treat at least 59 patients with HRAS mutant HNSCC who have received prior platinum-based therapy. The primary endpoint of AIM-HN is overall response rate. The study has approximately 80% power to detect a difference between a null hypothesis of 15%, which is the point estimate of second line therapy ORR for recurrent and metastatic disease, and 30% in ORR considered of interest. We're targeting close to 100 clinical sites worldwide, and the study should take approximately two years to fully enroll. Based upon the statistical assumptions, the trial could need as few as 15 confirmed responses in order to reject the null hypothesis and meet its primary efficacy endpoint. Since our last call, we've initiated startup activities and expect to initiate this registration-directed trial later this year.
Meanwhile, we also recognize the potential opportunity for tipifarnib in HRAS-mutant lung squamous cell carcinoma, or LSCC, a histology with a similar genetic pattern as HNSCC. To evaluate this opportunity, we are collaborating with the Spanish Lung Cancer Group, a cooperative group that consists of more than 150 public and private oncology centers in Spain on a proof of concept trial. This investigator-sponsored trial of tipifarnib in HRAS mutant LSCC has now been initiated and is open for enrollment. We continue to be very encouraged by the clinical and pre-clinical data we've generated supporting the potential of tipifarnib as a treatment for solid tumors characterized by HRAS mutations. Our goal is to generate a data package to support an application for marketing approval in HRAS mutant HNSCC as soon as possible, while we work to broaden its potential use to include other diseases of high unmet need.
Let's turn our attention to hematologic malignancies, which also represent a significant opportunity in our development strategy for tipifarnib. Previously conducted studies demonstrated that tipifarnib can drive clinical activity in certain patients with hematologic malignancies, including AML, MDS, and PTCL. However, no molecular mechanism of action was identified that could explain its activity in those patient populations. In December 2017, we presented new findings that identified activation of the CXCL12 pathway and bone marrow homing of myeloid cells as potential biomarkers of tipifarnib's activity in certain hematologic malignancies, including PTCL, MDS, and myeloid neoplasias, CMML, and AML. Based on these observations, we've been working to continue to validate the CXCL12 pathway as a therapeutic target of tipifarnib and to prospectively validate potential biomarkers in our three ongoing phase II trials.
The PTCL trial was the first of three to begin and is actively enrolling into two cohorts, patients with angioimmunoblastic T-cell lymphoma, or AITL, and patients with PTCL who have the absence of a single nucleotide variation in the three prime untranslated region of the CXCL12 gene. We continue to be encouraged that the CXCL12 pathway holds promise for identifying patients who will respond to tipifarnib, and we look forward to providing initial data from PTCL and potentially other biomarker-enriched hematologic indications by the end of this year. Let's quickly turn our attention to our two emerging pipeline programs, beginning with our ERK inhibitor KO-947. We're advancing KO-947 as a potential treatment for patients with tumors that have dysregulated activity due to mutations or other mechanisms in the MAP kinase pathway. Our phase I dose escalation trial of KO-947 in solid tumors is ongoing.
We're working to define a dose and schedule that will enable us to evaluate KO-947 in genetically selected patients whose tumors are sensitive to ERK inhibition. Given that we're currently still in the dose escalation phase of the phase I clinical trial, we're now expecting to present clinical data next year. We're also advancing KO-539, a potent and selective small molecule inhibitor of the menin-MLL interaction that has demonstrated potential antitumor activity in genetically defined subsets of acute leukemia, including those with oncogenic driver mutations in NPM1 and DNMT3A. Pending successful completion of IND-enabling studies, we expect to submit an IND application for KO-539 in late 2018 or early 2019. I'll provide a quick overview of our financial results here on the call and invite you to review our 10-Q filed today for a more detailed discussion.
Research and development expenses for the second quarter of 2018 were $11.5 million, compared to $5.7 million for the second quarter of 2017. The increase in R&D expenses for the quarter was primarily due to an increase in clinical development activities related to tipifarnib. General and administrative expenses for the second quarter of 2018 were $3.8 million, compared to $2.3 million for the second quarter of 2017. The increase in G&A expenses was primarily due to increases in non-cash share-based compensation, professional fees, and patent-related costs. Net loss for the second quarter of 2018 was $14.7 million, or $0.45 per share, compared to a net loss of $17.8 million, or $0.40 per share for the second quarter of 2017. As of June 30th, 2018, we had cash equivalents, and short-term investments of $125.9 million, compared with $93.1 million as of December 31st, 2017.
On July 2nd, 2018, we completed a public offering of common stock. As adjusted for the $74.5 million in net proceeds resulting from the public offering, Kura had, on a pro forma basis, $200.4 million in cash equivalents, and investments at June 30th, 2018. We also terminated our ATM facility in July 2018. We expect that our current cash equivalents, and short-term investments will be sufficient to fund current operations through 2021. I'm very pleased with the progress we've made over the past quarter with a focus on operational execution. We've enhanced our leadership team, improved our ability to screen and identify patients with HRAS mutations, positioned our pipeline to create additional opportunities, and strengthened our balance sheet.
We began the second half of the year with approximately $200 million, giving us the resources to advance our pipeline through a series of upcoming potential milestones, including data from our upcoming registration-directed trial of tipifarnib in HRAS mutant HNSCC. I'd like to thank everyone who participated in our recent offering for your vote of confidence. We are grateful for your support, and we will continue to work toward creating significant value for patients and for you, our shareholders. I appreciate your attention this afternoon and look forward to providing additional updates in the months ahead. Before we jump into the Q&A section, let me quickly lay out our anticipated milestones. For tipifarnib, initiation of our registration-directed trial by the end of this year, additional data from our ongoing RUN-HN trial and our exploratory cohort of other HRAS mutant squamous cell carcinomas in an oral presentation at ESMO.
First patient dosed in the HRAS mutant lung squamous cell carcinoma investigator-sponsored study, and biomarker-enriched data in PTCL and potentially other hematologic malignancies by the end of this year. For KO-947, data from our phase I dose escalation trial in 2019, and for KO-539, submission of an IND application in late 2018 or early 2019. With that, operator, we're now ready for questions.
Understood. Ladies and gentlemen on the phone lines, if you'd like to ask a question to our speakers, please hit star, then the number 1 key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, you may hit the pound key. We ask that once you've asked your question to please prevent any background noise from coming through by muting yourself on your end so that there is no background noise on the recording as well. Again, that is star, then 1 to ask a question. Our first question comes from Joel Beatty with Citigroup. Your line is now open.
Hi, guys. This is Sean calling in for Joel. Thank you for taking my call and my questions. At ESMO, how large of a data package can we expect to see? Will that data package be similar in scope to previous data readouts?
Sean, thanks for the question. We can't get into the specific number of patients that you can expect. What we can tell you is both the cohort in HRAS mutant HNSCC and the additional cohort in other squamous cell carcinomas are open and enrolling patients. The other thing that we've said is that currently, the HRAS mutant HNSCC cohort is enrolling patients at a rate of approximately two patients per month. As of ESMO, we'll give an update on whatever patients at that point are currently on study. We'll give the sort of full parameters as we've given in the past. We don't want to front-run either the abstract or the presentation with more specifics on numbers or what to expect.
Sure. That makes sense. Thank you. Just as a brief follow-up, I'm not sure if you can provide any additional color, but have you disclosed what other indications you've enrolled in the exploratory study?
No. We haven't disclosed the specifics of the additional patients that are being enrolled in that third cohort of other squamous cell carcinomas. We'll be in a position to provide additional information at the oral presentation at ESMO, which we're looking forward to.
Great. Thank you, Troy. Then lastly, can you give us a sense of how your retrospective analyses in the hem-onc indications frame your threshold for success in those programs?
Yeah. I'm sorry, Sean, can you ask that question again? I want to make sure I understand what you're asking.
Yeah. Absolutely. I'm just trying to gauge how your retrospective analyses of the hem-onc indications frame your thresholds for success in the upcoming readouts in the end of 2018.
Sure. Okay. I understand it. If I may, Sean, let me ask Antonio if he can answer that question for you.
Yeah. What I would say is that the importance of this data is the ability to reproduce equal or similar markers across several indications. The fact that we can potentially select responders in lymphoma indications using CXCL12, that we're able to reproduce that data retrospectively in AML patients, and that we can take that data and now look at our ongoing CMML patients and see that we can identify also patients that are receiving clinical benefit from tipifarnib. I think that's quite important because it's telling us that we are on the right track. This is a drug that was studied many years ago.
There's a number of patients that do very well, but the subset outside the oncogene-driven HRAS, this subset of patients with responses could not be identified in the past, and now we have independent indications that we are on the right path for the definition of that population.
Great. Thank you, Antonio and Troy. Appreciate it.
Thanks, Sean.
Thank you. Our next question comes from Joseph Pantginis with H.C. Wainwright. Your line is now open.
Hi, guys. Good afternoon. Thank you for taking the question. First, just a relatively quick question with regard to the HNSCC program. You've expanded your sites. You're enrolling about two patients per month, which is great. Just curious, with regard to the enrollment for AIM-HN, you said it'd take about two years to enroll the approximately 59 patients based on the growing database of patients that you have from RUN-HN, as well as the patients you expect from SEQ-HN or identification, I should say. Do you anticipate or is there a potential that this two-year timeframe could be conservative?
Joe, thanks for the question, also thanks for the initiation report that you put out. It was fun to read. With respect to your question, yes, there is the potential that the two-year timeline that we're projecting for enrollment of AIM-HN may be conservative. It's our preference to be conservative at this point. Then we can adjust our estimates as it's appropriate. You correctly point out that currently where we stand today with 25 clinical sites open, we're enrolling approximately two patients per month. There is, as we've indicated in the past, the potential both for the enrollment timeline to be shorter than we're projecting and for the trial to meet its primary efficacy endpoint prior to the completion of enrollment, as was what happened with RUN-HN.
It's just we prefer to be conservative, we're continuing to give that guidance on approximately two years for full enrollment because we're expecting that we're going to go through a period of bringing the sites online, that's going to take time. Even though there are approximately 25 sites open in the phase II, you still go through a sort of sigmoidal curve as you're bringing sites online. I think we're pleased at the current rate of enrollment, we think that that bodes well for the conduct of the pivotal trial.
No, that's really helpful. Thank you. If I could just switch quickly to heme indications for tipifarnib. This might be a multi-pronged question, bear with me. Just curious, obviously, we're looking forward to the data for PTCL and potentially others later this year. Just curious, now that you have a very strong balance sheet, what the potential wish list might look like, obviously dependent on the data with regard to one biomarker test readiness for studies that are upcoming and how quickly you might be able to ramp up these studies. Then third, any potential combos you might be considering based on the mechanism of action of CXCL12. Thanks.
Sure. Thanks for the question. We're certainly encouraged at continuing to evaluate tipifarnib both in the context of HRAS mutant solid tumors. In addition to providing the data update in RUN-HN, pointing people toward the initiation of AIM-HN, you notice that we did draw your attention to the lung squamous cell carcinoma trial that is currently open for enrollment with the Spanish Lung Cancer Group. That, as well as other HRAS mutant solid tumors, we think represents the most immediate opportunity, just given the strength of the data that we've shown thus far in the ongoing phase II study.
With respect to the heme malignancies and other diseases, that's where, as Antonio mentioned in his response to Sean's question, we're looking forward to providing an update around the end of the year, likely at ASH, that we hope will reinforce this notion that the CXCL12 pathway gives us an independent means of patient enrichment that is independent of HRAS. The significance of that is, as Antonio indicated, you've got a class of agents with farnesyl transferase inhibitors that have anecdotal reports of activity, but really no molecular mechanism of action that was ever assigned to them. If the CXCL12 pathway represents a therapeutic target and a way of enriching patients, that has implications potentially in both the hematologic malignancies, and we're starting with the ones where Janssen and then we have the most data, but other indications as well.
We're looking forward to continuing to be very data-driven and to providing that data update later in the year. With respect to the strength of the balance sheet, we really appreciate the strong support. I think we continue to evaluate how we prioritize our pipeline opportunities, and we'd like to continue to be in a position where we can look forward for places where we can spend additional resources to create more value for patients. With respect to your-
Great. Thanks a lot, Troy. Appreciate it. Yeah, sorry, go ahead.
Yeah, you asked about combinations.
Oh, right.
That work is going on pre-clinically. There's no currently clinical trials on combination studies with tipifarnib, but we continue to conduct a number of pre-clinical studies and more data potentially on those to come in the months ahead.
Great. Thanks again.
Sure.
Thank you. Our next question comes from Konstantinos Aprilakis with JMP Securities. Your line is now open.
Hey, guys. Thanks very much for taking my questions. I was wondering if I could get your thoughts on the recent readout for pembrolizumab and first-line HNSCC suggesting a significant survival advantage versus cetuximab plus platinum? Does this alter your development plans for tipifarnib in any way? What impact do you expect these data to have on clinical practice, if any, assuming checkpoint inhibitors establish themselves in the front line?
Sure. Constantine, thank you for the question. Let me let Antonio answer your question.
Hi, Constantine. Obviously, positive data, combination therapies that will be beneficial to patients is good for everybody. Certainly, we congratulate our colleagues. In a way, it makes things easier for us. You saw, obviously, the data about the markers. The fact that the immune therapy may require the identification of a susceptible population, it can only favor only other targeted therapies. Also, you have to take into account that the current standard of care will be platinum-based, followed by immune therapy. If those therapies were to be combined in the front line, actually the only thing that it does is cement our initial position on the second line.
There's a number of benefits, both in how we position tipifarnib and also in the fact that one of the main drivers of the expansion of the potential HRAS franchise is to have as many patients tested as possible. If patients are going to be tested, you will imagine your pathology departments that will not test only for IO compounds, but for any other possible targeted therapy that the patient may receive. That only increases the opportunities for other targeted therapies such as tipifarnib.
Got it. Thank you. In a post-cetuximab setting, there's reason to believe that HRAS plays a role in driving resistance to therapy. Tipifarnib certainly has a part to play there. Anything you can say in a post sort of checkpoint inhibitor setting?
Well, what I can tell you is that, you have seen this data, that patients with head and neck that carry an HRAS mutation, they're fairly resistant not only to cetuximab but also to the checkpoint inhibitors. We have shown anecdotally but for a number of patients that did not experience a response. In an initial step, yes, we are in the post setting. Once the patient, post IO setting, and once the patient progress from that therapy, it will be ideal candidates with tipifarnib. In the future, obviously, physicians will have to determine what is the best therapy for the patient that carry the HRAS mutation. There's some work to do, and we will have to initially show what is the depth, the duration of our responses initially in this post first-line setting.
Okay. Fantastic. Thank you, Antonio.
Sure.
Thank you. Our next question comes from Chris Shibutani with Cowen. Your line is now open.
Thanks very much. Perhaps if you could just provide us with a little bit more color on the lung study that's being done with the Spanish Lung Cancer Group. You mentioned that the study has been initiated. Can you give us a sense for perhaps the number of patients you're expecting the group to enroll, and then perhaps maybe some timeline upon which we might consider getting some initial data on that?
Sure. Chris, the study is very similar in design to the other proof-of-concept studies that we've used in the past. Approximately 18 patients, and you're looking for a certain response rate of interest. In terms of timeline, that's more difficult. This is obviously a cooperative group study. It's not at all under Kura's control. One of the reasons that we went with the Spanish Lung Cancer Group is with the frequency of this mutation estimated at between 1% and 3% of squamous lung cancer, you need a number of sites actively screening patients. We thought that the Spanish Lung Cancer Group was well-positioned to be able to do that. We're providing some support in terms of supporting diagnostic testing, I think it's probably premature to give guidance on what we might expect the enrollment to be.
As with ISTs, these studies are a very efficient way or cost-efficient way of generating proof-of-concept data, but they're largely in the control of the cooperative group. I don't know that we'll be able to give you much more in as near term on any kind of enrollment expectations or updates.
Got it. With the data that we're coming up at ESMO, we'll look forward to that. You did provide some context for a response rate. Can you help us as well with what you think would be reasonable to think about in terms of durability? To follow up on that, I think when you and I spoke earlier in the quarter, there was a possibility of having a presentation at the Triple Meeting as well. Is that no longer on the table with the focus being ESMO? Thank you.
Let's take your second question first, Chris. Our intent was that we would like to see the data presented either at ESMO or the Triple Meeting, just to give folks an update since the last data update was in February. We're very excited. We're also excited with the fact that we got an oral presentation at ESMO. I think that speaks to the excitement around targeted therapies in what is otherwise a sea of immune therapy. With respect to durability, it's our expectation that the agency would want to see a median duration of approximately six months across the patient population. Given the high unmet need and the relatively low response rate and short PFS among the approved second-line agents, it seems like six months is a reasonable proxy. That's what we're shooting for in terms of durability.
Got it. A final question, and I realize you're bringing a CFO on board at the end of the month, but with your cash balance presently and your comment about having runway into 2021, when I look out at consensus estimates, it's kind of a range with a denominator of maybe four or five analysts. Can you help me understand what you think would get you to 2021? I see, for instance, according to my sources, that the operating expense burn in 2019 and 2020 from consensus comes out to over $200 million. Are you comfortable where consensus is, or should the street view be a little bit more tempered spending during that period? If you could help us out with that to get us to 2021, that would be great. Thank you.
No. Just to clarify, Chris, as I said in the prepared remarks, we're anticipating that the $200 million will take us through 2021. That includes the anticipated enrollments of the pivotal trial and the anticipated six months of durability data needed. We don't give forward guidance on our quarterly spend. What we do give guidance on, and we've been consistent and I hope conservative, is how far we expect the runway to last. We feel confident that we have cash through 2021 at this point, which should take us through the requirements for the pivotal trial and give us a number of other opportunities with the pipeline. Hopefully that clarifies the situation for you.
Great. Appreciate it, Troy, look forward to meeting your team members. Thanks.
Thanks.
Thank you. As a reminder to our listeners, if you'd like to ask a question, please hit star, then the number 1 key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may hit the pound key. Our next question comes from Jonathan Chang with Leerink Partners. Your line is now open.
Hi, this is John Barrett on for Jonathan Chang. Thanks for taking my questions. How are you thinking about a companion diagnostic strategy for tipifarnib in HRAS mutant cancers?
Sure. Several answers to your question. We are developing a companion diagnostic. It's a PCR-based test that will accompany the NDA as part of the existing regulatory framework. Those activities are ongoing and in good shape for the initiation of the pivotal trial. That being said, the pivotal trial doesn't require us to use that companion diagnostic to enroll patients. Actually, we were very pleasantly surprised that the agency allows us to use any approved test to identify HRAS mutant patients. In the U.S., next-gen sequencing, FoundationOne is the current standard of care. Ex-U.S., there are a number of approaches. That's why we highlighted the new relationship with OncoDNA. That's an NGS platform that we've had very good success with in Europe, as well as now looking toward the rest of the world.
We would expect that a majority of the patients on the AIM-HN trial will likely be identified using next generation sequencing. To our standpoint, as long as patients are being screened by whatever method, that's good for targeted therapy. We will, however, be prepared to have satisfied the regulatory requirements in terms of the ultimate companion diagnostic. That effort is ongoing.
Great. Thank you.
Thank you. I am showing no further questions at this time. I'd like to turn the call back over to Troy Wilson, CEO, for any closing remarks.
Great. Well, thank you for the questions. Thank you all once again for participating in our call today. Next week, we'll be at the Wedbush Conference in New York. We look forward to seeing many of you there. In the meantime, if you have any additional questions, please feel free to contact Pete or myself. Thank you again, and have a good evening, everyone.
Ladies and gentlemen, thank you