Jennifer McNealey - Senior Director, Investor Relations Susan Molineaux - Founder, President and CEO William Waddill - SVP and CFO.

Mike King - JMP Securities Yanan Zhu - Wells Fargo Securities.

Good day, ladies and gentlemen, and welcome to the Q3 2016 Calithera Biosciences Earnings 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 call is being recorded.

I'd now like to introduce your host for today’s conference, Ms. Jennifer McNealey, you may begin..

Good afternoon, everyone, and welcome to Calithera’s third quarter 2016 conference call. Joining me today are Susan Molineaux, our Founder, President and CEO; and Will Waddill, our Senior Vice President and CFO.

Before we begin, I would like to remind you that today’s discussion will include statements about the company’s future expectations, plans, and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the Risk Factors section of our Quarterly Report on Form 10-Q, on file with SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

Please note this call is being recorded. With that, I will turn the call over to Susan..

Thanks, Jennifer. Good afternoon, everyone, and thank you for joining us today on our quarterly conference call. During the third quarter, we continued enrolling patients in trials evaluating our glutaminase inhibitor CB-839 in both triple negative breast cancer and in renal cell carcinoma.

And we look forward providing updates on these studies plus additional data on our program at medical meetings that are coming up soon in the fourth quarter. In addition, we opened two new immuno-oncology trials in the quarter, both of which should have an initial read out next year.

This includes our trials of CB-839 in combination with Nivolumab and our trial of CB-1158 in solid tumors. We also announced the appointment of Suzy Jones to the Company’s Board of Directors. Ms. Jones is currently Founder and Managing Partner of DNA Ink, a life sciences advisory firm. And we are pleased to welcome her to our board.

At Calithera, our program targeting glutamine, arginine, and glucose metabolism effectively are interrelated with each program targeting a different aspect of tumor specific metabolism and immune metabolism.

Tumor metabolism and immuno-oncology have emerged as promising new fields for cancer drug discovery and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally new therapies for cancer patients.

We are developing agents to take advantage of the unique metabolic requirements of tumor cells and cancer fighting immune cells such as cytotoxic T-cells. With our pipeline of novel therapeutic product candidates, we believe that we have multiple opportunities to impact clinical outcomes for cancer patients. Now for an update on our clinical programs.

CB-839 is a first-in-class selective and potent inhibitor of glutaminase and we believe it is the only glutaminase inhibitor currently in clinical development. The drug has been well tolerated in Phase 1 at doses that fully and continuously inhibited the glutaminase enzyme and we have seen signs of activity in multiple tumor types.

At this year's ASCO conference in June, we presented initial positive combination data for CB-839 from our solid tumor studies. Based on that positive data, we have focused the CB-839 program on triple negative breast cancer or TNBC and renal cancer or RCC. In both cases the combination data was with standard of care chemotherapeutic agent.

So first an update on RCC. At ASCO, we present a compelling date with CB-839 in combination with everolimus. Among 10 patients treated in combo; that was an 80% disease control rate, including one partial response with a notable 100% disease control rate among clear cell and papillary renal patients.

This compares favorably to treatment with everolimus alone, where one would expect 30% to 40% of the patients to progress at their first scan.

In September, we announced the clinical data of CB-839 in combination with everolimus has been selected for a plenary session at 28th Annual EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics, which is taking place November 29th to December 2nd, 2016 in Munich, Germany.

The plenary session is on Wednesday, November 30th, 2016 and data then will be presented by Dr. Funda Meric-Bernstam of MD Anderson Cancer Center. In addition, we plan to present additional preclinical results demonstrating synergy of CB-839 with everolimus as well as with tyrosine kinase inhibitors.

The benefits of the dual metabolic blockade of glucose and glutamine have emerged as an important mechanism in the treatment of RCC. We are also continuing to enroll additional patients on the CB-839 plus everolimus trial and have note in renal cell carcinoma there are limited combination treatment options.

Historically it is not impossible from a toxicity perspective to combine tyrosine kinase inhibitors with mTOR inhibitors. In addition, tyrosine kinase inhibitors and mTOR inhibitors cannot only be tolerated in combination with I-O drug.

With CB-839 tolerability profile, therapy is an ideal complement for this standard of care, and we believe it has the potential to be a backbone in the treatment of RCC.

We plan to explore combinations of CB-839 and renal cell carcinoma beyond the combination of everolimus and we are currently enrolling a cohered patients in combination with tyrosine kinase. Additionally in August, we announced the first patient enrolled in our CB-839 plus Nivolumab combination trial.

Checkpoint inhibitors like Nivolumab promote the activation and tumor killing properties of the patients own immune cells such cytotoxic T-cells. CB-839 can potentially have dual action in the treatment of cancer by first starting to tumor cell, and second, facilitating the activation of T-cells in the nutrient deprived tumor microenvironment.

The Phase 1/2 study will assess the safety, pharmacokinetics and pharmacodynamics of CB-839 and Nivolumab. The study will enroll patients with clear cell, renal cell carcinoma who are either naïve to checkpoint inhibitors or who were recently treated with nivo without a tumor response.

In particular, we are looking add-on CB-839 to patients on Nivolumab as a most recent therapy that not yet respond to Nivolumab as a monotherapy. Additional preclinical results highlighting the immune effect of CB-839 will be presented at the upcoming Society for Immunotherapy of Cancer or city meeting this week.

And we anticipate clinical data from this trial of CB-839 plus Nivolumab to be presented in 2017. Next, an update on our TNBC trial in combination with paclitaxel. At the time of the ASCO presentation, we had treated 15 patients with locally advanced or metastatic triple negative breast cancer.

Patients were dosed to twice-daily in combo with full dose paclitaxel. The combination was well tolerated and among patients treated with at least 600 milligrams twice a day, there were three partial responses for response rate of 38% and disease control that is response or stable disease were seen in seven out of eight patients.

Two of the three patients with PRs had seen a prior taxanes in the metastatic setting but had not responded to that taxanes. The majority of patients had been treated with at least three lines of prior therapy and 40% had more than five or more lines from prior therapy.

Most patients had received prior taxanes in the adjuvant neo-adjuvant setting or the metastatic setting. The historical expected PFS of this population would be two to three months.

We and our investigators are particularly pleased with the responses seen with CB-839 plus paclitaxel in patients who had received prior taxanes in the metastatic setting and some as I said without a response.

We continue to enroll additional triple negative breast cancer patients and plan to update you at the San Antonio Breast Cancer Symposium in San Antonio from December 6th through 10th, 2016 in San Antonio, Texas.

We're also pleased to announce that we have enrolled our first patient in an investigator sponsor trial in a biomarker selective colorectal cancer cohort at Case Western Reserve University. The trial would be enrolling colorectal cancer patients with a PIK3CA mutation for treatment with a combination of CB-839 and capecitabine.

Next, let me discuss our immuno-oncology program CB-1158. In September, we announced that the first patient was dosed in a Phase 1 trial of our first-in-class arginase inhibitor. Arginase is an immuno-suppressive enzyme expressed by immune cells in the tumor microenvironment.

Our initial protocol is a monotherapy study with the ability to move into combination therapy with a PD-1 antibody as quickly as possible. In preclinical studies, we have shown CB-1158 to be a potent bioavailable inhibitor of arginase. Arginase is an enzyme that has a normal immunosuppressive function in the immune system.

Its function is to deplete arginin which is required for the activation and proliferation of T-cell. Tumors are able to co-op this mechanism and shut T-cells off in the tumor microenvironment by bringing in myeloid-derived suppressor cells that express arginine, thereby deplete arginine and shutting the T-cell activation down in the tumor.

CB-1158 is a well-tolerated molecule that increases the arginine levels in tumors of animals. In pre-clinical model, we showed that it had single agent activity and it acts directly on the immune cells in the mice.

When we looked in human tumours, we found arginase expressing cells across all solid tumors with the highest levels seen in lung, colon, gastric and bladder tumors. We plan to present additional preclinical results of both the city as well as the triple meeting.

And in addition, we anticipate the clinical data from patients treated with the monotherapy to be presented in mid-2017. And with that update, I’ll pass it over to Will for an update on our financials..

Thank you, Susan, and good afternoon everyone. Calithera continues to be in a solid financial position to drive our first in class tumor specific metabolism programs forward. As reported in our filing today, our cash, cash equivalents and investments as of September 30, 2016 were $56.5 million as compared to $71.9 million as of December 31, 2015.

Based on the result of the first nine months of 2016 in the company’s current expectations for the remainder of the year, the company is raising its guidance in cash, cash equivalents and investments to be at least $50 million at the end of 2016.

For the three months ended September 30, 2016, research and development expenses were $6.3 million as compared to $6.8 million for the same period in the prior year.

The decrease of $0.5 million was primarily due to the timing of manufacturing clinical supplies to support the company's CB-839 CB-1158 clinical trials partially offset by increased personal related costs primarily due to higher headcounts, salary increases, and stock based compensation expenses, and costs associated with the company's licensing agreement.

General and administrative expenses were $2.3 million for the three months ended September 30, 2016 compared with $2.2 million for the same period in the prior year. The increase of 100,000 was primarily due to higher personnel related costs as a result of higher headcount, salary increase, and stock based compensation expense.

Net loss for the three months ended September 30, 2016 was $8.5 million or $0.44 per share. And with that I'll turn it back over to Susan..

Thank you, Will. And with that operator, we’re happy to open the line for questions..

[Operator Instructions] And our first question comes from the line of Mike King with JMP Securities. Your line is now open. Mr. King, your line is now open..

Sorry, I was on mute, I apologize.

Can you guys hear me?.

Yes, Mike. Hi..

Okay, sorry about that. Yeah, just calling it from Citi in fact.

Susan, I just wanted to ask on, just if you could go over the combo of 839 and checkpoint that you're saying is going to be in patients that are not responding at all or just not responding adequately to Nivo?.

So, actually we have two cohorts, one is RCC patients who are naïve to Nivo, never had an IO therapy. So we do have one cohort that just combined CB-839 with naïve patients. The other cohort is designed to test the question of whether we could take somebody who is just stable for six months or more on Nivo and hasn't seen a respond.

And see if we could add to CB-839 in these respond..

Okay..

Or if some - if a patient is just starting to progress if we could reverse that progression and get them stable or responsive, so both type in it..

Okay.

And is this just empirical study or do you have certain predefined response criteria that you would need to see just thinking about trying to compare what you guys are doing there with what's been done with you know the IDO inhibitors and just for as what sort of an acceptable improvement over an expected response rate in order to determine a go, no go decision?.

Right. So in the naive cohort, since historically was about 25% response rate to Nivo alone, we’re designing it to look for something with the face for the first part of the study that hasn't find in two stage design.

So with the first part of the study we’re looking for a response, they look interestingly above that 25% historical number that would allow us to expand the study and keep going. In the case of the add-ons, we really design the trial that any responses would be interesting because you weren't getting a response until you add CB-839..

Sure okay.

And I guess the same question would apply for arginase, is it sort of the same approach?.

Well, yes, it is. So the first part of the study is monotherapy dose escalation. Obviously we're looking for PKPD safety and signs of efficacy whether it's responses or whether it's immuno modulation of the tumor microenvironment or peripheral mono nuclear cell. That's the kind of responses, so looking for.

And then we're planning to go into our combinations with a PD1 antibody again as quickly as possible. And those cohorts are designed in a similar fashion. One of the cohorts will be with colorectal cancer where there is not a strong response rate in single agent in Nivolumab or any other PD1 antibody.

And so they're designed appropriately to look for changes that would be about what you would expect to start treat for each cohort to allow an expansion to continue..

Okay.

And in colorectal, I mean other than the fact that checkpoints don’t really work there other than high patients, is it just because of unmet need or is there some biologic rational I think arginase inhibition would be helpful there?.

Well, it’s certainly been known before we started looking at this situation the colorectal cells have an inflammatory component that has the high percentage of myeloid cells.

The work that we’ve done, it’s been published already are looking at human tumor samples from colorectal patient, indicates that there is my myeloid cells are arginase containing. I have used some myeloid cells that are MDSCs or myeloid-derived suppressor cells and that over there in very large numbers are relative to other tumors.

So we would postulate that that is one of the blocks that would prevent PD-1 from working and essentially by removing a downstream immunosuppressive enzyme that’s keeping T-cell from activating. We would combine the PD-1 and push those tumors into responses..

Right. Okay.

And then just - if I could just swing back real quick to CB-839, any contemplation of TKI combos or are those going to be of secondary considerations?.

And they are running in parallel, so we have cabozantinib plus CB-839 trial that just opened a few months ago and is enrolling. We need safety data and we can follow those patients to see what their responses are. So that our first step towards TKI and it’s only TKI trials we have open right now.

Because again we are committed to everolimus for doing the cabozantinib and we’re also enrolling the PD-1 trial. So that three trials in RCC running simultaneously..

Yeah.

And then Cabo, any idea when the release might be there we could see data from that trial?.

I would say the end of 2017, since the cabozantinib PFS is very long..

Okay, but nothing in terms of response rates?.

And if we have response rates then it could possibly be an earlier clinical meaning..

Okay. Great. Thanks for taking the questions..

Sure. Thank you, Mike..

And our next question comes from line of Jim Birchenough with Wells Fargo Securities. Your line is now open..

Hi, Thanks for taking our questions. This is Yanan and for Jim, today. Three questions on CB-839, two related to kind of scientific rationale and one related to timing of clinical trials.

If I may start with the question about rationale for combination with TKI, I think in the past you have well provided pretty good rationale for why the combo with [indiscernible] and the combo with paclitaxel work in their respective indications. So what would you like to highlight for the combination with TKI in term of biology? Thanks..

Okay. Good question too. So we’ve looked at TKIs in more than one solid tumor setting but for renal cell carcinoma as it’s similar for other tumor types, any TKIs that are either controlling PI-3 kinase pathway or the Ras/Raf pathway are synergistic when we combine them with CB-839 in preclinical models.

We believe that due in large part to the fact that those TKIs are limiting because metabolism in cells and our compound limits the glutamine metabolism and together that has a synergistic effect. In RCC, we’re presenting - continuing to present data at the triple meeting showing our preclinical studies with TKIs in RCC as well as with everolimus.

And so, what we’ve shown so far is that the TKIs are very similar to everolimus and we think that the positive data we’re seeing in clinic but everolimus help to support our preclinical data as being predictive of what’s going to happen in the clinic and as a result of those preclinical studies it with cover that [Technical Difficulty]..

Because so non-temporary histologists, if there’s a rationale for why those patients don’t respond to the combo, is that because of they’re not known to respond to [Technical Difficulty].

We would have Phase II clinical trial designs and initiative at some time in 2017 to support going forward in both RCC and TNBC very much dependent on what we can dispose in a few weeks and what we continue to see in the next say it three to six months..

Great. That’s very helpful. Thank you..

And our next question comes from the line of [indiscernible] with Citigroup. Your line is now open..

Hey, guys. Thank you so much for taking my question. I am on for Robin.

So I had a quick question about the TNBC, what - in terms of what we should think about for the Phase II study, would you be looking only at the taxane failures or would you also be looking at people who have not had any taxane? And for those patients what would the bar be in terms of what you should see in the current study that’s ongoing for you to be able to look at that population in a Phase II study?.

But there are two kinds of Phase II designs that we’re contemplating and where we’re going to continue to enroll TNBC patients to address both of them. So the first one and possibly the fastest path towards moving down towards an approval would be to look at taxane failures.

Because our initial data shows that we can take the taxane sale, taxane refractory patients who never responded to taxane and who we have clear evidence to not respond to a taxane because they received it in the metastatic setting and do not respond.

That patient population if we can make them sensitive to paclitaxel is a very appealing population to focus on. So we’re continuing to enroll patients in that category and will be able to update some of that data in December.

And the path there would be again a Phase II study in the very late stage taxane refractory patients where we would be we sensitizing and more sensitizing them for the first time.

But if CB-839 is actually sensitizing patients who would not have been sensitive to paclitaxel, that does open up the possibility of going into an earlier set of patients who’ve never seen taxane in the metastatic setting.

But that hypothesis that we can create a larger population of responders from we had CB-839 to taxane rather than what you would see in taxane alone. And that of course is the outline of an earlier Phase II study that would be randomized.

That we are working to get the data and the patients to clarify, so those are possible way forward and to understand the mechanism better and we’re keeping it open for both of those types of studies to go forward to the next study..

Okay. Great, thank you.

So we’re talking about mechanism can you just briefly explain how CB-839 is sensitizing these patients to taxane, is it well understood or are you in the process of trying to understand how that works?.

It is not well understood how we’re reversing the taxane insensitivity and we are actively studying that both clinically by looking at biomarkers and data on the patients as well as by looking at preclinical studies.

The suggestion in the literature is that ability to utilize glutamine is a barrier for paclitaxel to work to induce a through a glutamine metabolism pathway may be one of the ways in which it’s working. And if you have a high enough glutamine metabolism going on and so they may be primary refractory. That’s the hypothesis that’s in the literature.

We’re trying to pursue that hypothesis and understand it better by looking at our patients. And in addition, we are actively looking at potential sub-populations in the TMBC patient group that might have more of a response to taxane for CB-839 then other sub-group and we’ll be able to report on those findings at San Antonio..

Okay, that’s great, thank you.

And if I can ask one last question about the CB-1158 program, can you just talk a little bit about when you might go into combo studies, what the combo studies might be with, have you narrowed down candidates and what indications would you looking into for the combo studies?.

Yes, so right now we are in monotherapy dose escalation and we are feeling quite confident that in the first half of next year, we would be moving towards a combinations antibody with PD1 antibody. That’s our current plan is to go with the PD1 antibody and we expect to go into a couple of different solid tumor type.

And if we pursue a clinical collaboration, we have more latitude on what tumor types we would go into. So for example, colorectal which is of interest to us would require a clinical collaborations, so that we could go into an unapproved indication. So obviously we are interested in doing that. We’ve been pursuing that kind of approach.

But however we do it, we would expect to start this study again in the first half of 2017..

Okay, great, thank you so much. I appreciate it..

I am showing no further questions at this. I would now like to turn the call back over to Ms. Susan Molineaux for closing remarks..

Thank you. Once again, thank you all for joining the call today. And in closing, we look forward to seeing at City, the triple meeting and in San Antonio. Thank you and have a good day..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day..