Jim DeNike - ‎Senior Director of Corporate Communications, Investor Relations Scott Cormack - President, Chief Executive Officer, Treasurer, Secretary, Director John Bencich - Chief Financial Officer, Vice President Cindy Jacobs - Executive Vice President, Chief Medical Officer.

Katherine Xu - William Blair Chad Messer - Needham & Company Joel Herin - RBC Capital Markets.

Good day ladies and gentlemen and welcome to the OncoGenex fourth quarter 2015 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Mr. Jim DeNike, Senior Director of Corporate Communications. Sir, please begin..

Thanks Vance and thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer, John Bencich, Chief Financial Officer and Dr. Cindy Jacobs, our Chief Medical Officer.

Before we begin, I would like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected.

Please refer to OncoGenex documents filed with the SEC concerning factors that could affect the company, copies of which are available on the website. I will now turn the call over to Scott..

Thanks, Jim. On today's call, we will provide an update on our clinical development programs with near-term milestones that we believe could create significant value for the company over the next 12 months.

Following our program update, John will provide an overview of our financial position that includes steps we have taken to further strengthen our balance sheet. These steps have extended our cash runway for additional six months, which now takes us into the third quarter of 2017.

Our cash position will allow us to execute on our clinical development plans, including reporting of two Phase III clinical trials, two Phase II clinical trials and preparation of an investigational new drug application so that it would be submission ready for the FDA.

Let me take a few minutes to walk you through the status of each of these programs starting with the Apatorsen IND in non-muscle invasive bladder cancer. Our Apatorsen compound is a subject of four ongoing clinical studies designed to evaluate whether inhibition of Hsp27 can lead to improved treatment outcomes for cancer patients.

The trials underway are designed to evaluate Apatorsen in bladder, lung and prostate cancer in combination with various treatments. They are being conducted in order to provide information for designing future Phase III trials and could be used as supportive studies for registration purposes. Starting with bladder cancer.

We have data in hand from two completed studies in advanced metastatic and non-muscle invasive bladder cancer.

These data include results presented at ASCO 2015 from the Phase II Borealis-1 trial in which patients who were defined as having risk for poor survival outcome and received Apatorsen in combination with chemotherapy experienced a 27% reduction in risk of death compared to patients receiving chemotherapy alone.

Data has also been presented from a Phase I trial evaluating patients with non-muscle invasive bladder cancer in which 33% of the patients treated had no pathologic evidence of disease following treatment with Apatorsen.

Based on these encouraging findings, we submitted a pre-IND package to the FDA for evaluation of intravesically administered Apatorsen in combination with BCG treatment in patients with non-muscle invasive bladder cancer. We recently received feedback from the FDA regarding our proposed trial protocol under this newly proposed IND.

I am pleased to report that the FDA had no objection to our proposed study population or classification of subpopulations in the study design and concluded that the proposed definitions of primary and secondary endpoints were acceptable.

We are preparing the IND submission materials and the FDA feedback is helping to frame discussions with potential partners interested in Apatorsen in this indication. Given our current market cap and focus on other development activities, we do not intend to finance or fund further development of this program without a collaboration partner.

The third trial in our bladder cancer program is Borealis-2, our largest Apatorsen trial to-date.

This is an investigator sponsored, randomized Phase II trial evaluating Apatorsen in combination with docetaxel treatment compared to docetaxel treatment alone in patients with advanced or metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy.

The trial will randomize approximately 200 patients and results are expected in the second half of 2016. We are very excited about the progress to-date in our bladder cancer program and look forward to advances in a number of our programs throughout the rest of this year. Turning to our other asset, Custirsen.

We have two important Phase III clinical trial data milestones anticipated in the next 12 months. The AFFINITY trial is our Phase III clinical trial evaluating the survival benefit for Custirsen in combination with cabazitaxel treatment as second-line chemotherapy in approximately 630 men with castrate-resistant prostate cancer.

The interim futility analysis for the intent--treat population was completed in December 2015. Per the recommendation of the independent data monitoring committee, the trial is continuing as planned. Both the IDMC and OncoGenex remain blinded to all analyses so far.

Depending on timing of events, final results for the ITT population are expected in the third quarter of 2016. The ENSPIRIT trial is our second ongoing Phase III clinical trial, which is evaluating a survival benefit for Custirsen in combination with docetaxel treatment as second-line chemotherapy in patients with non-small cell lung cancer.

A final interim futility analysis with more rigorous criteria was successfully completed in July 2015 and the trial is continuing as planned. Based on current ENSPIRIT enrollment projections, we believe final survival results could be available in the first half of 2017.

That concludes my summary of our clinical development programs and our upcoming milestones. At this time, I would like to turn the call over to John who will review our fourth quarter and year-end 2015 final results.

John?.

Thanks, Scott. As Scott mentioned, we recently implemented a plan to reduce operating expenses, including a significant reduction in headcount, external consultants and expenditures not required for completion of our ongoing studies. In doing so, we have extended our cash runway an additional six months further strengthening our cash position.

We remain focused on executing our clinical development plans in order to reach several near-term milestones for both the Custirsen and Apatorsen programs while reducing at-risk spend. As of December 31, 2015, our cash, cash equivalents and short-term investments increased to $55.2 million from $47.1 million as of December 31, 2014.

Based on our current expectations and following the recent restructurings, we believe that our cash, cash equivalents and short-term investments will be sufficient to fund the company's currently planned operations into the third quarter of 2017 and through a number of anticipated and significant milestones.

Those milestones include preparation of a submission ready IND application for Apatorsen treatment in patients with non-muscle invasive bladder cancer, announcement of Borealis-2 trial results in the second half of 2016, announcement Spruce trial results for the overall survival endpoint in the second half of 2016, announcement of the AFFINITY trial results in the third quarter of 2016 and announcement of ENSPIRIT trial results in the first half of 2017.

Revenue for the fourth quarter and year ended December 31, 2015 was $6 million and $18.2 million respectively. This compares with $5.7 million and $27.1 million respectively in the same periods in 2014.

Revenue recognized in 2015 is attributable to the advanced reimbursement received in the second quarter of 2015 under the termination agreement with Teva for research and development costs incurred by us related to the Custirsen development program.

Total operating expenses for the fourth quarter and year ended December 31, 2015 were $9.5 million and $36.9 million respectively. Net loss for the fourth quarter and year ended December 31, 2015 were $1.7 million and $16.8 million respectively. That concludes the summary of our year-end financial results.

Before I turn the call over for questions, I would like to thank each of you for your ongoing interest in OncoGenex. We continue to look forward to a number of significant data milestones beginning in the second half of this year that will frame what promises to be a pivotal 12 months for the company. Thank you, again.

At that this, I would like to invite the operator to open the call to questions..

[Operator Instructions]. The first question is from Katherine Xu of William Blair. Your line is open..

Hi. Good afternoon. I am just wondering what the Apatorsen IND that you are preparing? Is that kind of the study, if other studies fail, is this kind of the one that you think you would push forward at this stage? That's question number one.

Number two, with regards to the second line non-small cell lung cancer setting in combination with Taxotere, so far we have seen Synta as well as Peregrine failed in the same setting. Granted the mechanisms are all very different, but the other two could not pass the futility analysis.

So just wondering, what's your thoughts are on this setting, these studies, the fact that you passed your interim futility analysis and things like that?.

Right. Thank you for your questions, Katherine. So first of all, with respect to your question on Apatorsen and the plan for non-muscle invasive, as you know, we have got two sets of data set for bladder cancer that we are quite encouraged by.

The non-muscle invasive was one that we have talked about for the last number of conference calls where we saw the about 33% of patients that have passed CRs in about or after about a week of treatment. So that certainly is encouraging and does represent a go-forward plan that is independent of any additional data events for Apatorsen.

The second is actually Borealis-1. And Borealis-1, as you recall, particularly if we looked at the subpopulation that had poor prognosis did quite well. We are looking forward to seeing what Borealis-2 holds for us and as we noted in this conference call, expecting the results from that trial in the second half.

I would say if that trial also shows encouraging activity, then we probably have a path for both metastatic disease as well as non-muscle invasive. So I think we have got both of those trajectories presently in our sites. And that would be the go-forward plan.

As far as orderly ranking of which one of those would be going forward, I don't think we could say until we see the Borealis-2 results, but stay tuned on that one. And as we said in our notes in this call, the Borealis-2 trial is actually a large trial. It's 200 patients.

So it does represent our largest trial to-date for Apatorsen and should give us pretty good signal. Your second question is an interesting one.

The ENSPIRIT trial and specifically the futility assessment that was passed and while we haven't been able to provide granularity of what that futility was, we have repeatedly indicated that it was a pretty material futility assessment that we are looking at for survival in this patient population. And so, having passed that, to us, is a nice signal.

And you are right, there have been other companies that have been developing drugs in similar states that has not yielded the same outcomes. I don't know what their futilities were specifically but I think looking at our data set certainly gives us indication that this drug continues to be a drug of interest in non-small cell lung cancer.

So we continue to push on that trial and look forward to seeing the results, as John said, in next year..

Thank you. Our next question is from Chad Messer of Needham & Company. Your line is open..

Great. Thanks for taking my questions. On ENSPIRIT, I believe the last estimate or readout had been 2H 2016 or at least that was an estimate at one point in time.

Is that purely based on accrual or patients into the trial or events that you kind of think it's going to come in 2017?.

Thanks for the question, Chad. It's mostly events. So as you know, I guess we have both features going. We are continuing to accrue the trial, but I think the accrual is tracking to what the expectations were.

I think the bigger feature as we look at the events as they come in and remember, this is on a pooled basis, so we can't track them on a per arm basis. They are not coming in at the same rate and that could be feature of the changing landscape and probably a few other things.

But this is always a difficult one to try to estimate because things like death events are difficult to assess, particularly in changing landscape.

So that's the primary driver and things may change, forward or backward, actually as we continue through this year and we will continue to provide updates as they become known to us with respect to timing..

Great. Thanks. I know we have had this discussion into these kind of blinded events accruing slower. It's just too difficult to try to figure out what it means. It could be good or bad. All right.

And then just looking at the Apatorsen, the IND intravesicular, I assume one rationale there is to give that at the same time as PCG because that's best delivered that way, but in terms of that being a good way to deliver Apatorsen, is there preclinical work or other work that you have done to give you comfort that this is going to be a good way to deliver Apatorsen? You have data showing a systemic delivery.

You may have data on intravesicular, but I wasn't aware of it, if you did..

Yes. Again, a really good question, Chad. We do have preclinical data showing intravesicular administration of Apatorsen. So that was in an animal model and demonstrated activity in the PK/PD attributes that you would want to see.

And then, I would say that is further substantiated by the Phase I trial that was done that also showed it was designed to basically show that if we administer Apatorsen into patients that had superficial non-muscle invasive bladder cancer that we would basically be able to see drug uptake and target knockdown.

And again, that was something that has been published. So I think that substantiates what we saw on the preclinical. I think on the broader front, bladder cancer particularly the non-muscle invasive, so I guess we will first the maybe the market.

I think it's becoming probably better known by many that bladder cancer and specifically non-muscle invasive is a very large unmet need market. Bladder cancer is a disease that typically in its advanced stages does claim the lives of a lot of individuals and it is one of the larger indications.

And fortunately, we haven't seen new developments in that disease setting for a long, long time. That's starting to change. We are starting to see some drugs come into the marketplace.

But what's interesting, from a drug delivery perspective, is non-muscle invasive disease is one that is characterized by the tumors basically being in or just starting to protrude through the bladder wall.

And so from a drug delivery perspective, if it's one of those rare circumstances where you can instill the drug directly into the bladder, you have drug and tumor environment directly contained in the same environment, which is kind of an ideal scenario for drug development and so on.

And from a urology perspective, those clinicians are very used to taking and extracting things out of the bladder. It's a common practice that can be done pretty easily.

So I think in this indication, if we can take the drug and instill it directly into the bladder like that, put the drug right beside where the tumor burden, it's kind of a one of your more optimal ways that you could get treatment.

We reserve systemic approaches to more of your metastatic disease settings as we have in the other bladder trials and lung trials and so on and that's always a tougher thing to do because you have got a much longer body environment where you are trying to get drug distribution.

But I think the non-muscle invasive setting is certainly one that we are interested in because you can get drug right to tumor environment..

Understood.

So this next one 's a bit like asking you pick your favorite child here but it sounds like given you are ponying up at this stage for a company-sponsored trial and you have got a big readout coming up soon in metastatic bladder, that this maybe to saying you guys believe have the most confidence and I was wondering if you could just on a relative basis confirm, deny or evade the question that this is maybe the best shot, in your mind, based on the data that we have?.

Right. So my children do this to me ironically on a regular basis too, but trying to get them to or me to pick to the favorite child.

So I guess first of all, on the Apatorsen front, the bladder indication is the area that we have the strongest data, that we have both the Borealis-1 that gave us particularly in poor prognostic patients and then the non-muscle invasive was a similar signal of anticancer activity, because that was a single agent administration.

So I think in the context of Apatorsen, bladder cancer is today an actionable path for us. We are not dependent on getting more data to say go forward into another stage of development. And that is different than obviously the other indications for Apatorsen. So I would say, bladder is the favored approach in the Apatorsen pathway.

We still need to see what Borealis-2 shows us where I would say we haven't really determined whether a non-muscle invasive versus metastatic is actually the preferred setting. I think we have to reserve until we see Borealis-2 and then we can make that call. But right now bladder is a very good one that we can go after.

With respect to the picking between Custirsen and Apatorsen, I think that's a much more difficult task. As we talked about and particularly in Katherine's question, we do have the information that we passed the futility and survival with non-small cell lung cancer patients.

And that is something that we see as a positive signal to continue our enthusiasm. And then, with respect to the prostate environment, we still have the ITT analysis and we talked about the statistics and so on and whether that is a strong signal or not.

We remain very committed to seeing the AFFINITY trial complete and look forward to those results in the second half. And I think that's going to be very exciting for us. And I personally have not at all given up hope on Custirsen at all for those two reasons..

All right. Great. Thank you..

Thanks a lot, Chad..

Thank you. [Operator Instructions]. Our next question is from Joel Herin of RBC Capital Markets. Your line is open..

Hi guys.

A quick question on the Teva breakup fee and Isis which is now Ionis Pharma, their requests for 30% of that, could you give a quick update on that?.

Yes. Thanks for questions, Joel. Because this is in active discussions with Ionis Pharma, we can't give an awful lot of detail.

All we can really provide you is really what's in our disclosures which is as you properly stated, Ionis has made a claim to portion of the dollars that were provided to us from Teva in respect of the collaboration and development agreement for Custirsen.

Our position, as we have stated, is that those dollars were advance reimbursement for continued development of the drug which is an excluded provision in the Isis agreement and we intend to continue to defend that position. And at this point that's really all that we can give you much more detail on..

Okay. Thanks.

So is there a lawsuit being filed?.

Yes. It has..

Okay. Thank you.

And second quick question, could you just elaborate quickly on the population that you intend to treat for the non-muscle invasive bladder cancer? Will you be targeting BCG refractory patients at all or purely patients before that stage?.

Yes. So again, really good question, Joel. I appreciate this. It's actually the BCG relapsing disease. So these are patients that would have had responses to BCG and would be eligible and appropriate for BCG retreatment. And so the patient population there is going to be, either they get BCG or BCG plus Apatorsen.

And then really our focus is then directed towards whether the benefit is better in intermediate or high-risk disease where your endpoints are slightly different versus the carcinoma in situ, which is obviously the much more aggressive and lethal form of that disease and the endpoint there is typically response rate driven. A complete response rate..

Perfect. Thank you very much..

Thanks a lot, Joel. Appreciate the call..

Thank you. At this time, I would like to turn the call back to Mr. Scott Cormack for any closing comments..

Thanks a lot, Vance.

We appreciate it and very much appreciate everybody's time and attention on this call today as we wrap up by the results from 2015 and we continue to look forward to a number of significant data milestones beginning the second half of this year that will frame, as John had said what promises to be a very exciting next 12 months for the company.

We have got some very pivotal data sets and we look forward to providing those updates to you as our year progresses. Thank you very much..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program. You may now disconnect. Everyone have a great day..